GlaxoSmithKline Plc

GlaxoSmithKline Plc (LON: GSK) is a healthcare company, which focuses on the manufacturing, commercialisation, and development of pharmaceuticals vaccines and consumer healthcare products. The company offers over the counter (OTC) products for pain, relief, nutrition, skin health, oral health, and gastrointestinal disorders.

Recent News
On 5th December 2019, ViiV Healthcare (owned by GSK, Pfizer Inc and Shionogi Limited) submitted the application for New Drug to the US Food and Drug Administration (FDA). The company seeks approval of inhibitor used for the treatment of HIV-1 infection in adults with limited availability of treatment.

Financial Highlights – Q3 Financial Year 2019 (30^th September 2019, GBP, million)

(Source: Quarterly Report, Company Website)
 
For the nine months period of the financial year 2019, the company’s total revenue stood at £24,855 million and increased by 10 per cent (AER), while increased by 7 per cent on CER basis. The company’s pharmaceuticals sales increased by 4 per cent (AER) to £12,996 million, while on a CER basis, sales increased by 1 per cent.  In Vaccines, sales surged by 23 per cent (AER) to £5,415 million, while on a CER basis, sales increased by 19 per cent. In the Consumer Healthcare segment, sales stood at £6,424 million. The company’s operating profit went up by 29 per cent (AER) to £5,059 million for 9M FY2019 versus £3,929 million for 9M FY2018. The PBT (Profit before tax) surged by 22 per cent (CER) from £3,426 million for 9M FY2018to £4,510 million for 9M FY2019. The company’s PAT (Profit after tax) increased by 37 per cent (AER) to £3,751 million for 9M FY2019 from £2,746 million for 9M FY2018. The company’s earnings per share surged by 38 per cent (AER) to 67.7 pence for 9M FY2019 from 49 pence for 9M FY2018.

Share Price Performance

Daily Chart as of  December 13^th, 2019, before the market close (Source: Thomson Reuters)

GlaxoSmithKline Plc shares were trading at GBX 1,716.80 at the time of writing before the market close (at 9:44 AM GMT) on 13^th December 2019 and were down by 1.57% versus the previous day closing price. Stock's 52 weeks High is GBX 1,796.40 and Low is GBX 1,429.80.The company’s stock has given investors 1.24 per cent of a negative return in the last week. The company’s stock has given investors a positive return of 8.42 per cent of in the last 6 months.

Conclusion
The company has shown decent fundamentals and growth prospects. The company’s business segments have performed well during the third quarter of FY2019. In the financial year 2019, the company expect a decline in adjusted EPS in the range of 3-5 per cent at CER. The company will close the Consumer Healthcare nutrition disposal business by the end of this year and anticipated the impact of the Tesaro acquisition. In FY2019, the company continue to expect a dividend per share of 80 pence. The company has raised its earnings, with strength in its consumer health and vaccines business offsetting weakness in its pharmaceutical’s unit caused by the launch of a generic rival to its asthma treatment Advair. The company said that the strong uptake in the United States for Shingrix, a shingles vaccine, as well as rapid sales of meningitis vaccines has contributed to the growth.

Based on the decent prospects, we have given a "Hold" recommendation, at the current price of GBX 1,677.79 (as on 13^th December 2019, before the market close at 8:10 AM GMT).

Rio Tinto Plc

Rio Tinto Plc (LON: RIO) is a metal and mining company operating at a global scale with a focus to explore, mine and process the Earth's mineral resources. The group has a presence across 35 countries across six continents with significant business spread across Australia and North America.

Recent News
On 12th December 2019, Rio Tinto accepts the outcomes of the Takeovers Panel related to ERA (Energy Resources of Australia Limited) offer to raise USD 324 million (AUD 476 million) for Ranger Project Area’s rehabilitation in Australia's Northern Territory. In the absence of commercially viable solution available, the RIO will underwrite and fully subscribe to an entitlement offer.
Financial Highlights: H1 Financial Year 2019 (30th June 2019, $, million)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019, as higher iron ore prices helped in offsetting the impact of lower volumes and lower aluminium prices, excluding the $0.8 billion contributions by the coking coal assets divested in 2018, consolidated sales revenue of $20.7 billion was 9 per cent higher than 2018 first half. The operating profit during the period was $5.2 billion, against $6.4 billion recorded in the prior year, reflecting the increase in impairment charges. Lower volumes and higher costs in iron ore was more than offset by an increase in iron ore prices, which drove underlying EBITDA to $10.3 billion, which was 19% higher than 2018 first half, and led to an EBITDA margin of 47 per cent. Profit before finance items and taxation amounted to $5.5 billion while profit before taxation was $5.2 billion. Due to a strong contribution from Iron Ore, underlying earnings during the period were $4.9 billion, which was 12 per cent higher than the prior period. The group declared an ordinary dividend per share of 151 cents, which amounted to $2.5 billion, and announced a special dividend of 61 cents, which amounted to $1 billion.

Share Price Performance

Daily Chart as of  December 13^th, 2019, before the market close (Source: Thomson Reuters)
Rio Tinto Plc shares were trading at GBX 4,438.50 at the time of writing before the market close (at 10:26 AM GMT) on 13^th December 2019 and were up by 2.06% versus the previous day closing price. Stock's 52 weeks High is GBX 4,979.14 and Low is GBX 3,399.11.The company’s stock has given investors 5.86 per cent of a negative return in the last six months. The company’s stock has given investors a positive return of 8.85 per cent of in the last 1 month.

Conclusion
The successful operations of the group have enabled it to deliver sector-leading cash returns to shareholders, which is backed by its strong portfolio and balance sheet. The company expects the cash returns to shareholders to be in a range of 40-60% of underlying earnings over the long run, indicating the confidence of the board in the performance of the company.

Despite weather impacts, the company expects the run-rate to be around $0.5 billion from its mine-to-market programme in FY 2019, while the capital expenditure is expected to be approximately $6.0 billion in 2019 and around $6.5 billion in the next two years. Despite the threat from the US-China trade war, the Chinese economy has remained healthy, fuelled by an increased share of domestic consumption and supported by positive policy decisions and reforms.

Based on the decent prospects, we have given a "Hold" recommendation, at the closing price of GBX 4,349.00 (as on 12^th December 2019).

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