Business Performance Updates Of Two Stocks: XAR and JSG

About – Xaar PLC

Xaar PLC (XAR) is the world’s leading independent manufacturer of piezoelectric drop-on-demand industrial inkjet printheads. The company is a world leader in the development of inkjet technology as well, and its technology is used all over the world in a wide range of manufacturing and print applications. The group operates in three principal geographical areas: EMEA, Asia and the Americas, while its operations are differentiated in four operating segments: Product sales, commissions and fees, Royalties, Printhead and Product Print Systems.

XAR – Recent News

On 3rd September 2019, the company announced its trading update focused on the Thin Film business and a revised date for declaring its interim results which were earlier supposed to be released on 10th September 2019.

The company’s revenue in H1 FY19 was recorded at £22.5 million. There was revenue reversal whose realisable value needs reassessment and a review of the printhead inventory (XaaR 1201). The company had made a prudent move of creating a provision of £5.7 million, which will be reflected in the interim results of the first six months. The company had net cash balances of £21.6 million as on 30th June 2019.

The business of the company is expected to be weak than previously anticipated. This can be due to declining sales volume of the printheads (XaaR 1201,2001). Therefore, the company expects the business in the second half to be at par to that of the first half.

The company is currently focusing on strategic initiatives and expects more time to release a more eloquent update on the progress which might impact the first-half results. Therefore, the company has postponed the release of the results of first-half FY2019 to 26th September 2019. 

XAR – Financial Highlights for FY2018 period ended 31st December 2018 (£, million)

The group’s revenue for the period declined by 37 per cent to £63.5 million, due to the decrease in the Ceramics business. The company reported an IFRS operating loss of £15.1 million and an adjusted operating loss of £11.9 million, driven by a reduction in gross profit, increase in R&D and increase in Sales and Marketing expenses. Adjusted operating loss margin increased to 18.7 per cent as compared with the financial year 2017 of 17.8 per cent. Loss before tax as reported under IFRS was £14.9 million, while adjusted loss before tax was £11.7 million in FY18. The group reported adjusted loss after tax of £7.5 million as compared to a profit after tax of £16.1 million reported in 2017. The company’s net cash was recorded at £27.9 million at 31st December 2018 as against £44.7 million in FY17.

The group’s FY19 outlook remains challenging from the profitability perspective. Product Printing should see growth in China and from other products. In the last three years, the company has diversified its revenue flow with 79% of the revenue now generated from new products and businesses. However, sales of Ceramics-products have continued to decline, and the company had to face integration issues which slowed down its Thin Film product business. Brexit also poses significant risks for the company, most notably regarding EU workers and migration.

Key Risks for Xaar PLC

Competition, failure to identify market requirements, commercialising and maintaining products with cutting edge technology, Brexit, loss of manufacturing facility, inventory obsolescence, ability to access enough capital, customer credit exposure, and volatility in exchange rates.

XAR – Share price performance

Daily Chart as on 03-September-19, before the market close (Source: Thomson Reuters)

On 3rd September 2019, at 12:34 PM GMT while writing, XAR shares were trading at GBX 63 per share; which were down by 28.40 per cent as compared to the closing price level of the previous day. The company’s M-cap (market capitalisation) was recorded at £69.35 million at the time of writing.

On 7th September 2018, the shares of XAR have touched a new peak of GBX 199.00 and reached the lowest price level of GBX 61.80 on 3rd September 2019 in the last 52 weeks. The company’s shares were trading at 68.34 per cent lower from the 52-week high price mark and 1.94 per cent higher than the 52-week low price mark at the current trading level.

The stock’s traded volume was hovering around 390,309 at the time of writing before the market close. The company’s 5-day stock’s average traded volume was 14,798.80; 30 days average traded volume- 27,759.47 and 90 days average traded volume – 281,736.83. The company’s stock was less volatile in comparison with the index considered as the benchmark as the beta of the company’s stock was recorded at 0.46.

