AUS
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GER
ESP
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The outbreak of Covid-19 pandemic has increased the volatility in the market and raising liquidity pressure. Meanwhile, Essensys PLC’s stock fell by 3.17% on 9th April 2020, against the previous day close as the group has announced the placement of ordinary shares to raise approximately £7 million, the fluctuation was coupled with the release of half-yearly results. In contrast, Superdry PLC soared over 25.93%, following the rally of European and London markets, with the hopes that the infection rate of Covid-19 is reaching a plateau.
Essensys PLC (LON:ESYS)
(Source: Annual Report)
Essensys is an FTSE AIM All-Share listed United Kingdom-based company, which provides software-as-a-service (“SaaS”) platforms and on-demand cloud services. It is certified by ISO 9001 and ISO 27001 that safeguards the clients against security risk.
Strategic Vision and Accomplishments for Organic and Inorganic growth
- For strengthening the position in the market, the group believes in leveraging both demand and supply side drivers to evolve the flexible workspace industry.
- The group has launched an IPO in May 2019 on AIM.
- It has recently expanded the sales team of west coast office in the United States and acquired the offshore development capability in Vietnam and the European mainland.
- Increasing pipeline visibility: the group has attained contract for 64 connect sites to be delivered by the end of 2020.
Significant Developments of 2020
9th April 2020: The group has announced that the proposal of ordinary shares had been placed by Nplus1 Singer Advisory LLP, at the price of 151 pence per Placing Share for raising £7 million.
30th January 2020: The group has announced the immediate appointment of Alexandra Notay and Elizabeth Sandle, as independent Non-Executive Directors.
Robust First Half of 2020 Performance Underpins ESYS Resilience
- The revenue and underlying profits were in line with management guidance, with revenue up 19% year on year, recurring revenue up 29%, and group ARR (Annual Recurring Revenue) gross margin of 70% (H1 2019: 69%).
- The adjusted EBITDA for H1 FY20 was lower than H1 FY19, reflects an investment in marketing and sales, geographic expansion, and product development to support long term progress.
- The group has robust cash generation, undrawn RCF (revolving credit facility), and with no debt in the current period.
- As per operational performance, the company has strong performance in the first half of 2020, driven by major growth in US region. Essensys continued investment to support long-term growth, with increased reach, capacity and capability of essensysCloud, development of new products, services and unified platform to drive increased cross and up-sell, and the expansion activity within North America & Europe continue.
- Growing occupier and structural drivers’ awareness have led to a growing number of international landlords and CRE (commercial real estate) businesses entering the market.
Share Price Performance
One Year Chart as of April 9th, 2020, after the market closed (Source: Thomson Reuters)
On 9th April 2020, ESYS’s shares closed at GBX 152.50. Stock's 52 weeks High is GBX 250, and 52 weeks Low is GBX 100.
Current Trading and Outlook
The second half of 2020 started well with trading in line per anticipations as customers continued to deliver contracted Connect sites as planned. With 51 new Connect sites contracted for delivery post half year-end, the group has good pipeline visibility. From the perspective of the Covid-19 outbreak, a number of these client site openings have been delayed; however, the company currently expects to deliver a further 20 over the second half of the financial year and has delivered 15 of these sites since the half year-end. The Board remains positive as to prospects for the remainder of FY20. Despite the Covid-19 crisis, the Group's sales pipeline stays strong and significant future opportunities.
Superdry PLC (LON:SDRY)
Superdry is an FTSE All-Share listed, multinational apparel retailer which manufactures and sells clothes, accessories and footwear with multi-channel approach along with Ecommerce. The company’s products leverage British style with a mix of Americana and Japanese inspired graphics. The company’s products are known for its quality fabrics, exclusive detailing, authentic vintage washes, hand-drawn graphics and custom fits for unique styling. It operates in 63 countries and a workforce of over 53,000 people globally.
Brand Positioning through Creative Business Model
- Design, manufacture and sell premium apparel globally.
- Leveraging a capital-light, flexible and multi-channel approach to sell and maximize opportunities.
- Digitalization across value chain by embracing technology in marketing, selling, sourcing and designing.
- Understanding market trends and demand by using insights of business partners and in-house capabilities.
- Building a high margin business with strong brand recognition by capturing opportunities globally.
Actions of the recent past
18th March 2020: The group has discussed significant impact of coronavirus while their 78 stores were already affected by government-mandated closures across Europe, by that time. Moreover, it reflected upon the inability to meet 2020 guidance amid the unprecedented challenges caused by coronavirus outbreak.
14th October 2019: The group has extended the tenure of Julian Dunkerton as Chief Executive Officer until April 2021. He has been serving as an interim CEO since 2 April 2019.
(Source: Annual Report)
Company’s Current Trading Update and Facing Unprecedented Challenges Arising from COVID-19 Chaos
- Currently, the company is facing challenges created by a coronavirus (COVID-19) outbreak; the trading is expected to be significantly impacted with such deadly infections impacting several lives. Accordingly, the group is no longer giving a formal outlook in relation to the financial year 2020.
- After the international outbreak of coronavirus, the store estate was estimated to generate in the range of £5-£6 million in sales per week for the rest of the fiscal year 2020. Presently, 78 stores are affected by government-mandated closures across Europe.
- The company do not anticipate the decrease in sales from the retail stores to be fully mitigated by sales through the e-commerce channel, which stays fully open for business. While the group is also pursuing cost-saving measures across the business. The company has a robust position of 47 million pounds of net cash on the balance sheet.
Share Price Performance
One Year Chart as of April 9th, 2020, after the market closed (Source: Thomson Reuters)
On 9th April 2020, SDRY’s shares closed at GBX 170. Stock's 52 weeks High is GBX 534.64, and 52 weeks Low is GBX 60.10.
Future View Impacted by the Closures of Stores or Cancellation of Events
In the US and the UK, stores stay largely open; however, the footfall has been marginally impacted, decreasing on an average ~25% week on week, as customers and governments take increasing measures to contain the spread of the coronavirus virus. These main markets signify ~50 per cent and 10 per cent of weekly sales predictions, respectively. The company expect the financial performance to reflect the historic issues inherited with uncertain market conditions in the financial year 2020. The outbreak of COVID-19 has impacted the business performance of the company due to closures of its stores.
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