OneSavings Bank Plc

OneSavings Bank Plc (OSB) is a financial services company, regulated by the Prudential Regulation Authority and Financial Conduct Authority The group provides retail savings and lending services to its clients.

Financial Highlights – H1 Financial Year 2019 (30^th June 2019, £, million)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019,the company’s net interest income was at £151 million versus £135.2 million in H1 FY2018. The company’stotal income stood at £143.8 million in H1 FY2019 versus £133.1 million in H1 FY2018. The Underlying PBT (profit before tax) surged by 6 per cent to £96.9 million in H1 FY2019 from £91.8 million in H1 FY2018, while reported PBT remained flat at £91.0 million. The company’s reported PAT (profit after tax) was at £65.8 million in H1 FY2019 as against £69.5 million in H1 FY2018. The company’s basic earnings per share were at 25.5 pence in H1 FY2019 versus 27.5 pence in H1 FY2018. The Interim dividend in H1 FY2018 increased by 14 per cent to 4.9 pence from 4.3 pence in H1 FY2018.

Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, OneSavings Bank Plc shares were trading at GBX 324.4 at the time of writing before the market close (at 10:55 AM GMT), down by 4.81% against the previous day closing price. Stock's 52 weeks High and Low are GBX 458.80/GBX 312.80.

Valuation Methodology

*Peers: CYBG Plc, Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc and Paragon Banking Group Plc.

Conclusion
The company had shown a decline in the financial performance in the first half of the financial year 2019. Although the top-line performance has improved,the bottom-line performance declined for the current period. The company hadnot been able to control its operating and non-operating expenses effectively, due to which profitability declined. The company’s operations can be affected negatively due to ongoing uncertainties created over the Brexit. The company has achieved decent growth from its core market segments.

Based on the above rationale and valuation, we recommend investors to keep a "Watch" on the stock at the closing price of GBX 340.80 (as on 8^th October 2019), with support from few catalysts needs to be evaluated at a later stage.
 

A.G. Barr Plc

A.G. Barr PLC (BAG) is a London, the United Kingdom-based manufacturer and marketer of soft drinks. The group markets its products under several brands including IRN-BRU, Barr Originals, KA, D & B, St. Clements, Simply, Sun Exotica, Rubicon, Strathmore and Tizer brands. The company distributes Rockstar energy drink in the UK, Ireland and Scandinavia.

Financial Highlights – H1 Financial Year 2020 (27^th July 2019, £, million)

(Source: Interim Report, Company Website)

In the first half of the financial year 2020,the company’s revenue was at £122.50 million versus £136.9 million in H1 FY2019. The company’sGross Profit stood at £50.7 million in H1 FY2020 versus £58.6 million in H1 FY2019. The adjusted operating profit declined to £14.2 million in H1 FY2020 from £18.4 million in H1 FY2019, while the reported operating profit was at £13.8 million for the period. In H1 FY2020, the reported PBT (Profit before tax) declined to £13.5 million in H1 FY2020 from £18.2 million in H1 FY2019. The company’s reported PAT (profit after tax) attributed to shareholders was at £10.8 million in H1 FY2020 as against £14.5 million in H1 FY2019. The company’s basic earnings per share were at 9.57 pence in H1 FY2020 versus 12.74 pence in H1 FY2019.

Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, A.G. Barr Plc shares were trading at GBX 545.00 at the time of writing before the market close (at 11:16 AM GMT), down by 1.27% against the previous day closing price. Stock's 52 weeks High and Low are GBX 980.00/GBX 542.00.

Conclusion
The company’s financial performance has declined in the first half of the financial year 2020. Both the top-line and the bottom-line performance have declined for the current period.Also, continued Brexit uncertainty has the potential to cause a slowdown in the soft drinks industry, with the added potential of supply chain issues. In the future, intense competition, changing consumer preferences, water concerns and obesity could affect its future growth avenues. Given the tough competition in the premium bottled water space, the company anticipated that the sales growth would slow down in addition to regulation on plastics and sugar.

Keeping in mind the weak financial performance and risks associated, we recommend investors to “Avoid” taking fresh positions at the closing price of GBX 552 (as on 8^th October 2019).
 

