For the last couple of days, there has been some respite and sense of recovery in the markets across the globe, after witnessing continuous slump, as investors grappled with the economic impact of the covid-19. Though the economic activities in the US, UK and the Eurozone slipped to their lowest level on record in March 2020. But the stock markets across the globe bounced back, the gains in the different markets were induced by the reports that various nations are now working on finance packages to cushion the economic blow. In the US, Dow Jones Industrial Average surged by over 11 per cent after Donald Trump and the Senate agreed on a massive economic relief package worth more than $1.8 trillion. The package is likely to include direct payments to US households. It is also likely to have measures to support small businesses and most affected industries such as travel. In the UK FTSE 100 too posted its second-biggest daily rise in history on 25th March, surging by over 9 per cent for the day. Recently, the nation has taken some extraordinary measures in response to the outbreak of the Coronavirus, by slashing interest rates to the historic low level of 0.1 per cent, and a pledge of an additional stimulus of £200billion into the economy through quantitative easing.
Here we are going to discuss two FTSE listed diverse sector stocks, Bellway Plc and Botswana Diamonds Plc, which announced their earnings on 25th March, when markets across the globe bounced back to the jubilation mood.
Overview of Bellway Plc
Bellway Plc (LON: BWY) is one of the top housebuilders in the United Kingdom. The company is into the building of one-bedroom apartments to luxury penthouses and prestigious executive houses. The company employees over 2,000 people and has earned an excellent reputation for quality, trust and services. In just seventy years, it has become a leading builder of houses from a small, family-owned firm.
BWY - Financial Highlights
On 25th March 2020, the company declared interim result for the half-year ended 31st January 2020.
The company’s total revenue rose by 3.6 per cent to £1,541.4 million versus £1,488.0 million in Half-year ended 31st January 2019. The private reservation rate increased by 11 per cent to 151 per week whereas, overall reservation rate increased by 6.0 per cent to 194 per week as compared to the previous year due to outlets opening in good quality locations with robust demand of new homes. The reservations improved by 7.3 per cent to 278 per week in the six weeks from 1st February 2020 (2019 - 259 per week), which shows positive underlying customer sentiment for new build housing.
The gross margin decreased to 23.1 per cent for the half-year ended 31st January 2020 as compared to the previous year. It remained nearly consistent with the future margin, which was anticipated to be attained on recent land acquisitions, as evaluated during the time of purchase.
The net finance expenses decreased to £5.9 million as compared to £7.3 million in the previous year, mirroring a lower average net debt position.
Profit before taxation decreased to £291.8 million for the half-year ended 31st January 2020 as compared to £313.9 million in the previous year. The income tax charge was reported at £52.5 million, representing an effective tax rate of 18.0 per cent, mainly remained in line with the corporate tax of 18.3 per cent.
The net asset value per share increased by 12.7 per cent to 2,467p over the past twelve months due to the positive implementation of continuing growth strategy.
Impact of Novel Coronavirus
As per the company’s information, it can face some significant risk related to manufacturing capability and customer demand in the months and weeks to come. The company further said that there is a liquidity concern throughout the economy. The company management is taking required action to preserve the strength and flexibility of the balance sheet. This action consists of new site acquisitions and a re-prioritisation of production spending to concentrate on plots which are in the advanced phases of construction programmers.
BWY – Share Price Performance
At the time of writing this report, on 26th March 2020, at about 10:39 AM (GMT), Bellway Plc’s stock was trading on the London Stock Exchange at a price of GBX 2,060.00 per share, up by around GBX 21.00 or 1.03 per cent, as compared to previous day closing price, which has been reported to be at GBX 2,039.00 per share.
The one year high of BWY stock price was recorded at GBX 4,336.0 on 20th February 2020 while its one year low was recorded on 19th March 2020 at a price of GBX 1,735.50.
As on 26th March 2020, the market capitalisation of the company was reported at GBP 2.51 billion with regards to the stock’s current market price. Bellway Plc’s free float and outstanding shares were reported at 122.16 million and 123.33 million, respectively.
At the time of writing, the annual dividend yield stood at 7.26 per cent, and the annual dividend of the company was reported at GBX 150.40 per share. The beta of the stock has been reported at 1.45, which indicates that the share price movement is highly volatile as compared to the movement in the comparative benchmark index.
Botswana Diamonds Plc
Botswana Diamonds Plc (LON: BOD) is a project development and diamond exploration company, having licences for exploration in South Africa and Botswana. The company’s strategy is to get potential projects in the highly potential diamond zone of Africa. It is listed on the Botswana Stock Exchange and Alternative Investment Market of London Stock Exchange.
BOD – Financial Performance
On 25th March 2020, the company has announced Financial Results and Interim Statement for the Six Months Ended 31st December 2019.
The total comprehensive income/ (loss) for the period increased to £194,000 during the six months ended 31st December 2019 versus £190,000 during the six months ended 31st December 2019.
With regards to funding exploration and general working capital purpose, the company has raised around £0.25 million during the early part of the present year. The intangible assets of the company increased to £8.3 million as at 31st December 2019 as compared to the prior year. The cash and cash equivalent decreased significantly to £13,000 as of 31st December 2019 versus £39,000 as of 31st December 2018.
The group has earned a 40 per cent interest in Vutomi as at 31st December 2019. The company has identified eight high-grade targets in Botswana during the year 2019.
Impact of Novel Coronavirus
As per the company’s information, the current situation due to the Novel Coronavirus outbreak makes planning very problematic for the company. The national disaster has already been announced in respect of the outbreak in South Africa, which will affect the scheduling of activities and mainly Marsfontein project in the coming weeks.
BOD – Share Price Performance
At the time of writing this report, on 26th March 2020, at about 08:10 AM (GMT), Botswana Diamonds Plc’s stock was trading on the London Stock Exchange at a price of GBX 0.45 per share, decrease in the value of around GBX 5.26 per cent or 0.025 per cent, as compared to previous day closing price, which has been reported to be at GBX 0.475 per share.
The one year high of BOD stock price was recorded at GBX 1.44 on 17th October 2019, while its one-year low was recorded on 24th March 2020 at a price of GBX 0.40. The current share price was down by 68.75 per cent from the 52-week high price, while it was up by 12.5 per cent from the 52-week low price.
As on 26th March 2020, the market capitalisation of the company was reported at GBP 3.18 million with regards to the stock’s current market price. Botswana Diamonds Plc’s free float and outstanding shares stood at 529.95 million and 669.22 million, respectively.
The beta of the stock has been reported to 0.055, which indicates that the share price movement is less volatile as compared to the movement in the comparative benchmark index.