Ramsdens Holdings Plc - Strong Liquidity to Manage Near Term Covid-19 Pressures

Ramsdens Holdings Plc (LON: RFX) is a FTSE AIM All-Share listed financial service Company, which is engaged in the business of financial services and retailer.

Financial Highlights (for the twelve months ended 31 March 2020)


(Source: Company Website)

The Group delivered a robust performance that was ahead of the management’s initial expectations for the twelve months ended 31 March 2020, with a 27% increase in revenue to £59.5 million and a 19% increase in underlying Profit Before Tax to £8 million. As per the segment, foreign currency exchange income increased by 13%, jewellery retail revenue was up by 28%, and pawnbroking income surged by 19%. Regarding the financial position, the Group has substantial liquidity to manage near term Covid-19 pressures and strong balance sheet with net assets of £35 million, including net cash of £11.1 million. The Group has the benefit of a £10 million revolving credit facility (RCF), which is expiring in March 2023. The Group is currently not drawing on this facility.

Share Price Performance
 
1-Year Chart as on 31 July 2020, before the market close (Source: Refinitiv, Thomson Reuters)

Ramsdens Holdings Plc’s shares were trading at GBX 129.00 on 31 July 2020 (before the market close at 8:39 AM GMT+1), which was down by 1.53% against the last day closing price. Stock 52 week High and Low were GBX 260.00 and GBX 68.00, respectively.

From the technical standpoint, 90-day RSI is currently close to an oversold zone, which means there is a good potential for a short term rebound in the stock price.

Key Risks

The Company’s performance is subject to certain liquidity and credit risk arising from the volatility presented by the COVID-19 disruption. Moreover, business operations are impacted negatively due to the foreign exchange rate fluctuations.A major part of the revenue is generated in the UK, the Group’s revenue and the financial performance may be impacted due to the challenging market dynamics.

Valuation Methodology



Conclusion

Overall, the Group is well placed to manage this unprecedented crisis, supported by the good cash position, strong balance sheet and an ability to convert jewellery stock into cash (if needed).The Board also remains committed to the Group’s long-term dividend policy.As per the recent results, the Group delivered a strong performance for the twelve months ended 31st March 2020, with double-digit growth in core segments.Looking forward, the Group said it expects to benefit from the customer demand across the diversified income streams, as well as highlighting the ability to rapidly generate cash from the foreign currency holdings and retail jewellery stock. Moreover, the Group has increased investment in e-commerce activities and digital strategy, which will maintain the existing customers and also attracting new ones.

Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” stance at the current market price of GBX 129.00 (as on 31 July 2020, before the market close at 8:39 AM GMT+1) and will recommend fresh buying at the right time.

Vianet Group Plc – Operating with Strong Financial Position

Vianet Group Plc (LON: VNET) is a FTSE AIM All-Share-listed technology service provider that offers business insights through the internet of things (IoT) capabilities.

AGM Statement (as on 30 June 2020)

In this statement, the Government announced on 23 June 2020 that pubs were reopened from 4 July 2020, with the social distancing from 2 meters to 1 meter plus. In the Smart Zones division, the Group’s some pubs might not re-open immediately, and others will take some time to return to more normal levels of trade. Moreover, most pubs which the Company service was started. For weekly support services, the Company will result in the billing of approximately 70% of normal contracted fees until 31 October 2020. Further, the Company stated that in North America, the partner AMC Theatres was planned to re-open in July 2020. The Group increased investment in Q4 2020 in Smart Machines have started to generate results. The Company received the first order for Smart Shield, pubs sanitisation service.

The Group witnessed a strong trend during the period and expected the same post lockdown as demand for remote connection requirement is increasing rapidly. At present, the situation remained uncertain, but the Company is confident to be in a solid position to resume strong earnings growth with decent momentum to deliver exciting growth opportunities. The Company is having an encouraging pipeline and has finalised Contracts with Lavazza and Tchibo.

Share Price Performance

 
1-Year Chart as on 31 July 2020, before the market close (Source: Refinitiv, Thomson Reuters)
 

Vianet Group Plc’s shares were trading at GBX 91.50 on 31 July 2020 (before the market close at 8:45 AM GMT+1) and remained same against the last day closing price. Stock 52 week High and Low were GBX 169.75 and GBX 54.50, respectively.

From the technical standpoint, 14-day RSI is currently close to an oversold zone, which means there is a good potential for a short term rebound in the stock price.

Key Risks

The United Kingdom is facing the most significant slowdown in productivity presently.Moreover, the Company operates in multiple geographies, and the profits can be impacted negatively due to foreign exchange rate fluctuations. Current market dynamics are volatile and challenging, which may have a negative impact on the business operations in the near term.

Conclusion
In the first two months of the financial year 2021, the Group remained strong and has a decent pipeline with positive momentum and have won many new contracts.Also, the Company is having decent cash flow and recurring income stream. The Group witnessed a robust balance sheet and operational cash generation capabilities, with decent earnings growth. However, the Company had shown a decline in financial performance in the financial year 2020. The Group expects the strong trend to continue post lockdown period and will provide exciting growth opportunities. Moreover, the Company is making sales investment to accelerate growth, with extra focus on developing the capability and contactless payment device connectivity.

Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” stance at the current market price of GBX 91.50 (as on 31 July 2020, before the market close at 8:45 AM GMT+1) and will recommend fresh buying at the right time.
 
*All forecasted figures and Industry information have been taken from Refinitiv, Thomson Reuters.
*Dividend Yield may vary as per the stock price movement.

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