The shares of the company have delivered a positive return of 4.76 per cent in the last quarter. The company’s stock plummeted by 39.35 per cent from the start of the year to till date. The company’s stock has generated a negative return of 53.19 per cent in the last year. 

 

About – Johnson Service Group PLC

The company (JSG) is based in the United Kingdom and provides services related to renting of textiles. The company is a major supplier of protective wear, workwear and laundry services. These include linen services in the hospitality sector with products ranging from garments to dust mats. The company aims to provide higher levels of customer delight and satisfaction while ensuring quality, reliability.  JSG – Financial highlights for H1 FY19 period ended 30th June 2019

The company’s revenue surged by 9.8 per cent to £167.1 million in H1 FY19 as against £152.2 million in H1 FY18. This can be attributed to the South West Laundry acquisition which took place in August 2018 along with the acquisition of several contracts in January 2019. The company’s growth was driven by strong sales and high customer retention ratio. The company’s operating profit (adjusted) surged by 13.6 per cent to £22.6 million in the first half of FY19 as against £19.9 million in H1 FY18. This can be attributed to the adoption of IFRS 16 standards, which resulted in the benefit of £0.6 million and improving efficiencies along with growth in revenue. The company’s profit before taxation (adjusted) surged to £20.1 million in H1 FY19 as against £18.2 million in H1 FY18. However, this was slightly impacted by a net cost incurred due to the adoption of IFRS 16 standards to the tune of £0.2 million. The applicable tax rate (underlying) on the company was 18.9 per cent in H1 FY19 as against 19.5 per cent to H1 FY18.

The company’s total finance costs incurred surged to £2.5 million in H1 FY19 as against £1.7 million in H1 FY18. The company’s notional interest and borrowing costs were constant. However, the adoption of IFRS 16 standards resulted in an increase in cost (£0.8 million) with respect to lease liabilities recognition. The company’s diluted earnings per share (adjusted) surged by 10 per cent to 4.4 pence per share in H1 FY19 as against 4 pence per share in H1 FY18. The company’s total net debt (excluding the impact of IFRS 16) was recorded at £92.6 million as at 30th June 2019 as against £98.4 million in December 2018. However, post the adoption of IFRS 16 standards, the company’s net debt was recorded at £130.5 million at 30th June 2019. The company is reaping benefits on interest costs (on Floating rate) linked to LIBOR, which is at lower levels.

JSG Dividend policy

The company’s strong performance is reflected in its results. The company has increased the half-yearly dividend by 15 per cent to 1.15 pence per share in H1 FY19 as against 1 pence per share in June 2018. This is in accordance with the company’s progressive dividend policy. The payable date for the interim dividend is 1st November 2019; the ex-dividend date is 3rd October 2019. 

JSG – Share price performance

Daily Chart as on 03-September-19, before the market close (Source: Thomson Reuters)

On 3rd September 2019, at 12:39 PM GMT while writing, JSG shares were trading at GBX 163.6 per share; up by 0.12 per cent as compared to the closing price level of the previous day. The company’s M-cap (market capitalisation) was recorded at £608.70 million at the time of writing.

On 13th August 2019, the shares of JSG have touched a new peak of GBX 177.00 and reached the lowest price level of GBX 112.00 on 29 November 2018 in the last 52 weeks. The company’s shares were trading at 7.57 per cent below the 52-week high price mark and 46.07 per cent higher the 52-week low price mark at the current trading level as can be seen in the price chart.

The stock’s traded volume was hovering around 101,477 at the time of writing before the market close. The company’s 5-day stock’s average traded volume was 106,515.60; 30 days average traded volume- 174,169.00 and 90 days average traded volume – 274,179.04. The company’s stock was less volatile in comparison with the index considered as the benchmark, as the beta of the company’s stock was recorded at 0.53.

The shares of the company have delivered a positive return of 2.13 per cent in the last quarter. The company’s stock rocketed by 39.66 per cent from the start of the year to till date. The company’s stock has generated a positive return of 16.55 per cent in the last year. 

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