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Summary
- AVEVA is carrying no debt obligation and operating with robust cash position.
- The business outlook is resilient for AVV with high levels of recurring revenue.
- The acquisition of OSIsoft would be financed by the right issue and new debt facilities. AVV expects significant operational and financial benefits through the acquisition.
- Tritax Big Box REIT disposed of £134 million of assets in FY20.
- BBOX expects to collect 99% of Q4 FY20 rent by the end of November 2020.
- BBOX declared Q2 FY20 interim dividend per share of 1.5625 pence.
AVEVA Group PLC (LON:AVV) and Tritax Big Box REIT PLC (LON:BBOX) belongs to the Technology and Financials industry domain of the LSE market, respectively. Based on last 1-year trading performance, AVV’s stock is up by nearly 20.12%, while BBOX’s stock is up by around 8.48%.
AVEVA Group PLC (LON:AVV) – Accelerating digital transformation to add scale and industry diversification
AVEVA Group PLC is a FTSE 100 listed Company, which is a global leader in engineering and industrial software. It is a Holding Company that provides software services through three broader segments – EMEA, the Americas and Asia Pacific regions. It serves various industries, such as Marine, Power, Oil & Gas, Chemical, Mining, Pharmaceuticals, among others. Since 5 December 1996, it has been listed on the London Stock Exchange.
Upcoming Event: On 5 November 2020, the Company expects to announce its H1 FY20 results (for the six months ended 30 September 2020).
Key Recent Developments: Acquisition of OSIsoft remained on track
On 25 August 2020, AVV announced the acquisition of OSIsoft, to significantly add scale and industry diversification. The enterprise value of OSIsoft was US$5.0 billion at the time of announcement. OSIsoft has been growing revenue at a CAGR of 10.3% over the past ten years (FY09 to FY19), and it is expected to strengthen the AVV’s position as a global leader in industrial software. The acquisition is expected to be funded by a combination of new debt facilities and right issue capital raise.
Further, on 12 October 2020, AVV completed syndication of £250 million revolving credit facility. The debt financing had been made for the proposed acquisition of OSIsoft, which remains on track. The publication of the prospectus to launch the proposed right issue is scheduled in early November 2020.
(Source: Company Presentation)
Pre-close Trading Update (for the period from 1 April 2020 to 30 September 2020): Expects to report solid revenue growth in H1 FY21
As per the trading update released on 12 October 2020, AVV’s software witnessed a solid demand despite Covid-19 related disruption due to its diversified customers. Therefore, the outlook for FY21 remained unchanged, and it expects to report revenue of around £333 million in H1 FY21. Meanwhile, the order pipeline remained strong for FY21 due to higher contract renewals, including major Global Account contracts.
(Source: Company Presentation)
Financial Performance
In FY20 (for the year ended 31 March 2020), revenue increased by 8.8% year-on-year to £833.8 million while recurring revenue was up by 25.7% year-on-year. Similarly, EBITDA surged by 23.3% to £216.8 million against £175.9 million in FY19. Subsequently, final dividend per share was maintained at 29.0 pence. Regarding the financial position, it had a strong balance at the end of FY20 with cash and deposits of £114.6 million and was carrying no debt obligation.
Share Price Performance Analysis
(Source: EODHD/Others, Thomson Reuters)
Shares of AVEVA Group PLC were trading at GBX 4,531.00 and were down by close to 4.33% against the previous closing price (as on 12 October 2020, before the market close at 12:48 PM GMT+1). AVV's 52-week High and Low were GBX 5,364.00 and GBX 2,634.00, respectively. AVEVA Group had a market capitalization of around £7.66 billion.
Business Outlook
Despite the Covid-19 led disruptions, demand for the Company’s software remained solid, while order pipeline benefitted from large contract renewals. Adjacently, the acquisition of OSIsoft would accelerate the digitalization strategy to bring an extensive product portfolio to the market, and would deepen and broaden its relationship with new and existing customers. The transaction would also create substantial cross-selling opportunities across EMEA, the Americas and the Asia Pacific regions. Hence, it is likely to create material cash savings and synergies over a long period of time.
Tritax Big Box REIT PLC (LON:BBOX) – Ensuring sustainable dividend payout ratio
Tritax Big Box REIT PLC is a FTSE 250 listed Real Estate Investment Trust, which is headquartered in Bristol, United Kingdom. It focuses on funding the pre-let development of large logistics facilities. Its client includes major players in retail, automotive, logistics and consumer products sector. Since 9 December 2013, it has been listed on the London Stock Exchange.
Upcoming Event: The ex-dividend date for Q3 FY20 dividend is 22 October 2020, while the payment for Q4 FY20 is expected to be in April 2021.
Key Recent Developments: Declared an interim dividend following the decent portfolio performance
On 12 October 2020, it declared an interim dividend per share of 1.5625 pence for the period from 1 July to 30 September 2020. It is expected to paid on 13 November 2020 with an ex-dividend date of 22 October 2020.
Previously on 22 September 2020, the Company announced the disposal of three assets (please refer to the image below), for a combined consideration of £77 million. BBOX has sold assets of £134 million in FY20 so far (including £57.3 million of Chesterfield asset on 3 September 2020) to secure attractive returns for shareholders.
(Source: Company Website)
Trading Update – Q3 FY20: Reflecting decent portfolio performance and continuing strategic progress
As per the update released on 12 October 2020, the Company continued to be benefitted from changing shopping habits despite the uncertain economic backdrop as it witnessed increasing volume of online sales. Moreover, it is likely to collect 99% of Q4 FY20 rent by the end of November 2020 (including 89% of rent already paid). During the quarter, it also disposed of four assets for a total consideration of £134 million and generated an average levered IRR of above 12.5% per annum.
Financial Highlights (for the six months ended 30 June 2020): Reflecting resilient income and growth
As per the H1 FY20 results released on 6 August 2020, adjusted earnings were stable with successful development activity. Therefore, the Company declared a dividend per share of 1.5625 pence for Q2 FY20, resulting in H1 FY20 dividend per share of 3.125 pence. It represented a payout ratio of 96%. Meanwhile, LTV (loan-to-value) stood around 31.8% in H1 FY20, which fell in the target range of 30-35%. Adjacently, the net debt at the end of H1 FY20 stood was £1,256.5 million, which slightly increased from the level seen at the end of FY19 (£1,137.8 million).
(Source: Company Presentation)
Share Price Performance Analysis
(Source: EODHD/Others, Thomson Reuters)
Tritax Big Box REIT PLC's shares were trading at GBX 165.00 and were up by close to 2.20% against the previous closing price (as on 12 October 2020, before the market close at 1:01 PM GMT+1). BBOX's 52-week High and Low were GBX 165.30 and GBX 79.00, respectively. Tritax Big Box REIT had a market capitalization of around £2.69 billion.
Business Outlook
Despite the Covid-19 challenges, the logistic real estate sector remained resilient, and thus, the Company’s portfolio continued to collect a high proportion of the rent. The credit rating agency, Moody’s reaffirmed Baa1 long-term credit rating with a stable outlook. However, the plausible long-term impact from Covid-19 pandemic cannot be ruled out. Nevertheless, there is sufficient financial headroom and level of economic visibility to safeguard the business against a protracted period of economic weakness.
(Source: Company Presentation)
