National Express Group Plc

National Express Group Plc (LON: NEX) is a Birmingham, United Kingdom-based leading transport provider delivering services company, which operates in the UK, North Africa, the Middle East, Continental Europe, and North America. 

Financial Highlights – Financial Year 2019 (31^st December 2019, GBP)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by organic growth from all businesses, the group’s revenue surged by 12 per cent to GBP 2.74 billion versus GBP 2.45 billion in FY2018. The normalised operating profit went up by 14.6 per cent to GBP 295.3 million in FY2019 from GBP 257.7 million in FY2018. The statutory operating profit went up by 12.5 per cent from GBP 215.4 million in FY2018 to GBP 242.3 million in FY2019. The normalised PBT (profit before tax) increased by 9.1 per cent from GBP 220 million in FY2018 to GBP 240 million in FY2019. The statutory PBT went up by 5.2 per cent to GBP 187 million in FY2019 from GBP 177.7 million in FY2018. The statutory PAT (profit after tax) went up by 6.9 per cent to GBP 148.3 million in FY2019 from GBP 138.7 million in FY2018. The basic earnings per share stood at 27.6 pence in FY2019 versus 26.6 pence in FY2018, reflecting an increase of 3.8 per cent.

Share Price Performance

Daily Chart as of March 16^th, 2020, before the market close (Source: Thomson Reuters)

National Express Group Plc shares were trading at GBX 169.70 at the time of writing before the market close (at 12:35 PM GMT) on 16^th March 2020 and down by 29.59% versus the previous day closing price. Stock's 52 weeks High is GBX 485.00 and Low is GBX 157.10.

Valuation Methodology

*Peers: Stagecoach Group Plc, Go-Ahead Group Plc, Easyjet Plc and First Group Plc.

Conclusion
During the key summer period, the company has delivered another strong performance. ALSA is on-track, and the UK coach business increased too. ALSA is also driving operational excellence and providing a growth platform for the group. North America business had shown robust growth, boosted by both good back-to-school performance and the WeDriveU acquisition.

The group recorded decent performance in the financial year 2019, driven by organic growth in all divisions, and the recorded performance was ahead of the group's expectations.  The company’s outlook stays positive. The group will continue to emphasize on continuing profit growth in the coming years and operational excellence to maximize shareholder returns.

Based on the decent fundamental prospects and support from valuation done using the above method, we have given a “Buy” recommendation at the current price of GBX 157.40 (as on 16^th March 2020, before the market close at 10:30 AM GMT) with high single-digit upside potential based on 4.72x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).

Joules Group Plc

Joules Group Plc (LON: JOUL) is a Market Harborough, the United Kingdom-based company. The company’s business is differentiated in three segments: Retail, Wholesale and Other. 

Financial Highlights – H1 Financial Year 2020 (24th November 2019, £, million)
In the first half of the financial year 2020,the company’s revenue stood at £111.6 million, a decrease of 1.4 per cent versus £113.1 million in H1 FY2019. In the current period, the active customers surged by 8 per cent to 1.4 million. The company’s gross margin was in line with the previous year at 54.8 per cent. In the retail segments, the gross margin surged by 50bps to 60.8 per cent in the current period, with benefit from exchange rate hedging and disciplined management of promotions. The group proposed an interim dividend per share of 0.77 pence versus 0.75 pence in H1 FY2019.

Share Price Performance

Daily Chart as of March 16^th, 2020, before the market close (Source: Thomson Reuters)

Joules Group Plc shares were trading at GBX 80.00 at the time of writing before the market close (at 12:39 PM GMT) on 16^th March 2020 and down by 20% versus the previous day closing price. Stock's 52 weeks High is GBX 304.00 and Low is GBX 76.40.

Valuation Methodology

*Peers: Boohoo Group Plc, Fuller Smith & Turner Plc, Ted Baker Plc and Superdry Plc.

Conclusion
 
In spite of the challenges facing the retail sector in the United Kingdom market, the company stays well on-track to continue to provide against its tactical growth aims. The company expect non-recurring costs from these initiatives in the financial year 2020 and the first half of 2021, with continuing cost efficiencies from the financial year 2022 onwards. In the current period, the company has a customer proposition in order to support long-term sustainable growth and invested further in the infrastructure. The company is improving the underlying processes and also has a robust consumer demand which persists to exist for the Joules brand.

Based on the decent prospects, and supported by valuation done using the above method, we have given a “SPECULATIVE BUY” recommendation at the current price of GBX 76.40 (as on 16^th March 2020, before the market close, GMT 9:25 AM) with a lower double digit-upside potential based on 11.00x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.). 
 
*All forecasted figures and peer’s information have been taken from Thomson Reuters. 

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