Updates On Two Stocks: IG Group Holdings PLC And AFC Energy PLC

Updates On Two Stocks: IG Group Holdings PLC And AFC Energy PLC

IG Group Holdings PLC

IG Group Holdings PLC (IGG), with headquarters in the UK, provides an online trading platform in the Over the Counter (OTC) leveraged derivatives, exchange-traded derivatives and share dealing and investment instruments globally. The company primarily offers leveraged derivatives that include contracts for differences (CFDs) and spread betting (provided in the UK and Ireland only).

Recent News

On 23rd July 2019, the company reported a fall of almost a third in its earnings for the financial year 2019, driven by Europe’s clampdown on the provision of entry to high-risk financial betting to amateur traders. The mid-cap company, which permits individuals and other non-institutional retail investors to bet on currency, stock, and oil market moves, said pre-tax profit decreased by 31 per cent to 194.3 million pounds for the financial year 2019.

Financial Highlights (FY2019, £ million)

(Source: Preliminary Results, Company Website)

In FY19, the company’s net trading revenue declined by 16 per cent to £476.9 million as against £569.0 million in FY2018. The decline in revenue was due to the impact created due to ESMA measures and unfavourable market conditions. The company’s net operating income stood at £477.2 million in FY2019 versus £571.2 million in FY2018. The company’s operating profit declined to £192.9 million in FY19 as against £281.1 million in FY2018. The company’s PBT (Profit before tax) stood at £194.3 million in FY2019 versus £280.8 million in FY2018. The profit for the year attributable to the shareholders was £158.3 million in FY2019 versus £226.4 million in FY2018. The company’s basic earnings per share for the FY2019 was down by 30 per cent to 43.1 pence from 61.7 pence in FY2018. The group’s diluted earnings per share stood at 42.8 pence in FY19 versus 61.2 pence in FY2018. The company’s Board has recommended a final dividend per share at 30.24 pence, taking the full year 2019 dividend to 43.2 pence per share, that remains same at 43.2 pence per share paid for the financial year 2018. If the final dividend is approved by shareholders, then it will be paid on 24th October 2019 to those members on the register at the close of business on 27th September 2019.

Share Price Performance

Daily Chart as of July 26, 2019, after the market closed (Source: Thomson Reuters)

On July 26, 2019, IG Group Holdings PLC shares closed at GBX 560.60, down by 2.334 per cent from the last day closing price. Stock’s 52 weeks High is GBX 956.50, and 52 weeks Low is GBX 467.40. At the time of writing, the share was quoting 41.39 per cent lower than the 52 weeks High and 19.94 per cent higher than the 52 weeks low. Stock’s average traded volume for 5 days, 30 days, and 90 days was 1,444,450.40, 988,843.13, and 1,151,740.36. The average traded volume for five days surged by 46.07 per cent against the thirty days average traded volume.

On the valuation front, the company’s stock was trading at a trailing twelve months PE multiple of 13.3 times against the industry median of 12.3 times. The company’s stock beta stood at 0.14, reflecting lower volatility from the benchmark index. Total outstanding market capitalisation stood at around £2.07 billion with a dividend yield of 7.71 per cent.

The company stock has delivered a price return of negative 36.48 per cent at year-on-year basis, the stock decreased by 1.65 per cent at year-to-date basis, and the stock was up by around 7.56 per cent in the past three months. In the past one month, the company’s stock price reduced by 3.71 per cent. In the past five trading sessions, the stock declined by around 5.43 per cent.

Some Risks are Regulatory headwinds, especially lower leverage from other markets in which IG operates; falling and low volatility, reducing the incentive for clients to trade; sustained fall in the active client’s growth rate and the financial services transaction tax or changes in tax rates.

The company had shown weak financial performance in the financial year 2019, though, the company expects its revenue to grow in the Financial year 2020. The company will make an additional investment towards potential acquisition to promote the IG brand. The company believes that the macroeconomic and demographic trends of surging wealth and financial awareness, combined with a move towards self-direction, will support to increase the business. The company will make necessary changes in its operations for the growth of its client base and will focus on building new businesses in the USA and EU.

