Forterra Plc

Forterra Plc (LON: FORT) is one of the largest producers of building products in Britain. It produces building products like bricks, blocks, precast concrete, paving and many crucial other building products through 1 of its 18 manufacturing facilities. 

Financial Highlights – Financial Year 2019 (31^st December 2019, GBP, million)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by growth in Bespoke Products for the period, the company’s revenue increased to GBP 380 million from GBP 367.5 million in FY2018. The adjusted EBITDA stood at GBP 76.4 million in the financial year 2019 versus GBP 78.8 million in the financial year 2018. The statutory operating profit declined from GBP 67.1 million in FY2018 to GBP 60.7 million in the financial year 2019. The adjusted PBT (profit before tax) stood at GBP 62.5 million in the financial year 2019 versus an adjusted PBT (profit before tax) of GBP 64.8 million in the financial year 2018. The reported PBT (profit before tax) stood at GBP 58.2 million in the financial year 2019 versus a reported PBT (profit before tax) of GBP 64.8 million in the financial year 2018. The earnings per share stood at 23.8 pence in the financial year 2019 versus earnings per share of 26.5 pence in the financial year 2018. The dividend per share stood at 11.5 pence in FY2019 versus 10.5 pence in FY2018.
 
Share Price Performance
 

Daily Chart as of March 19^th, 2020, before the market close (Source: Thomson Reuters)

Forterra Plc shares were trading at GBX 178.40 at the time of writing before the market close (at 2:10 PM GMT) on 19^th March 2020 and down by 5.41% versus the previous day closing price. Stock's 52 weeks High is GBX 376.00 and Low is GBX 170.00.

Valuation Methodology

*Peers: Ibstock Plc, Grafton Group Plc, Persimmon Plc and Taylor Wimpey Plc.
 
Conclusion
 
The company operates in the industry, which is impacted by economic and political uncertainty, due to which the company’s businesses performance has been impacted. Although the revenue had increased, while the bottom-line performance declined for the period. The company witnessed a strong demand in the first half of the financial year, which declined in the second half due to low consumer confidence and uncertain economic environment. The group expect demand to recover in the future period. The company’s investment in brick manufacturing facility in Desford, the biggest brick factory in the European region, reflects its ability to drive fundamentals of markets.The company didn’t witness any material impact of COVID-19 on its performance.

Based on the above rationale and supported by valuation done using the above method, we have given a “SPECULATIVE BUY” recommendation at the current price of GBX 170.00 (as on 19^th March 2020, before the market close at 12:05 PM GMT) with a lower double digit-upside potential based on 4.25x NTM Price/Earnings (approx.) on FY20E Earnings per share (approx.).

iomart Group Plc

iomart Group Plc (LON: IOM) is a Software & Computer Services company providing cloud services and secure managed hosting services. The services offered by the company help its customers to reduce capital costs, improve efficiency and productivity and improve business agility and flexibility. 

Financial Highlights – H1 Financial Year 2020 (30^th September 2019, GBP, million)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2020, driven by growth in the revenue from Cloud Services operation, the revenue increased by 8 per cent to GBP 55.1 million from GBP 50.9 million in H1 FY2019. The adjusted EBITDA went up by 3 per cent to GBP 21.8 million in the first half of the financial year 2020 from an adjusted EBITDA of GBP 21.1 million in H1 FY2019. The company’s adjusted PBT (profit before tax) declined by 8 per cent from GBP 12.4 million in the first half of the financial year 2019 to an adjusted PBT (profit before tax) of GBP 11.5 million in the financial year 2020. The reported PBT (profit before tax) surged by 15 per cent to GBP 8.4 million in the financial year 2020 from a reported PBT (profit before tax) of GBP 7.3 million in the first half of the financial year 2019. The basic earnings per share stood at 6.4 pence in H1 FY2020 versus basic earnings per share of 5.4 pence in the first half of the financial year 2019, reflecting an increase of 19 per cent for the period. The interim dividend increased by 6 per cent to 2.6 pence in H1 FY2020 from 2.45 pence in the first half of the financial year 2019.

Share Price Performance

Daily Chart as of March 19^th, 2020, before the market close (Source: Thomson Reuters)

iomart Group Plc shares were trading at GBX 231.00 at the time of writing before the market close (at 2:19 PM GMT) on 19^th March 2020 and down by 0.86% versus the previous day closing price. Stock's 52 weeks High is GBX 409.00 and Low is GBX 226.50.

Valuation Methodology
 

*Peers: Blancco Technology Group Plc, Sage Group Plc, NCC Group Plc and First Derivatives Plc.

Conclusion
The company had shown good financial performance for the H1 of the financial year 2020. Driven by good growth from all the businesses in which the company operates, the company’s revenue and the profitability have improved for the current period. The company made good progress and is looking for further growth, both organically and through strategic acquisitions. Going forward, due to several big customers wins, the company expects positive momentum and expects to see growth in both revenue and profit in the coming years. The company also have many projects under pipeline, which will help the company to achieve strong organic growth. 

Over the course of 4 years (FY15 - FY19), the company’s revenue surged from £65.8 million in FY15 to £103.7 million in FY2019. Compounded annual growth rate (CAGR) stood at 12.04 per cent.

Based on the fundamental prospects and support from valuation done using the above method, we have given a “Speculative Buy” recommendation at the current price of GBX 221.50 (as on 19th March 2020, before the market close at 11:45 AM GMT) with single-digit upside potential based on 12.50x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).
 
*All forecasted figures and peer’s 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.