Reckitt Benckiser Group PLC

Reckitt Benckiser Group PLC (RB) is a Slough, United Kingdom-headquartered leading consumer health, hygiene and homegroup that manufactures and markets household, toiletry and health care products under several famous brands like Dettol, Harpic, Air Wick, and many others. The operations of the group are differentiated in two operating segments, namely Health and Hygiene and Home.

On 27^th February 2020, the company will announce the full-year results.

Q3 FY2019 Trading Update (as on 22^nd October 2019)
On an LFL basis, the net revenue increased by 1.6 per cent to £3,285 millionin the third quarter of 2019. In Q3 FY19, the reported net revenue surged by 5.3 per cent. The company’s price/mix growth surged by 3 per cent, and volume was down by 1 per cent. In Q3 FY19, LFL performance in Health was down by 0.3 per cent, after lapping the supply disruption in the IFCN (Infant Nutrition) business in the previous year. An underlying decline of approximately 4 per cent reflects improving but continued share loss and careful retailer purchasing ahead of the flu season. In the third quarter of 2019, LFL growth in Hygiene Home rose by 4.5 per cent.

Share Price Performance

Daily Chart as at October-22-19, before the market closed (Source: Thomson Reuters)

On 22nd October 2019, Reckitt Benckiser Group PLC shares were trading at GBX 5,611 at the time of writing before the market close (at 10:07 AM GMT), down by 4.44% against the previous day closing price. Stock's 52 weeks High and Low are GBX 6,862/GBX 5,510. The company’s stock beta stood at 0.88, reflecting the lower movement of the stock as compared to the benchmark index.

Conclusion
While the expectation for adjusted operating margin declined, the company’s net revenue target was reduced to 0-2% LFL growth, reflecting the decrease in-retailer inventory levels of seasonal products in the third quarter of 2019 and associated stocking, inherent uncertainties of the season. The Hygiene Home business is well positioned and is deriving solid performance from multiple geographical locations and numerous brands. The company has robust capabilities in e-commerce and innovation.

Based on the above rationale, we have given a "HOLD" recommendation at the current price of GBX 5,611 (as on 22 October 2019, before the market close).
 

Bunzl PLC

Bunzl PLC (BNZL) is a London, United Kingdom-headquartered specialist multinational distribution company, which is engaged in supporting businesses by distributing non-food consumable products to various markets in 31 countries. The operations of the group are differentiated in four operating segments, namely North America, Continental Europe, UK & Ireland, and Rest of the World.

Q3 FY2019 Trading Statement (as on 22^nd October 2019)
For the third quarter of 2019, the company’s revenue growth stood at 4 per cent at actual exchange rates. At constant exchange rates, revenue increased by 0.5 per cent. The acquisitions contributed to 1.5 per cent with underlying revenue declined by 1 per cent. This mainly reflects the earlier announced lower sales to a large grocery client in North America, driven by the price deflation and account-specific product specification changes. Growth through acquisitions is a vital part of the continuing strategy of the company with total committed spend on acquisitions so far this year of around £100 million.

Share Price Performance

Daily Chart as at October-22-19, before the market closed (Source: Thomson Reuters)

On 22nd October 2019, Bunzl Plc shares were trading at GBX 1,927.5 at the time of writing before the market close (at 10:15 AM GMT), down by 3.529% against the previous day closing price. Stock's 52 weeks High and Low are GBX 2,554/GBX 1,908.50. The company’s stock beta stood at 0.82, reflecting the lower movement of the stock as compared to the benchmark index.

Conclusion
According to some market experts, foodservice market in the UK has been driven by increasing numbers of transactions, and Bunzl is poised to benefit from the positive outlook for the foodservice industry in the UK as it provides food packaging, disposable tableware and catering equipment.

For the financial year 2019, the company's expectations remained unchanged with overall trading consistent with the slowing underlying revenue growth indicated in prior announcements this year and driven by the effect of the ongoing mixed macro-economic and market conditions across the sectors and countries in which the company operates. The acquisition pipeline stays active.

Based on the above rationale, we have given a "HOLD" recommendation at the current price of GBX 1,927.50 (as on 22 October 2019, before the market close).
 

