Update On Two FTSE Stocks – ESL and AIR

Eddie Stobart Logistics Plc

Eddie Stobart Logistics (ESL), previously known as Greenwhitestar UK Plc, is a Warrington, United Kingdom based company that is engaged in providing logistics and end to end supply chain solutions in the United Kingdom and across Europe. The company’s primary serving base is the Manufacturing, Industrial & Bulk (MIB) customers. The business of the company is also focused on E-commerce, retail and consumer sectors. The company maintains current operations by leveraging its assets of approximately 2700 vehicles, around 5000 trailers and 43 operating centres across the United Kingdom as well as in the other European countries. The company’s revenue model is based on an approach where the customers only pay for the services utilized with pay-as-you-go, scale enabled and shared user network approach.

The services that company provides are a result of the latest technology being used by it and the innovations in Logistics that the company has succeeded in doing. These solutions include – The in-cab technology, Warehousing management systems, E-commerce software, Advanced transport management systems, container terminal management and Yard management.

ESL – Latest NewsÂ

On 9^th September 2019, the company responded to the media speculation- that it had noted and confirms the recent media speculation of receiving a primary expression of interest from DBAY Advisors (DBAY) for the purchase of its issued, and to be issued share capital of the company. The company had given a deadline of October 7^th, 2019 to DBAY to announce the intention to make an offer or to not make an offer.

On 16^th September 2019, the company gave an update regarding the group’s review of the unaudited interim results for the six months ended 31 May 2019. The company expects the revenue for H1 2019 to be around £450 million and underlying Earnings Before Interest and Taxes (uEBIT) to be between £10 and £11 million for the same period. The board’s outlook for full year results on uEBIT is that it will be significantly below the company’s expectations. The company announced that as a part of the review in relation with the pending results, the company was applying a more prudent approach toward revenue recognition. The company also stated that the impact of the items on Adjusted EBIT will make it significantly lower than anticipated and as a result, the group will also review the divided policy for the year, following which, the trading of the stock would be temporarily suspended.

On 7^th October, the company made a press release regarding the extension of Put-Up or Shut-Up (PUSU) deadline. Previously it was announced that the deadline for DBAY to announce the intention to make an offer was on 7^th October 2019 but after the ongoing discussions on the possible offer, the company had made a request to the Panel on Takeovers and Mergers to extend the deadline to make an offer or not to make an offer to 16^th October 2019, at 5:00 P.M. As per the announcement, this deadline can be further extended with the consent of the panel, at the company’s request.Â

ESL Financial Performance (Full year results for the year ended 30^th November 2018)Â

In the underlying results, the company reported a strong revenue growth in the year 2018 of 35 per cent year on year to £843.1 million from £623.9 million in the year 2017. This was driven by the new contracts that the company won and also the added contributions from the acquired businesses in addition to keeping hold of their customer base. Segment wise, the E-commerce revenue growth was the highest at 65 per cent to £171 million. The underlying EBIT grew at around 14 per cent to £55.3 million from £48.5 million in 2017. This was due to the lower costs incurred and major contract wins. Even though the EBIT margin reduced from 7.8 per cent to 6.6 per cent, the company anticipates the margins to improve in 2019. The company issued new debt associated with the acquisition of the TPN brand and also a working capital facility to support the year on year increase in revenue. The adjusted EPS increased by 16.3 per cent to GBX 11.4 per share from GBX 9.8 per share in 2017. To reflect this robust performance, the company declared a final dividend of GBX 4.76 per share taking the annual dividend to GBX 6.3 per share.

The company had announced that trading in the company’s shares will remain suspended till the HY 2019 Interim results are announced.

Air Partner Plc

Air Partner Plc (AIR) is a United Kingdom based company that is involved in providing aviation based support services to companies across various industries and sectors. The company’s solutions are mainly used for Industry, Commerce, Governments and Private Individuals. The services provided by the company include Group Charter, with a wide variety of aircrafts for Business purposes with a VIP experience, Private Jet for business as well as Leisure trips, Cargo Charters as a freight transporter or logistics service provider solution, JetCard by Air Partner that allows people to travel on the company’s aircrafts in any model made after 2000, and other consulting services such as Emergency Planning, Remarketing and other travel services. In terms of the sectors served, the company provides its services to the oil and gas sector, with their experience of logistical servicing in remote locations for precise operational demands of the sector, Automotive, by getting the parts of various vehicles to and fro across the world. Other businesses included are Tour Operations, Music and Entertainment, Finance, Sport, NGO’s and Government and Defence.

AIR Financial Performance (Half year results for six months ended 31 July 2019)

The company reported a decline in the Gross Transaction Value (GTV) of 6.6 per cent year on year to £124.1 million in H1 FY20 from £132.8 million in H1 FY19. The company also reported a decrease in revenue of 12.1 per cent year on year from £36.0 million in H1 FY19 to £31.7 million in H1 FY20. This also translated to a decrease in gross profit of 1.0 per cent year on year from £17.3 million in H1 FY19 to £17.2 million in H1 FY20. This was contrary to the excellent performance from the US region with an 18.2 per cent year on year increase in the Gross Profit. Underlying Profit before Tax (uPBT) also fell from £4.2 million in H1 FY19 to £3.0 million in H1 FY20, a decline of 29.5 per cent year on year. Statutory Profit before tax reported an increase of 6.8 per cent year on year from £2.6 million in H1 FY19 to £2.8 million in H1 FY20. Underlying Basic Earnings Per Share (uEPS) were reported at GBX 4.3 per share in H1 FY20, a decline of 30.6 per cent year on year from GBX 6.2 per share in H1 FY19. In contrast with the performance, the company declared an interim dividend at an increase of 2.9 per cent to GBX 1.80 per share in H1 FY20 from GBX 1.75 per share in H1 FY19. The company also reported the Net Cash (excluding the Jet Card cash) as on 31 July 2019 at £4.3 million.

AIR Stock performance

On 8^th October 2019, at 08:35 A.M., while writing, Air Partner’s stock’s current market price was at GBX 86.00 per share, a decline of 6.01 per cent or GBX 5.50 per share as compared to the previous day’s reported closing price at GBX 91.50 per share. This was at an increase of 1.17 per cent since the notice of interim results came out on 2^nd October 2019. At current market price, the company’s shares were trading 25.59 per cent above the 52-week low price of GBX 68.53 per share, which was set on August 05, 2019. This was also 23.21 per cent below the 52 week high price of 112.00, which the company’s shares set on 10 October 2018. The company’s market capitalisation (M-Cap) was currently reported at £48.37 million.

By the time of writing, 103,480 of company’s stocks had been traded for the day. The average volume of trade, per day, in the last one year was at 51,320 stocks. The company’s stock had lost 23.21 per cent in the last one year, from the price of 112.00, which was also the 52 week high price as mentioned above.

The Beta of the stock has been reported to be at -0.0929, which means stock’s price movement, is inversely correlated to the movement of the comparative benchmark index.