Virgin Money UK PLC

Glasgow, the United Kingdom-based Virgin Money UK PLC (LON: VMUK), formerly called as CYBG PLC, is a financial services company that indulges in the business of providing solutions in the space of financial services as well as banking. The company provides Personal Banking, Business Banking, as well as Mortgage services through its different brands which are Clydesdale Bank, Yorkshire Bank, B, and Virgin Money.

Financial Highlights (for the full year to 30 September 2019, £million)

(Source: Company Website)

The group’s prominent point within the results was the good performance of the company despite extremely difficult uncertainties and geopolitical conditions, especially from its personal banking segment in the United Kingdom. The company stated a Net Interest Margin (NIM) of approximately 1.66 per cent. During the period, the group reported an underlying profit before tax stood at £539 million, a decrease from the Underlying profit before tax of £581 million in 2018. The underlying RoTE (Return on Tangible Equity) for the financial year 2019 was stated at 10.8 per cent against the 11 per cent in the previous year data. The company delivered a strong capital position with CET1 (Common Equity Tier 1) ratio of 13.3 per cent.

Share Price Performance

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

On 29th November 2019, Virgin Money UK PLC shares were trading at GBX 178 at the time of writing before the market close (at 9:08 AM GMT), up by 4.71% against the previous day closing price. Stock's 52 weeks High and Low are GBX 220.10/GBX 102.25. The company's stock beta was 1.18, reflecting the higher volatility as compared to the benchmark index.

Conclusion
In challenging market conditions, the company has delivered an excellent operating performance and also made decent progress on the integration and rebrand to Virgin Money.The company’s statutory result was substantially affected by further PPI provisions, due to the unprecedented increase in PPI in August 2019, along with Virgin Money expected acquisition-related costs. The customer division is well-positioned in the current period. The group has delivered an additional 2 billion pounds in net lending to support customers and the United Kingdom SMEs, attracted customer deposits of 3 billion pounds and made marked enhancements to the client experience.

In the financial year 2019, the company attained all the required approvals to enable them to work as one bank, with one brand,and are ready to provide the plan to disrupt the status quo with unique Virgin Money products and brilliant client service. In December 2019, the company is launching three new Virgin Money concept stores and Virgin Money’s first digital personal existing account. In terms of its guidance for the financial performance in FY20, the company expects the net interest margin in the range between 160-165 basis points, CET1 ratio of 13 per cent, and underlying cost to be less than £900 million.The company’s strategy stays on track with all targets, including modest enhancement in NIM by FY22 and statutory RoTE of more than 12 per cent by FY22.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 170 (as on 28th November 2019).

Sabien Technology Group PLC

United Kingdom-based Sabien Technology Group PLC (LON: SNT) is involved in the supply of energy efficiency products. The group is primarily involved in the manufacturing of M1G and M2G, which are the boiler energy efficiency technologies.

Recent News
On 5^th November 2019, the company announced that Alan O'Brien, as a founder of the group, resigned from his role as CEO (Chief Executive Officer) and has also resigned from the Board.

Financial Highlights (for the year ended 30 June 2019, £’000)

(Source: Final Results, Company Website)

In the financial year 2019, the company’s reported sales increased to £1.38 millionas compared with the financial year 2018 of £0.59 million. The profit before tax for the financial year 2019 stood at £0.18 million against a loss of £0.85 million in FY18. During the financial year 2019, overseas sales represented 9.5 per cent of total sales at £0.131 million(2018: £0.18 million). Fundraise in FY19 was £0.70 million. On 30^th June 2019, the net cash balance stood at £0.74 million, an increase from the previous year data.

On 24^th September 2019, the sales were £0.06 million, orders received but not yet invoiced £0.04 million, and net cash was £0.95 million. The company do not propose any dividend.

Share Price Performance

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

On 29th November 2019, Sabien Technology Group PLC shares were trading at GBX 0.21 at the time of writing before the market close (at 9:10 AM GMT), down by 2.33% against the previous day closing price. Stock's 52 weeks High and Low are GBX 0.328/GBX 0.0607. The company's stock beta was 0.48, reflecting the lower volatility as compared to the benchmark index.

Key Risks
Downward pressure on gas and oil prices, technology developments and competitive products, changes in legislation, supply chain issues, inability to meet customer demand, brand awareness and maintenance of reputation.

Conclusion
The company said that the United Kingdom was committing to a carbon-neutral economy by 2050.The company operates globally through its distributorship arrangements in Europe and the United States and is exposed to currency risk arising from the Euro and the US dollar. Given the current scale of the Group's overseas operations, overall currency risk is considered to be low.

Despite the company has reported a decent surge in the top-line and bottom-line in the financial year 2019 but the market outlook has seen some volatility in the short-term period.Since the company is ramping up production, economies of scale are low, and there is a risk that its products would be considered too expensive. The company operates in a challenging environment which requires continuous investments, sometimes at the cost of profitability, to stay ahead of the competition.

On the basis of above rationale, we recommend investors to keep a “Watch” on the stock at the current price of GBX 0.21 (as on 29th November 2019, before the market close at 9:02 AM GMT), while we look for any upcoming catalysts.

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