Anglo African Oil & Gas Plc

Anglo African Oil & Gas Plc (AAOG), is a London-based oil and gas and mining company. The company offers extraction, exploration, operations, production, management, and development of oil and gas natural resources.
Financial Highlights – H1 Financial Year 2019 (30^th June 2019, £)
 

(Source: Interim Report, Company Website)

In the first half of the financial year 2019,the company’s revenue was at £173,524 versus £106,378 in H1 FY2018. Due to an increase in the administrative expenses for the period, the company reported operating loss of £2,451,710 in H1 FY2019 versus an operating loss of £2,170,805 in H1 FY2018.The company’s reported LBT and LAT (loss before tax and loss after tax) were at £2,452,741 in H1 FY2019 as against LBT and LAT (loss before tax and loss after tax) of£2,171,606 in H1 FY2018. The company’s basic and diluted loss per share was at 1.03 pence in H1 FY2019 versus a basic and diluted loss per share of 2.71 pence in H1 FY2018.

Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, Anglo African Oil & Gas Plc shares were trading at GBX 2.855 at the time of writing before the market close (at 12:38 PM GMT), up by 0.18% against the previous day closing price. Stock's 52 weeks High and Low are GBX 19.00/GBX 2.57.

Conclusion
Although the top-line performance has improved, the bottom-line performance has declined for the period. The company is looking forward to increasing its production through development in Tilapia and expand its surface facilities through a field-development plan which include ten additional wells. This strategy has been facilitated by the achievement of the drilling of TLP-103C and the detection of hydrocarbons at each level that was breached. The company was able to increase its production in the upcoming financial year 2019.

Based on the above rationale, we have given a “SPECULATIVE BUY” recommendation at the closing price of GBX 2.85 (as on 8^th October 2019).
 

Kodal Minerals Plc

Kodal Minerals Plc (KOD) is an exploration and evaluation company. The company explores mineral resources across the United Kingdom, Norway and West Africa. The company’s business is divided into two segments: the Kodal Project segment and the Grimeli Project segment.

Financial Highlights – Financial Year 2019 (31^st March 2019, £)
 

(Source: Annual Report, Company Website)
 
In the financial year ending 31^st March 2019, the company had not begun commercial production from its exploration places and therefore had not reported revenue for the period. Due to an increase in the administrative expenses, the company reported an operating loss of £722,691 in FY2019 versus an operating loss of £858,556 in FY2018. The Group reported an LBT and LAT (loss before tax and loss after tax) of £712,611 in FY2019 as compared to an LBT and LAT (loss before tax and loss after tax)of £857,057 in the FY2018. The company’s basic and diluted loss per share was at 0.0096 pence in FY2019 versus a basic and diluted loss per share of 0.0136 pence in FY2018. Reported Cash balances for FY2019 was £1,408,393 as compared to £3,123,549 for FY2018. 
Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, Kodal Minerals Plc shares were trading at GBX 0.05075 at the time of writing before the market close (at 1:04 PM GMT), up by 2.00% against the previous day closing price. Stock's 52 weeks High and Low are GBX 0.2075/GBX 0.0465.

Conclusion
The company made significant progress towards delivering maiden lithium production at flagship Bougouni. Lithium Project is situated in southern Mali, placing Bougouni in the top 15 lithium projects internationally with substantial exploration upside through further exploration across the extensive 450 sq. Km project area. Another upside potential is expected from exposure to gold projects through a joint venture with Resolute Mining Limited. The company has recently announced the commencement of its 2 projects. The company’ Bougouni is under the development phase and expected initial production is targeted in the year 2020. 

Based on the decent growth prospects of the company, we have given a “Speculative Buy” recommendation at the closing price of GBX 0.05 (as on 8^th October 2019).
 

Immedia Group Plc

Immedia Group Plc (IME) is a supplier of digital audience engagement solutions and multi-media content for global businesses and leading brands. The company is focussed on providing technology and content business to its clients to transform media channels into entertainment and engagement properties. 
Financial Highlights – H1 Financial Year 2019 (30^th June 2019, £)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019,the company’s revenue was at £1,741,721 versus £2,016,677 in H1 FY2018. Due to an increase in the administrative expenses for the period, the company reported an operating loss of £447,004 in H1 FY2019 versus an operating loss of £33,871 in H1 FY2018.The company’s reported LBT (loss before tax) was at £457,181 in H1 FY2019 as against LBT (loss before tax) of£35,220 in H1 FY2018. The company’s reported LAT (loss after tax) was at £453,785 in H1 FY2019 as against LAT (loss after tax) of£35,220 in H1 FY2018. The company’s basic and diluted loss per share was at 3.31 pence in H1 FY2019 versus a basic and diluted loss per share of 0.26 pence in H1 FY2018.

Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, Immedia Group Plc shares were trading at GBX 13.00 at the time of writing before the market close (at 2:59 PM GMT) and remained same against the previous day closing price. Stock's 52 weeks High and Low are GBX 33.96/GBX 9.50.

Valuation Methodology

*Peers: NRJ Group SA, Digital360 SpA, Klassik Radio AG, STV Group Plc and Digitouch SpA.

Conclusion
The company’s financial performance has declined in the first half of the financial year 2019. Both the top-line and the bottom-line performance have declined for the current period. The company is having a strong relationship with its clients and is helping them to exceed the forecasted figures. The company had made an investment in AudioBoom Group plc, which has helped the company to broaden its communications and digital marketing services. The company had alsoextended its partnership with the JD Sports and will expand JD-X in more than 550 stores in Europe and the UK.The company’s collaboration with SUBWAY® Radio is performing exceptionally well. The solid improvement in revenue and profitability is reflected by new business coming on stream and the impact of cost control measures taken by the company, specifically on AVC Immedia division. 

Based on the decent growth prospects, and supported by valuation done using the above method, we have given a “Speculative Buy” recommendation at the closing price of GBX 13.00 (as on 8^th October 2019) with single-digit upside potential based on 12.59x NTM Price/Earnings (approx.) on FY19E earnings per share (approx.).

SSE Plc

SSE PLC (SSE) is a Perth, United Kingdom-headquartered integrated energy utility company, with operations and investments across the UK and Ireland, including regulated electricity networks and renewable sources of energy.
Financial Highlights – Financial Year 2019 (31st March 2019, £, million)

(Source: Annual Report, Company Website)

For the financial year ending 31st March 2019, driven by poor performance by the wholesale business, the company’s revenue declined by 73 per cent to £7,331.6 million as against £27,250.4 million in FY2018. The company’s total gross profit in FY2019 was at £1,545 million in as against £2,276.8 million in FY2018. The company’s underlying operating profit stood (continuing operations) in FY2019 was at £979.5 million versus £1,400.2 million in FY2018. The company’s underlying PBT (profit before tax) was at £725.7 million, which was decreased by 38 per cent from the last year. The company’s Underlying EPS (earnings per share) stood at 67.1 pence per share, which was down by 32 per cent from the last year.

Share Price Performance

Daily Chart as at October-09-19, before the market closed (Source: Thomson Reuters)

On 9th October 2019, SSE Plc shares were trading at GBX 1,254.50 at the time of writing before the market close (at 9:08 AM GMT), up by 1.17% against the previous day closing price. Stock's 52 weeks High and Low are GBX 1,265.00/GBX 997.80.

Valuation Methodology

*Peers: Drax Group Plc, United Utilities Group Plc, Severn Trent Plc, National Grid Plc and Pennon Group Plc.

Conclusion
On an adjusted basis, the company’s financial performance has declined in the financial year 2019. Both the top-line and the bottom-line performance has declined for the period. The company’s operations can be affected negatively due to ongoing uncertainties created over the Brexit, as it widens the political uncertainty. As the company operates inmultiple geographies, its profits can be impacted negatively due to foreign exchange rate fluctuations.

The company’s P/E multiple is significantly higher as compared to the industry multiple, reflecting overstretched valuations.Moreover,the company is trading near 52-week high, raising doubts at its upside potential at current prices.

Based on the above rationale and support from valuation done using the above method, we have given a “Sell” recommendation at the current price of GBX 1,254.50 (as on 9^th October 2019, before the market close) based on 7.00x NTM Price/Cash Flow (approx.) on FY20E cash flow per share (approx.).

*The “Speculative Buy” recommendation is valid for the current price as covered in the report (as on 9^th October 2019).
*All forecasted figures and Peer information have been taken from Thomson Reuters.

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