Quick Insights About Three FTSE 100 Stocks: SMDS, TW and PSN

                     

On 4th September 2019, at the time of London stock markets’ closing, housebuilder Taylor Wimpey PLC, Persimmon PLC and DS Smith PLC, which is into the business of general industrials, were among the day’s top performers on the FTSE 100, each moving up by around 3%.

Stock comparison of DS Smith PLC, Taylor Wimpey PLC and Persimmon PLC

(Source: (Thomson Reuters)

DS Smith PLC

DS Smith PLC (SMDS) is a London, United Kingdom-based multinational packaging company. The group is involved in plastic packaging internationally and is also a top provider of corrugated packaging. The company’s packaging business is differentiated in six segments: UK, Western Europe, DCH & Northern Europe, Central Europe & Italy and North America.

Trading Statement (as on 3rd September 2019)

In the current scenario, the company continues to progress well despite the macro-economic uncertainty, and the prospects for overall financial performance remain unchanged. The outstanding client engagement and differentiators of service, innovation, scale, and quality have enabled robust pricing discipline. This, combined through ongoing operating cost-effectiveness and emphasis on cash flow generation, together with new business wins in the US and Europe, gives the company confidence in the resilient commercial model in spite of ongoing subdued volumes in several markets, in particular, those economies with substantial export-led market exposure.

Recent News

On 9th July 2019, the company reported that Kathleen O’Donovan would retire from the group’s Board with effect from the conclusion of the 2019 Annual General Meeting on 3rd September. The company also announced the appointment of Non-Executive Director, Celia Baxter, to the group’s Board. Celia Baxter will join the Nomination Committee, the Audit Committee, and the Remuneration Committee.

On 1st July 2019, the company had accomplished the sale of two packaging businesses in Portugal and France to International Paper for £56 million (€63 million).

Financial Highlights (FY2019, £ million)

(Source: Final Results Presentation, Company Website)

In FY2019, the company’s reported revenue stood at £6,171 million, an increase of 12 per cent as compared to £5,518 million in FY2018. The growth in revenue was due to organic growth from Europac and Interstate Resources. In the FY2019 period, the company’s adjusted operating profit stood at £631 million versus £492 million in FY2018. The group’s operating profit increased by £98 million to £427 million in FY2019 from £329 million in FY2018. The company’s adjusted PBT (Profit before Tax) climbed by 31 per cent to £569 million in the financial year 2019. The company’s reported PBT (Profit before Tax) increased to £350 million in FY2019 from £260 million in the financial year 2018. The Adjusted Basic Earnings per Share from continuing operations rose to 33.3 pence in FY2019 against the 30.7 pence in FY2018. The total dividend per share increased by 13 per cent to 16.2 pence in FY2019.

Outlook

The specialised offering helps to boost continuing market share and volume growth and the underlying drivers of demand for supportable corrugated packaging. In Germany, the company said that they saw volume weakness in certain export markets, but the group expects this to progress during the current financial year. Focus on operating efficiencies, cash flows, and pricing discipline support the opportunities for further progress in the coming year. The company’s capital expenditure plan of balancing asset renewal and an increase in investment opportunities and efficiency has been maintained.

Through a strong FMCG presence and focus on e-commerce, the company continues to win market share. Strategic acquisitions, along with strong organic growth, have considerably improved the company’s financial position, which has made the market confident about the prospects of the business.

In Indiana, the construction of the greenfield packaging plant will significantly increase the capability in the United States and decrease the long paper position, with production anticipated to start in this financial year 2020. Before the end of this calendar year, the company is expecting the completion of the disposal of the Plastics division.

Share Price Performance

(Source: Thomson Reuters)

(Daily Chart for the prior year as at September 05, 2019, before the market closed)

On September 05, 2019, at the time of writing the report (before the market closed, at GMT 10:42 am), DS Smith PLC was quoting at GBX 346.80, and rose by 2.09 per cent as compared to the last day closing price. Stock’s 52 weeks High and Low is GBX 494.40/GBX 285.83. The company’s stock beta was 1.06, reflecting more volatility as compared to the benchmark index. The outstanding market capitalisation was around £4.60 billion, with a dividend yield of 4.77 per cent.

Taylor Wimpey PLC

Taylor Wimpey Plc (TW), which was formed post the merger of George Wimpey and Taylor Woodrow and is known for building various types of homes in the UK, seems to be on investors’ radar lately given the overall economic and house price scenario.

