TBC Bank Group Plc

TBC Bank Group Plc (LON: TBCG) is the largest banking group in Georgia, serving around 83% of the adult population in Georgia.

Recent News
On 7^th April 2020,TBC Bank Group announced the signing of Trade Finance Facility by its subsidiary JSC TBC Bank for USD 67 million with Citi. The facility will be utilised to support import and export transactions of the bank for its customers.

Executive Remuneration Update
On 6^th April 2020, TBC Bank Group released an update on the Executive Remuneration for the year 2020. On 3^rd April 2020, the bank announced the measures taken to alter daily operations to adjust according to the challenging environment. The group is focused on ensuring the health and safety of its employees and customers. The company has taken the necessary steps to improve its cost structure and reduce unwanted expenditures. The Top Management of TBC Bank Group PLC and JSC TBC Bank has decided to skip potential bonuses and incentive plan grants for 2020 voluntarily. The company’s board is closely ministering the impact of the outbreak and agreed that the situation is changing continuously, which required necessary measures.

Share Price Performance

Daily Chart as of April15^th, 2020, after the market close (Source: Thomson Reuters)

TBC Bank Group Plc shares closed at GBX 748.00 at the time of writing after the market close on 15^th April 2020. Stock's 52 weeks High is GBX 1,732.00 and Low is GBX 635.00.

Valuation Methodology

*Peers: Bank of Georgia Group Plc, OneSavings Bank Plc, Paragon Banking Group Plc, and Close Brothers Group Plc.

*Currency exchange rate taken for 1 GEL = 0.31845 GBP.

Conclusion
During 2019, the company has recorded a robust financial result and made substantial progress as compared with the strategic priorities. The company expects a good momentum in the year 2020. The company is on track to deliver superior results and to attain sustainable growth to the shareholders. Therefore, the company continues to operate with a strong capital base and a robust liquidity position and is developing customer-focused digital ecosystems, along with enhancing its value proposition beyond the financial service. In the short-term period, the company and industry will be impacted by COVID-19. The group expect the Georgian economy to contract due to the outbreak of Covid-19 pandemic. 

Based on the decent prospects, which are supported by valuation done using the above method, we have given a “Buy” recommendation at the closing price of GBX 748 (as on 15^th April 2020) with single-digit upside potential based 0.46x NTM Price/Book Value (approx.) on FY20E book value per share (approx.).

Restaurant Group Plc

United Kingdom-based Restaurant Group Plc (LON: RTN) is a hospitality group with a diverse portfolio of brands. Presently, the company operates more than 650 pubs and restaurants in the UK.

Recent News
On 9^th April 2020,The Restaurant Group announced the completion of the shares placing successfully into the Company’s capital. The 98,199,245 shares were placed in the capital by J.P. Morgan Securities plc at a price of 58 pence per placing share.

Market Update
On 8^th April 2020, the Restaurant Group released a market update. The group is focused on ensuring the health and safety of its staff, customers and business partners. The company has modelled a pessimistic scenario due to the rapidly changing environment created by Covid-19 in the financial year 2020. The group has taken multiple measures to preserve cash and reduce its costs. As per the present scenario, Restaurant Group expects all pubs and restaurants will remain closed till the June end. The Government imposed lockdown and other social distancing measures to contain the spread, and the company expect a slow recovery in footfall in the financial year 2020. The group need to be adopted phased reopening and expect to open 400 of its restaurants between July to December out of 600 restaurants. The company expect its sales on a like-for-like basis will decline by around 45 per cent, while the total sales are expected to be declined by 50 per cent (approximately) in the current financial year. The group completed its cash preservation activities and reduced its capex to around GBP 30 million for the financial year 2020. The group managed to reduce costs to a lower level with approximately GBP 3 million for four weeks period. The group forecasted its adjusted EBITDA ranging from GBP 45 million to GBP 55 million and net debt in between GBP 310 million and GBP 320 million for the financial year. The group expect cash of GBP 60 million in the remaining financial year 2020.

Share Price Performance

Daily Chart as of April15^th, 2020, after the market close (Source: Thomson Reuters)

Restaurant Group Plc shares closed at GBX 50.85 at the time of writing after the market close on 15^th April 2020. Stock's 52 weeks High is GBX 167.70 and Low is GBX 20.26.

Conclusion
The company’s top-line performance has improved significantly with a solid performance from all businesses in the financial year 2019. Going forward, the Company is well-positioned to take advantage and generate returns once the trade gets normalized with its diversified set of brands. The Restaurant Group is fundamentally operating with strong assets base and plans to maintain liquidity of around GBP 60 million in the remaining financial year. Despite a challenging scenario, the Group is firm about generating substantial operational efficiency across all areas of our business in FY2020 and is targeting to save at least GBP 45 million. With the outbreak of Covid-19, many countries have imposed restrictions on travel and resulted in a sharp fall in the stock markets globally. The group’s financial performance has been impacted due to the travel bans imposed by governments of various countries. The group has taken multiple steps to tackle the outbreak.

Over the four years (FY15 - FY19), the company’s revenue surged from £685.38 million in FY15 to £1,073.1 million in FY19. Compounded annual growth rate (CAGR) stood at 11.86 per cent.

Based on the above rationale, we have given a "Hold" recommendation at the closing price of GBX 50.85 (as on 15^th April 2020).
 
*All forecasted figures and peers have been taken from Thomson Reuters.

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