AFC Energy PLC

AFC Energy PLC (AFC) is an industrial fuel cell power company. The group develops alkaline fuel-cell systems using hydrogen to produce electricity. The group owns, maintains, installs, and operates alkaline fuel cell power projects. The company works with the development of fuel cells segment.  The company contributes in across three projects - POWER-UP, LASERCELL, and ALKAMMONIA. POWER-UP project contains the delivery and construction of the alkaline fuel cell system to an operative site in Germany.

POWER-UP project contains installation of around 500 kilowatt-electric fuel cell system across two phases, with 250 kilowatts each. ALKAMMONIA project mixes an ammonia fuel system, alkaline fuel cell system, and fuel processing system. The company mainly focuses on regions that provide market conditions for electricity created from fuel cells.

Financial Highlights (H1 FY2019, £)

(Source: Interim Reports, Company Website)

In H1 FY19, operating loss decreased to £2.1 million as compared to £2.8 million in H1 FY18, was due to close control of overheads. Loss before tax stood at £2.1 million, a decline from the same period in 2018. The loss for the period H1 FY19 was £1.9 million against the £2.5 million in H1 FY18. Basic and diluted loss per share stood at 0.49 pence, a decrease against the previous year same period data.

In the six months to 30 April 2019, the net cash outflow stood at £0.7 million. This net cash outflow includes amount raised of £0.8 million from the issue of shares before expenses and collecting £0.6 million for the Research & Development tax credits due at the year-end.

On 30th April 2019, the cash balance was £1.9 million against the £4.0 million in the same period of FY18, through a further £4.0 million before expenses available to be drawn down from the convertible bond facility. After the 30th April 2019, an additional amount has been raised of £1.1 million to fund the Go-to-Market strategy. During the last six months, the balance sheet had been strengthened from the strict expense and cash flow control, funds raised and available facilities. In respect of this half-yearly period, the Board of the company has not declared any dividend.

With the successful demonstration of CH2ARGETM prototype, the company is entering into the high growth EV (Electric Vehicle) charging market. This is the first electric vehicle charger in the world and has created on hydrogen fuel-cell technology. The company has signed an agreement with Rolec (Rolec Services Limited). In response to off-grid power genset market and emerging opportunities in the EV charger, the company had appointed a dedicated sales team. The company is also expanding its product variety through the ongoing development of supplementary products with decreased operating and footprint costs.

Outlook

In the coming months, the company will launch numerous new products, which will enable it to provide a wider range of consumer solutions. The company will do the expansion in the high-power density fuel cell project, which will decrease the footprint of the existing fuel cell and not only increase the power density but can also become a game-changer through alkaline electrolysis. For the EV charging solution, fully funded demonstration programme includes engagement of a commercial team with experience both in diesel generator markets and introducing new disruptive technology, building a re-locatable demonstration unit, and agreement to stage numerous roadshow events to EV charging operators. The company has expanded and increased the website visibility with greater importance on consumers, products and solutions.

Share Price Performance

 Daily Chart as at July 26, 2019, after the market closed (Source: Thomson Reuters)

On July 26, 2019, AFC Energy PLC shares closed at GBX 4.76 and declined by 2.766 per cent from the last day closing price. Stock’s 52 weeks High is GBX 9.48, and 52 weeks Low is GBX 2.72. At the time of writing, the share was quoting 49.79 per cent lower than the 52 weeks High and 75 per cent higher than the 52 weeks low. Stock’s average traded volume for 5 days, 30 days, and 90 days was 641,530.80, 683,046.37, and 1,484,746.16. The average traded volume for five days decreased by 6.08 per cent against the thirty days average traded volume.

On the valuation front, the company’s stock was trading at a trailing twelve months PE multiple of negative 4.9 times against the industry median of negative 3.3 times. The company's stock beta was negative 1.00, reflecting negative correlation as compared to the benchmark index. Total outstanding market capitalisation stood at around £21.30 million.

The company’s stock has delivered a price return of negative 48.59 per cent at year-on-year basis, the stock increased by 9.94 per cent at year-to-date basis, and the stock was up by around 54.13 per cent in the past three months. In the past one month, the company’s stock price reduced by 0.83 per cent. In the past five trading sessions, the stock declined by around 0.31 per cent.

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