Results Update For Micro Focus And Synnovia

Results Update for Micro Focus And Synnovia

Micro Focus International PLC

Micro Focus Plc (MCRO) is engaged in delivering and supporting software solutions. It is a pure-play software firm, focused on developing, selling and supporting software. The company focuses on offering an invariably high level of consumer satisfaction through extraordinary product implementation.

Trading Update (as on May 16, 2019)
From April 30, 2019, the company’s return of value stood at $1.8 billion, due to the proceeds of the SUSE Business disposal, which was completed on March 15, 2019.  The company continues to target a mid-term net debt to Adjusted EBITDA ratio of 2.7x.

Financial Highlights for H1 FY19 ($, million)

(Source: Company’s filings, LSE)

 

The company’s revenue was as per the management expectations, pegged between minus 4 per cent to minus 6 per cent on a CCY basis (constant currency). The company booked a profit of $1,727.2 million on disposal of SUSE, and $1,800 million returned to shareholders. The company’s profit for the period stood at $1,397.1 million as against $619.7 million in H1 FY18.

 The company’s Adjusted EBITDA margin surged by 2.8ppt to 40 per cent on a CCY basis. The company delivered sound cash performance with Adjusted Cash Conversion of 115.1 per cent for H1 FY19 as against 96.1 per cent for H1 FY18. The company had a solid free cash flow (FCF) of $429.9 million in the six months ended April 30, 2019, as against $213.7 million in H1 FY18. The company’s net finance costs stood at $132.2 million in H1 FY19 as against $132.7 million in H1 FY18. The company’s Adjusted Diluted Earnings per Share growth from continuing operations stood at 8.4 per cent. The company has declared an interim dividend of 58.33 cents per share for the period.

The company’s net debt (adjusted) stood at $3,807.5 million for the period, which was 2.7x Adjusted EBITDA post including $1,800 million returned to shareholders in May 2019.

Cloud-based operations enable enterprises to scale their operations instantly, handle demand fluctuations, and access systems and services over a variety of devices at a lower cost. A decent business model is being used to focus on maximising and sustaining a track record of delivering value accretive growth.

The significant risk is associated with the product created by the company if the products do not meet the requirements of customers, they will seek alternative solutions, resulting in the loss of new revenue opportunities and the cancellation of existing contracts. Insufficient focus on essential research and development projects may damage the long-term growth prospects of the Group.

Micro Focus Plc Share price performance

Daily Chart as at July-09-19, before the market close (Source: Thomson Reuters)

At the time of writing (as on July 9, 2019, at 12:01 PM GMT), shares of Micro Focus Plc (MCRO) were quoting at GBX 2,091.5 per share; down by 0.28 per cent against the yesterday’s closing price level. The company’s market capitalisation (outstanding) stood at £7.21 billion.

In the last 52-weeks, shares of Micro Focus Plc have registered a high of GBX 2,174.50 (as on Jul 4, 2019) and a low of GBX 1,125.39 (as on Jul 11, 2018). At the current trading level, as quoted in the price chart, its shares were trading 3.81 per cent below the 52-week high price level and 85.84 per cent above the 52-week low price level.

The stock’s volume (before the market close, at the time of writing) stood at 419,741. Stock’s average traded volume for 5 days was 658,736.40; 30 days- 992,056.03 and 90 days – 1,089,901.46.

The average traded volume for 5 days was down by 33.60 per cent as compared to the 30 days average traded volume. The company’s stock beta was 1.46, reflecting higher volatility as compared to the benchmark index.

The shares of the company (at the time of writing) were trading above the 30-days and 60-days SMA, which shows a positive trend in the stock price movement and could further move up from the current trading levels.

In the past 1 year, shares of Micro Focus Plc have delivered a positive price return of 67.31 per cent. Also, on a year-to-date basis, the stock was up by about 52.49 per cent and was higher by 7.32 per cent in the past three months.

Share’s RSI for the 30-days, 14-days and 9-days stood at 58.25, 58.26 and 56.01 respectively. Also, the stock’s 3-days RSI stood at 31.15. The volatility of the stock for 200 Days, 90 Days, 30 Days stood at 32.87, 29.04 and 27.92 respectively.

