Ashtead Group Plc (LON: AHT) – With Diverse Customer Base
Ashtead Group Plc is a global equipment rental business with national networks in the United Kingdom, Canada, and the United States.

Trading Update and Actions Taken to Tackle Covid-19 Pandemic (27^th April 2020)
On 27^th April 2020, Ashtead Group released an update on trading and impact of covid-19 on business performance. The group started experiencing the impact of coronavirus in the mid-March 2020 and actions taken by the government to contain the virus resulted in uncertain conditions. The company is focused on ensuring the health and wellbeing of its employees, customers and the communities and enable remote access for its employees as a part of the Business Continuity Plan. At present, the company’s locations across Canada, the US and the UK are open and active with few exceptions, while trading volumes are negatively impacted due to actions taken to contain the spread of the virus. The group is looking to mitigate the risk through its specialty businesses. In Canada, the US and the UK, the company designed Sunbelt Rentals, an essential business, to support the private sector and government responses against the outbreak. The group’s Sunbelt US rental-only revenue to be 2 per cent higher in March and expect a decline by 15 per cent approximately in April 2020. The company witness stability and a slight improvement in rent from the US fleet the same as Canadian and UK businesses. AHT expects its adjusted PBT (profit before tax) to be around GBP 1,050 million for the year ending 30^th April 2020. The group has taken required steps to reduce cost, preserve cash and optimise cash flow. The group is not seeking help from Coronavirus Job Retention Scheme introduced by the UK Government. The company has a robust financial position with a strong balance sheet, committed debt facilities and positive free cash flow.

Share Price Performance

Daily Chart as of April 27^th, 2020, after the market close (Source: Thomson Reuters)

Ashtead Group Plc shares closed at GBX 1,985.00 on 27^th April 2020. Stock's 52 weeks High is GBX 2,797.00 and Low is GBX 1,010.00.

Valuation Methodology
 

Growth Catalysts
The group witnessed strong demand throughout the general tool average fleet and specialty average fleet businesses. In US and Canadian markets, the group has delivered good growth. The progress in Sunbelt Canada continues to reflect the effect of current acquisitions, comprising William F. White acquired in the last of 2019.

Conclusion
Looking forward to the financial year 2021, the group expect gross capital expenditure to £500 million. The strong margins and increasing scale are delivering significant free cash flow and growing earnings. As per the third-quarter results, the leverage to be maintained within the target of 1.5-2 times net debt to EBITDA range, excluding IFRS 16. The share buyback programme was paused. In North America business, the company is on-track in supportive end markets, while in the UK region, the tactical action to refocus the business in the challenging market conditions. Even if construction markets are moderating, the group anticipate results to be in line with anticipations and theBoard of Ashtead continues to look to the medium term with confidence.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 1,985.00 (as on 27^th April 2020).

Mind Gym Plc (LON: MIND) – Offering Variety of Development Services

Mind Gym Plc is a support services company, providing business improvement and human capital solutions globally.

The group will announce its Full-year results ending 31^st March 2020 in late June.

Trading Update For the Full-year 2020 and increased Digital Development (27^th April 2020)
On 27^th April 2020, Mind Gym released an update on the full-year performance ending 31^st March 2020. The group expect its revenue to increase by 15 per cent to GBP 48.2 million, despite the uncertain events. The adjusted PBT is expected to be in the range of £5.8-£7.3 million, with strong cash generation of around GBP 15.9 million.The company hasno debt and remained in a good position for digital development to meet clients demands. The group is focused on ensuring the health and well-being of its employees, clients and coaches and has enabled remote access for its employees. The group has taken the required steps to reduce cost and preserve cash. The company has started part-time working for some businesses and has been using the Coronavirus Job Retention Scheme launched by the UK Government. The group’s management has been agreed to take reduced salaries, and the founder directors will skip their 100 per cent salaries for 3 months. The group expect the environment to be challenging and will be presenting opportunities as well. The group is looking to increase the development of its digital business as a part of the strategy and current situation. At present, the company is unable to quantify the impact of the outbreak and hence withdrawn its guidance for FY2021.

Share Price Performance

Daily Chart as of April 27^th, 2020, after the market close (Source: Thomson Reuters)

Mind Gym Plc shares closed at GBX 97.50 on 27^th April 2020. Stock's 52 weeks High is GBX 207.00 and Low is GBX 75.00.

Valuation Methodology


*Peers: Hays Plc, Science Group Plc, Keystone Law Group Plc, and Knights Group Holdings Plc.

Key Risks
The company’s operations can be affected negatively due to economic and geopolitical risk uncertainties, as it would disturb the supply chain. As the company operates in multiple geographies, its profits can be impacted negatively due to foreign exchange rate fluctuations. 

Conclusion
In the first half of 2020, the company has performed decently and expect to carry the same momentum in the financial year ending 31^st March 2020. The company continue to make substantial investments in the digital proposition, infrastructure, senior leadership, and talent in the pursuit of long term, sustainable growth. But this investment would decline the company’s financial performance. The companyhad not been able to control its operating and non-operating expenses effectively, which may result in a decline in profitability in the coming years.  The group faces a risk of fines and investigations which can impact the future growth as it operates in an industry which is subject to the adverse regulatory headwinds, breaches of which can be potentially fatal for the group. The companywitnessed a negative impact on its operational performance due to outbreak of Covid-19 and has been taking measures to mitigate the impact.

Therefore, based on the above rationale, we have given a “Watch” recommendation at the closing price of GBX 97.50 (as on 27^th April 2020), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and information have been taken from Thomson Reuters. 

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