Assura PLC

Assura Plc (LON: AGR) is an investor and developer of primary care property (United Kingdom-based healthcare REIT). The company trades at the London Stock Exchange and is a part of the FTSE 250 index. Portfolio comprises around 576 properties, investment property value of approximately £2,039 million, and has an employee base of around 69 people.

Trading Update for the Fourth Quarter Ending 31 March 2020 (as on 2^nd April 2020)
The company delivered a decent performance in the fourth quarter, with three schemes progressed to on-site, completed development at Knebworth, and 13 acquisitions completed for combined £54 million. The contracts exchanged for the disposal of 20 properties for a total consideration of £17 million and one disposal completed for a consideration of £0.8 million. The company also delivered a strong performance in the year, with four developments completed in the year at a total cost of £14.8 million, 15 developments presently on-site with a total cost of £81 million, with the acquisitions for the year total 28 for consideration of £119 million. On 31^st March 2020, the gross debt stood at £847 million, with £220 million of undrawn facilities.

Share Price Performance

Daily Chart as of April8^th, 2020, after the market closed (Source: Thomson Reuters)

On April 08, 2020, Assura PLC shares closed at GBX 77.20, up by 2.93% against the previous day closing price. Stock's 52 weeks High and Low are GBX 88.00/GBX 56.80.

Key Risks
The market conditions in which the company operates is full of challenges and might impact the operation performance and reduce financial performance as well. Liquidity and interest rate risks could affect the operations of the company. Accidents, anti-social behaviour, pandemic or Coronavirus outbreak, violent crime or system failure can also lead to reputational loss. Weakness in the macroeconomic and political environment could impact the company’s ability.

Conclusion
In a highly fragmented market, the company stays well-positioned to become the NHS's partner of choice in the primary care property.The coronavirus situation is rapidly evolving, and the group is closely monitoring the impact on the centres. The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors. With weak consumer confidence and political uncertainty resulted in pessimistic investor sentiment and declining property values. Other health care investment trusts are avoiding participating in the recapitalisation of the Assura, which shows their lack of confidence in the company’s growth prospects, and they are not confident about the Group’s business. Currently, the stock is trading near the 52-week high, suggesting that the upside potential might be limited, and the company can face stiff resistance at the current level.

Therefore, based on the above rationale, we have given a “Watch” recommendation at the closing price of GBX 77.20 (as on 8^th April 2020), while we look for any upcoming catalysts in the near term.

Helios Towers PLC

Helios Towers PLC (LON: HTWS) is a United Kingdom-based telecommunications company, which owns and operates passive infrastructure and telecommunications towers in five high-growth African markets. In FY19, the tenancy growth of 8% and colocation growth of 12%. The company is operating 6,974 of sites, with 14,591 of tenants, and 2.09x of Tenancy ratio.

Financial Highlights for the year to 31^st December 2019 (USD Million)

(Source: Final Results, Company Website)

Led by the continued growth in the number of sites and tenancies, the group’srevenue increased by 9% year-on-year to US$388 million in 2019 (2018: US$356 million). In FY19, the adjusted EBITDA rose by 16% to US$205 million (2018: US$178 million), reflecting both continued improvements in operational efficiency and tenancy growth. Operating loss for FY19 stood at US$4.5 million. On 31^st December 2019, the net debt stood at US$627 million, representing net leverage of 2.9x. T Raised $125 million of primary equity to be deployed in value-accretive future expansion opportunities.

Share Price Performance

Daily Chart as of April8^th, 2020, after the market closed (Source: Thomson Reuters)

On April 08, 2020, Helios Towers PLC shares closed at GBX 133, up by 7.09% against the previous day closing price. Stock's 52 weeks High and Low are GBX 160.10/GBX 81.95.

Key Risks
A slowdown in the growth of wireless communication services could adversely affect the demand for communication sites and tower space and could have a material adverse effect on the Group’s financial condition and results of operations. Fluctuations in, or devaluations of, local market currencies where the Group operates could have a significant and negative financial impact on the Group’s business, financial condition and results. Failure to remain competitive and the inability to integrate new lines of business in new markets.

Conclusion
The market in which the company operates will continue to grow and expand in the future, to benefit from this expansion, the company actively looking for acquisitions. The company is actively looking forward to investment opportunities for growth in its core businesses.

The economic conditions within the geographic areas within which the company operates influence the operating and financial performance of the company and can face uncertainty in the medium-to-long term due to the ongoing Brexit.However, the company faces pressure on pricing and margins due to the mature and highly competitive markets it operates in, and material adverse changes in certain raw material prices could affect the profitability of the group. Due to a higher level of debt, the company might enter credit risk in the near future. Recent Coronavirus outbreak has impacted the performance of the company; however, the extent of the impact would be determined in some time.

Currently, the stock is trading near the 52-week high, suggesting that the upside potential might be limited, and the company can face stiff resistance at the current level.

Therefore, based on the above rationale, we have given a “Watch” recommendation at the closing price of GBX 133 (as on 8^th April 2020), while we look for any upcoming catalysts in the near term.

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