Xaar PLC

Xaar PLC (LON: XAR) is operating as an independent manufacturer of piezoelectric drop-on-demand industrial inkjet printheads. The Group operates in three principal geographical areas: EMEA, Asia and the Americas, while operations are differentiated in four operating segments: Product sales, commissions and fees, Royalties, Printhead and Product Print Systems.

Trading Update (as on 23^rd March 2020)
The company continues to make good progress with its strategy. For the year ended 31 December 2019, the company expects to report revenues for its continuing operations of £49.4 million. On 31^st December 2019, the group’s cash balances stood at £25.3 million, including cash held for investment in Xaar 3D.

The company’s preliminary financial statements for 2019 were scheduled to be released March 24, 2020. The FCA (Financial Conduct Authority) has requested all listed companies to delay the release of preliminary financial statements for a minimum of two weeks. In compliance with this above request, the company will not be announcing preliminary financial statements; however, it will release full audited financial statements within 4 months of the financial year-end.
In early 2020, the Group's trading performance was in line with expectations. While the full implications of coronavirus (COVID-19) outbreak on the financial performance for the present financial year are difficult to determine at this stage, the Board of the Group stays confident in the long-term prospects.

Share Price Performance

Daily Chart as on 26^th March 2020, before the market closed (Source: Thomson Reuters)

On March 26, 2020, Xaar PLC shares were trading at GBX 20.50 at the time of writing before the market close (at 9.15 AM GMT), up by 1.235% per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 118.20/GBX 18.95.

From the technical standpoint, 14 days relative strength index of the stock was favourable, and prices could rise further from the current trading level.

Conclusion
The company has increased investment in Thin Film, which has helped the company to lower down the costs to the minimum level and resulted in increased satisfaction levels among customers. The group’s operations are impacted by several risks such as competition, Brexit, inventory obsolescence, loss of manufacturing facility and volatility in exchange rates. Xaar PLC, after a successful restructuring of its Printhead Business, looks for decent progress and robust sales pipeline. The company also believe that the next stage of the partnership with Stratasys provides substantial value for the investors. Also, the 3D investment will also improve the cash position of the group. On the macro front, all the major indices are currently trading near their 52-week low as a result of coronavirus outbreak butbelieve that global policy makers would make all efforts to introduce comprehensive and coordinated stimulus to cushion the economic impact of a coronavirus outbreak.

Based on the healthy prospects, we have given a "SPECULATIVE BUY" recommendation at the current price of GBX 20 (as on 26th March 2020, before the market close at 8:00 AM GMT).

Hurricane Energy Plc

AIM-listed Hurricane Energy PLC (LON: HUR) is a United Kingdom-based oil production and exploration company, which mainly focused on naturally fractured basement reservoirs. It was founded in 2005.

Operational Update (as on 24^th March 2020)
The company provides an operational update following current developments in the UK government response to coronavirus (COVID-19). The company has postponed its 2020 Capital Markets Day. On the current production levels and oil prices, the Lancaster EPS (Early Production System) has cash operating costs of $17 per barrel. From the Lancaster EPS, the operating cash flow will be significantly lower than earlier anticipated for an indeterminate period. The company has a robust balance sheet, with unrestricted cash (at 18 March 2020) of $164.3 million. However, the group is on-track to deliver a strong position in this current downturn. From the Lancaster EPS, the oil production continues in line with prior updates, at around 20 thousand barrels of oil per day. For 2020, it stays at 18,000 barrels of oil per day, considering an assumed 90 per cent uptime and production to date. In April 2020, the company will release its full update.

Financial Performance for the period ended 31 December 2019 (USD Million)
The revenue for the period was $170.3 million. Profit after tax was $58.7 million as compared to a loss after tax of $60.9 million in the year-ago period. The overall result was a highly satisfactory financial outcome, with unrestricted cash of $156.6 million at year-end and operating cash flow of $112.2 million. The company sold over 2.9 million barrels of oil in 2019.

Share Price Performance

Daily Chart as on 26^th March 2020, before the market closed (Source: Thomson Reuters)

On March 26, 2020, Hurricane Energy PLC shares were trading at GBX 13.46 at the time of writing before the market close (at 11:55 AM GMT), down by 2.60% per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 64.70/GBX 7.15.

Valuation Methodology


Conclusion
The company has shown a good top-level and bottom-level performance in the current financial year.The company also had a robust head start to the year 2020, with providing steady production. The two-well production return is imminent. For the Lancaster EPS wells, the company’s production performance is above the base case anticipations. Hurricane remains focussed on providing returns to shareholders. The company is looking attractive and is in the growth phase and provide opportunities for long term investment. The company is also exploring numerous options to drill an extra Lancaster production well in the year 2020 to allow for the full utilisation of the Aoka Mizu FPSO's (Floating production storage and offloading vessel’s) throughput capacity and to deliver dynamic data from another part of the Lancaster reservoir.

Recently, the company provided an update in relation to the commercial arrangements with its joint venture (JV) partner in the GWA (Greater Warwick Area), Spirit Energy, which represents an increase in the financial performance of the company. Recent Coronavirus outbreak could affect the performance of the company. However, the Group is capable enough to tackle this uncertainty with its sustainable growth model.

Based on the decent prospects and supported by valuation as done using the above method, we have given a “Speculative Buy” recommendation at the current price of GBX 12.87 (as on 26th March 2020, before the market close at 8:25 AM GMT) with lower double-digit upside potential based on 1.60x NTM P/CF (approx.) on FY20E cash flow per share (approx.)
 
*All forecasted figures have been taken from Thomson Reuters.

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