Aston Martin Lagonda Global Holdings PLC

United Kingdom-based Aston Martin Lagonda Global Holdings Plc (AML) is a prominent luxury brand which is focused on the engineering, manufacturing, and design of luxury sports cars. Both brands have a history of over 100 years. AML has a long tradition of extraordinary design, manufacturing and engineering of luxury sedans and sports cars. The company is manufacturing and exporting cars in 53 countries around the world.

On 7^th November 2019, the company will announce the Q3 FY2019 results.

Financial Highlights (for the 6 months to 30 June 2019, £million)

(Source: Interim Reports, Company Website)

In the first half of the financial year 2019, the company’s reported wholesale volumes increased by 6 per cent to £2,442 millionas compared with the corresponding period of the last year. Total revenue decreased by 4 per cent from £424.9 million in H1 FY18 to £407.1 million in H1 FY19, due to substantially fewer Vantage and specials, which resulted in less ASP (Average Selling Price).

Adjusted EBITDA reduced by 79 per cent to £22 millionas compared with the corresponding period of the last year, while adjusted EBITDA margin was at 5 per cent. Adjusted operating loss was recorded at £35.2 million from the corresponding prior-year period. Reported operating loss stood at £37.7 million against the profit of £64.4 million in H1 FY18. Loss before tax stood at £78.8 million in H1 FY19 against the profit of £20.8 million in H1 FY18. Diluted loss per share was 28 pence in the first half of 2019 as compared to the 4.3 pence recorded in the first half of 2018. On 30^th June 2019, the net debt was £732 million.

Share Price Performance

Daily Chart as at 30th October 2019, before the market closed (Source: Thomson Reuters)

On 30th October 2019, Aston Martin Lagonda Global Holdings PLC shares were hovering at GBX 430.8 at the time of writing before the market close (at 11:45 AM GMT), up by 1.58% against the previous day closing price. Stock's 52 weeks High and Low are GBX 1,704.93/GBX 371.10.

Conclusion
Although the company’s wholesale volumes rose in the half-year of the financial year ending 2019, the profitability margins have either remained stagnant or declined. Both top and bottom lines declined in the current period. The ongoing uncertainty created by Brexit will affect consumer sentiment and may hamper the company’s operating performance and affect the company’s subscriber base. The company expects its second half to be benefitted by an increase in demand for models such as DB4GT Zagato, Specials and Aston Martin Valkyrie. The company is further planning to reduce its fixed cost run rate. Clearly, a more recessionary environment could hurt car retailers.

The company’s P/E multiple is significantly higher as compared to the industry multiple, reflecting overstretched valuations.

Based on the headwinds faced by the company, we have given a “WATCH" recommendation at the current price of GBX 430.80 (as on 30th October 2019, before the market close), while we look for any upcoming catalysts.
 

Plus500 Ltd

Israel-based Plus500 Ltd (PLUS) is a provider of CFDs (Contracts for Difference). The group operates an online trading platform for shares, forex, commodities, ETFs, options and indices for retail clients and innovates trading technologies. The group conducts its operations in the geographic areas of Australia, Asia, Europe, Gibraltar, and the Middle East.

Q3 FY2019 Trading Update (as on 29^th October 2019)
The company announced the trading update for the three months ended 30^th September 2019. In the third quarter of 2019, the company’s revenue surged by 10 per cent to $110.6 millionas compared with the corresponding period of the last year, while revenue increased by 18 per cent from the previous quarter (Q2 FY19: $94.1 million). The number of new customers accelerated by 18 per cent to 24,359 in Q3 FY19 against the same period in 2018. The number of active customers increased by 9 per cent to 110,939 in Q3 FY19 against the same period in 2018 (Q3 FY18: 102,043). Average user acquisition cost declined by 42 per cent to $921 per customer. ARPU (average revenue per user) showed a 15 per cent sequential improvement (from the previous quarter ended), and a year-on-year surge of 2 per cent. In the third quarter of 2019, EBITDA surged by 39 per cent to $70.1 millionas compared with the corresponding period of the last year, while EBITDA margin rose from 57 per cent in Q2 FY19 to 63 per cent in Q3 FY19 (Q3 FY18: 50 per cent).

In the current quarter, the company repurchased 1,639,246 shares for a total consideration of $14.7 million as part of its $50.0 million share buyback programme that commenced on August 20, 2019. On 30^th September 2019, the cash balances were around $297.5 million (30 June 2019: $327.3m), reflecting the share buyback and the dividend payment on July 9, 2019 of $70.2 million.

Share Price Performance

Daily Chart as at October-30-19, before the market closed (Source: Thomson Reuters)

On 30th October 2019, Plus500 Ltd shares were trading at GBX 831 at the time of writing before the market close (at 12:50 PM GMT), down by 0.12% against the previous day closing price. Stock's 52 weeks High and Low are GBX 1,668/GBX 397.18. The company's stock beta was negative 0.48, reflecting the inverse volatility as compared to the benchmark index.

Valuation Methodology

*Peers: Brewin Dolphin Holdings Plc, Burford Capital Ltd, Arrow Global Group Plc, Rathbone Brothers Plc, Close Brothers Group Plc and Non-Standard Finance Plc.

Conclusion
During the current period, the company continued to concentrate on providing substantial improvements to the trading platform, through the addition of functionality which appeals to more sophisticated traders and to the client service. Like all operators in the sector, the company’s performance for the rest of the year 2019 is dependent on the financial market conditions.

The company’s financial performance for the third quarter of 2019 has performed decentlyas compared to the corresponding period of the last year and the previous quarter. In the previous year, European regulatory agencies put restrictions on the sale of Contracts for Differences, which permits shareholders to bet on the prices of the assets without holding the asset. The company’s main emphasis was on the restriction on the leverage limit. While the group believes it is well prepared for the several Brexit-related scenarios given its separate European Union licence in Cyprus. Global political uncertainties make the financial markets weak and will gradually reduce the number of trading expectations for the shareholders. According to most of the traders, the new leverage rule is the key reason which led to a decline in clients and trading business.

Based on the headwinds faced by the company, we have given a “WATCH" recommendation at the closing price of GBX 832 (as on 29th October 2019), while we look for any upcoming catalysts.
 
 
*All forecasted figures and peer information have been taken from the Thomson Reuters. Currency Rate is 1 USD = 0.776433 GBP.

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