Covid-19 impact and Earnings of Two LSE-Listed Stocks: MGP, SEPL

Covid-19 impact and Earnings of Two LSE-Listed Stocks: MGP, SEPL

The United Kingdom too has entered the trapdoor of deadly coronavirus like several other European nations after China, as the death toll has increased from 48 to 336 in just 2 days on 23 March 2020. The news sent the shock wave across London Stock Exchange which led FTSE 100 to close 196.89 points lower from the previous close of 5,190.78. However, the market witnessed many LSE-listed companies coming up with the trading updates and financial results for fiscal 2019 and updates on Covid-19 impacts. Let’s discuss the impact of pandemic coronavirus and the result of two such listed companies that include Medica Group PLC (LON: MGP) and Seplat Petroleum Development Company PLC (LON: SEPL).

Medica Group PLC

Medica Group PLC (LON: MGP) is a healthcare sector company, which is a market pioneer in the delivery of Teleradiology facilities such as the transmission X-ray/CT/MRI to NHS. The company offers three services to Hospital Radiology Departments to mitigate the supply and demand imbalance in non-urgent and urgent situations such as Routine Cross-sectional, Nighthawk and Routine Plain film. Listed on London Stock Exchange, the company is headquartered in Hasting, the United Kingdom with more than 370 consultant reporters.

  • Financial Performance and Trading Update

During the financial year ended 31 December 2019, Medica’s revenue increased by 19.4 per cent to £46.54 million as compared to the previous year. Its gross profit also increased by 16.6 per cent to £22.25 million on the back of significant revenue growth achieved across all the business segments. However, the company’s gross profit margin dropped by 120 bps to 47.8 per cent in FY2019 due to already expected Night Hawk pricing pressure.

The Adjusted EBITDA increased by 9.2 per cent to £13.03 million in fiscal 2019 as compared to £11.93 million in the year 2018. In contrast, the Adjusted EBITDA margin decreased by 260 bps to 28.0 per cent during the year versus 30.6 per cent in the previous year.

Medica’s net cash position increased significantly from nil in FY2018 to £4.6 million as at 31 December 2019.

  • Impact of Novel Coronavirus

As per the trading update dated 23 March 2020, Medica at present cannot predict the impact of novel coronavirus on its revenue growth for the rest of the year 2020. However, the company has observed a drop of around 30 per cent in NightHawk cases as people are going into self-isolation (reduced A&E admission).

The Directors of the company consider the Novel Coronavirus epidemic to be a material post balance sheet event, as the effect on the United Kingdom economy is expected to have a substantial impact on operating activities and financial results of the company for the foreseeable future.

  • Stock Price Performance- MGP

On 24th March 2020, at around 08:00 AM (GMT), by the time of writing this report, the stock of Medica Group Plc was trading at a price of GBX 110.0 per share on the London Stock Exchange, an increase in the value of around 3.77 per cent or GBX 4.00 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 106.0 per share.

MGP stock price formed a new 52-week low on 23 March 2020 at GBX 88.0 while its 52-week high is GBX 168.50 as recorded on 18 December 2020. The company’s annual dividend yield currently stands at 2.22% with the annual dividend of GBX 2.35.

At the time of writing, the company’s market capitalisation was reported at GBP 117.78 million with respect to the stock’s current market price. The free float and outstanding shares of Medica Group Plc stood at 98.21 million and 111.11 million, respectively.

Seplat Petroleum Development Company Plc

Seplat Petroleum Development Company Plc (LON: SEPL) is a prominent natural gas and oil company in the productive Niger Delta area of Nigeria, engaged in exploration as well as production. It concentrates on increasing Hydrocarbon production as well as farming and acquiring new prospects in Nigeria. It was listed on the London Stock Exchange and Nigerian Stock Exchange in the year 2014.

  • Financial Performance and Trading Update

On 23 March 2020, Seplat Petroleum declared its financial results for the year ended 31 December 2019. The company’s revenue decreased by 6.5 per cent to US$697.8 million due to lower production and oil price. The profit before deferred tax increased by 13.4 per cent to US$270.3 million during the year 2019.

Operating cash flow decreased by 32.7 per cent to US$337.8 million during FY19. However, the company maintained a final dividend of US$0.05 per share for the year ended December 31 2019. The working interest production decreased by 6.8 per cent to 46,498 boepd as compared to 49,867 boepd for the FY2018. The average realised oil price fell by 8.2 per cent to 64.40 US$/bbl in FY2019 as compared to 70.13 US$/bbl in FY2018. The average realised gas price also decreased by 3.4 per cent to 2.84 US$/Mscf as compared to 2.94 US$/Mscf during the FY2018.

The company’s cash at bank was reported to US$333 million as at December 31 2019.

  • Impact of Novel Coronavirus

Looking forward, the company informed that the emergence of the COVID-19 pandemic in the first quarter of 2020 combined with pressure on oil prices in March had placed a responsibility on solid financial management. Currently, the company expects its target 2020 production to be within the range of 47-57 kboepd, including Eland production of 6-10 kbopd.

  • Stock Price Performance- SEPL

On 24th March 2020, at around 08:49 AM (GMT), by the time of writing this report, the stock of Seplat Petroleum Development Company Plc was trading at a price of GBX 54.80 per share on the London Stock Exchange, an increase in the value of around 3.40 per cent or GBX 1.80 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 53.0 per share.

52-week high of SEPL stock price was recorded at GBX 134.0 on 14 May 2019 while its 52-week low was on 18 March 2020 at a price of GBX 37.30. The current share price was lower by 59.10 per cent from the 1-year high price. The current share price was higher by 46.92 per cent from the 1-year low price. The beta of the company’s stock has been reported at a value of 0.59, which shows that movement of the share price is less volatile against the movement in the comparative benchmark index. The annual dividend of the company was reported at GBX 7.78 per share, and the annual dividend yield was reported to 16.88 per cent at the time of writing.

As on 24 March 2020, the company’s market capitalisation was reported at GBP 311.88 Million with respect to the stock’s current market price. The free float and outstanding shares of Seplat Petroleum Development Company Plc stood at 82.55 million and 588.44 million, respectively.

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