A Catch Up With Four Stocks On LSE: FLO, CARD, MAB1, and DNL

  • Sep 24, 2019 BST
  • Team Kalkine
A Catch Up With Four Stocks On LSE: FLO, CARD, MAB1, and DNL

We are going to discuss the latest result announcements of four diverse sector stocks listed on the London Stock Exchange (LSE). The stocks include FLO from Industrial Engineering Sector, CARD from General Retailers sector, MAB1 from the Financial Services sector and DNL from Pharmaceuticals & Biotechnology sector.

Flowtech Fluidpower PLC

United Kingdom-based Flowtech Fluidpower PLC (FLO) is a distributor of technical fluid power products and services. The operations of the group are differentiated in two core division, namely components and services. The company’s business is focused on its distribution offering in more than three categories: Pneumatics, Hydraulics and Industrial.

Financial Highlights (Six months ended 30 June 2019, £ million)

(Source: Interim Report, Company Website)

In the first half of 2019, the company’s reported revenue increased by 5.7 per cent to £59.6 million as compared with the corresponding period of the last year. The revenue rose by 6.3 per cent in the components division and revenue climbed by 1.9 per cent in the services division. In the current period, the gross margin increased to 35.6 per cent against the 34.3 per cent in H1 FY18. Operating profit reduced by 2.9 per cent to £4.3 million as compared to £4.5 million in H1 FY18. In H1 FY19, the underlying operating profit surged by 7 per cent to £6.1 million against the same period in 2018. Profit before tax decreased by 8.5 per cent to £3.8 million in H1 FY19 against the £4.1 million in H1 FY18, while underlying profit before tax climbed by 3.3 per cent to £5.6 million in the first half of 2019. Earnings per share stood at 5 pence in H1 FY19, a decrease of 10.7 per cent as compared to 5.78 pence in H1 FY18.  Given the positive growth being made with cash generation across the company, the group’s board confirmed an increase of 5 per cent in the first half of 2019 dividend per share to 2.13 pence (H1 FY18: 2.03 pence). The net bank debt, excluding IFRS 16 related debt, surged to £18.8 million in H1 FY19 against the £18 million in H1 FY18.

Outlook

In the financial year 2019, the company anticipate adjusted profit before tax to be in the range of £10.8- £11.2 million. However, after a sustained current period of robust organic growth over the company, Brexit induced tension in the UK and Ireland is affecting the markets and throughout the summer months the company have suffered a period of decreased sales activity.  The group’s board also thinks that existing conditions are expected to continue well into 2020 before reverting to long-term progress trends. As a result, the company anticipate revenue progress to be subdued relative to earlier anticipations. In 2020, the company hope to substantially mitigate the impact of diminished revenue progress on adjusted profit before tax. The company expect cash conversion to ramp up in as working capital declines. This will compensate for any cash costs related to the cost decrease initiatives.

Share Price Performance

 Daily Chart as at September-24-19, before the market close (Source: Thomson Reuters)

On September 24, 2019, at the time of writing (before the market close, at 1:44 PM GMT), Flowtech Fluidpower PLC shares were trading at GBX 115, down by 8 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 152/GBX 95.81. The company’s stock beta was negative 0.16, reflecting negative volatility as compared to the benchmark index. The outstanding market capitalisation was around £76.74 million, with a dividend yield of 4.86 per cent.

Card Factory PLC

Card Factory Plc (CARD) is a UK based greeting cards and gifting items retailer. The company owns and operate 975 stores across the United Kingdom. The company also had an online presence and offer customised cards and gifts. The company is having an employee base of 7,000 people in the UK and hires additional 6,000 people based on business season every year.

Financial Highlights (six months ended 31st July 2019, £ million)

(Source: Interim Report, Company Website)

In H1 FY20, the company’s revenue surged by 5.5 per cent to £195.6 million as compared with the corresponding period of the last year, due to the overall Card Factory like-for-like (LfL) sales increase of 1.5 per cent; an increase of 1.2 per cent in store LfL sales, outperforming reported negative high street footfall.Cardfactory.co.uk sales increased by 25 per cent with robust performance against internal and external KPIs. A total of 26 new stores opened, driving further revenue progress. Underlying profit before tax (PBT) declined by 7.9 per cent to £22 million against the £23.9 million in H1 FY19, while adjusted underlying PBT decreased by 7 per cent to £21.1 million in H1 FY20. The company’s reported PBT stood at £24.3 million, a decrease of 14.4 per cent against the same period in 2019. In the first half of 2020, the adjusted underlying EBITDA reduced by 4 per cent to £28.7 million as compared with the corresponding period of the previous year. Underlying basic EPS decreased by 7.1 per cent to 5.2 pence against the 5.6 pence in H1 FY19, while adjusted underlying basic EPS stood at 5 pence in H1 FY20. The company’s reported basic EPS was 5.7 pence in H1 FY20, a decrease of 14.9 pence from the previous year same period data. The company had leverage (pre-IFRS 16 Leases) of 1.93x in the first half of 2020.

Outlook

The company has the right products and ranges to provide decent performance in the critical upcoming key Q4 FY20 trading period, which will have a substantial effect on the outturn for the financial year 2019. The company is aware of the ongoing political and economic uncertainty and weak customer confidence but have concentrated on the important strategic priorities to attain progress and operate effectively. In the financial year 2020, the group’s board anticipates adjusted underlying EBITDA to be in line with expectations. The company is also confident as ever of the robust progress expectations for the main business and the new channels of progress in the United Kingdom as well as the other global markets with additional retail business partners.

