Quick Updates On Three Large Cap Stocks: LSE, RDSA and BOE

  • Aug 01, 2019 BST
  • Team Kalkine
Quick Updates On Three Large Cap Stocks: LSE, RDSA and BOE

London Stock Exchange Group (LSE: LSE)

London-headquartered London Stock Exchange Group is engaged in providing market infrastructure services. The group is also engaged in capital formation, intellectual property and balance sheet risk management. As on July-20-2001, its shares got listed on the main market of the London Stock Exchange for trading. The outstanding market capitalisation of the company stood at £23.16bn, which ranks it among the large-cap companies listed on the London Stock Exchange. Lindsell Train Ltd., Capital Research & Management Co. (World Investors) and BlackRock Investment Management (UK) Ltd. are the major institutional investors in the company. (Source: TR)

Recent Deals

In the exchange filing made by the group, as on August 01, 2019, the group announced that is has acquired Refinitiv business in an all-share deal for a total enterprise value of US$27bn. The transaction will provide existing shareholders of the Refinitiv business an approximately 37% stake in the London Stock Exchange Group, and they will have less than 30% of the total voting rights in the group.

Both Refinitiv and LSEG together generated a combined revenue above £6bn in 2018, which made the combined entity the biggest listed global financial market infrastructure provider in terms of revenue last year.

Interim Results – (H1FY19, £m)

During the period under consideration, the company recorded strong financial performance, with the group’s total revenue at £1,018m in H1FY19 and recorded a growth of 7% on a YoY basis and total income increased by 8% to £1,140m from £1,060m recorded in the year-ago period.

In the H1FY19, FTSE Russel revenue recorded at £315m and was 9% higher against the £290m in the same period of the corresponding financial year.

Excluding depreciation, amortization and impairment charges, operating expenses stood flat against the previous levels on a reported basis and narrowed by 2% on a constant currency basis in H1 2019.

In the six-months under review, the group’s adjusted operating profit (excluding amortisation, impairment and good and non-underlying items) surged by 11% on a YoY basis to £533m. However, post consideration of amortisation, impairment, goodwill and underlying items, its operating profit was up by 2% on a YoY basis and stood at £399m.

Adjusted earnings per share surged by 13% to 100.6pence, and basic EPS declined marginally on a YoY basis and stood at 71.1pence.

Cash flows

Net cash generated from operations surged up by 39.3% to £400m in H1 FY19, this reflects solid performance of the group supported by diligent cost control. Capex narrowed marginally to £89m from £90m recorded in the first half of the H1FY18, and net cash generated from investing post capex, dividends and other investing activities stood at £122m.

Discretionary free cash flow per share during the period under review nudged up to 89.7pence from 56.6pence recorded in the first half of the previous financial year.

Debt

At the end of the H1FY19, the group’s operating net debt stood at £1,942m, after sparing cash of £1,022m for regulatory and operational support purposes. The company spent £244m for the acquisition of 4.92% stake in Euroclear and also did some smaller inorganic investments. On account of strong earnings, operating debt to EBITDA ratio of the group was firm at 1.7x, however marginally below on a sequential-quarter basis.

Stock Performance Daily

Daily price chart (as on August 01, 2019), before the market close. (Source: Thomson Reuters)

At the time of writing (before the market close, at 12:16P PM GMT), shares of LSE were quoting at GBX 7,088 and added 462 points or 6.9%. Its shares have registered a new 52w high of GBX 7,152 by the time of writing on 1 Aug 2019. Its shares have registered a 52w low of GBX 3,843 on 6 Dec 2018. In the year-ago period, the stock has delivered a price return of 63.12%, and in the past one month, the stock is down by 20.78% respectively. At the current trading level, the dividend yield of the company stood at 0.91%. Also, the 5-day average daily volume in the stock has risen substantially against the 30-day average daily volume traded at the LSE.

