Croda International Plc

Croda International Plc (LON: CRDA) is the UK’s largest diversified chemicals group in terms of Mkt Cap (market capitalisation). The company’s operations are differentiated in four segments: Performance Technologies, Personal Care, Industrial Chemicals, and Life Sciences.

On 23^rd April 2020, the company will take place an Annual General Meeting (AGM). The company will announce its Half-year 2020 results on 23^rd July 2020.

Recent News
On 19^th March 2020, the company announced that Jez Maiden, as a Group Finance Director, will resign from his place of Non-Executive Director of PZ Cussons plc, which will be effect from 31 May 2020.

Financial Highlights for the Year Ended 31^st December 2019

(Source: Annual Report, Company Website)

Sales in reported currency declined by 0.7% to £1,377.7 million in 2019(2018: £1,386.9 million). Constant currency sales tumbled 2.6%, comprising an 11 million pounds benefit from acquisitions. Led by innovation and an improved product portfolio, the sales volume was 5% lower, partly offset by price/mix adding 3%. The sales from core business decreased by 2.3% at constant currency. Life Sciences sales increased by approximately 6%, while sales in Personal Care reduced by 3% and Performance Technologies decreased by more than 7%, driven by weakness across industrial markets. The adjusted operating profit declined by 0.8 per cent in reported currency to £339.7 million (2018: £342.5 million). The subdued market conditions in the year had an adverse impact on adjusted basic EPS which fell to 185 pence, a decrease of 2.7% on last year. ROIC reduced to 17.0% in 2019, below the medium-term target. Despite subdued market conditions, the group ROS (return on sales) was unchanged at 24.7%.

Share Price Performance

Daily Chart as of April15^th, 2020, after the market closed (Source: Thomson Reuters)

On April 15, 2020, Croda International Plc shares closed at GBX 4,447, down by 5.08% against the previous day closing price. Stock's 52 weeks High is GBX 5,415, and 52 weeks Low is GBX 3,814.

Valuation Methodology


Key Risks
Failure to drive New and Protected Products (NPP) through innovation will impact on growth. As a global chemical manufacturer, the company operate in highly regulated markets, which are subject to regular change. Impact of COVID-19.

Conclusion
The industrial markets would be a decline in the short-term period,driven by COVID-19 crisis. In 2019, the group delivered a decent performance with increased cash flow, and decent margin maintained, despite subdued market conditions.  However, being a manufacturing company, the company is subject to numerous health, safety and environmental laws, regulations and standards, and any adverse shift can significantly impact the company's operations. The company has limited suppliers from which it sources its strategic raw materials and any breakdown in the supply, especially considering the risk from Brexit, would result in the company's inability to manufacture and satisfy customer demand. The Group has witnessed a weaker performance in its energy business. Croda has a highly cash generative business model which would contribute in the growth of its business. However, there are certain principal risks and uncertainties, which could affect the overall business of the company. Fluctuations in foreign exchange rates could affect the profitability of the company. Failure in supply chain management could hamper its operations.

Based on the valuation and factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 4,447 (as on 15^th April 2020), with support from few catalysts needs to be evaluated at a later stage.

Apax Global Alpha Limited

United Kingdom-based, Apax Global Alpha Limited (LON: APAX) is a closed-ended investment company. The group's investment main objective is to offer investors with capital appreciation from its regular dividends and investment portfolio strategy. The company focuses on derived investments and private equity funds. The group invests in Rest of Europe, India, Switzerland, the United Kingdom, North America, and China.

On 30 April 2020, the company will release its Q1 results for the period ended 31 March 2020. AGA will update the market on its quarterly performance on 15^th May 2020.

AGM Update (as on 1^st April 2020)
In this update, the company is closely monitoring the impact of coronavirus (COVID-19). As per the current guidance, the Board considers that it becomes appropriate or necessary to make alternative arrangements for the holding of the AGM due to uncertainty created by COVID-19.

Financial Highlights for the Year Ended 31^st December 2019
In the fiscal year 2019, the company’s total income increased to €227.16 millionas compared to the €73.53 million in the fiscal year 2018. Profit before tax stood at €211.34 million, an increase from the previous year same period data. Profit after tax for the period rose to €210.93 million as compared to €64.94 million with the corresponding period of the last year. Basic and diluted earnings per share climbed to 42.95 cents in the fiscal year 2019 against the 13.22 cents in the fiscal year FY18. The company declared an annual dividend of 4.68 pence per share.

Share Price Performance

Daily Chart as of April15^th, 2020, after the market closed (Source: Thomson Reuters)

On April 15, 2020, Apax Global Alpha Ltd shares closed at GBX 113, down by 9.60% against the previous day closing price. Stock's 52 weeks High is GBX 185.50, and 52 weeks Low is GBX 105.55.

Key Risks
Uncertainty hovering around the Brexit or COVID-19 crisis could have a negative impact on the financial position of the group, as the majority of the group's investments are in domestic assets. Also, inflation has increased in Europe and on the other hand, declining in the UK. Devaluing sterling against the US Dollar could even dent the group's top-line in near-term.

Conclusion
Apax Global Alpha Limited has performed well over the financial year 2019,delivering on its quantified objectives. There is still uncertainty from trade tensions between China and the US, and new tensions might possibly arise between Europe and the US. In addition, Brexit anxieties remain unresolved. The Group is focusing on identifying attractive prospects that will allow the company to continue to deploy its excess liquidity.

So far in 2019, the capital markets seem to be discounting the associated risks, and the current sentiment, whether persists into the future is uncertain.The corporate and public-to-private deals in the Private Equity portfolio would continue to feature more prominently in sourcing deals. The COVID-19 situation is rapidly evolving, and the group is closely monitoring the impact on the centres.

Therefore, based on the fundamental analysis, we have given a “Watch” recommendation at the closing price of GBX 113 (as on 15^th April 2020), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and peer information have been taken from Thomson Reuters.

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