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Much has been written about the effects of the virus on the world and on the stock market. Here is one analyst’s take on some of the likely impacts on the way we should look at companies. This article was originally produced as a blog, “10 Changes Post Virus”, which was published a few weeks ago.
Companies: AGY ARBB ARIX DNL GDR NSF PCA PIN PHNX PHP RE/ RECI STX SCE SIXH TRX SHED VTA
FY20 started well, with value share gains in GB, Ireland and Brazil. As expected, lockdown has affected out-of-home and on-the-go consumption in particular. Conversely, sales of at-home consumption packs have increased significantly, thus leading to an adverse mix effect. GB and Ireland have been the most affected markets for Britvic, as they have a greater exposure to the out-of-home channel. The company is maintaining its guidance of a likely monthly impact from the COVID-19 pandemic of £12–18m adjusted EBIT, though its scenarios seem very conservative.
Following the equity fund-raising via a new share placing on 22 April 2020, Science in Sport has announced a new debt financing facility. The equity placing raised gross proceeds of £4.5m, and the group has now secured a new £8m invoice financing facility from HSBC for an initial one-year term. This latest undrawn facility provides further headroom to the company’s liquidity position during the COVID-19-related uncertainty and gives it the financial flexibility to continue with its strategy of pursuing strong sales growth.
Companies: Science In Sport
Finsbury has announced a positive H1/20A, boosted by strong LFL revenue growth (+5.2% YoY) in UK Bakery, and the maintenance of group Adj EBITDA margins (at c8.5%) in the face of challenging market conditions. Finsbury's cash generative business profile (c11% FY20E FCF yield) is enabling the company to steadily deleverage, whilst also supporting a growing dividend (3.6% FY20E yield).
Companies: Finsbury Food Group
Much of the UK’s privatisation programme took place between the early 1980s and the mid-1990s: subsequent sales have been few. Undoubtedly, privatisation attracted many private investors to the market, many for the first time.
Companies: AVO AGY ARBB ARIX BUR CLIG DNL FLTA GDR NSF PCA PIN PXC PHP RE/ RECI RMDL STX SCE SIXH TRX SHED VTA
Whilst Finsbury is experiencing strong demand from the retail channel, the food service channel (c20% of FY19A revenues) has been significantly impacted by the government's decision to close food outlets in order to control the spread of COVID-19. Finsbury is only in the early stages of assessing the impact of the virus on their business, and as such, is unable to provide earnings guidance. We withdraw our forecasts and place our rating Under Review, until visibility improves.
Companies: AVO AGY ARBB ARIX BUR CMH CLIG DNL GDR HAYD PCA PIN PHP RE/ RECI RMDL STX SHED VTA
There has been much comment on the fact that equity markets in the US and Europe have been shrinking for some years now, certainly in terms of the number of quoted companies, if not in total market capitalisation (MCap). This paper has been written with the assistance of the Quoted Companies Alliance (QCA) and focuses on the evidence for such in the London market and, in particular, that for smaller and midcap companies. It assesses that evidence and considers explanations. Finally, we ask why it matters, and assuming that it does, what practical steps can be taken to reverse the trend. Successful public markets have been a key part of the United Kingdom’s economic success for generations, even centuries, and we should not allow them to wither on the vine.
Companies: AVO AGY ARBB ARIX ASAI DNL GDR HAYD NSF PCA PIN PXC PHP RE/ RECI RMDL STX SCE TRX TON SHED VTA
FY20 started well, with value share gains in GB, Ireland and Brazil. As expected, lockdown has affected out-of-home and on-the-go consumption in particular. Conversely, sales of at-home consumption packs have increased significantly, thus leading to an adverse mix effect. GB and Ireland have been the most affected markets for Britvic, as they have a greater exposure to the out-of-home channel. The company is maintaining its guidance of a likely monthly impact from the COVID-19 pandemic of £12–18m adjusted EBIT, although its scenarios seem very conservative.
Most major pharmaceutical companies have reported results for 2016 during the last few weeks, providing the opportunity to update our industry statistics. For an industry that requires a long investment cycle, decisions made many years ago have consequences on current financial performance. Being able to look at performance over 20 years highlights how strategic decisions have panned out.
Companies: ABZA AVO AFHP AGY APH ARBB AVCT BUR COG CLIG COS DNL EVG GDR GHE MCL MUR NSF ODX PPH YGEN PHP PURP RE/ RGD REDX SCLP SPH TRX TON VAL VRP OXB
This month’s feature article is the first publication of the 2017 global pharmaceutical industry statistics from which the global and US rankings of the top 15 drug companies are derived. Comparisons are made with historical data to show how different company strategies have evolved. In addition, an analysis of the evolution of biopharmaceuical drugs has been made, together with a key sub-set, namely drugs derived from antibody technology, which now represent 12% of the entire market. Two more drugs joined the $100bn club in 2017.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BNO BUR CMH CLIG COS DNL EVG GTLY GDR INL KOOV MCL MUR NSF WBI YGEN PHP RE/ REDX SCLP SCE SIXH TRX TON VAL OXB
Britvic (BVIC) has successfully managed two potential threats – the Soft Drinks Levy (SDIL) and the industry CO2 shortage – to confirm modest earnings growth prospects for FY18. The recent heatwave might otherwise have driven outperformance. But with redirected marketing driving double-digit stills growth, the position was held. Looking forward, as BVIC’s business capability programme completes and benefits start to flow, more meaningful earnings growth may narrow the discount to peers.
Premier Foods’ H119 results demonstrate the business has become more resilient under the stewardship of outgoing CEO, Gavin Darby. Revenue growth of 1.0% in Q2 despite the hot summer was encouraging, and the UK relaunch of the Mr Kipling brand has clearly gone well. The news that Ambrosia may be sold suggests yet another step in the business transformation, although the price will determine the level of dilution and any change to net debt/EBITDA.
Companies: Premier Foods
Hotel Chocolat provides double-digit compound earnings growth from disciplined roll-out alongside a highly accretive digital model. The capture of efficiencies from the well-invested vertically integrated supply chain will be a key profit driver.
Companies: Hotel Chocolat Group
Since their privatisation in 1989, the 10 water companies have faced a periodic review every five years; it is undertaken by Ofwat, and prescribes customer prices, along with the investment requirements. As part of the ongoing review, PR19, Ofwat will publish its Final Determination numbers on 11 December 2019; they will apply as from April 2020, although water companies do have the option to seek a reference to the CMA.
Companies: AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR KOOV MCL MUR NSF PCA PIN PHP RE/ RECI RMDL STX SCE SIXH TON SHED VTA W7L