Beazley PLC

Beazley plc (BEZ) is a London, the United Kingdom-based company. The company’s business is differentiated in five divisions: Specialty lines, Property, Marine, Reinsurance, and Political, accident & contingency. The company was started in 1986. The company cover its insurance business around 87 per cent and reinsurance approximately 13 per cent of its overall businesses.

Financial Highlights (H1 FY2019, US$ million)

(Source: Interim Reports, Company Website)

In H1 FY2019, gross premium surged by 12 per cent to $1,483.6 million as compared with the corresponding period of the last year, supported by rate increase averaging 5 per cent over the portfolio. Net premiums increased by 11 per cent to $1,225.50 million against the $1,105.3 million in H1 FY2018. The company attained a profit before tax of $166.4 million, an increase of 189 per cent from the previous year same period data. The combined ratio stood at 100 per cent against 95 per cent recorded in a year-ago period.

In the first half of the year, the scale of claims had seen limited scope for reserve releases, which were $3.4 million as compared to $48.1 million on 30^th June 2018. Net investment income stood at $170.3 million, an increase from the previous year same period data.

In H1 FY2019, basic earnings per share increased to 26.4 centsagainst the 9.1 cents in H1 FY18. Net assets per share stood at 295.4 cents, an increase of 14.1 cents as compared to 281.3 cents in H1 FY18. Net tangible assets per share were 272.4 cents, an increase from the corresponding period of the last year data.

The board has declared a first interim dividend per share of 4.1 pence, an increase of 0.2 pence against the 3.9 pence in H1 FY18, in line with the strategy of delivering in the range of 5 per cent to 10 per cent dividend growth.

Share Price Performance

Daily Chart as at 24th July 2019, before the market closed (Source: Thomson Reuters)

On 24th July 2019, at the time of writing (before the market close, GMT 11:08 AM), Beazley PLC shares were hovering at GBX 573 and increased by 1.506 per cent as compared with the previous day closing price. Stock's 52 weeks High is GBX 604.50 and 52-weeks Low is GBX 486.44. The company’s stock beta stood at 0.48, reflecting lower volatility against the benchmark index.

Valuation Methodology


Conclusion
On 23^rd July 2019, the company CEO has warned that the prices for marine insurance will increase after the seizure of British-flagged tanker in the Strait of Hormuz. The company is well-positioned to continue to grow in several markets such as healthcare, cyber, and environmental liability across the years. The company is seeing solid demand from the financial sector companies for a variety of complimentary insurance covers in Europe, Asia, and Latin America. In the financial year 2019, the company had seen the double-digit growth, due to the improving rating environment.

In the future, the company is planning to grow the United States business. The company transact in the United States and see considerable opportunity for the upcoming growth in all the key lines of business. Changing market dynamics, along with a continued programme of investment in digital capabilities augur well for the group's future growth. The group is highly exposed to exogenous factors which can severely affect its performance. The potential for a rise in frequency and severity of claims due to climate change can reduce the group's performance.

Based on the decent prospects and supported by valuation done using the above method, we have given a “BUY” recommendation at the closing price of GBX 564.50 (as on 23^rd July 2019) with a single digit-upside potential based on 2.40x NTM Price/Book Value (approx.) on FY19E book value per share (approx.).
 

Quadrise Fuels International Plc

Quadrise Fuels International Plc (QFI) is a UK based Oil & Gas Producer company providing innovative technological solutions. The company, through its MSAR® (Multiphase Superfine Atomised Residue), has invented an HFO (heavy fuel oil) for industrial applications, power and marine bunker.

Recent News
On 23rd July 2019, Tuesday, the Quadrise Fuels International announced its progress on business development. The company is actively seeking equity or equity-linked funding to finance its operations after October 2019.

Financial Highlights – H1 Financial Year 2019 (£, thousand)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, the company remained on the development phase and hence does not generated any revenues. The company’s operating loss stood at £1,667 thousand in H1 FY2019as against a loss of £1,982 thousand in H1 FY2018. The PBT & PAT (Profit before and after-tax) stood at £1,669 thousand in H1 FY2019 versus a loss of £1,970 thousand in H1 FY2018. The basic and diluted loss per share for H1 FY2019 was 0.19 pence versus a loss per share of 0.23 pence in H1 FY2018. As on 31^st December 2018, the company’s cash reserves stood at £1.0 million as against £3.4 million as on 31st December 2017. The company also raise gross proceeds of £1.51 million for the period. The company’s total assets for the H1 FY2019 period was £5.1 million versus £7.8 million in H1 FY2018.

Share Price Performance 

Daily Chart as at July-24-19, before the market close (Source: Thomson Reuters)

On July 24, 2019, at the time of writing (before the market close, at 3:24 PM GMT), Quadrise Fuels International Plcshares were trading at GBX 3.904, down by 10.25 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 8.00/GBX 1.87. Stock’s average traded volume for 5 days was 2,841,916.60; 30 days – 2,897,824.30 and 90 days – 2,064,396.59. The average traded volume for 5 days was down by 1.93 per cent as compared to 30 days average traded volume. The company’s stock beta was 1.33, reflecting higher volatility as compared to the benchmark index. The outstanding market capitalisation was around £40.26 million.

Conclusion
Since the company is in the development phase, it doesn’t generate any revenues, and all the operations are financed through its cash reserves and grants. The profitability margins have remained stagnant or declined. The company is looking for funding as it only has funds to finance its operations till October 2019.

The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors. Moreover, the company is trading near its 52-week low, raising doubts at its upside potential at current prices. 

Based on the above factors, we recommend investors to “Avoid” taking fresh positions at the closing price of GBX 4.35 (as on 23^rd July 2019).
 
*In valuation Methodology, all USD figures have been converted into GBP; USD: GBP - 0.802942.
*The buy recommendation is valid for the current price as covered in the report (as on July-24-19)
*All forecasted figures and peer information have been taken from Thomson Reuters.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.