Analysing the performance of LSE listed Ocado Group Plc and Intertek Group Plc

  • Nov 29, 2019 GMT
  • Team Kalkine
Analysing the performance of LSE listed Ocado Group Plc and Intertek Group Plc

Ocado Group Plc

Ocado Group Plc (LON: OCDO) is a United Kingdom domiciled one of the largest online grocery retailers of the country. The company does not own any stores and all deliveries are made directly to consumer homes directly from the company’s warehouses.  The company has developed and operates a unique business model which positions it strongly as more and more consumers choose to shop online. The company’s business is based on a proprietary technology and intellectual property patent, which provides the unique end-to-end operating solution for online grocery retail operations and positions the group well to take advantage of long-term structural trends, driven by different shopping habits and ever evolving advanced technologies intended for the consumer.

The shares of the company have their listing on the London Stock Exchange. There they trade in the main market segment with the ticker name OCDO. The shares of the company are also components of the FTSE 100 index.

Strategic Update

The company on 29 November 2019 came out with a strategic update on partnership agreement it has signed with Aeon of Japan.

  • Aeon is one of Japan's largest, longest established, and most prominent of retailers with almost a century of operations in serving Japanese customers. Across Asia the company has over 580,000 associates, operating over 21,000 stores and serving approximately 100 million customers across fourteen countries.
  • The agreement entails that Aeon will be launching a new online business vertical making use of Ocado Group Plc’s, Ocado Smart Platform ("OSP") which the latter had developed has used extensively in its operations.

The OSP platform has a unique proprietary customer fulfilment centres ("CFCs") and end-to-end software app which Aeon will be using to increase its capacity to sales value of JPY¥ 600 billion by 2030.

  • The latter will pay certain upfront fees to the former upon the signing of the deal and also a certain amount during the development phase. After that there will be ongoing fees which will be linked to both sales achieved by Aeon and on the installed capacity within each of CFCs along with other criteria for services rendered.

Performance on the London Stock Exchange

Source – Thomson Reuters

At the time of writing of this report on 29 November 2019, the shares of the company were trading at GBX 1317.50 per share.

On a 52-week trading cycle on the London Stock Exchange the company has a 52-week high of GBX 1440.50 and a 52-week low of GBX 739.70. The market capitalization of the company as on 29 November 2019 at the time of writing of this report was £8.54 billion.

Outlook

The agreement marks Ocado Group’s first major foray into the Asian markets, which offers very high volumes of business that is not matched anywhere else in the world. The agreement could very well help the company to double its business as well as provide a base for the company to expand its services further in the world.

The companies Ocado Smart Platform ("OSP") is a mature system and will be able to fulfil the needs of Aeon, along with any modifications required to service this new client base. This will be the company’s first such major foray into the Asian continent.

Intertek Group Plc

Intertek Group Plc (LON: ITRK) is a United Kingdom domiciled London-headquartered Total Quality Assurance service provider to industries across the globe. The company provides Assurance, Testing, Inspection and Certification services through industry-leading technical experts and a global network of state-of-the-art facilities. The company has a presence in more than 100 countries, across over 1,000 offices and centres while employing more than 44,000 personnel. The company’s operations are segmented into three business verticals: Products vertical, Trade vertical and Resources vertical. The company is considered amongst the top companies in this field in the world.

The shares of the company have their listing on the London Stock Exchange. There they trade in the main market segment with the ticker name ITRK. The shares of the company are also components of the FTSE 100 index.

 

Trading Update

The company on 26 November 2019 came out with a trading update on its performance for the ten-month period ending on 31 October 2019.

  • Year to date the company has earned a revenue of £2,487.5 million which is a growth of 4.7 per cent on constant rates and 7.4 per cent on actual rates.
  • Of the company’s divisions, the group operations generated 3.3 per cent growth in organic revenues in the year to date, the Products division generated 2.3 per cent organic revenue growth in the year to date, the trade division generated 4.4 per cent growth in organic revenue in the year to date and the resources division generated 5.2 per cent organic revenue growth in the year to date.

Performance on the London Stock Exchange

Source – Thomson Reuters

At the time of writing of this report the shares of the company were trading at GBX 5,500 per share.

On a 52-week trading cycle on the London Stock Exchange the company has a 52-week high of GBX 5,982.00 and a 52-week low of GBX 4,485.00. The market capitalization of the company as on 29 November 2019 at the time of writing of this report was £8.93 billion.

Outlook

The company has given a good performance for the reported period, with the resource division performing the best with a 5.2 per cent organic growth followed by the trade division which recorded a growth of 4.4 per cent organic growth. The company over the years has been going from strength to strength on account of increasing demand for Total Quality Management (TQM) products across industries. The TQM industry which itself is valued globally at $250 billion has attractive structural growth prospects driven by an increased focus of corporations on risk management, global trade flows, global demand for energy, expanding regulations, more complex sourcing and distribution operations, technological innovations, government investments in large infrastructure projects, and increased consumer demand for higher quality and more sustainable products.

Given the prospects of the industry significant growth in the industry can be expected to entail in coming years and the company is very well placed among its peers to be at the forefront of this growth and deliver value to all its stakeholders.

The company on its part is confident that for the full year it will be able to deliver on the revenues, margins and cash generations as per market expectations, while maintaining operational disciplines on margins, costs and cash management. 

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