Standard Life Aberdeen Plc

Standard Life Aberdeen Plc (LON: SLA) is a financial services company headquartered in Scotland and has operations in 50 locations globally. The company administer and manage assets across Australia, the Middle East, Asia, the Americas and Europe.

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

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by positive investment returns and an increase in profit on disposal of interests in associates, the group’s total income (continuing operations) increased to GBP 3,993 million as against GBP 2,131 million in FY2018. The PBT (profit before tax) from continuing operations stood at GBP 243 million in the financial year 2019 versus LBT (loss before tax) from continuing operations of GBP 787 million in FY2018. The PAT (profit after tax) from continuing operations stood at GBP 215 million in the financial year 2019 versus LAT (loss after-tax) from continuing operations of GBP 830 million in FY2018. The reported PAT (profit after tax) stood at GBP 271 million in the financial year 2019 versus PAT (profit after tax) of GBP 868 million in FY2018. The basic earnings per share (continuing operations) stood at 8.9 pence in FY2019 versus a loss per share (continuing operations) stood at 29.3 pence in FY2018.

Share Price Performance

Daily Chart as of March 23^rd, 2020, before the market close (Source: Thomson Reuters)

Standard Life Aberdeen Plc shares were trading at GBX 182.55 at the time of writing before the market close (at 9:32 AM GMT) on 23^rd March 2020 and down by 3.62% versus the previous day closing price. Stock's 52 weeks High is GBX 338.25 and Low is GBX 173.90.

Valuation Methodology
 
Conclusion
The company has shown an increase in financial performance on a continuing basis for the financial year 2019. On a continuing operations basis, the top-line and the bottom-line performance has improved for the current period, with healthy margins. The company remained focused on capital generation potential and operational efficiency with improving net fund flow. The group see robust opportunity in multiple areas such as retirement advice, and in the year 2019 announced digital retirement advice proposition with further development in the year 2020. Going forward, the group is expected to sustain its strong market position.

Based on decent financials and the valuation done using the above method, we have given a “BUY” recommendation at the current price of GBX 177.15 (as on 23^rd March 2020, before the market close at 10:05 AM GMT) with lower double-digit upside potential based on 0.68x NTM Price/Book Value (approx.) on FY20E book value per share (approx.).

Empiric Student Property Plc

Empiric Student Property Plc (LON: ESP) is a United Kingdom-based real estate investment trust company. The company acquires, develops and manages student accommodation properties.

Board Changes
On 18th March 2020, Empiric Student Property announced that is Chief Executive Officer, Tim Attlee has decided to step down from his position till June 2020.

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

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by an increased bed numbers and higher occupancy rates with rental growth, the group’s revenue increased by 11 per cent to GBP 70.9 million as against GBP 64.2 million in FY2018. The gross margin went up to 67 per cent in FY2019 from 61.8 per cent in FY2018. The PBT (profit before tax) stood at GBP 54.8 million in the financial year 2019 versus PBT of GBP 40.3 million in FY2018, reflecting an increase of 36 per cent for the period. The basic earnings per share increased to 9.08 pence in the financial year 2019 versus basic earnings per share of 6.68 pence in FY2018, reflecting an increase of 36 per cent. The adjusted earnings per share increased by 38 per cent to 4.43 pence in the financial year 2019 versus adjusted earnings per share of 3.20 pence in FY2018. The group declared a dividend of 5 pence in the financial year 2019.

Share Price Performance

Daily Chart as of March 23^rd, 2020, before the market close (Source: Thomson Reuters)

Empiric Student Property Plc shares were trading at GBX 60.40 at the time of writing before the market close (at 9:47 AM GMT) on 23^rd March 2020 and down by 6.93% versus the previous day closing price. Stock's 52 weeks High is GBX 104.00 and Low is GBX 50.30.

Valuation Methodology


Conclusion
The company has shown an increase in financial performance in the financial year 2019. Both the top-line and the bottom-line performance have increased for the period. The group made progress in its in-sourcing programme and revenue management remained on track for 2021 delivery. The company benefited from its Direct led model with rental income growth of around 3 per cent for the academic year 2018/19. With effective cost management and operating efficiencies, the group witnessed a reduction in average cost per bed. The company is closely monitoring the Impact of COVID-19 outbreak and is following advice from Public Health Scotland, Public Health England and the World Health Organisation.

Based on the above rationale and the valuation done using the above method, we have given a “Speculative Buy” recommendation at the current price of GBX 59.30 (as on 23^rd March 2020, before the market close at 9:20 AM GMT) with single-digit upside potential based on 13.55x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).
 
 
*All forecasted figures and Peer information have been taken from Thomson Reuters.

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