Share Price Performance

 Daily Chart as at September-24-19, before the market close (Source: Thomson Reuters)

On September 24, 2019, at the time of writing (before the market close, at 2:15 PM GMT), Card Factory PLC shares were trading at GBX 165, up by 1.852 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 210/GBX 150. The company’s stock beta was 0.92, reflecting lower volatility as compared to the benchmark index. The outstanding market capitalisation was around £555.45 million, with a dividend yield of 5.74 per cent.

Mortgage Advice Bureau (Holdings) PLC

United Kingdom-based Mortgage Advice Bureau (Holdings) PLC (MAB1) is a non-trading holding company. The group, along with its subsidiaries, is involved in the provision of financial services. The company proposes insurance cover for income protection, critical illness cover (CIC), mover's protection, mortgage payment protection, buildings and contents insurance, and life assurance. The group's software, MIDAS Pro, allows the group to provide bespoke solutions in all its regions of specialisation.

Financial Highlights (six months ended 30 June 2019, £ million)

(Source: Interim Reports, Company Filling, LSE)

In the first half of 2019, the company’s reported revenue increased by 5 per cent to £60.9 million against the £57.9 million in H1 FY18, while on an underlying basis, revenue surged by 9 per cent in H1 FY19. Gross margin rose to 23.3 per cent in H1 FY19 as compared with the corresponding period of the last year. Overheads ratio (before acquisition costs) increased to 11.2 per cent versus 10.9 per cent in H1 FY18. In H1 FY19, the profit before tax and acquisition costs was up by 6 per cent to £7.4 million against the same period in 2018, while statutory profit before tax increased by 3 per cent to £7.2 million. Profit before tax margin stood at 11.8 per cent, a decrease from the previous year same period data. Adjusted EPS surged by 5 per cent to 12.3 pence in H1 FY19 against the 11.7 pence in H1 FY18, while basic EPS increased by 1 per cent to 11.9 pence in H1 FY19. In the first half of 2019, continued high operating profit to adjusted cash conversion of 99 per cent versus 108 per cent in H1 FY18. The interim dividend per share increased by 5 per cent to 11.1 pence against the 10.6 pence in H1 FY18.

During the current period, the average number of Advisers increased by 13 per cent to 1,242 as compared with the same period of the last year. On 30th June 2019, advisers’ numbers were up by 7 per cent to 1,293. Underlying revenue per adviser decreased by 4 per cent, driven by the lower banked productivity in the first quarter of 2019. Gross mortgage lending arranged, including product transfers, rose by 6 per cent to £6.9 billion in H1 FY19. In H1 FY19, gross mortgage lending arranged with new lenders surged by 7 per cent to £6.3 billion against the £5.9 billion in H1 FY18.

Outlook

The adviser numbers have been consistently increasing, the company including the advisers at first mortgage was having a total of 1,433 advisers as on 20th September 2019, with the. The company has decent visibility that endorses the expected progress in adviser numbers from new ARs (Appointed Representative firms). The majority of the current ARs are having robust progress plans for 2019 and 2020.  In 2020, the company hopes that the increase in revenue per adviser will return to normal levels.  The company then expects seeing additional productivity progress beginning to come through in 2021 and beyond, driven by the lead generation and technology initiatives.

Share Price Performance

 Daily Chart as at September-24-19, before the market close (Source: Thomson Reuters)

On September 24, 2019, at the time of writing (before the market close, at 3:15 PM GMT), Mortgage Advice Bureau (Holdings) PLC shares were trading at GBX 572, up by 0.704 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 650/GBX 470. The company’s stock beta was 0.19, reflecting lower volatility as compared to the benchmark index. The outstanding market capitalisation was around £294.29 million, with a dividend yield of 4.10 per cent.

Diurnal Group PLC

Diurnal Group PLC (DNL) is a United Kingdom-based clinical-phase pharmaceutical company. The group is involved in developing hormone therapeutics to aid treatment for various endocrine conditions. The group's products comprise Chronocort, Infacort, Native Oral Testosterone, and Tri4Combi. The group's several products are under clinical trials, with Chronocort, Infacort, and Native Oral Testosterone.

Financial Highlights (for the year ended 30 June 2019, £’000)

(Source: Final Results, Company Fillings, LSE)

During the financial year 2019, the company’s revenue stood at £1 million, an increase from the previous year. Operating loss reduced to £14.5 million against the prior year, due to the implementation of cost-saving measures, increase in revenues, and completion of the Chronocort European Phase 3 study. Basic and diluted loss per share stood at 19.7 pence in FY19, a decrease from the 26.8 pence in FY18. On 30th June 2019, Cash and cash equivalents were £9.1 million versus £17.3 million in FY18. Net cash used in operating activities stood at £13.7 million in the financial year 2019, an increase from the previous year and in line with the group’s anticipations.

Outlook

Following the cost-reducing measures and the net proceeds from the placing and open proposal accomplished in June 2019, Diurnal hopes its cash resources to last until at least Q2 FY20 based upon existing planned expenditure which is focused on submission of marketing authorisation applications for Alkindi® in the US and Chronocort® in Europe, and sustained development of the European commercial organisation and roll-out of Alkindi® together with ongoing licensing discussions. Diurnal considers that the planned submission of the marketing sanction applications are crucial steps in the execution of the company's strategic proposals that will provide for additional financing leverage. Further, the company is looking positively to the United States interest in its late-stage pipeline, which offers a prospect to create non-dilutive income, with potential for milestone payments, development cost funding, and signature fees.

Share Price Performance

 Daily Chart as at September-24-19, before the market close (Source: Thomson Reuters)

On September 24, 2019, at the time of writing (before the market close, at 3:45 PM GMT), Diurnal Group PLC shares were trading at GBX 30.50, down by 4.69 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 109.95/GBX 20.80. The company’s stock beta was 3.03, reflecting higher volatility as compared to the benchmark index. The outstanding market capitalisation was around £27.19 million.

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