John Laing Group Plc (LON: JLG)

Business Overview
John Laing provides financial services to infrastructure projects. Its business focuses on infrastructure projects across the UK, Europe, Asia Pacific and North America. Its operation includes costs and cost recoveries, bidding for and winning infrastructure and renewable energy projects. Its also deals in investment returns from and growth in the value of the Secondary Investment portfolio, and it also provides investment management services.

Recent News
On 12^th December 2019, the company announced a pre-close update for the financial year 2019 ending 31 December 2019. The company will announce its results on 3 March 2020.

Pre-close Statement
In the second half of the financial year 2019, John Laing Group has benefited from healthy PPP project delivery and ongoing value enhancements. The Sterling strengthening has negatively impacted the value of the portfolio by c.£50 million. A decline in power price forecasts - currently expected to have an adverse impact of c.£40 million - and changes in macroeconomic and tax assumptions, expected to have a c.£7 million negative impact. As a result, Net Asset Value for the full year, before the above-mentioned impact of foreign exchange, is expected to be marginally below market expectations.

Financial Highlights – H1 Financial year 2019 (30^th June 2019, GBP, million)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019, the company’s NAV increased to GBP 1,599 million as compared to GBP 1,505 million in the first half of the FY18 due to steady growth in infrastructure business of the company. The company’s profit before tax decreased to GBP 35 million as compared to GBP 175 million in the first half of the FY18 due to an exceptional gain on IEP Phase 1 disposal in the first half of the FY18. The company declared an interim dividend of 1.84p per share in the fiscal year 2019.

Share Price Performance  

Daily Chart as on 16^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 16^th, 2019, John Laing Group Plc shares were trading at GBX 363.8 at the time of writing before the market close (at 8:05 AM GMT), down by 0.22 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 402.40/GBX 311.91. The stock price has dropped 9.8 per cent during the last week.

Valuation Methodology


Conclusion
The company delivered a strong operational performance in the first half of the fiscal year 2019. The company delivered value enhancements across the portfolio and made good progress on key assets in its PPP portfolio. The company is looking confident of generating value from its existing portfolio and capitalise on the demand for operational infrastructure. The company’s pipeline remains healthy across its existing geographies and in new markets. However, the company is facing a number of challenges with its renewable energy assets in Australia and Europe. Any change in government policy or regulation could impact the overall business of the company. Uncertainty in macroeconomic factors could result in loss of revenue. A liquidity crisis in the secondary market could affect the revenue and operations of the company. Inability to secure project finance could hamper the operations of the company. The company operates in a competitive market and may not be able to compete effectively or profitably. The valuation of an investment in a project may not reflect its ultimate realisable value and could affect the profitability of the company.
Based on the valuation and factors highlighted as above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 364.60 (as on 13^th December 2019), with support from new catalysts needs to be evaluated at a later stage.  

Britvic Plc (LON: BVIC)

Business Overview
Britvic Plc is a soft drinks company. The company mainly operates in Great Britain (GB), Ireland, France and Brazil. The company has several brands such as Tango, Ballygowan, Fruité, Maguary DaFruta, etc. The company also produces and sells several of PepsiCo’s soft drinks brands. Britvic is the largest supplier of branded still soft drinks and the number two supplier of branded carbonated soft drinks in GB.

Recent News
On 10^th December 2019, the company announced its Annual Report and Accounts 2019. The company also announced that it would host the Annual General Meeting on 31 January 2020 at 11.00 am at the offices of Linklaters LLP, One Silk Street, London.

Financial Highlights – Financial year 2019 (29^th September 2019, GBP, million)

(Source: Interim Report, Company Website)

In the fiscal year 2019, the company’s revenue grew by 2.8 per cent (on the actual exchange rate basis) to GBP 1,545 million due to strong market demand of both Britvic and PepsiCo brands. Adjusted EBIT margin grew by 20bps to 13.9 per cent due to the impact of foreign exchange movements and the effect of the SDIL in the UK and SSDT in Ireland. Profit after tax decreased by 30.9 per cent to GBP 80.9 million due to the inclusion of adjusting items of £84.6m, which included restructuring costs and the write-down of assets held for sale. The company declared a dividend of 30p per share in the financial year 2019.

Share Price Performance  

Daily Chart as on 16^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 16^th, 2019, Britvic Plc shares were trading at GBX 915.5 at the time of writing before the market close (at 10:35 AM GMT), down by 0.32 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 1,079/GBX 783. The stock has given 2.75 per cent and 11.7 per cent in the last six months and one year respectively.

Conclusion
The company has delivered decent financial performance in the fiscal year 2019. However, the company is facing certain principal risks and uncertainties, along with challenging market conditions. Failure to respond to growing health concerns regarding soft drinks could impact the revenue of the company. Inability to maintain third party relationship could affect the overall performance of the company. Failure in supply chain management could affect the operations and revenue of the company. The company is growing at a steady growth, and the outlook of the company looks good. The company’s proper execution, innovation agenda and revenue management continue to deliver growth for the business of the company. Britvic is well placed to capitalise on future growth opportunities. The company has a portfolio of good brands which would enhance the growth of the company, and the company has the potential to deliver value to its investors.

Based on the rationale highlighted above, we have given a “Hold” recommendation at the current price of GBX 913.50 (as on 16th December 2019, before the market close at 10.50 AM GMT).
 
 
*All forecasted figures and information have been taken from Thomson Reuters.

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