Apax Global Alpha Limited (LON: APAX)

Business Overview
United Kingdom-based Apax Global Alpha Limited is a closed-ended investment company. The group's investment main objective is to offer investors with capital appreciation from its regular dividends and investment portfolio strategy. The company focuses on derived investments and private equity funds. The group invests in Rest of Europe, India, Switzerland, the United Kingdom, North America, and China.

Recent News
On 5^th March 2020, the company announced that 3,607,299 Ordinary Shares have been acquired in the secondary market to satisfy the performance fee payable to the Investment Manager as at 31 December 2019 (the "Performance Shares"). The Performance Shares were acquired at an average price of 167.61 pence per share.

Financial Highlights – Financial Year 2019

(Source: Preliminary Report, Company Website)

In the fiscal year 2019, the company’s total income increased to €227.16 million as compared to the €73.53 million in the fiscal year 2018. Profit before tax stood at €211.34 million, an increase from the previous year same period data. Profit after tax for the period rose to €210.93 million as compared to €64.94 million with the corresponding period of the last year. Basic and diluted earnings per share climbed to 42.95 cents in the fiscal year 2019 against the 13.22 cents in the fiscal year FY18.

2019 Final Dividend
The company declared an annual dividend of 4.68 pence per share. The dividend will be paid on 3rd April 2020 and total Dividend Payment stood at GBP 22,983,516.

Share Price Performance  
 
Daily Chart as on 10^thMarch 2020, before the market closed (Source: Thomson Reuters)

On March 10, 2020, at the time of writing (before the market close, at 8.20 AM GMT), APAX were trading at GBX 161.7212, up by 4.34 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 185.50/GBX 140. 

Conclusion
Apax Global Alpha Limited has performed well over the financial year 2019, delivering on its quantified objectives. There is still uncertainty from trade tensions between China and the US, and new tensions might possibly arise between Europe and the US. In addition, Brexit anxieties remain unresolved. So far in 2019, the capital markets seem to be discounting the associated risks and the current sentiment whether persists into future is uncertain. The corporate and public-to-private deals in the Private Equity portfoliowould continue to feature more prominently in sourcing deals. The Group is focusing on identifying attractive prospects that will allow the company to continue to deploy its excess liquidity.

Therefore, based on the fundamental analysis, we have given a “Watch” recommendation at the current price of GBX 161.72 (as on 10^th March 2020, before the market close at 8:20 AM GMT), while we look for any upcoming catalysts in the near term.

Petropavlovsk Plc (LON: POG)

Business Overview
Petropavlovsk Plc is a London-registered Russian gold mining company with operations in the Far East of Russia, and in terms of production, reserves and resources, it is one of the major gold mining companies in Russia.

Recent News
On 5^th March 2020, the company announced that it is set to be included in the FTSE 250 Index ("FTSE 250") from Monday 23 March 2020.

Q4 and FY2019 Sales and Production Statement (Ended on 31st December 2019)
In the financial year 2019, the company’s gold sales increased by 39 per cent to 514,000 oz as compared to 369,800 oz in the fiscal year 2018 due to the processing of refractory concentrates in the first year of operations at the POX Hub. The company’s own mined production of gold increased by 28 per cent to 471,600 oz of the total FY 2019 sales amount as compared to FY2018 and in line with the company's guidance of 450 - 500koz. The average realised gold price was US$1,395/oz in Q4 FY2019 against US$1,244/oz in Q4 FY2018 and US$1,346/oz for the fiscal year 2019 versus US$1,263/oz in fiscal year 2018. In Q4 FY2019, the company’s gold sales increased to 162,600 oz as compared to 85,400 oz in Q4 FY2018.

Share Price Performance  
 
Daily Chart as on 10^thMarch 2020, before the market closed (Source: Thomson Reuters)

On March 10, 2020, at the time of writing (before the market close, at 8:00 AM GMT), Petropavlovsk Plc were trading at GBX 19.199, up by 2.34 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 23.50/GBX 7.58. 

Conclusion
The company has witnessed a decent financial performance in the fiscal year 2019. The company’s POX Hub accounted for one third of gold sales in 2019 which showed its successful transition towards the growth of the company.  The POX plant has designed in the minimal time to reach its commissioning stage which demonstrates the quality of Petropavlovsk's engineering capabilities. The company is planning to increase its production in the expected range of 620koz to 720koz for the next year. The company has a high level of fixed costs at the POX plant which could affect the growth of the business. There are some principal risks and uncertainties which could impact the overall business of the company. Operational risks arise due to weather conditions, failure in delivery of equipment, etc. could affect the operations of the company. Financial risks such as lack of funding and liquidity could affect the operations of the Group. Fluctuations in gold price and foreign exchange rate could affect the profitability and revenue of the company. Health, safety and environment risks are associated with the company’s business and failure in these could hamper its operations and could cause government intervention which could damage its reputation. The Group requires various licences and permits in order to operate, any violation in these could affect the overall business of the Petropavlovsk.
Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of GBX 19.64 (as on 10^th March 2020 before the market close at 8:00 AM GMT), with support from few catalysts needs to be evaluated at a later stage.

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