Smurfit Kappa Group PLC

Smurfit Kappa Group Plc (LON: SKG) is a London Stock Exchange-traded company, which is a provider of paper packaging solutions. As on March 20, 2007, its shares were admitted to the main market of the London Stock Exchange and its stock is a constituent of the UK’s broader FTSE 100 index.

On 30^th April 2020, the company will announce the Q1 FY20 trading update.

Financial Highlights (for the full year ending 31 December 2019, €million)

(Source: Final Results, Company Website)

For the full year 2019, the company’s revenue increased by 1% to €9,048 millionas compared with the previous year (FY18: €8,946 million). This increase was driven by the volume growth, the net contribution from disposals and acquisitions, and the benefits of resilient box pricing. The EBITDA for the financial year 2019 increased by 7% to €1,650 millionagainst the prior year (FY18: €1,545 million), while EBITDA margin increased to 18.2% in FY19. In the financial year 2019, the free cash flow increased by 11% to €547 million as compared with the previous year data (FY18: €494 million). The ROCE stood at 17% and was line with the company’s expectations. The company has increased the geographic reach with acquisitions in Serbia and Bulgaria. The final dividend per share rose by 12% to 80.9 cents as compared with the financial year 2018. In the current period, the net debt to EBITDA (LTM) stood at 2.1x.

Share Price Performance

Daily Chart as at February-10-20, before the market closed (Source: Thomson Reuters)

Smurfit Kappa Group PLC shares were trading at GBX 2,962 (at the time of writing before the market close, at 3:55 PM GMT) on 10^th February 2020 and were up by 0.817% versus the previous day closing price.Stock 52 weeks High and Low are GBX 2,976.00/GBX 2,072.00. The group’s stock is reflecting the higher volatility as against the benchmark index based on the company’s beta of 1.12. The stock price has given positive 4.81 per cent returns during the last month.

Conclusion
The company is facing some challenges such as macro-economic, political uncertainties, etc. which could possibly hamper its growth trajectory. Other risks and uncertainties, such as Price fluctuations in raw materials and energy costs, could adversely affect the Group’s manufacturing costs. The company is exposed to currency exchange rate fluctuations which could impact its profitability. However, due to the quality of its business and the benefits of its geographic diversity, the company’s business operations remain profitable.

In the financial year 2019, the company has delivered a good financial performance.The company has a good business model through which the company is demonstrating its strength and performance. The company’s volume is growing organically, and it has seen improvement in its EBITDA and EBITDA margins year on year. Consumers are increasingly demanding sustainable packaging solutions, and with expertise in paper-based packaging, the company is positioned well to take advantage of this trend.

The company expects its “Better Planet Packaging” initiative to be a source of future incremental demand. The company’s prospects are looking good, and it could prove an excellent opportunity to invest for the long term.
The company’s gross profit has grown from Euro 2,437 million in FY2015 to Euro 2,997 million in FY2019, giving approximately 5.31 per cent growth on a CAGR basis.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 2,938 (as on 7^th February 2020).

Standard Life Aberdeen PLC

Edinburgh, United Kingdom-based Standard Life Aberdeen PLC (LON: SLA) is a financial services company headquartered in Scotland and has operations in 50 locations globally. The company administer and manage assets across Australia, the Middle East, Asia, the Americas and Europe.

On 10^th March 2020, the company will announce the 2019 full-year results.

Recent News
On 7^th February 2020, the company announced its Share Repurchase Programme. During the period, the purchase of Shares will take place commencing on 10 February 2020 and ending no later than 30 September 2020.

Financial Highlights (for the six months ended 30 June 2019)

(Source: Interim Reports, Company Website)

In the first half of the financial year 2019, reflecting a positive market movement and investment performance, assets under management and administration increased to GBP 577.5 billion from GBP 551.5 billion in H1 FY2018, while gross inflows remained strong at GBP 36.5 billion in H1 FY2019 and decreased from GBP 37.4 billion reported in H1 2018.

Net outflows were at GBP 15.9 billion in H1 FY2019versus an outflow of GBP 16.9 billion in H1 2018, reflecting lower gross inflow and weak market sentiment. Due to unfavourable market movements in H2 2018, fee-based revenue decreased by 16 per cent from GBP 966 million in H1 2018 to GBP 815 million in H1 FY2019.

The adjusted diluted earnings per share for the first half of 2019 were 8.9 pence, while reported diluted earnings per share for the period stood at 27 pence. Interim dividend per share stood at 7.30 pence in the current period and remained the same from the previous year. The dividend payment is anticipated to be £173 million.

Share Price Performance

Daily Chart as at February-10-20, before the market closed (Source: Thomson Reuters)

Standard Life Aberdeen PLC shares were trading at GBX 320.30 (at the time of writing before the market close, at 3:58 PM GMT) on 10^th February 2020 and were up by 1.009% versus the previous day closing price. Stock 52 weeks High and Low are GBX 338.25/GBX 208.85. The group’s stock is reflecting the higher volatility as against the benchmark index based on the company’s beta of 1.24. The stock price has given positive 5.01 per cent returns during the last week.

Conclusion
Political uncertainties and macroeconomic headwinds may continue to impact the current business environment and investors sentiments. However, the company with its diverse array of resources is on-track to take benefit of the prospects and to deal with the challenges. On 3^rd December 2019, the company released that the offers for sale of shares in HDFC AMC (HDFC Asset Management Company Limited) by SLI (Standard Life Investments Limited). Despite the company reported net outflows, the rate slowed in the first half of 2019, and total investment performance-enhanced steadily. Over the last 12 months, the group has returned shareholders a substantial capital and is focused on driving operational efficiency and cost control. The company’s deputy global head of investment execution said that the shorter trading hours would enhance the work-life balance for all financial staff.

Based on the above rationale, we have given a “HOLD" recommendation at the closing price of GBX 317.10 (as on 7^th February 2020).

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