Business Overview
Fragrant Prosperity Holdings Ltd. is a non-equity investment company. The group was incorporated on January 28, 2016, in the British Islands and is established to undertake acquisitions of businesses which operate in the finance and technology sector. Its shares are listed on the main market of the London Stock Exchange. Since, September 05, 2016, the group commenced to trade its ordinary shares on the Standard Listing segment of the main market of the London Stock Exchange. It was earlier known as Vale International Group Ltd and changed its name in November 2017 as Fragrant Prosperity Holdings Ltd. Viceroy Global Investment Ltd., Peel Hunt LLP and Brintons Ltd are the major shareholders in the group. (Source: Thomson Reuters).

Key Statistics


Interim Financial results: H1 FY19

Source: Company filings

As on January 14, 2019, the group reported its interim financial results for the six months ended as on September 30, 2018. During the period under review, the non-equity investment group reported an operating loss of £122,741 against the operating loss of £39,540 recorded in the year-ago period and a net loss of £122,741.

As on September 30, 2018, the group’s recorded Cash and Cash Equivalents position stood at £131,438 against the cash and cash equivalents of £459,692 recorded in the corresponding period of the previous financial year. Net Assets of the company stood at £91,688 against £434,652 recorded in the year-ago period. 

The retained loss at the end of the first half of FY19 stood at £838,436 against the loss of £495,472 reported as of September 30, 2017. 

Cash Flows
During the H1 FY19, the group recorded a net operating cash outflow of £122,741 against the outflow of £39,540 in the year-ago period. As on September 30, 2018, group’s cash at bank position stood at £54,599.

In the exchange filing, the group also stated that it had reviewed several potential acquisition opportunities across the industry, but none of them had met the necessary criteria for selection. The group will continue to consider a number of opportunities for potential investment.

Stock Performance

Daily price chart (as on June 14, 2019), after the market closed. (Source: Thomson Reuters).

At the close, shares of LSE: FPP ended the market session at GBX 1.95 and traded flat against the previous day closing price, with no trades took place in the scrip throughout the day. In the last one year, the stock has surged around 56%, and in the past 3-months period, the stock has delivered a price return of 160%. In the past one year, shares have touched a 52-wk high of GBX 2.0 and a 52w low of GBX 0.75. At the close, the market capitalisation of the company stood at £0.84 mn.

Conclusion
Despite a humongous rally in the stock price over the past couple of months, one should take a cautious stance before creating their long position in the group. Loss in the first half of FY19 has widened from £39,540 recorded in the H1 FY18 to £122,741 in H1 FY19, cash outflows at the operating level have been expanded to almost three-fold from the outflows recorded in the H1 FY18.

Its shares are highly illiquid as past volume data indicates, and on a couple of days, there was no volume in the stock traded on the LSE. Therefore, based on the unfavourable financial parameters, we have given an "Avoid" recommendation at the closing price of GBX 1.95 (as on June 14, 2019).

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