Croda International Plc

Croda International Plc (LON: CRDA) is an East Yorkshire, United Kingdom-based chemical company that manufactures, creates, and markets speciality chemicals for an array of diverse products including engine lubricants, health and beauty, plastics and several more. The operations of the company are differentiated in four operating segments: Performance Technologies, Personal Care, Industrial Chemicals, and Life Sciences.

Recent News
On 7th October 2019, the company hosted an investor seminar about the life science sector. The Life Sciences sector opens up new prospects for both Crop Care and Health care; the company will keep looking to invest capital in acquiring new adjacent technologies.

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

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, Sales at reported rates surged by 1.7 per cent to £714.7 million as against £702.8 million in H1 FY 2018, while it was reduced by 1 per cent on a constant currency basis, reflecting a 30 bps decrease in return on sales to 25.1 per cent for the period. Sales in the Core Business increased to £657.9 million in H1 FY2019 versus £642.2 million in H1 FY 2018 and increased by 2.4 per cent in reported currency and contracted by 0.4 per cent in constant currency mainly driven by an accelerating macroeconomic uncertainty and the trade dispute between the United States and China. Profit before tax on an IFRS basis reduced by 2.7 per cent to £166.2 million in H1 FY2019 versus £170.8 million in H1 FY2018, and IFRS basic EPS declined by 1.9 per cent to 95.6 pence in H1 FY2019 from 97.5 pence in H1 FY2018. The interim dividend surged by 3.9 per cent to 39.5 pence from 38.0 pence in H1 FY2018.

Share Price Performance

Daily Chart as of  December 12^th, 2019, before the market close (Source: Thomson Reuters)

Croda International Plc shares were trading at GBX 4,860.00 at the time of writing before the market close (at 2:13 PM GMT) on 12^th December 2019 and were up by 0.21% versus the previous day closing price. Stock's 52 weeks High is GBX 5,415.00 and Low is GBX 4,510.00.The company’s stock has given investors 7.34 per cent of a negative return in the last six months.

Valuation Methodology

*Peers: Symrise AG, Elementis Plc, Kerry Group Plc, Linde Plc and Victrex Plc.

Conclusion
Driven by the strength of Health and Crop Care platforms, the company reported a robust performance in the Life Sciences, which rose by 13% and recorded return on sales of 30.6%, helping the company to report a resilient performance in the challenging market conditions.The life sciences sector is positioned well in the niche market with a stronger IP & technology portfolio. This sector will also strongly be aligned to megatrends with organic and inorganic growth opportunities. 

In the second half of the year 2019, the company expects a slight improvement in financials against the prior year and enjoys opportunities for investment for future growth and returns due to low leverage and strong cash generation. However, Personal Care and Performance Technologies, which account for most sales, are expected to remain subdued due to the challenging economic and political conditions.

Customers became much more cautious in their purchasing due to the trade dispute between China and the US and significantly impacting the Personal Care market in the US and North Asia. Moreover, slower end markets in automotive and polymers affected the market for Performance Technologies, and the recent global data does not augur well for the segment.

Based on the above rationale and supported by valuation, we recommend investors to keep a “Watch” on the stock at the current price of GBX 4,872.00 (as on 12^th December 2019, before the market close at 9:10 AM GMT), while we look for any upcoming catalysts.

Rightmove Plc

Rightmove Plc (LON: RMV) is a property search platform provider in the UK. The company is focussed on providing portal services to make it easy for home finders. Rightmove Plc’s major customers include estate agents, new home developers and lettings agent. The company commenced its operations in the year 2000 and is an alliance between top corporate estate agencies.

Recent News
On 22nd November 2019, Rightmove announced the selection of Andrew Fisher. Mr Fisher will hold the responsibilities of Chairman non-executive effective from 1st January 2020.

Financial Highlights – H1 Financial year 2019 (30th June 2019, GBP, million)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, due to continued growth in the Agency and New Homes Businesses for the period, the company's revenue recorded an increase of 10 per cent to GBP 143.9 million as against GBP 131.1 million in the first half of the financial year 2018. The company’s operating profit surged by 10 per cent to GBP 108.2 million in H1 FY2019 from GBP 98.2 million in H1 FY2018. The company’s underlying operating profit surged by 10 per cent to GBP 111 million in H1 FY2019 from GBP 101 million in H1 FY2018. The PBT (Profit before tax) stood at GBP 108,082 thousand in H1 FY2019 versus a PBT (Profit before tax) of GBP 98,055 thousand in H1 FY2018. The PAT (Profit after tax) stood at GBP 87,450 thousand in H1 FY2019 versus a PAT (Profit after tax) of GBP 79,255 thousand in H1 FY2018. The underlying basic earnings per share increased by 12 per cent to 10.2 pence in H1 FY2019 versus 9.1 pence in H1 FY2018. The company’s basic earnings per share stood at 9.85 pence in H1 FY2019 versus 8.75 pence in H1 FY2018. The company’s diluted earnings per share stood at 9.81 pence in H1 FY2019 versus 8.69 pence in H1 FY2018. The interim dividend surged by 12 per cent to 2.8 pence in H1 FY2019 versus 2.5 pence in H1 FY2018.
 
Share Price Performance 

Daily Chart as of  December 12^th, 2019, before the market close (Source: Thomson Reuters)

Rightmove Plc shares were trading at GBX 612.20 at the time of writing before the market close (at 2:19 PM GMT) on 12^th December 2019 and were up by 0.26% versus the previous day closing price. Stock's 52 weeks High is GBX 641.20 and Low is GBX 415.20.The company’s stock has given investors 4.04 per cent of a positive return in the last month.

Valuation Methodology

*Peers: Land Securities Group Plc, Derwent London Plc and IWG Plc.

Conclusion
The company had shown good financial performance in the first half of the financial year. Both the top-line and the bottom-line performance have improved for the period. Any macroeconomic changes in the UK housing market will impact the company’s performance. The company operate in a highly competitive market with no barriers to entry and exit. With an increased competition, the company may lose its audience and advertisers, which will further reduce the revenue of the company. Rightmove Plc being an online service provider will have to invest heavily on its platform maintenance, any failure to innovate will reduce its customer base and financial stability as well.
 
Based on the risks factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of GBX 614.60 (as on 12^th December 2019, before the market close at 8:00 AM GMT), with support from few catalysts needs to be evaluated at a later stage.
 
 
*All forecasted figures and peers have been taken from Thomson Reuters.

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