Market Updates: Ryanair Holdings PLC (RYA) And Softcat PLC (SCT)

  • May 20, 2019 BST
  • Team Kalkine
Market Updates: Ryanair Holdings PLC (RYA) And Softcat PLC (SCT)

Ryanair Holdings

Ryanair Holdings PLC (RYA) is a Dublin, United Kingdom-based low-cost airline and is Europe’s largest budget airline. The airline operates low fare passenger airline services to destinations between Ireland, the United Kingdom, Continental Europe, Morocco and Israel.

Key Financial Highlights (FY 2019, in €m)

(Source: Company Filings)

The company reported that revenue rose by 6% to €7.6bn, while average revenue per guest remained flat at €54. The increased revenue was driven by strong traffic growth, which was up by 7% to 139m but was offset by a 6% decline in average fares, which fell to €37. The company has the lowest unit costs of an EU airline, with the gap continuing to increase, even though ex-fuel unit costs rose by 5% due to higher staff costs and repeated ATC staff shortage disruptions. The group reported its weakest annual profit in four years with a full year profit of €1.02bn and decreased by 29% over the year because of higher oil prices and lower fares. Reported profit after tax fell to €885 million, driven by €139.5 million in exceptional start-up losses.

Conclusion

The company's outlook for the upcoming year remained cautious on pricing, with a broadly flat group’s profit. Fares are expected to continue to be lower, and the full-year fuel bill is forecasted to jump by another €460m. The group said that "attritional fare wars" in Europe would result in further fall in earnings. The company, which is Europe's largest buyer of Boeing's 737 MAX jets, also warned that the earnings are expected to be hit due to the aeroplanes' global grounding.

Share Price Commentary

Daily Chart as at May-20-19, before the market closed (Source: Thomson Reuters)

 

On 20th May 2019, at the time of writing (before the market closed, GMT 3:15 pm), RYA shares were trading at EUR 10.33, down by 4.3 per cent against its previous day closing price. Stock's 52 weeks High and Low is EUR 16.98/EUR 9.55. Total outstanding market capitalisation was around €12.26 billion.

Softcat Plc

Softcat PLC (SCT) is a British provider of technology solutions and services and is one of the UK's leading IT infrastructure providers. It provides corporate and public sector organisations with solutions, which is complemented by all the services required to deliver and support these on the cloud or premise. The company on 19th May 2019, released the first interim results for the six months to 31st January 2019. The company reported strong profit growth and excellent cash generation.

Key Financial Highlights (H1 FY 2019, in £m)

(Source: Company Filings)

Revenue recorded a growth of 21.1% to £434m, while gross profit grew by 26.5% to £94.7m. While growth in gross profit represents a continuation of strong performance, revenue growth was lower due to an increase in the share of cloud‐based software transacted. Operating profit rose by 40.4% to £33.9m, reflecting the effect of strong short‐term operating leverage on higher than expected income growth, though this improvement to normalise in the second half. Profit for the period was £27.45m, against £19.43m in H1 FY 2018. The company’s cash balance at the end of the period was £52.8m, and it remains debt‐free. The cash conversion rate stood at 103.4% and was in line with expectations.

Conclusion

Demand in hybrid cloud computing helped Softcat to extend its run of year-on-year profit growth for a tenth consecutive year, and the company expects a full-year outcome marginally ahead of previous expectations, upgrading its expectations for the third time during the fiscal year.

Share Price Commentary

Daily Chart as at May-20-19, before the market closed (Source: Thomson Reuters)

 

On 20th May 2019, at the time of writing (before the market closed, GMT 3:20 pm), SCT  shares were trading at GBX 949.50, up by 1.01 per cent against its previous day closing price. Stock's 52 weeks High and Low is GBX 969.00/GBX 550.30. Total outstanding market capitalisation was £1.86 billion with a dividend yield of 1.41 per cent.

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