VP PLC

Founded in 1953, VP PLC (LON: VP.) is a specialist equipment rental group with operations in the UK and internationally. In 1973, the company was floated on the United Kingdom Stock Market as Vibroplant PLC. The group is focused on generating progressive returns to investors by providing a range of products and services.

Trading and Covid-19 Update
On 25^th March 2020,the group released an update stating satisfactory performance since the last interim results. In the United Kingdom, the group experienced a fall in demand in the construction industry while its international division performed resiliently. Following the government restrictions regarding Covid-19 pandemic, the group is focusing on the health and well-being of stakeholders. The group also observed a reduction in revenue during the latter part of March 2020, and it is anticipated to further affect the business. The group reported a GBP 200 million committed facility along with overdraft facility of GBP 7.5 million. As at 31^st March 2020, the group anticipated nearly GBP 165 million of net debt. 

Share Price Performance

Daily Chart as on 22^nd April 2020, before the market closed (Source: Thomson Reuters)

VP PLC’s shares were trading at GBX 662 on 22^nd April 2020 before the market close at 3.09 PM GMT, down by 6.23% against the last day closing price. Stock's 52 weeks High is GBX 1,040.00 and Low is GBX 499.00.

Valuation Methodology
 
 

Risk Factors
The equipment rental market is already competitive and could impact the company’s market share, revenues and margins. The company is also exposed to foreign exchange and interest rate fluctuations which may impact profitability and have exposure to credit risk relating to clients who hire the equipment.

Conclusion
In the first half of 2020, the revenue was down by 3% to £186.6 million as compared with the corresponding period of the last year (H1 2019: £193.2 million). The decrease in revenue was driven by a decline in the UK and international performance. The statutory profit before taxation decreased to £23.4 million in H1 FY20 against the same period last year (H1 2019: £23.9 million).

Post half-year results, the group has witnessed a reduction in the construction sector in the UK; however, international divisions have been resilient. In the wake of Covid-19, the group has been following government instructions and maintaining liquidity to mitigate any uncertain risk.

Based on the above rationale and valuation, we have given a “Watch” recommendation at the closing price of GBX 706 (as on 21^st April 2020), while we look for any upcoming catalysts in the near term.

Urban&Civic PLC

Urban&Civic PLC (LON: UANC) is a United Kingdom-based company which deals in property management and investment activities. The group has three operating segments, namely Strategic sites, Commercial and Catesby.  

In May 2020, the group is expected to announce its next interim results.

Recent News
4^th February 2020: Bill Holland was appointed as Independent Non-Executive Director.Since 6^th February 2020, he held the position as Chair of the Audit Committee.

Covid-19 Update
On 30^th March 2020, the group released its latest update regarding the impact of social distancing amid the Covid-19 contagion, which has ceased major construction sites of the company and its employees are working remotely during this period. However, their civil infrastructure work is continued due to the openness of the working environment. The group was also benefited from the investment programme of Central government and Homes England. Besides operations, the group affirmed a robust state of the balance sheet with GBP 143 million of undrawn facilities, the majority of which is backed by the government. The group had also taken two new loans, comprising GBP 60.6 million from Homes England and GBP 35 million from the Department of Education.

Share Price Performance

Daily Chart as on 22^nd April 2020, before the market closed (Source: Thomson Reuters)

UANC’s shares were trading at GBX 211.0 on 22^nd April 2020 before the market close at 3.08 PM GMT, up by 2.68% against the last day closing price. Stock's 52 weeks High is GBX 375.00 and Low is GBX 183.00.

Price Performance
UANC’s price performance over the 3 months, 6 months, 9 months, and 12 months have been negative, which stood at -39.88 per cent, -36.06 per cent, -31.72 per cent and -24.10 per cent, respectively.

Valuation Methodology


Valuation Metrics

(Source: LSE)

As on 31st March 2020, the Price/Earnings and EV/EBITDA multiples of the Urban&Civic PLC’s share were 25.3x and 100x, reflecting that the company is trading at a higher multiple as compared to its peers.
 
Conclusion
Urban&Civic PLC has shown consistent growth over the past five years. EPRA NAV in FY2019 stood at GBP 527.5 million as against GBP 481.2 million. Also, the Profit before tax for FY2019 stood at GBP 16.3 million (versus GBP 22.3 million in FY2018).

Regarding the market scenario, the housing market has been cyclical historically. Moreover, the change in legislation and regulations can adversely impact the group operations. Furthermore, in the wake of Covid-19 and social distancing regulations imposed by the government, the demand for the housing market has fallen drastically. Moreover, the construction sites of houses are already ceased.  However, the strategic sites are still functional, and housebuilders will be able to resume construction post mid-year 2020 only.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the current market price of GBX 212.80 (as on 22nd April 2020, before the market close at 2.47 PM GMT), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and Peers information has been taken from Thomson Reuters.

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