Ashtead Group Plc

Ashtead Group Plc (AHT) is United Kingdom-headquartered commercial and vehicle equipment leasing company.  The company rents a variety of construction and industrial equipment for a myriad of applications to a wide range of customers, ranging from non-residential construction markets to climate control and disaster relief.

Financial Highlights – Q1 Financial Year 2020 (31^st July 2019, GBP, million)

(Source: Quarterly Report, Company Website)
 
In the first quarter of the financial year 2020, led by strong North American markets and supplemented by target bolt-on acquisitions, the group’s statutory revenue recorded a growth of 17 per cent on a YoY basis and stood at £1,278.2 million and underlying rental revenue of the group surged by 16 per cent to £1,164.5 million from £961.0 million recorded in the year-ago period. Underlying EBITDA increased by 14 per cent to £626.6 million in Q1 FY2020 versus £503.7 million in Q1 FY2019.The company’sstatutory operating profit surged by 11 per cent to £358.3 million in Q1 FY2020 versus £305.2 million in Q1 FY2019.The underlying PBT (profit before tax) surged by 9 per cent to £319 million in Q1 FY2020 versus £285.6 million in Q1 FY2019. The Underlying Earnings per share during the period expanded by 12 per cent to 51.4 pence versus 44.8 pence in Q1 FY2019.

Share Price Performance

Daily Chart as at November-1-19, before the market closed (Source: Thomson Reuters)

On 1^st November 2019, Ashtead Group Plc shares were trading at GBX 2,340.00 at the time of writing before the market close (at 12:48 PM GMT), down by 0.34 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 2,387.00/GBX 1,572.50.

Conclusion
The company continues to perform well in improving end markets. The company’s growth prospects look favourable. The business is performing well, and a decent balance sheet will add support to the plans. The company’s Board will look to the medium term with confidence.

Though the downturn can impact the demand for its product, strong market offering and fundamental shift in the US towards renting, indicates significant growth opportunities. The company expects decent growth from North American business which will help them to deliver organic growth. The company is also looking forward towards strategic acquisitions to expand its global reach.

Therefore, based on the above discussion, we have given “Hold” recommendation at the current price of GBX 2,340 (as on 1^st November 2019, before the market close).
 

Midatech Pharma PLC

Midatech Pharma Plc (MTPH) is a pharmaceutical company that develops and commercializes products in oncology and other therapeutic regions. The company’s products include oravig, zuplenz, soltamox and gelclair. Midatech’s products are used in the treatment of diabetes; rare cancers including brain, ovarian, liver and pancreatic cancer and neurological and ophthalmologic conditions.

Recent News
On 28^th October 2019,the company released the closing of its previously declared registered direct offering of 3 million of its ADSs (American Depositary Shares) at a US$1.00 per ADS of the purchase price.

On 24^th October 2019,the company announced that the United States FDA (Food and Drug Administration) has granted the group orphan drug designation for MTX110 for the treatment of patients with Malignant Glioma, comprising DIPG (Diffuse Intrinsic Pontine Glioma), a rare and fatal form of childhood brain cancer.

Financial Highlights (for the six-months period ended 30 June 2019, £’000)

(Source: Interim Reports, Company Website)
In the first half of the financial year 2019, due to low grant revenue for the period, the company’s total income declined to GBP 452 thousand as against GBP 549 thousand in H1 FY2018. The company reported an operating loss of GBP 5,244 thousand in H1 FY2019 versus an operating loss of GBP 6,270 thousand in H1 FY2018.

The company’s LBT (Loss before tax) stood at GBP 5,251 thousand for the first half of the financial year 2019versus an LBT (loss before tax) of GBP 6,509 thousand in the first half of the financial year 2018. The company’s LAT (loss after-tax) from continuing and discontinued operations stood at GBP 4,419 thousand for the first half of the financial year 2019 versus a LAT (loss after-tax) of GBP 11,413 thousand in the H1 of the financial year 2018.

The total basic and diluted loss per share (continuing and discontinued operations) in H1 FY2019 stood at 1 pence versus a basic and diluted loss per share of 18 pence in H1 FY2018.

Share Price Performance

Daily Chart as at November-1-19, before the market closed (Source: Thomson Reuters)

On 1^st November 2019, Midatech Pharma PLC shares were trading at GBX 4.00 at the time of writing before the market close (at 12:52 PM GMT), down by 1.23% against the previous day closing price. Stock's 52 weeks High and Low are GBX 15.76/GBX 2.46.

Valuation Methodology

*Peers: OptiBiotix Health PLC, E-Therapeutics PLC, ReNeuron Group PLC, and Diurnal Group PLC

Conclusion
The company’s profitability in the first half of the financial year 2019 remained in the negative zone. The company is now focusing on advancing its research and development pipeline through clinical testing.

The group will be initiating a pivot trial in the H2 FY2019 and also completed a phase study of MTD201 in FY18. In late 2018, the company also secured significant funding. The company has received orphan drug designation for MTX110 which is another vital milestone to emerge from the innovative MTX110 programme, based on the MidaSolve technology. The current market sentiment in relation to the company is fair with favourable fundamental indicators, positive estimates and valuation.

Therefore, based on the above rationale and future growth catalyst, we have given a "SPECULATIVE BUY" recommendation at the current price of GBX 4.00 (as on 1^st November 2019, before the market close), with lower double-digit upside potential, based on 9x NTM EV/Sales (approx.) on the FY19E sales (approx.).

*All forecasted figures and Peer information have been taken from Thomson Reuters.

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