Two FTSE 100 Stocks Under Focus: Prudential Plc and Just Eat Plc

Two FTSE 100 Stocks Under Focus: Prudential Plc and Just Eat Plc

Prudential Plc

Prudential PLC (PRU) is a British financial services group that provides long-term savings and protection products, with a focus on three markets, Asia, the US and the UK, to serve more than 26 million customers worldwide. Capital Research & Management Co. (World Investors), Norges Bank Investment Management and Baillie Gifford & Co. are the major institutional investors in the company. (Source: Thomson Reuters).

PRU-Regulatory News

In the exchange filing made by the group as on September 25, 2019, Prudential Plc announced that a circular in relation to the proposed demerger announced (as on March 14, 2018 to demerge M&G Prudential, resulting in two separately listed companies on the London Stock Exchange), and the prospects in relation to the listing of M&G’s ordinary shares have been submitted to the Financial Conduct Authority (FCA) by the group and M&G respectively for approval.

The group reported that the Financial Conduct Authority had approved the proposal with respect to the demerger and the prospects in relation to the proposed admission of M&G's ordinary shares on the LSE.

PRU-Financial highlights for H1 FY19

During the period under consideration, the company's operating profit from the continuing operation surged by 21% (AER basis) to £2,024 million from £1,669 million recorded in the year-ago period. Operating free surplus (continuing operations) generated during the same period went up by 28 per cent (AER basis) on a Y-o-Y basis and stood at £1,502 million. Life new business profit from continuing operations recorded a growth of 3 per cent (AER basis) and stood at £1,643 million from £1,588 million recorded in the first half of 2018. IFRS Post-tax profit from continued and discontinued operations stood at £1,540 million and recorded a growth (AER basis) of 14 per cent on a Y-o-Y basis.  However, the group's Solvency II Cover ratio declined by 1000 basis points to 222 per cent from 232 per cent recorded as on Dec-31-18 (FY18).

As on September 25, 2019, the group announced the demerger of the asset manager and insurer M&G into a separate FTSE 100 company by October 21, 2019, just 10 days before the scheduled Brexit day.

The spin-off of M&G from Prudential Plc comes at a challenging time for the active fund managers such as M&G, whose bottom line has been walloped by declining management fees as investors are shifting to more low-cost passive funds. Also, the proposed entity witnessed massive outflow from its open-ended funds in the past couple of years, driven by underperformance by a range of its flagship bond strategies. In 2019, M&G is one of Europe's worst-selling fund managers and has witnessed a massive net outflow.

Meanwhile, as on August 16, 2019, the High Court of England and Wales declined to sanction the transfer of a portfolio of annuities from The Prudential Assurance Company Limited, a subsidiary of M&G Prudential, to Rothesay Life plc, it was setback for the group as it planned transfer of £12bn of annuities to Rothesay Life.

PRU-Share price performance

(Source: TR)

Before the market close, at the time of writing on 23rd October 2019 at 11:10 AM GMT, PRU shares were hovering around GBX 1,413.50 and was up by 0.71 per cent against the previous day closing price.

Prudential PLC shares have recorded a high price of GBX 1,532.79 and a low price of GBX 1,109.67 in the last year. As quoted in the price chart, at the current trading price level, shares were hovering around 27.38 per cent higher from the 52-week low price mark.

6,974 trades took place for the day while writing and day’s stock traded volume was recorded at 3,262,449.

Just Eat Plc

Just Eat Plc (JE.) company runs a foremost global hybrid marketplace for online food delivery and it is in the United Kingdom. The international footprint of the company, with brands spread across 13 countries, helps it in creating a varied revenue base.

Recent developments

The company rejected an unsolicited successive proposal of 670 pence, 700 pence and 710 pence per share of Just Eat Plc by Prosus N.V. for company’s issued and to be issued share capital. The company’s board stated that the offer underestimated company and its resources both on a standalone basis and as part of the planned all-share grouping with Takeaway.com. Furthermore, Takeaway.com after the rejection of the offer said that companies like Just Eat and Takeaway.com, can achieve material profits in the bigger markets, and their merger needs to be seen in that context and this will certainly lead to the creation of a superb company.​

Q3 Update

On 21st October 2019, Just Eat announced its Q3 update for the period ending 30th September 2019. The company’s revenue increased by 25 per cent to £248 million for the period, while the orders increased by 16 per cent to 62 million. Driven by speedy growth in the delivery proposition, the UK orders surged by 8 per cent to 33 million for the period. The company’s Canadian subsidiary SkipTheDishes had been performing well with double-digit growth. The company witnessed a strong performance in Switzerland and Italy. The company’s iFood with more than 21 million orders in September had shown exceptional growth.

Financial Highlights for H1 FY19 for the period ended 30th June 2019

In the first half of the Financial Year 2019, orders increased by 21 per cent to £123.8 million against the £102.5 million in H1 FY2018, through 2 million net new customers joining Just Eat. The company’s reported revenue surged by 30 per cent to £464.5 million as compared with the corresponding period of the last year, due to an increase in orders and given the greater weighting of delivery. Underlying EBITDA, excluding Mexico, reduced by 16 per cent to £72.4 million against the £86 million in H1 FY18, driven by the accelerated rollout of delivery. Profit before tax was down by 98 per cent to £0.8 million as compared to £48.1 million in H1 FY18. Adjusted Basic EPS stood at 5.7 pence, a decrease of 36 per cent from the same period in 2018.

The group continues to build a more dynamic environment, leading to faster executions, simpler operations, and more accountability. This will help to deliver value to customers and shareholders for the long-term and report better financials in the future. Moreover, with growing pressure from investors, Just Eat is focussing on technological innovation to stand out in the food-delivery space. The company is aiming to reinvest increased profits to accelerate growth through new initiatives, specifically in the UK and Australia. The focus remains on increasing its customer base in key zones.

Share price performance

(Source: TR)

Before the market close, at the time of writing on 23rd October 2019 at 03:28 PM GMT, JE. shares were hovering around GBX 738.8 and was up by 0.92 per cent against the previous day closing price.

Just Eat Plc shares have recorded a high price of GBX 833.14 and a low price of GBX 519.20 in the last year. As quoted in the price chart, at the current trading price level, shares were hovering around 42.29 per cent higher from the 52-week low price mark.

2,304 trades took place for the day while writing and day’s stock traded volume was recorded at 2,446,636.

 

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