Aberforth Smaller Companies Trust Plc

Aberforth Smaller Companies Trust Plc (LON: ASL) is a Closed End Investments company based out of the United Kingdom with an objective to earn a total return more than the NSCI (Numis Smaller Companies Index) excluding Investment Companies. The group’s investment portfolio includes investment in multiple sectors such as leisure goods, food producers, support services, industrial transportation and mining, etc.

 
Financial Highlights – Financial Year 2019 (31^st December 2019, GBP, thousand)
 

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by positive capital returns for the period, the groups’ net return before finance expenses and tax stood at GBP 300,447 thousand versus negativenet return before finance expenses and tax of GBP 215,069 thousand in the financial year 2018. The group reported a return on ordinary activities before tax of GBP 299,510 thousand in the financial year 2019 versus a negative return on ordinary activities before tax of GBP 215,871 thousand in FY2018. The PAT (profit after tax) attributable to shareholders stood at GBP 299,510 thousand in the financial year 2019 versus a LAT (loss after tax) attributable to shareholders of GBP 215,871 thousand in the financial year 2018. The earnings per share stood at 332.22 pence in FY2019 versus a loss per share of 235.92 pence in the financial year 2018.

Share Price Performance
 

Daily Chart as of April7^th, 2020, after the market close (Source: Thomson Reuters)

Aberforth Smaller Companies Trust Plc shares were trading at GBX 889.00 at the time of writing after the market close on 7^th April 2020. Stock's 52 weeks High is GBX 1,543.41 and Low is GBX 608.25.

Conclusion
The group has shown an increase in financial performance for the financial year 2019. Both the top-line and the bottom-line performance has improved for the period.The group need to manage its operating expenses more effectively as it can result in a decline in the profitability in the near future. The group will face challenges in the future due to complex legal and commercial work as a result of the exit of the UK from the EU. With the outbreak of Covid-19, many countries imposed restrictions on travel and resulted in a sharp fall in the stock markets globally. The negative economic shock will keep downward pressure on the rate of interest, and central banks globally are cutting rates, including the bank of England for economic impact mitigation.The Covid-19 has resulted in increased volatility and reduced the liquidity, which has impacted the company’s share price.

Therefore, based on the above rationale, we have given a “Watch” recommendation at the closing price of GBX 889.00 (as on 7^th April 2020), while we look for any upcoming catalysts in the near term.

Majedie Investments Plc

Majedie Investments Plc (LON: MAJE) is a Closed End Investments company based out of the United Kingdom and operates an AIF (alternative investment fund) and investment trust company to maximise the returns for shareholders through increasing dividends over inflation rate for a long duration. The group invests in publicly quoted companies listed in the Emerging Markets, Asia Pacific, North America, Europe and the United Kingdom.

Financial Highlights – Financial Year 2019 (30^th September 2019, GBP, thousand)

(Source: Annual Report, Company Website)
 
For the financial year ending 30^th September 2019, due to negative capital returns, the negative net investment result income stood at GBP 21,342 thousand versus net investment result income of GBP 36 thousand in FY2018. Driven by an increase in the income from investments for the period, the groups’ total income stood at GBP 8,053 thousand in FY2019 versus GBP 7,883 thousand in the financial year 2018. The loss before finance expenses and tax stood at GBP 14,980 thousand in FY2019 versus return before finance expenses and tax of GBP 6,201 thousand in FY2018. The group reported an LBT (loss before tax) of GBP 16,503 thousand in the financial year 2019 versus a net return before tax of GBP 1,576 thousand in FY2018. The LAT (loss after tax) stood at GBP 16,525 thousand in the financial year 2019 versus a PAT (profit after tax) of GBP 1,559 thousand in the financial year 2018. The loss per share stood at 31.00 pence in FY2019 versus earnings per share of 3.00 pence in the financial year 2018.

Share Price Performance

Daily Chart as of April7^th, 2020, after the market close (Source: Thomson Reuters)

Majedie Investments Plc shares were trading at GBX 209.00 at the time of writing after the market close on 7^th April 2020. Stock's 52 weeks High is GBX 276.00 and Low is GBX 134.00.

Conclusion
The group has shown a decline in financial performance for the financial year 2019. Both the top-line and the bottom-line performance has declined, and profitability remained in the negative zone for the period. The group need to manage its operating expenses more effectively as it can result in a decline in the profitability in the near future. With the outbreak of Covid-19, many countries imposed restrictions on travel and resulted in a sharp fall in the stock markets globally. The negative economic shock will keep downward pressure on the rate of interest, and central banks globally are cutting rates, including the bank of England for economic impact mitigation.The Covid-19 has resulted in increased volatility and reduced the liquidity, which has resulted in a decline shares of the company. Moreover, the company’s stock is trading on the higher side, raising doubts at its upside potential at the current price level.

Therefore, based on the above rationale, we have given a “Watch” recommendation at the closing price of GBX 209.00 (as on 7^th April 2020), while we look for any upcoming catalysts in the near term.

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