Royal Dutch Shell Plc (RDSA)

London-headquartered Royal Dutch Shell Plc is engaged in the business of exploration of crude oil and natural gases across the world. Royal Dutch Shell Plc is based in Hague, Netherlands. It is an international group of energy and petrochemical company, which engages in exploring, producing, refining and marketing oil and natural gas. The group employs around 86,00 people across 70 countries globally. As on 20 July 2005, its shares got listed on the main market of the London Stock Exchange for trading. The outstanding market capitalisation of the company of £209.13bn, ranking it among the large-cap companies listed on the London Stock Exchange.

Interim Results- (H1 FY19)

For the six months under consideration, Income attributable to shareholders declined by 25% to $8,999m from $11,923m recorded in the year-ago period. CCS earnings attributable to shareholders declined by 24% to $8,318m in H1 FY19.

Integrated gas income during the period under review, declined to $4,294m from $4,744m recorded in the same period of the previous financial year. Upstream income grew marginally to $3,060m from $3,008m on a YoY basis. Downstream income narrowed to $3,160m from $3,426m recorded in the corresponding period of the previous financial year.

Basic earnings per share plunged by 23% to 1.11 cents from 1.44 cents recorded in the H1FY18. The board announced a dividend per share of 0.94cents, which was similar to the dividend announced in H1FY18.

Cash Flows

Cash generated from operating activities during the period under consideration improved by 4% to $19,661m from $18,972m in the year-ago period. Cash outflow from investing activities stood at $8,788m from an outflow of $4,265m recorded in a year-ago period. Free cash flow declined considerably from $14,707m in H1FY18 to $10,873m in the H1FY19.

Despite lower gas prices and macro headwinds in refining and chemical businesses, the group recorded decent cash flow performance; however, earnings were volatile in the period under consideration.

Stock Performance

 Daily price chart (as on August 01, 2019), before the market close. (Source: Thomson Reuters)

At the time of writing (before the market close, at 12:16P PM GMT), shares of the RDSA were quoting at GBX 2,467.0 and declined 125.50 points or 4.84% in day’s session on account of the lacklustre performance of the company recorded in the second quarter of 2019. Shares of the RDSA have registered a 52w high price of GBX 2,811.38 and a 52w low of GBX 2,209.50 respectively. On a YTD basis, shares of the RDSA have delivered a price return of 12.42%, and at the current trading level, the dividend yield of the company stood at 5.56%.

Boeing Co (LSE: BOE)

The United States-headquartered Boeing Company is a global aerospace and defence company. Its areas of operation are divided into segments like Commercial Airplanes (BCA), Defense, Space & Security (BDS) and Boeing Capital (BCC). As on January-14-1980, its shares got listed on the main market of the London Stock Exchange for trading. The outstanding market capitalisation of the company stood at £151.6bn, which ranks it among the large-cap companies listed on the main market of the London Stock Exchange.

Interim Results (H1FY19 ended as on June 30, 2019, $m)

Recorded revenue for the period under consideration stood at $38,668m, 19% below the revenue of $47,640m recorded in the year-ago period. This was primarily driven by 737Max impacts and on account of increased defence and services volume in the second quarter of the FY19.

The Operating margin got dragged to negative 2.7% in the H1FY19 from a positive 11.7% recorded in the H1FY18. Operating margin tumbled sharply in the second quarter of FY19 to negative 21.5% from a positive 11.2% recorded in the same period of the corresponding financial year.

Net loss in the first half of 2019 stood at $793m, as compared with the net earnings of $4,673m recorded in the first half of 2018. This was largely driven by a net loss of $2,942m recorded in the second quarter of the FY19 against net earnings of $2,196m recorded in the year-ago period.

Cash inflow from operating activities slumped substantially to $2,198m from $7,816m recorded in the year-ago period, however, operating cash outflow during the second quarter of the FY19 was at $590m against an inflow of $4,680m recorded in the year-ago period.

Stock Performance

 Daily price chart (as on August 01, 2019), before the market close. (Source: Thomson Reuters)

At the time of writing (before the market close, at 12:17 PM GMT), shares of the BOE were quoting at USD 330.0 and trading flat against the previous day closing price. In the year-ago period, shares of the BOE have registered a 52w high of USD 445.71 and a 52w low of USD 295.39 respectively. On a YTD basis, shares of the BOE were down by 1.85%. At the current trading level, the dividend yield of the company stood at 2.49%.

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