Georgia Capital PLC

United Kingdom-based Georgia Capital PLC (CGEO) is a holding company. The group is focused on investing in developing businesses in Georgia. As of 30 June 2019, the company has a total portfolio of GEL 2.2 Billion, total gross invested capital of GEL 975 million, NAV per share of GEL 53.90.

3Q FY19 and 9M FY19 Trading Update (as on 22^nd October 2019)
The company delivered robust growth in private portfolio operating cash flow generation, an increase of 67% y-o-y in 9M FY19 (up 44.7% y-o-y in 3Q FY19). During the third quarter of 2019, the company had a strong investment of GEL 113 million (GEL 176 million in 9M FY19). The NAV per share increased by 12.9 per cent to GEL 50.04 in Q3 FY19, while NAV per share was down by 7.2 per cent in 9M FY19. The company continued robust and sustainable progress in revenues and EBITDA around the private portfolio. In Q3 FY19, the water Utility EBITDA rose by 19.7%, due to tripling of electricity sales revenues. The beer business enhanced revenues by 52 per cent while posting the first quarterly positive EBITDA of GEL 1 million.

Share Price Performance

Daily Chart as at October-22-19, before the market closed (Source: Thomson Reuters)

On 22nd October 2019, Georgia Capital PLC shares were trading at GBX 985 at the time of writing before the market close (at 10:54 AM GMT) and remained the same against the previous day closing price. Stock's 52 weeks High and Low are GBX 1,275/GBX 927.

Conclusion
Some risks are currency fluctuations, including depreciation of the Georgian Lari, and macroeconomic risk; regional instability; regulatory risk across a wide range of industries; portfolio company strategic and execution risks; investment risk and liquidity risk.

The company’s NAV was GEL 174 million, due to the decrease in the market value of listed assets, while private assets generated GEL 37 million value. In August 2019, the company 0.7 million shares were cancelled. In the current period, the company also increased its net debt position. The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors.
Based on the headwinds faced by the company, we have given a "WATCH" recommendation at the current price of GBX 985 (as on 22 October 2019, before the market close), while any correction with support from few catalysts needs to be evaluated at a later stage.

Judges Scientific PLC

AIM-listed Judges Scientific PLC (JDG) is a United Kingdom-headquartered company, which focuses on the development and acquisition of a portfolio of scientific instrument enterprises. The company is differentiated into two segments: Materials Sciences and Vacuum.

Financial Highlights (for the six-month period to 30 June 2019)
In the first half of 2019, the company’s revenue surged by 9% to £40.2 millionas compared with the corresponding period of the last year. Sales were boosted by efforts throughout the company to pursue operational excellence further; in particular, management strived to decrease client delivery lead times. Therefore, sales in H1 FY19 accelerated ahead of order intake and resulted in a small reduction of the order book. Adjusted basic earnings per share increased by 30% to 108.7 pence against the same period in 2018. The group’s board declared an interim dividend per share of 15 pence, an increase from the previous year (2018: 12 pence).

Share Price Performance

Daily Chart as at October-22-19, before the market closed (Source: Thomson Reuters)

On 22nd October 2019, Judges Scientific PLC shares were trading at GBX 4,428 at the time of writing before the market close (at 12:05 PM GMT), up by 1.56% against the previous day closing price. Stock's 52 weeks High and Low are GBX 4,490/GBX 2,080. The company’s stock beta stood at 1.0, reflecting the same movement of the stock as compared to the benchmark index.

Conclusion
The company continue to remain cautious about the ongoing political and macro-economic uncertainty and its potential effect on the future performance of the group. Also, majority of the group's revenue is dependent on the UK and Rest of Europe, which could be affected in near-term post Brexit (if exercised); however, a no-deal kind of Brexit could have a substantial impact on the group's profitability and performance. The ongoing trade war between the US and China has also impacted the company’s performance. Currently, the stock is trading near the 52-week high, suggesting that the upside potential might be limited, and the company can face stiff resistance at the current level.

Therefore, considering the above risk, we have given an “Avoid” recommendation at the current price of GBX 4,428 (as on October 22, 2019, before the market closed).

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