Abrdn Group PLC

Abrdn Group PLC (LON: ABDN) is an FTSE 100 listed global asset management entity that provides a comprehensive range of fixed-income, emerging market equities, real estate, and multi-asset solutions. Standard Life Aberdeen PLC became Abrdn PLC on 2 July 2021.

It expects to release the full-year results on 1 March 2022.

Rationale for Valuation – BUY at GBX 239.00

• Strong Fundamentals: During H1 FY21, Abrdn reported higher revenue and profits and strengthened capital position.
• Solid Platform for Growth: Post rebranding in July 2021, investment platform integration, and the acquisition of a majority interest in Tritax, the Company has shown its focus on meeting strategic priorities and client needs.
• Capital Distribution: It also intends to rebase dividend per share of 14.6 pence until adjusted capital generation reaches 1.5x cover.
• Technical Indicator: From a technical standpoint, the 14-day RSI (~46.12) is close to the oversold zone, while the price is hovering around the lower Bollinger Band.
• Undervalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, Price/Cash Flow, and Price/Book) are quite lower than the median of the Financials industry.

Key Risks

• Inflation Concern: British Consumer Price inflation surged to 5.4% in December 2021, putting pressure on the Bank of England to raise interest rates again.
• Macroeconomic Risk: The early tapering of assets by the US Federal Reserve can strengthen US Dollar, can cause equity market volatility and other financial risks.

Interim Results (for the half year ended 30 June 2021, as on 10 August 2021)

 (Source: Company Website)

• Financial Growth: The Company reported improved revenue and profits in H1 FY21. It reported a 7% increase in fee-based revenue in H1 FY21 vs H1 FY20, while the adjusted operating profit of the Group increased by 52% year-on-year.
• Dividend: The Company recommended an interim dividend of 7.3 pence, which was in line with its dividend policy.
• AuMA Growth: The Assets Under Management and Administration (AuMA) stood at £532 billion at the end of H1 FY21 (FY20: £535 billion).

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: Price/Book Approach (FY21) (Illustrative)

 Conclusion 

ABDN delivered a good start to FY21 and made good progress against its three-year growth plan. The cost-to-income ratio of 79% in H1 FY21, reflected improved operational leverage than prior year. Moreover, the Company also progressed well in simplifying the business by exiting the Indonesian market and disposing of Parmenion and Nordics real estate business. The stock made a 52-week High and Low of GBX 333.40 and GBX 226.10, respectively.

Based on the increased revenue, strengthened capital position, good progress in its growth vectors, business simplification, and favourable valuation conducted above, we have given a “BUY” stance on Abrdn Group PLC at the current price of GBX 239.00 (as on 21 January 2022, at 8:45 AM GMT), with lower double-digit upside potential based on 0.91x Price/NTM Book (approx.) on FY21E Book Value per share (approx.).

Moneysupermarket.com Group PLC

Moneysupermarket.com Group PLC (LON: MONY) is an FTSE 250 listed Company, which provides price comparison services through three brands - TravelSupermarket, MoneySuperMarket, and MoneySavingExpert.

Investment Highlights – BUY at GBX 200.50

• Confidence in Outlook: The positive future is underpinned by continued investment in technology platforms, good cash conversion, and constant recovery in the travel market.
• Resilient Financials: MONY sustained strong gross margin performance in Q3 FY21 and projects FY21 EBITDA to meet market expectations.
• Synergy: The expected synergy with the combination of TravelSupermarket and Icelolly.com shall offset the expected EBITDA loss of Icelolly.com due to the travel restrictions.
• Technical Indicator: From a technical standpoint, the 14-day RSI (~36.98) is close to the oversold zone, while the price is hovering around the lower Bollinger Band.
• Undervalued Multiples: On a forward 12-month basis – EV/Sales, EV/EBITDA, Price/Earnings, and Price/Cash Flow are undervalued against the median of the Technology industry.

Key Risks

• Macroeconomic Risk: The resurgence in Covid-19 cases across the globe can dampen the economic recovery and keep the travel market battered.
• Subdued Energy Market: The energy market dynamics remained challenging, which can impact full-year revenue.

Q3 FY21 Trading Update (for the quarter ended 30 September 2021, as on 19 October 2021)

 (Source: Company Website)

• Revenue Impact: The revenue was impacted by unprecedented energy market conditions.
• Operational Progress: The demand for travel insurance returned to nearly half of pre-Covid-19 levels, for the third quarter. It also intensified customer acquisitions despite the softened car and home insurance market.
• Guidance: FY21 EBITDA is likely to be in line with current market expectations, with strong margin performance.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY21) (Illustrative)

Conclusion

The modernization of data infrastructure and capabilities shall simplify internal processes and expand offerings. On 19 October 2021, MONY acquired a 100% stake in Maple Syrup Media Ltd (trading as Quidco) for initial consideration is £87 million in cash with an additional deferred payment of £14 million. The transaction will bolster MONY's position in the cashback business and shall be earnings accretive in FY22. The stock made a 52-week high and low of GBX 311.00 and GBX 196.70, respectively.

Based on the strong strategic execution, resilient business performance, unchanged market factors, with support from the valuation as done using the above method, we have given a “BUY” recommendation on Moneysupermarket.com Group PLC at the current price of GBX 200.50 (as on 21 January 2022, at 8:05 AM GMT), with lower double-digit upside potential based on 20.27x Price/NTM Earnings (approx.) on FY21E Earnings per share (approx.).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios. 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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