PureTech Health Plc (LON: PRTC)

Business Overview
PureTech Health Plc is an advanced biopharmaceutical company developing medicines for dysfunctions of the Brain Immune Gut (BIG) axis across its affiliates and its internal labs. Growth stage business includes activities with a focus on developing products to solve the healthcare problems, and project phase business includes activities concentrate on financing, sourcing and creating new products candidates.

Financial Highlights – H1 Financial year 2019

(Source: Interim Report, Company Website)

In the first half of the financial year 2019, the company’s consolidated cash reserves stood at $202.1 million of which $149.2 million was held on a PureTech parent company level. The cash reserves declined because the company spent its cash reserves to advance both its associate and internal pipeline. The company has focused on research and clinical activities and continued to invest in infrastructure to support these activities. The company recorded an operating loss of $70.3 million for the period due to an increase in research and development spending.

The company will announce its annual results on 9^th April 2020.
Share Price Performance  

Daily Chart as on 27^thMarch 2020, after the market closed (Source: Thomson Reuters)

On March 27, 2020, at the time of writing, PureTech Health Plc were closed at GBX 215, with no change against the previous day closing price. Stock’s 52 weeks High and Low are GBX 339.36/GBX 155.50. 

Conclusions
During the first half of the financial year 2019, the company’s operating loss increased by 34.3 per cent on year on year basis which includes research and development expense which was increased by 61 per cent while general and administrative spending increased by 34.8 per cent. The general expense is expected to grow in the coming period due to lease costs, professional fees, marketing and sales as well as an increase in the overall corporate expenses. Besides this, the company faces some principal risks. Clinical trials and other tests are expensive and have uncertain outcomes which could affect the company’s operations. The failure of the company’s products to obtain required regulatory approval could cause a significant decrease in the company’s value. There is a risk of adverse reactions of all drugs and medical devices which result in a smaller market for the company’s product. The risk of the company is to obtain reimbursements from third-party players which could decrease the revenue of the company. The failure of the company to obtain patent protection and maintain the secrecy of crucial information could affect the income of the company. Another risk is Brexit risk which could impact the profitability of the company.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 215 (as on 27^th March 2020), with support from few catalysts needs to be evaluated at a later stage.

RDI REIT Plc (LON: RDI)

Business Overview
London, the United Kingdom-based RDI REIT Plc (RDI) is a REIT (Real Estate Investment Trust). The company’s primary policy is the delivery of long-term sustainable returns by robust fundamentals by investment in the Real Estate sector. The company’s investment strategy is to invest in distribution and Industrial real estate properties. The company was previously known as Redefine International Plc.

COVID-19 Updates
On 19^th March 2020, RDI reported the impact of COVID-19 on travel patterns and specifically hotel bookings. It said that there had been a significantly reduction in demand for travel which had resulted in a reduction in occupancy and future bookings across the Group's 13 managed hotels.

Financial Highlights -Year 2019

(Source: Preliminary Report, Company Website)

The company highlighted a robust asset management performance with the completion of 131 leasing events during the financial year, which was 4.7 per cent above the ERV. The company reported that the EPRA (European Public Real Estate Association) occupancy stood at 95.9 per cent as on August 31, 2019, below prior year’s EPRA occupancy of 97.1 per cent as on August 31, 2018. The underlying earnings stood at £49.4 million during the financial year 2019, down by 7.6 per cent year on year. This translated into a year on year decline of 8.45 per cent in the underlying earnings per share to GBX 13.00 per share in FY 2019 from GBX 14.20 per share in FY 2018. There was also a reduction in the net rental Income to £80.8 million in FY 2019 from £84.7 million in FY 2018. Dividend per share declined to GBX 10.00 per share in FY 2019 from GBX 13.50 per share in FY 2018.

Share Price Performance  

Daily Chart as on 27^thMarch 2020, after the market closed (Source: Thomson Reuters)

On March 27, 2020, at the time of writing, RDI Reit Plc shares were closed at GBX 74, up by 7.25 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 162.40/GBX 50.50. 

Valuation Methodology

*Peers: Capital & Regional Plc, Intu Properties Plc, Piction Property Income Ltd and Land Securities Group Plc

Conclusion
The company is focusing on reducing leverage and accelerate the reweighting of the portfolio through the disposal of certain retail assets. The operational results across the business remain robust, reflecting the portfolio's increasing exposure towards growth subsectors and stronger economic locations. The Group has a structurally resilient portfolio that is well positioned for the long term. UK Property market is going through a challenging time as commercial and household property prices are plummeting. Most of the portfolio has continued to provide decent operational results. The company has made material growth in repositioning the portfolio to date and reducing the exposure to retail assets with a lower level of the debt burden. Political and economic uncertainty due to Brexit negotiations could have a negative effect on the financials and target market of the company, along with the additional risk of competition from other property investors and change in the property valuations.

Based on the factors and valuation as highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 74 (as on 27^th March 2020), with support from few catalysts needs to be evaluated at a later stage.
 
*All forecasted figures and information have been taken from Thomson Reuters.  

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