John Wood Group PLC

John Wood Group PLC (WG) is an Aberdeen, Scotland-headquartered group which provides performance-driven project, engineering and technical services to its customers throughout the asset life cycle. The group's operations are differentiated in five operating segments: Assets Solutions Americas (‘AS Americas'), Asset Solutions Europe, Africa, Asia, Australia (‘Asset Solutions EAAA'), Environment and Infrastructure Solutions (‘E&IS'), Specialist Technical Solutions (‘STS') and Investment Services.

Trading Update (as on 26th June 2019)
In the first half of the Financial Year 2019, the company’s revenue was the line in with the first half of the year 2018, and the company had also increased its earnings and margin. The operating margin increased, due to the relative strength in energy-related activity in Asset Solutions EAAA segment and in-built environment activity within Environment & Infrastructure Solutions division. Adjusted EBITDA (excluding the impact of IFRS 16) in the H1 FY19 will increase by approximately 7 per cent, and operating profit (pre-exceptional items) will be increased by around 25 per cent from H1 FY18. At the end of June 2019, the company expects net debt, excluding the impact of IFRS 16, to be around $1.6 billion, due to the benefit of H1 earnings growth and the continued attention on the active management of working capital.

Financial Highlights – Financial Year 2018 (US$, million)

(Source: Annual Report, Company Website)
 
In the financial year ending 31^st December 2018, the company’s revenue including joint ventures surged by 12 per cent to $11,036 million against proforma revenue of $9,882 million reported in 2017, which was supported by favourable conditions in the full range of energy and industrial end markets. Adjusted EBITA rose by 5.4 per cent on a proforma basis, leading to an adjusted EBITA margin of 5.7 per cent, while operating profit before exceptional items was $357 million. Adjusted diluted EPS rose by 7.7 per cent to 57.4c and was ahead of 2018 consensus, while basic loss per share for the year was 1.3 cents per share, against a loss of 7.4 cents reported in the prior year. A final dividend of 23.7 cents, representing an increase of 2 per cent, was proposed by the group, leading to a dividend cover of 1.6x. In line with the guidance at December trading update and supported by a strong operational cash generation, net debt reduced to $1.5 billion, leading to a reduction in Net debt to adjusted EBITDA to 2.2x at the end of the year (FY 2017: 2.4x).

Share Price Performance

Daily Chart as at July-08-19, after the market closed (Source: Thomson Reuters)

On 08th July 2019, John Wood Group Plc shares closed at GBX 493.70, up by 1.29 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 801.20/GBX 379.74.

Valuation Methodology

Conclusion
The full year 2019 outlook remains unchanged, despite disposals finished in H1, which contributed EBITDA of around US$20 million in 2018. The company’s revenue increased in the geographical region by 5 per cent, together with the rise in cost synergies of approximately $60 million.

The company is in a good position for growth trends emerging across a broad range of industries which is expected to assist in a decent organic growth rate.

Based on the decent fundamental and valuation done using the above methodology, we have given a “BUY” recommendation at the closing price of GBX 493.70 (as on July 8, 2019) with single-digit upside potential, based on 12x NTM Peer Average Price/Earnings (approx.) on FY19E Earnings Per Share (approx.).
 

Motif Bio Plc

Motif Bio PLC (MTFB) is a London, United Kingdom-based clinical-stage biopharmaceutical company. The company is focused on the development of antibiotics; its lead product candidate is iclaprim, which has a Qualified Infectious Disease Product (QIDP) designation from the FDA. The company develops drugs which are designed for the treatment of infections caused by multi-drug resistant bacteria.

Recent News
Motif Bio Plc announced the selection of Andrew Powell, J.D. as a Director Non-executive. Mr Andrew holds the position of General Counsel in many biotechnology firms such as Imclone Systems, Intermune, Cornerstone Therapeutics, CollaGenex Pharmaceuticals and Medivation.

Financial Highlights – Financial Year 2018 ($, million)

(Source: Annual Report, Company Website)

The submission of a New Drug Application to the U.S. Food & Drug Administration for iclaprim marked a highly productive year for Motif Bio, though it has not been approved yet. The company completed fundraising in the United Kingdom, securing $3.6 million in gross proceeds, along with an equity financing of approximately $13.4 million in gross proceeds. The company reported a net loss of $14.0 million as against $44.8 million in FY 2017. This led to a basic loss per share of $0.05, while diluted loss per share was $0.07. Cash and cash equivalents of approximately $12.3 million stood at December 31, 2018.

Share Price Performance

Daily Chart as at July-08-19, after the market closed (Source: Thomson Reuters)

On 08th July 2019, Motif Bio Plc shares closed at GBX 2.20, down by 4.35 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 44.90/GBX 2.00.

Valuation Methodology


Conclusion
There remains an urgent need for new antibiotics that can overcome resistance and is a critical healthcare issue that is recognized around the globe. The company is in a great position to capitalise the opportunity presented by this pressing medical need as with the targeted Gram-positive spectrum of activity, iclaprim has the potential to help address the problem. While preparations for the European regulatory process are underway, securing approval for iclaprim in the U.S. remains highest priority for the company. The company remained careful in managing its costs and continues to aggressively manage its resources to improve profitability.

Though the company has successfully engaged with investors to generate significant cash resources to date, failure to generate additional funding may compromise the company’s ability to execute its business plans. Based on the risks faced by the company and the valuation done using the above method, we have given a “SPECULATIVE BUY” recommendation at the closing price of GBX 2.20 (as on 8th July 2019) based 0.56x NTM EV/Sales (approx.) on FY19E Sales (approx.).
 
*All forecasted figures and Peer information have been taken from Thomson Reuters. Currency exchange rate taken for 1 USD = 0.799659 GBP.

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.