Spotlight On Two Stocks: TUNG & AA

Spotlight On Two Stocks: TUNG & AA

Tungsten Corp PLC

Tungsten Corp PLC (TUNG) is a London, United Kingdom-headquartered leading global supply chain enabler which founded the Tungsten Network’s electronic invoicing network in 2000 to help in accelerating global trade for customers. Tungsten Network seeks to improve business outcomes for the networked firms and is a compliant business transaction network which is backed by intelligent use of data. These include access to disruptive supply chain finance through Tungsten Network Early Payment, real-time spend information through Tungsten Network Analytics, electronic invoicing for connected supply chains through Tungsten Network and much more. The company has three operating segments, namely Tungsten Network, Tungsten Network Finance and Corporate.

Recent News

The company on 3 July 2019 announced that Andrew Lemonofides would join the company as its new Chief Executive Officer, taking over David Williams who will revert to his role as Chief Financial Officer.

Financial Highlights (FY19, in £m)

Results have been presented excluding Tungsten Network Finance to aid future comparability as the company announced its intention to divest Tungsten Network Finance on 30 April 2019. The company’s revenue in FY19 surged by 7.1 per cent to £36.0 million (FY18: £33.7 million). Representing growth of 6.1 per cent, revenue excluding the results of Tungsten Network Finance grew to £35.4 million (FY18: £33.3 million). As the take up of new products were lower than expected, and the company underperformed in onboarding and signing new buyer and supplier customers, growth was slower than both expectations and FY18 performance. Out of the composite revenue, 92 per cent was represented by recurring and repeatable revenue, against 90 per cent in FY18. Due to continued detailed focus on the cost base, the group was successful in reducing adjusted operating expenses by 10 per cent to £31.0 million (FY18: £34.3 million), which led to the group returning an EBITDA profit of £0.6 million (FY18: loss of £4.6 million). Excluding Tungsten Network Finance, EBITDA improved by £5.8 million to report EBITDA of £2.5 million (FY18: loss of £3.3 million). Operating loss for the year was £5.2 million (FY18: loss of £12.1 million), while the statutory loss for the year was £0.6 million (FY18: £10.1 million). Gross cash at the end of FY19 was £3.8 million, while net cash was £2.8 million at the end of FY19, as the company successfully generated cash flows of £1.9 million in H2.

Share price performance

Daily Chart as at July-23-19, before the market close (Source: Thomson Reuters)

At the time of writing (as on July 23, 2019, at 03:15 PM GMT), shares of Tungsten Corp PLC were quoting at GBX 53 per share; up by 1.92 per cent against the yesterday’s closing price level. The company’s market capitalisation (outstanding) stood at £65.70 million.

In the last 52-weeks, shares of Tungsten Corp PLC have registered a high of GBX 62.00 (as on Aug 21, 2018) and a low of GBX 19.95 (as on Dec 20, 2018). At the current trading level, as quoted in the price chart, its shares were trading 14.51 per cent below the 52-week high price level and 165.66 per cent above the 52-week low price level.

The stock’s volume (before the market close, at the time of writing) stood at 669,530. Stock’s average traded volume for 5 days was 132,981.80; 30 days- 225,363.87 and 90 days – 185,827.04.

The average traded volume for 5 days plunged by 40.99 per cent as against 30 days average traded volume. The company’s stock beta was 0.16, which means it was less volatile 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.

In the past 1 year, shares of Tungsten Corp PLC have delivered a negative price return of 3.70 per cent. However, on a year-to-date basis, the stock was up by approximately 90.48 per cent and surged by 34.89 per cent in the past three months.

Share’s RSI for the 30-days, 14-days and 9-days stood at 63.24, 66.14 and 69.09 respectively. Also, the stock’s 3-days RSI stood at 84.29. The volatility of the stock for 200 Days, 90 Days, 30 Days stood at 67.06, 42.15 and 40.63 respectively.

