Easyjet PLC

Luton, the United Kingdom-based EasyJet PLC (LON: EZJ) is a low-cost European point-to-point airline company. The company has four geographic segments, which are differentiated according to the origin country. The segments include the United Kingdom, Southern Europe, Northern Europe and Other.

Q1 Trading Statement (as on 21^st January 2020)

(Source: Trading Statement, Company Fillings, LSE)

The company announced a trading statement for the quarter ended 31^st December 2019. For the quarter ending 31 December 2019, the total group revenue increased by 9.9% to £1,425 million as compared with the corresponding period of the last year. In the first quarter of 2020, the passenger revenue surged by 9.7% to £1,124 million, and ancillary revenue rose by 10.8% to £301 million against the same period last year.  In the current quarter, the numbers of passenger surged by 2.8% to 22.2 million, due to an increase in capacity of 1%. Load factor in the quarter increased by 1.6 percentage points to 91.3%. On a constant currency basis, the total airline revenue per seat surged by 8.8% in the first half of 2020. For the quarter, easyJet's underlying costs were in line with anticipations. In the current quarter, Airline headline cost per seat surged by 4.3% (excluding fuel) at constant currency.

Share Price Performance

Daily Chart as at January-21-20, before the market closed (Source: Thomson Reuters)

Easyjet PLC shares were trading at GBX 1,515.10 at the time of writing before the market close (at 8:50 AM GMT) on 21st January 2020 and were up by 4.49% versus the previous day closing price. Stock 52 weeks High and Low are GBX 1,557.50/GBX 840. The group’s stock is reflecting significantly lower volatility as against the benchmark index based on the company’s beta of 0.57.

Valuation Methodology

*Peers: Ryanair Holdings PLC, International Consolidated Airlines Group, Wizz Air Holdings PLC, and Tui AG.

Conclusion
For the financial year 2020, the company expects full-year capacity to increase by 3%.On a constant currency basis, H1 revenue per seat expectsto grow by mid to high single digitsagainst the previous expectations. Excluding fuel, full Year headline cost per seatto be up low single digits at constant currency. Full Year unit fuel bill will be in the range of £110 million-£170 million.Total fuel bill includes £25 million investment in carbon offsetting and stood at around £1.64 billion. For the financial year ending 30 September 2020, easyJet holidays is anticipated to be at break-even point at least. The company expects to report a first-half headline loss before tax better than the first half of 2019 of £275 million loss.

As per the industry market, the aviation industry has been disturbed by several geopolitical events in the current year,such as extreme weather and terror attacks events. For the airline industry, environmental factors impact the operating parameters and passenger demand. In Europe, the Air Traffic Control environment has continued to worsen.

The company might be exposed to foreign exchange rate movements, mainly Sterling against the Euro and the US dollar.The group is facing emerging headwinds and cost pressures. Currently, the stock is trading near the 52-week high, suggesting that the upside potential might be limited.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the current price of GBX 1,515.10 (as on 21st January 2020, before the market close), while we look for any upcoming catalysts in the near term.

SSP Group PLC

SSP Group Plc (LON: SSPG) is a food travel experts’ company. The company has operations in 35 countries. In the portfolio, the company have over 550 brands. The company operates stores, lounges, cafes, restaurants, food courts and bars in travel locations such as train stations, motorway service stations, airports and other locations.

First Quarter Trading Update (as on 21st January 2020)
The company announced its trading update for the first quarter of its financial year ending 30th September 2020, covering the period from 1st October 2019 to 31st December 2019. In the new financial year 2020, the company had a good start with further reassuring progress on its strategic initiatives and unchanged profit expectations for the full year. For the first quarter of 2020, the total group’s revenue surged by 7.5% on a constant currency basis, while total revenue also increased by 6.1% on an actual exchange rates basis. On a like-for-like basis, the sales rose by 1.2% in Q1 FY2020. This represents that the company was in line with the anticipations.

In the UK and North America market, the like-for-like sales growth stayed robust in the first quarter of 2020, due to an increase in the passenger number. In Continental Europe markets, the like-for-like sales for the first quarter of 2020 were influenced by the transport strikes across France in December 2019. In the Rest of the World (RoW) market, the like-for-like sales were impacted by the disruption in Hong Kong in Q1 FY20 but benefitted from an increasing trend in India.

Net contract gains stayed robust in the first quarter of 2020, at 6.3%,due to the significant new contract openings in the previous year. The pipeline of new contracts stays encouraging. Recently, the company announced an acquisition with Melbourne Airports in Australia and Red Rock's operations in Perth. The company announced the recommended acquisition of Station Food GmbH in Germany.

Share Price Performance

Daily Chart as at January-21-20, before the market closed (Source: Thomson Reuters)

SSP Group PLC shares were trading at GBX 675 at the time of writing before the market close (at 8:30 AM GMT) on 21st January 2020 and were up by 1.66% versus the previous day closing price. Stock 52 weeks High and Low are GBX 751.20/GBX 602. The group’s stock is reflecting significantly lower volatility as against the benchmark index based on the company’s beta of 0.64.

Conclusion
The company do operate in a market full of economic and geopolitical uncertainties but is performing well based on cautious planning. For the full year 2020, the company’s expectation to being below 2% in like-for-like sales growth. Once fully operational in the year 2021, Station Food will include additional 28 new food and beverage units at railway stations in Germany and is anticipated to contribute around £10 million to the company’s revenue in 2020. The company’s anticipations for net gains for the full year 2019, including the acquisition, have surged to approximately 5%. The company also delivered a good start to the new financial year, with strong growth in revenue.
SSP Group PLC witnessed a CAGR growth of ~11.12% in revenue over the period of FY15-FY19 while net income recorded a stellar CAGR growth of ~24.16% during the same period.

Based on the decent prospects, we have given a "HOLD" recommendation at the closing price of GBX 664 (as on 20th January 2020). 
 
*All forecasted figures and peer information have been taken from Thomson Reuters.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.