4imprint Group PLC

4imprint Group Plc (LON: FOUR) is a media company engaged in the business of promoting products using direct marketing techniques in the region of Ireland, UK and North America.

Financial Highlights (for the year ended 28 December 2019, US$ Million)

(Source: Final Results, Company Website)

In 2019, the company produced a decent financial result. Group’s revenue surged by 17% to $860.8 million in FY19as compared with the previous year (2018: $738.42 million), and underlying operating profit rose by 19% to $53.9 million in 2019. Revenue in the UK region was less strong as the business faced tougher trading conditions. Although order intake was almost the same from the previous year, revenue decreased by 10% in the Group’s reporting currency and by 6% in local currency. Basic earnings per share (EPS) stood at 152.42 cents in FY19. The Board has proposed a final dividend per share of 59 cents which reflects a total paid and proposed regular dividend relating to 2019 of 84 cents. On 28^th December 2019, the net cash was $41.14 million. During 2019, the company has acquired 297,000 new customers.

Share Price Performance
 
Daily Chart as at March-03-20, before the market closed (Source: Thomson Reuters)

4imprint Group PLC shares were trading at GBX 3,231 before the market close (at 12:24 PM GMT) on 3rd March 2020 and were up by 18.79% versus the previous day closing price. Stock 52 weeks High and Low are GBX 3,540 /GBX 1,980.  The group’s stock is reflecting the higher volatility as against the benchmark index, based on the company’s beta of 1.41. At the current trading level, its stock was trading below its long-term crucial support level of 20-day and 50-day Simple moving average price, and prices could fall further from the current trading level.

4imprint Group V/S Industry V/S Sector – 3 Months
 
(Source: Thomson Reuters)

In the last three months, 4imprint Group PLC share price showed a negative performance of 12.54 per cent. This also reflects that the company is underperforming as compared with the industry and sector performance in last three months period.

Valuation Methodology


Key Risks
The uncertainties and principal risks which the business faces are: markets and competition; business facility disruption; disturbance in established marketing techniques; failure or interruption of IT systems and infrastructure; cyber threats; macroeconomic conditions; currency exchange; disruption to the product supply chain or delivery service; reliance on key personnel; and failure to adapt to new technological innovations.

Conclusion
In the first two months of 2020, the company’s trading results have been in line with the Board’s anticipations. The company will continue to invest in the business to underpin further organic revenue growth towards and beyond the target of $1 billion by 2022.

The group is closely monitoring the situation with regards to Coronavirus (COVID-19).Impact on the business has so far been minimal, reflecting the timing of the inventory cycle of the domestic suppliers.Being a media company, the FOUR needs to invest heavily in innovation and system maintenance and, any failure to do so will impact the brand royalty and may affect the company’s financial performance.The company also operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors.

Presently, the company is trading near its 52-week High, raising doubts at its upside potential at the current price level.

Based on the above rationale and valuation done using the above methodology, we have given a "Watch" recommendation at the current price of GBX 3,250 (as on 3^rd March 2020, before the market close at 12:25 PM GMT), based on the 21.39x NTM Price/Earnings (approx.) on the FY20E earnings per share (approx.), while we look for any upcoming catalysts.

Huntsworth PLC

Huntsworth PLC (LON: HNT) is a London-headquartered international communications and healthcare company which seeks to generate value through a network of specialist agencies.

Recent News
On 3^rd March 2020, the boards of Huntsworth Plc and CD&R Artemis UK Bidco Limited released that they have reached to a contractof a proposed cash offer by Bidco for the wholly issued and to be issued share capital of HNT.

Financial Highlights (for the year ended 31 December 2019, £ million)

(Source: Preliminary Results, Company Website)

Led by a £28.3 million contribution from acquisitions and positive currency movements of £4.9 million, the group revenue increased by 18% to £264.9 million in FY19as compared with the previous year (2018: £225 million). On a like-for-like basis, revenues rose by 4.2%, with the Constellation Communications growing by 3.3% and Healthcare divisions growing 4.6% in aggregate. The headline operating profit for the financial year 2019 surged by 35% to £44.8 million (2018: £33.2 million), representing a 16.9% of margin (2018: 14.8%). The headline diluted earnings per share stood at 8.1 pence, an increase of 14% from the previous year (2018: 7.1 pence). The company has delivered robust operating cashflow at 119% of operating profit. On 31^st December 2019, the net debt was £70.4 million, representing a leverage ratio of 1.5x EBITDA. The Board has proposed final dividend per share of 1.85 pence (2018: 1.6 pence), reflecting a total dividend per share for the year of 2.6 pence. The group has made an investment of £4 million in 2019 to improve and expand the property portfolio and talent to manage a rapidly growing business.

Share Price Performance

Daily Chart as at March-03-20, before the market closed (Source: Thomson Reuters)

Huntsworth PLC shares were trading at GBX 110 before the market close (at 1:40 PM GMT) on 3rd March 2020 and were up by 52.778% versus the previous day closing price. Stock 52 weeks High and Low are GBX 110.50 /GBX 58.24.  The group’s stock is reflecting the inverse volatility as against the benchmark index, based on the company’s beta of negative 0.08.

Huntsworth PLC V/S Industry V/S Sector – 1 Year
  
(Source: Thomson Reuters)

In the last one year, Huntsworth PLC share price showed a negative performance of 28.71 per cent. This also reflects that the company is underperforming as compared with the industry and sector performance in a one-year period.

Key Risks
The principal risks and uncertainties facing by the Group, including consideration of any emerging risks are: economic downturn; political instability; currency risk; overreliance on Health sector; service offering fails to evolve to meet changing market needs; and acquisitions or investments fail to deliver expected growth.

Conclusion
The acquisitions of Creativ-Ceutical in Medical and Kyne in Marketing both contributed to 2019 performance.In addition, the company enhanced the capability to attract larger and higher-margin client engagements. The impact of the coronavirus outbreak stays uncertain. The group is exposed to a downturn in the wider economy as it can face a reduction in business, downward pressure on pricing and fewer new client mandates. The pressure on the economy has been further exacerbated by uncertainties in the political environment, which affects business confidence. The company is also under the threat of losing its key clients which will have a direct impact on the operational and financial performance. Presently, the company is trading near the 52-week High, raising doubts at its upside potential at the current price level.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the current price of GBX 110 (as on 3^rd March 2020, before the market close), while we look for any upcoming catalysts in the near term.
 
 
*All forecasted figures and peers have been taken from Thomson Reuters.

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