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Summary
- GlaxoSmithKline Plc reported a revenue decline of 8% for Q3 FY20
- The Company partnered with COVAX to provide 200 million doses of Covid-19 vaccine.
- Ibstock Plc has reported a revenue of 88% of last year in Q3 FY20.
- The Company expects total adjusted EBITDA of £50 million in FY20.
GlaxoSmithKline Plc (LON:GSK) and Ibstock Plc (LON:IBST) are LSE listed healthcare stock and industrial stock, respectively. Shares of GSK were down by about 0.73%, shares of IBST were up 1.90%, respectively, from their last closing price (as on 29 October 2020, before the market close at 11:10 AM GMT).
Is GlaxoSmithKline Plc well-positioned for providing Covid-19 vaccine?
GlaxoSmithKline Plc is the FTSE 100 listed one of the world's leading research-based pharmaceutical and healthcare companies. The Company has three business segments that discover, develop and manufacture medicines, vaccines & consumer healthcare products.
(Source: Company website)
Financial Highlights (nine months ended 30 September 2020) as reported on 28 October 2020
In Q3 FY20, the Company reported sales of £8.6 billion, which declined by 8% year on year. The operating profit was £1.8 billion, and it was down by 13% year on year. For the first nine months of FY20 ended on 30 September 2020, revenues were increased by 2% year-on-year to £25.36 billion. Similarly, total operating profit is increased by 33% year-on-year to £6.72 billion for the nine months. Regarding the financial position, the Company has a free cash flow of £2.30 billion for the nine months ending on 30 September 2020. At the end of the reported period, GlaxoSmithKline had net debt of £23.88 billion, and it declared a dividend of 19 pence per share for Q3 FY20 that would be paid on 12 January 2021.
(Source: Company website)
Recent Updates
On 28 October 2020, GSK, along with Sanofi, signed a statement of intent with Gavi to support COVAX with 200 million doses of adjuvanted, recombinant protein-based COVID-19 vaccine. The COVAX Facility is part of COVAX, a global partnership of governments, world health organizations, and philanthropic organizations working together to accelerate development, production, and equitable access to COVID-19 vaccines. The approval from the regulatory authority is still pending and will be received by the first half of 2021. Both Companies are undergoing phase 1 and 2 trials for which results are expected by early December.
On 16 October 2020, Viiv Healthcare, subsidiary of GlaxoSmithKline Plc, received positive CHMP opinion for the long-acting regimen for the treatment of HIV. The long-acting regimen is based on co-administration of cabotegravir and rilpivirine injections once-monthly or once every 2-months to treat HIV-1. Ocabria injection is used in combination with Rekambys, has the potential to ease the day-to-day burden of HIV by offering significantly less frequent dosing from 365 days with oral regimens to 12 or 6 treatments per year.
On 22 September 2020, GSK and Sanofi have signed agreements with the Government of Canada to supply 72 million doses of Covid 19 Vaccine. The Companies are anticipating results of Phase-1 & 2 study done on 3 September 2020 by the end of the year. Sanofi & GSK are also increasing the manufacturing of the antigen with the target of producing up to one billion doses per year globally.
Share Price Performance Analysis of GlaxoSmithKline Plc
(Source: EODHD/Others, chart created by Kalkine Group)
Shares of GlaxoSmithKline Plc were trading at GBX 1,316.80, down by close to 0.73% against the previous closing price (as on 29 October 2020, before the market close at 11:10 AM GMT). GSK's 52-week High and Low were GBX 1,857.0 and GBX1,302.6, respectively. GlaxoSmithKline Plc had a market capitalization of around £68.29 billion.
Business Outlook
The Company is developing a Covid-19 vaccine, in partnership with Sanofi and results of Phase 1 & 2 trials are expected by early December. They are also working upon possible Covid-19 solutions by making strategic tie-ups, clinical trials for antibody therapy VIR-7831 are in process. GSK is confident and on track to meet its yearly target driven by the recovery in US vaccinations, despite significant disruptions caused by Covid-19. The R&D cost is expected to increase by a higher single digit for the entire FY20 as investments have been made in the late-stage pipeline.
Will Ibstock Plc's outlook remain gloomy?
Ibstock Plc is the FTSE 250 listed manufacturer of clay bricks and concrete products having operations in the UK and USA. The main products are clay bricks, brick components, concrete roof tiles, concrete substitutes for stone masonry, concrete fencing and pre-stressed concrete products.
(Source: Company website)
Q3 FY20 trading update as reported on 28 October 2020
- The Company reported Q3 FY20 revenues to be around 88% of the prior-year period. The Board is expecting adjusted EBITDA to be approximately £50 million for FY20 subject to no material disruptions. The net debt at the end of FY20 is expected to be lower than the net debt of £103 million reported at the end of H1 FY20.
- As volumes are recovering, the benefit of the cost and capacity actions taken from the start of the second quarter has resulted in an encouraging recovery in margins across both businesses, which are trending towards pre-COVID-19 levels.
- Despite significant uncertainty, a resurgence in demand is witnessed in Q3 FY20 across both business divisions, Clay & Concrete.
- Repair, Maintenance and Improvement (RMI) activities have witnessed massive growth driven by improving volumes of housebuilding customers.
- The Company has a significant revolving credit facility of £215 million which will expire in March 2022.
Recent Updates
On 8 October 2020, Ibstock Plc appointed Peel Hunt LLP as the joint corporate broker with immediate effect. Peel Hunt will work alongside existing broker, UBS.
H1 FY20 results (ended 30 June 2020) as reported on 6 August 2020
In H1 FY20, revenue declined by 36% constitutes, Clay division, down 43% and Concrete division, down 15% reflecting impact of Covid Pandemic. Loss before Tax was £52 million reflecting non-underlying cost and restructuring cost of £41 million. The financial position of the Company was robust having, leverage of 1.6x. Net debt on 30 June 2020 was £103 million.
(Source: Company results)
Share Price Performance Analysis of Ibstock Plc
(Source: EODHD/Others, chart created by Kalkine Group)
Shares of Ibstock Plc were trading at GBX 166.0, up by around 1.90% against the previous closing price (as on 29 October 2020, before the market close at 11:10 AM GMT). IBST's 52-week High and Low were GBX 323.98 and GBX 131.90, respectively. Ibstock Plc had a market capitalization of around £732.70 million.
Business Outlook
The Company has seen a resurgence in demand driven by improved housebuilding activity in both, repair, maintenance and improvement (RMI) and merchant markets. The volumes have reached at the same levels in October as it was in the prior year. However, there is significant uncertainty due to the second wave of Covid-19 and implementation of lockdowns, which may result in another shutdown of construction activity.