 

AA PLC

AA plc based in the United Kingdom provides roadside assistance and driving services to stranded vehicles due to breakdown or some other reason. The company has a dedicated workforce for helping motorists along the way or at homes, offices attending thousands of breakdowns every day. The company also owns a driving school. It also provides insurance services, particularly in the non-life sector, i.e. motor and home-related insurances. Furthermore, the company also provides financial services with regards to competitively priced credit facilities.

Financial Highlights (FY19, in £m)

The company’s revenue stood at £979 million (up by 2 per cent) in FY19 in comparison to the previous year. This rise can be attributed to both the Roadside and Insurance businesses doing well. The company’s EBITDA (trading) stood at £341 million (plunged by 13 per cent) in FY19 as against £391million in FY18 due to increased expenditure in both the business segments. The company’s operating profit (before exceptional items) plunged to £259 million (down by £45 million) in FY19. This reduction can be attributed to the £50 million plunge in EBITDA (trading) coupled with the extra expenditure of £26 million in the business segments along with Depreciation & Amortisation of investment in Capex and IT infrastructure. From a base of FY19, the company looks to achieve a target of 5-8 per cent CAGR for EBITDA (trading) by FY23.

The company’s PBT (Profit before tax) stood at £53 million in FY19. The company’s PAT (Profit after tax) stood at £42 million in FY19 as against £111 million in FY18. This fall can be attributed to the extra expenditure of £26 million in the business segments plus pension past service costs and the cost of Guaranteed Minimum Pension (GMP) equalisation.

The company’s PAT (adjusted) stood at £91 million in FY19 as against £133 million in FY18. The company’s EPS (adjusted) stood at 14.9 pence per share in FY19 as against 21.8 pence per share in FY18. These results were expected by the management. The adjustments in the calculations include exceptional operating items, pension service charges, share-based payments, contingencies, software impairments, and exceptional items. The company’s cash conversion ratio was good this year at 87 per cent (FY18: 94 per cent). The company’s operating cash flow stood at £258 million in FY19 as against £316m in FY18. The company’s net liabilities plunged by £65 million this year. The company announced a final dividend of 1.4 pence per share. The company’s credit ratings were recently reaffirmed, and it got refinanced successfully.

Smart Breakdown and Onward Mobility are launched recently. These digital products and services are launched by the company to enhance customer experience and shall bring in more membership’s enrolment for the company. The company’s insurance business is doing good, well supported by in-house underwriting of policies.

Share price performance

Daily Chart as at July-23-19, before the market close (Source: Thomson Reuters)

At the time of writing (as on July 23, 2019, at 03:37 PM GMT), shares of AA PLC were quoting at GBX 49.34 per share; down by 0.40 per cent against the yesterday’s closing price level. The company’s market capitalisation (outstanding) stood at £305.04 million.

In the last 52-weeks, shares of AA PLC have registered a high of GBX 127.40 (as on Sep 24, 2018) and a low of GBX 44.98 (as on Jul 01, 2019). At the current trading level, as quoted in the price chart, its shares were trading 61.27 per cent below the 52-week high price level and 9.69 per cent above the 52-week low price level.

The stock’s volume (before the market close, at the time of writing) stood at 394,794. Stock’s average traded volume for 5 days was 560,846.40; 30 days- 1,270,293.40 and 90 days – 1,250,516.08.

The average traded volume for 5 days plunged by 55.85 per cent as against 30 days average traded volume. The company’s stock beta was 2.03, which means it was much more volatile as compared to the benchmark index.

The shares of the company (at the time of writing) were trading below the 60-days and 200-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 AA PLC have delivered a negative price return of 56.28 per cent. Also, on a year-to-date basis, the stock was down by approximately 33.95 per cent and plunged by 39.10 per cent in the past three months.

Share’s RSI for the 30-days, 14-days and 9-days stood at 38.86, 45.85 and 50.51 respectively. Also, the stock’s 3-days RSI stood at 49.48. The volatility of the stock for 200 Days, 90 Days, 30 Days stood at 43.90, 35.92 and 38.00 respectively.

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