Synnovia PLC

Synnovia PLC (SYN) formerly known as Plastics Capital PLC, is into manufacturing of plastic products for different markets and supplying to different parts of the globe. It manufactures plastic for industrial use and packaging businesses. It has factories in China and the United Kingdom.

Recent News

The company has signed new commitments with Barclays with regards to refinancing. A term loan amounting to £25.3 million with a maturity of June 2023 has been structured using new arrangements with an overdraft, invoice discounting, asset financing and export finance facilities. This new structured product will replace the existing agreement (maturing June 2021) with the bank.

Financial Highlights for the year FY19 (£, thousand)

(Source: Company’s filings, LSE)

The revenue of the company stood at £81.6 million for FY19, up by 8.7 per cent from £75.1 million in FY18. The company’s gross profit stood at £24.5 million in FY19 as against £24.1 million in FY18. The company’s gross margin stood at 30 per cent in FY19 as against 32.1 per cent in FY18.

The company incurred exceptional costs (including administrative expenses) which stood at £2.6 million this year as against £1.4 million costs in FY18. The company’s adjusted EBITDA stood at £7.5 million in FY19, which was 7.3 per cent more than the previous year.

The company’s adjusted profit before tax in FY19 was the same as in the previous year at £4.2 million. The company’s Basic loss per share stood at 2.4 pence in FY19 as against earnings per share (EPS) of 5.7 pence in FY18.

The company has invested in Capex for production across facilities considering future growth. This includes upgradation of existing systems, adding new moulders and tools, acquiring property (Flexipol) to create further space. The company’s Capex stood at £6.8 million in FY19 as against £3.7 million in FY18.

The cash inflow from the company’s operations stood at £6.2 million in FY19 as against £4.5 million in FY18. The net debt of the company also witnessed an increase of £1.3 million during the year to £16.4 million from £15.1 million in FY18.

The company’s depreciation surged by 13.7 per cent from the previous year due to rise in Capex. Furthermore, the interest costs rose by 9.8 per cent from the last year because of the increase in debt during the period.

The influence of Brexit on the company is difficult to assess in the near as well as in the long term. Notably, around 50 per cent of revenue comes from the UK and 15 per cent from the European Union. In a “no deal” scenario, there could be several risks involved which are difficult to predict as of now.

Synnovia PLC Share price performance

Daily Chart as at July-09-19, before the market close (Source: Thomson Reuters)

At the time of writing (as on July 9, 2019, at 1:01 PM GMT), shares of Synnovia PLC were quoting at GBX 83 per share; down by 2.92 per cent against the yesterday’s closing price level. The company’s market capitalisation (outstanding) stood at £33.38 million.

In the last 52-weeks, shares of Synnovia PLC have registered a high of GBX 121.00 (as on Jul 17, 2018) and a low of GBX 83 (as on Jul 09, 2019). At the current trading level, as quoted in the price chart, its shares were trading 31.40 per cent below the 52-week high price level.

The stock’s volume (before the market close, at the time of writing) stood at 24,015. Stock’s average traded volume for 5 days was 10,096.40; 30 days- 18,449.90 and 90 days – 11,547.82.

The average traded volume for 5 days was down by 45.28 per cent as compared to the 30 days average traded volume. The company’s stock beta was 0.45, reflecting lower volatility as compared to the benchmark index.

The shares of the company (at the time of writing) were trading below the 30-days and 60-days SMA, which shows a negative trend in the stock price movement and could further move down from the current trading levels.

In the past 1 year, shares of Synnovia PLC have delivered a negative price return of 21.56 per cent. Also, on a year-to-date basis, the stock was down by approximately 24.34 per cent and plunged by 8.56 per cent in the past three months.

Share’s RSI for the 30-days, 14-days and 9-days stood at 23.46, 11.93 and 4.23 respectively. The volatility of the stock for 200 Days, 90 Days, 30 Days stood at 17.96, 14.88and 16.75 respectively.