Informa PLC

Informa PLC (INF) is a London, United Kingdom-headquartered international events, intelligence and scholarly research and publishing group which deliver intelligence-based products, data-driven services and research for specialist customer communities in more than 30 countries. The group is a constituent of the FTSE 100 index. The operations are differentiated in five operating segments: Informa Intelligence, Informa Connect, Informa Markets, Taylor & Francis, and Informa Tech. 

On 11^th November 2019, the company will announce the trading update.

Financial Highlights (for six months to 30 June 2019, £million)

(Source: Interim Reports, Company Website)

Due to favourable tailwinds from the currency movements and the full period of contribution from UBM, which the company acquired in 2018, the company delivered 47.1% reported growth and 3.4% underlying growth in revenue to £1,407.6m.

Statutory operating profit increased by 65.5% to £248.3mand adjusted operating profit grew by £141.3m or 48.0% on a reported basis to £435.7m, with underlying growth was 8.2%. Statutory profit before tax rose to £232.8m from £118.7m in H1 FY2018, while adjusted profit before tax was £377.8m against £264.7m in H1 FY2018.

Adjusted diluted EPS declined by 5.7% to 23.2p from 24.6p in H1 FY18 due to the increase in the number of shares in issue after the acquisition of UBM, despite strong growth in revenue and adjusted operating profit during H1 FY 2019.Statutory diluted earnings per share rose by 42.2 per cent to 14.5 pence.

The company recommended an interim dividend per share of 7.55p(H1 2018: 7.05p), which represented a surge of 7.1 per cent in the interim dividend from the previous period.

Share Price Performance

Daily Chart as at October-29-19, before the market closed (Source: Thomson Reuters)

On 29th October 2019, Informa PLC shares were trading at GBX 765.40 at the time of writing before the market close (at 9:55 AM GMT), up by 0.367% against the previous day closing price. Stock's 52 weeks High and Low are GBX 900.80/GBX 602.80. The company's stock beta was 0.76, reflecting the lower volatility as compared to the benchmark index.

Conclusion
In many individual markets, the company operates close to its customers, which provides a depth and breadth to the business. Helped by this, the company has a strong foundation for consistent future growth and is on track to deliver its targets for 2019, despite ongoing uncertainty from US/China trade tensions and the planned departure of the UK from the European Union.

From the perspective of the media market, Artificial intelligence is entering a new growth phase, due to the convergence of several trends. The Life Sciences sector enters the year 2019 with careful optimism amid a great deal of change. Biotech innovation is booming, new drug classes are emerging and gaining regulatory approval, and exit markets are healthy. The international banking industry is in decent health, with profitability, assets, and capitalisation all increased significantly since the international financial crisis. The international pharmaceutical manufacturing, ingredient, and processing market continue to mature, with substantial acquisitions and key product announcements to follow.

With the acquisition of UBM, the enlarged company now enjoys depth in a range of specialist markets with an international balance and reach.This helped the group to provide a further period of growth in revenues, adjusted operating profit and net profit. The company continues to grow consistently in Events and Exhibitions despite headwinds in its Fashion and Middle East businesses. Data, Information and Communities businesses are performing well, and the Advanced Learning businesses remain resilient.

Therefore, based on the above discussed factors, we have given a “Hold” recommendation at the closing price of GBX 762.60 (as on October 28th, 2019).
 

Drax Group PLC

Drax Group Plc (DRX) is an electricity company which is mainly focused on providing low-cost energy. The company’s operations are divided into 3 businesses being B2B Energy supply and solutions, Biomass production and Power generation and system services. The company’s operations are divided into three reportable segments being Generation, Pellet Production and Customers.

Recent News
On 24^th October 2019, the company notes the European Commission's (EC’s) decision regarding State aid approval of the United Kingdom Capacity Market. This decision confirms that the United Kingdom Capacity Market is acquiescent with State aid rules.

Financial Highlights (for the six months ended 30 June 2019, £ million)

(Source: Interim Reports, Company Website)

In the first half of the financial year 2019, the company’s reported revenue increased to £2,232.4 millionfrom £2,068.5 million in the H1 FY2018. The increase in the revenue was driven by a decent growth delivered by all reportable segments, especially the generation business for the current period. The group’s adjusted EBITDA surged by 35.83 per cent from £101.6 million in the H1 FY2018 to £138 million in H1 FY2019. The company’s underlying basic and diluted earnings per share stood at 2 pence in H1 FY2019 versus an underlying basic and diluted earnings per share of 1.6 pence in H1 FY2018. The interim dividend was up by 12.5 per cent from £22 million (5.6 pence per share) in H1 FY2018 to £25 million (6.4 pence per share) in H1 FY2019.

Share Price Performance

Daily Chart as at October-29-19, before the market closed (Source: Thomson Reuters)

On 29th October 2019, Drax Group PLC shares were trading at GBX 304 at the time of writing before the market close (at 11:55 AM GMT), down by 1.235% against the previous day closing price. Stock's 52 weeks High and Low are GBX 432.69/GBX 247.80. The company's stock beta was 1.41, reflecting the higher volatility as compared to the benchmark index.

Conclusion
The company is following renewable, low carbon and flexible approach to deliver higher operational growth with high-quality earnings. Drax Group Plc is looking forward to expanding its generation portfolio and system support services provisions for the period. Furthermore, the sector is exposed to political, financial and operational risks, each of which has the potential to impact the company’s performance significantly.

The company had shown decent financial performance for the first half of the financial year 2019. Both the top-line and bottom-line performance for the period have improved.The company expects higher production in the second half of the financial year from its biomass business. The company’s Pellet production business is more focussed on improving quality, reducing costs, and expects an increase in production in the second half. The company’s customers business is focused on increasing its gross profit by reduction of its bad debt and cost to serve. The company is looking forward to growth investment options through biomass capacity expansion, new gas generation and cost reduction.

Therefore, based on the above discussed factors, we have given a “Hold” recommendation at the current price of GBX 304 (as on October 29th, 2019, before the market close).

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