Blue Prism Group PLC

Blue Prism Group PLC (LON: PRSM) is an FTSE AIM-listed software company, which is dealing in RPA (Robotic Process Automation). The company caters a wide range of customers around the globe to intelligently automate their business processes, in order to cut costs by automating repetitive tasks and freeing up hours of work. The group’s operations are differentiated in three geographical segments: EMEA Operations, The Americas Operations and APAC Operations.
On 18^th June 2020, the group will announce its half-yearly results for FY2020.

Recent News
On 12^th March 2020,the Blue Prism embarked into South Africa by opening a local office in Cape Town.

On 4^th March 2020, the group had collaborated with Red Hat to enhance RPA Adoption and build comprehensive automation strategy.

COVID-19 Update (31^st March 2020)
In response to the disruption caused by Coronavirus, the company is operating the majority of the operations remotely and conducting flagship events virtually. The group reported a cash balance of GBP 42 million as at 27^th March 2020; however, they are unable to anticipate the impact of ongoing COVID-19 crisis over the Group’s growth plans. Nevertheless, the group is confident about delivering good growth in FY20. Despite the short-term uncertainties, the group expect positive prospects in the long run with their sales pipeline, historical retention rates and its licence based recurring revenue model.

Share Price Performance
 
Daily Chart as of April 1^st, 2020, before the market close (Source: Thomson Reuters)

Blue Prism’ shares were trading at GBX 1,033 on 1^st April 2020 at the time of writing before the market close (at 11.03 AM GMT), down by 8.18% versus the previous day closing price. Stock's 52 weeks High is GBX 2,030.00 and Low is GBX 774.25.

Valuation Methodology

*Peers: Craneware PLC, Biancco Technology Group PLC, iomart Group PLC and Sage Group PLC
 
Risk Analysis
 
The group is confronting some principal risks and uncertainties, which could exacerbate the overall business of the company. The risk includes - excessive dependency on channel partners, software reliability and performance, could affect the growth of the company. Market and technological changes could further hamper the business of the company.
 
Conclusion
During the financial year 2019, the company had delivered decent financial performance. The Group gained 685 net new customers while maintaining a customer retention rate of 96% as against 97% in FY2018. However, their adjusted EBITDA losses widened to £71.9 million in FY2019 as against EBITDA loss of £21.6 million in FY2018, though they continued to invest in global expansion and future growth.

Furthermore, the United Kingdom is facing the most significant slowdown in productivity presently. As per the National Institute Economic Review, the company will attribute to the slowdown, with a combination of these distinguishing factors, namely Brexit and the “waning impact of communications and information technology”. Furthermore, the ongoing impact of Covid-19 pandemic is imposing unique challenges.

Based on the risk associated with above factors and macro headwinds, we recommend investors to keep a “Watch” at the closing price of GBX 1,125 (as on 31st March 2020), with support from few catalysts needs to be evaluated at a later stage.

SQN Asset Finance Income Fund Ltd

SQN Asset Finance Income Fund Ltd (LON: SQN) operating as a closed-ended investment company. The company is catering diversified equipment leasing and asset financing services and focuses in the UK, Northern Europe and the US.

Recent News
On 18^th March 2020, the group has announced the suspension of further dividend on both the Ordinary and C share classes due to the impact of Covid-19. However, they affirmed that the dividend declared on 21 February 2020 would be paid.
Net Asset and Dividend Update (as on 24^th March 2020)
The group has delayed the update on the NAV per Ordinary Share; however, they have covered the valuation on Anaerobic Digestion ("AD") assets. The unaudited estimated NAV per C Share was reported at 97.90 pence, as at 29^th February 2020. The cumulative NAV total return performance as at 29^th February 2020 stood as - month to months return: 0.61%, 1-year return: 7.52%, 3-year return: 14.54% and return since inception: 14.41%. The C share NAV was quoted without deduction of dividend (0.6042 pence per share), declared on 21 February 2020.

Share Price Performance
  
Daily Chart as of April 1^st, 2020, before the market close (Source: Thomson Reuters)

SQN’ shares were trading at GBX 33.0 on 1^st April 2020 at the time of writing before the market close (at 11.25 AM GMT), down by 9.59% versus the previous day closing price. Stock's 52 weeks High is GBX 96.12 and Low is GBX 16.00.
 
Conclusion
As at 30^th June 2019, the group Net Assets valued at £474,492,470 as against £484,088,140 as at 30^th June 2018. SQN invests in diverse sectors to mitigate the risk; however, they need to adhere with various restrictions policy. Due to uncertainties regarding the Brexit and dampened consumer confidence, their returns are affected. Moreover, the ongoing crisis pertinent to Covid-19 pandemic has been affecting the businesses across sectors and geographies. Consequently, the group has also suspended their further dividends in order to preserve their liquidity.

However, the lower interest rates might benefit their loan portfolio. On the flip side, in the past five years, ample of lenders have entered the market and offering equipment leasing and asset finance, which has made their business environment quite competitive.

Furthermore, in the recent past, the group has also faced challenges in its forward foreign exchange hedging due to substantially weakened Sterling.
Based on the above factors and macro headwinds, we recommend investors to keep a “Watch” at the closing price of GBX 36.50 (as on 31st March 2020), with support from few catalysts needs to be evaluated at a later stage.
 
 
*All forecasted figures and Peers information has been taken from Thomson Reuters.

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