Business Review of LSE listed Fresnillo Plc and Phoenix Group Plc

Business Review of LSE listed Fresnillo Plc and Phoenix Group Plc

 Fresnillo Plc

Fresnillo Plc (LON: FRES) is a Mexico domiciled precious metal exploration, mining and production group. It is headquartered in Mexico City, the capital of that country. Although, as part of the Peñoles Group, the group has a history stretching back to over a century. The group became a listed company in 2008 when the wholly owned operating division of Industrias Peñoles was spun off on the London Stock Exchange in a May 2008 IPO. The group holds one of the largest precious metals land reserves in Mexico and is the world's leading silver producer and Mexico's largest gold producer.

The group's core operations are in Mexico, and it operates seven mines, one development project and an extensive portfolio of high-quality exploration projects and prospects, with the aim of maximising the potential of these operations while maintaining its position as a leading low-cost producer. It develops high potential silver and gold projects into low-cost, world-class mines, with business model spanning the full mining value chain from exploration, construction and development, to mining operations. The group ensures the longevity of its business by exploring and developing new projects and generates revenue by selling the metals contained in the ore which the company extracts and processes.

The shares of the company have their listing on the London Stock Exchange and at the Mexican Stock Exchange. At the London Stock Exchange, the shares of the company trade with the ticker name FRES in the main market segment. The shares of the company on the London Stock Exchange are also constituents of the FTSE 100 index.

Trading Update

The company on 23 October 2019 came out with its production report for the third quarter of the company ended on 30 September 2019.

  • For the third quarter of 2019 the company produced 13.3 moz of Silver including Silverstream which is a drop of 9 per cent compared to the production of second quarter of 2019 mostly on account of falling ore grades.
  • For the third quarter of 2019 the company produced 209.8 koz of gold, which is a drop of 5.2 per cent compared to the production of second quarter of 2019 mostly on account of falling ore grades.
  • For the third quarter of 2019 the company’s production of lead increased by 19.3 per cent and the production of zinc increased by 22.7 per cent compared to production figures of the second quarter of 2019 mostly on account of higher ore grades.

Performance on the London Stock Exchange

Source – Thomson Reuters

At the time of writing of this report on 03 December 2019 the shares of the company were trading at GBX 579.20

On a 52-week trading cycle on the London Stock Exchange the company has a 52-week high of GBX 1028.00 and a 52-week low of GBX 536.80. The market capitalization of the company as on 03 December 2019 at the time of writing of this report was £4.21 billion.

Outlook

The company has traded well during the three quarters of the year, the falling grades of gold and silver being a bit worrying. The company has taken steps to increase the volume of mineral processes in order to make up for the production deficit. The company’s new mines in Juanicipio is     on schedule to be commissioned in the second half of 2020 along with the second phase of its pyrites plant. The company expects to perform as per market expectations and to end the year with gold and silver production at lower end of the guidance given out by the management.

Phoenix Group Plc

Phoenix Group Holdings PLC (LON: PHNX) is a United Kingdom domiciled, one of the largest specialist life and pensions consolidator of heritage life assurance funds in Europe having headquarters in London. The company specialises in the Heritage business, which focuses on closed life fund consolidation. The group has a strategic partnership with Standard Life Aberdeen wherein the company operates an open business which underwrites and designs new products and policies. The company’s origins in the insurance world can be traced back to 1782 and the group was listed on the London Stock Exchange in 2010. It has operations in the United Kingdom, Ireland and Germany, with £226 billion of assets under administration, serving 10 million policyholders.

The company continues to be a predominantly Heritage business where the group specialises in the management and acquisition of pension and closed life insurance funds. But now it has a substantial open business element which is underpinned by a strategic partnership with Standard Life Aberdeen Plc. The company has five operating life companies which hold client assets and a distribution business, SunLife - which offers a wide range of financial products specially for the over 50-s segment. With an estimated market size of £540 billion across the United Kingdom, Germany and Ireland, the group seeks to be Europe’s Leading Life Consolidator in this market which is bifurcated between capital heavy insurance specialists and capital light firms which concentrate on sales and distribution.

The shares of the company have their listing on the London Stock Exchange. At the London Stock Exchange, the shares of the company trade with the ticker name PHNX in the main market segment. The shares of the company on the London Stock Exchange are also constituents of the FTSE 100 index.

Trading Update

The company on 28 November 2019 came out with a trading update on the strong cash generation it has achieved for the year 2019 exceeding the guidance it had given before.

  • The company for the year generated a cash of £707 million which is more than the £600 million - £700 million target range that had been given by the management in its previous guidance. The cash generation for 2018 was £664 million.
  • The company witnessed £440 million of incremental long-term cash generation from new business.

Performance on the London Stock Exchange

Source – Thomson Reuters

At the time of writing of this report on 03 December 2019 the shares of the company were trading at GBX 734.10

On a 52-week trading cycle on the London Stock Exchange the company has a 52-week high of GBX 750.20 and a 52-week low of GBX 536.72. The market capitalization of the company as on 03 December 2019 at the time of writing of this report was £5.33 billion.

Outlook

The company for the year has given out a sterling performance. The company has performed well on all relevant metrices its performance is measured on. The company has kept the client at the centre of all its activities and considers this as the main reason behind its success. The company is well positioned to deliver on all its guidance parametres that the management had foreseen for the company for the year.

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