IG Group Holdings Plc

IG Group Holdings PLC (LON: IGG) is a financial services company which through its range of dealing platforms and apps provide traders with fast and flexible access to the financial markets. The group operates in 16 countries and is the leading provider of contract for difference (CFDs) worldwide. 

Recent News
On 21st January 2020, IG Group Holdings announced that its CFO (Chief Financial Officer), Paul Mainwaring had informed the Board about his retirement plans.

Financial Highlights – H1 Financial Year 2020 (30^th November 2019, GBP, million)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2020, the company’s net trading revenue declined to £249.9 million as against £251.00 million in H1 FY2019. The decline in revenue was reflected by the impact created due to ESMA measures and unfavourable market conditions. The company’s net operating income stood at £252 million in H1 FY2020 versus £249.8 million in H1 FY2019. In the first half of the financial year 2020, the company’s operating profit was reported at £100.1 million as against £112.5 million in H1 FY2019. The company’s PBT (Profit before tax) stood at £101.2 million in H1 FY2020 versus £113 million in H1 FY2019. The profit for the year attributable to the shareholders was £82.4 million in H1 FY2020 versus £91.4 million in H1 FY2019. 

Share Price Performance

Daily Chart as of  January 21^st, 2020, before the market close (Source: Thomson Reuters)

IG Group Holdings Plc shares were trading at GBX 692.00 at the time of writing before the market close (at 1:39 PM GMT) on 21^st January 2020 and were up by 0.93 versus the previous day closing price. Stock's 52 weeks High is GBX 711.80 and Low is GBX 467.40.The shares of the company have delivered a positive return of 12.91 per cent in the last quarter.

Valuation Methodology


Conclusion
The company expect revenue growth in the financial year 2020 and expects its operating expenses on the higher side versus the FY2019 data. The Group faces client credit risk, counterparty credit risk, liquidity risk and capital adequacy risk. The company faces operational risks, including those arising through technology, people, process and external events. IG operates in a dynamic competitive environment, and its revenue is dependent on the number of active customers and the level of their activity. The business operates in a number of geographic markets and is regulated by the various different financial services regulators in those markets.

While the company is not expected to be directly impacted by the impending Brexit, as the exchange rate adjusts to the new market conditions, the company can experience increased volatility in the sterling gold price, which can affect the security of pledge and the revenues from scrap operations. In the financial year 2019, average tenure of the highest value clients was 4 years and 9 months, and 55% of the global OTC leveraged revenue was generated from clients who have been trading with the group for more than 3 years, indicating that the group has been successful in recruiting and retaining a high-quality client base.

Keeping in mind the risks faced by the company, investors are recommended to keep a “WATCH” on the stock at the current price of GBX 693.60 (as on 21^st January 2020, before the market close at 1:00 PM GMT), while we look for any upcoming catalysts. 

Dixons Carphone Plc

Dixons Carphone Plc (LON: DC) is a London-headquartered electrical and telecommunications retailer and services company which provides a full range of services and support across the value chain, ranging from mobile virtual network operator services to consumer electricals and mobile phones.

Trading Update
On 21^st January 2020, Dixons Carphone announced an update for 10 weeks trading period ending 4^th January 2020. The company showed strong sales performance with an increase in market share and higher satisfaction among its customers. The company’s revenue from UK & Ireland Electricals surged by 2 per cent on a like-for-like basis, driven by growth inGaming, Smart Tech, TVs and other Domestic Appliances. The company witnessed a growth in online by 7 per cent and in-store as well versus decline in the market by more than 3 per cent. Driven by growth in Kitchens and Domestic Appliances for the period, the company’s revenue surged by 3 per cent on a like-for-like basis from its International business for the period. The revenue from the Nordics region went up by 3 per cent on a like-for-like basis for the period. In Greece, the revenue on a like-for-like basis increased by 6 per cent for the period. The company’sInternational online growth stood at 5 per cent for the period. The revenue from UK & Ireland Mobile business declined by 9 per cent on a like-for-like basis. The company’sStrategic initiatives are making decent progress for the trading period. The company operations are on track to meet the set guidelines.

Share Price Performance

Daily Chart as of  January 21^st, 2020, before the market close (Source: Thomson Reuters)

Dixons Carphone Plc shares were trading at GBX 147.50 at the time of writing before the market close (at 1:43 PM GMT) on 21^st January 2020 and were up by 3.55 versus the previous day closing price. Stock's 52 weeks High is GBX 166.45 and Low is GBX 90.00.The shares of the company have delivered a positive return of 10.45 per cent in the last quarter.

Conclusion
The group reported that the Mobile market is challenging, and the current political and economic climate is volatile. However, it continued to grow and win market share in all territories and stood by its full-year guidance. The company forecasts sales and profit to grow in Electricals in both UK & Ireland and International in the financial year 2020 and given strong cash flow from working capital improvements and net debt is expected to remain flat year on year. The company plans to improve headline EBIT margin to at least 3.5% by FY 2023 and is on track for the cumulative free cash flow of over £1 billion under the 5-year transformation plan. The online market, where the company has a strong foundation, offers a big profitable growth opportunity for the company. Credit is the largest and fastest growing segment of services and is another big lucrative growth opportunity for the company. The company plans to build on these strengths and looks to revitalise its mobile business and give customers a smooth experience.

Based on decent prospects, we have given a "HOLD" recommendation at the closing price of GBX 142.45 (as on 20^th January 2020).

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