Financial Highlights (H1 FY2019, £ million)

(Source: Interim Presentation, Company Website)

In the H1 FY2019, the company’s revenue stood at £1,732.7 million, an increase of 0.8 per cent as compared to £1,719.8 million in H1 FY18. In H1 FY2019, the company as a group completed 6,541 homes versus 6,497 homes in H1 FY2018. The group’s operating profit stood at £311.9 million in H1 FY2019, a decrease of 9.4 per cent to from £344.3 million in H1 FY2018. The decrease in operating profit was due to an increase in the geographic mix and build costs. The company’s PBT was £299.8 million in H1 FY19 against the £301.0 million in H1 FY18. The Profit for the current period stood at £242 million in H1 FY19 versus £244.5 million in H1 FY18. The group’s basic earnings per share decreased to 7.4 pence in H1 FY19 as compared to 7.5 pence in H1 FY18.

Outlook

In the full year 2019, the company expect the results to be in line with expectations. The company anticipate full-year 2019 volumes to be slightly higher from the financial year 2018. As the company have seen results from the planned approach to huge sites effect more quickly than anticipated. During this environment where pricing remained flat, and there is a rise in build cost, the margins will decrease in FY19 against the FY18.

The company continue to monitor the market for any changes and client trends closely and manage the corporate cautiously, mainly against the backdrop of the ongoing macro and political uncertainty. The company is impacted by Brexit but still had been able to meet expected sales expectations. The company is well-positioned with a robust balance sheet and order book.

Share Price Performance

 (Source: Thomson Reuters)

Daily Chart for the prior year as at September 05, 2019, before the market close

On September 05, 2019, at the time of writing the report (before the market close, at GMT 10:42 am), Taylor Wimpey PLC was quoting at GBX 153.55, and rose by 3.68 per cent as compared to the last day closing price. Stock’s 52 weeks High and Low is GBX 180.51/GBX 119.72. The company’s stock beta was 0.99, reflecting almost the same volatility as compared to the benchmark index. The outstanding market capitalisation was around £4.79 billion, with a dividend yield of 5.16 per cent.

Persimmon PLC

Persimmon Plc (PSN) is a leading British housebuilder and is headquartered in York, United Kingdom. The group is a part of FTSE 100 index and is listed on the LSE (London Stock Exchange). The company has 31 regional offices in the United Kingdom, and it trades under brands such as Charles Church, Persimmon Homes and Westbury Partnerships over England, Wales and Scotland.

Financial Highlights (H1 FY2019, £ million)

(Source: Interim Presentation, Company Website)

The group sold 7,584 new homes in the H1 FY19 at an average selling price of £216,942, leading to a fall of 5.6 per cent in new housing revenues to £1,645.3 million, while total revenues for the H1 FY19 were 4.5 per cent lower than H1 FY18 at £1,754.0 million. Underlying gross profit stood at £555.5 million (H1 FY18: £565.1 million), representing a gross margin of 33.8 per cent (H1 FY18: 32.4 per cent), while total gross margin for the H1 FY19 was 31.7 per cent (H1 FY18: 30.8 per cent). Operating profit for the current period stood at £506 million as compared to £513.8 million in the previous period, while underlying operating profit stood decreased by 1.6 per cent to £510.1 million (H1 FY18: £518.2 million). Underlying basic earnings per share reduced by 4.2 per cent to 130.6 pence as compared to the previous year same period data, while total basic earnings per share reduced to 129.3 pence in H1 FY19 from 134.9 pence in H1 FY18. On 30th June 2019, the underlying return on average capital employed was 40.5 per cent versus 41.7 per cent in H1 FY18 and return on equity stood at 31 per cent in H1 FY19.

Outlook

The housing market has been under huge stress lately, and weak sterling has translated into a higher cost of inputs, which was evident from lower margins, as uncertainties persist regarding the future trajectory of the UK economy after Brexit. However, the current forward sales position remained strong, with total forward sales revenue of £2.048 billion as consumer confidence remained resilient, benefitting from a competitive mortgage market, high levels of employment and low-interest rates.

The company has continued to attract good customer interest with the total visitor levels being comparable to the previous year, and it provides a wide range and choice of new homes on all its developments, with an emphasis on first-time buyers. Though political uncertainty is holding back new housing purchases and construction, the central bank is expected to seek an expansionary monetary policy, which would further decrease the cost of funds.

The Help to Buy scheme, which is to be in place till 2023, has helped the company in posting strong results, while company’s focus on low to mid housing market and in North England helps it to cushion the blow from Brexit-related effects on the property market.

Share Price Performance

(Source: Thomson Reuters)

Daily Chart for the prior year as at September 05, 2019, before the market close

On September 05, 2019, at the time of writing the report (before the market close, at GMT 10:42 am), Persimmon PLC was quoting at GBX 1,897.50, and rose by 1.66 per cent as compared to the last day closing price. Stock’s 52 weeks High and Low is GBX 2,495.43/GBX 1,802.50. The company’s stock beta was 0.94, reflecting slightly low volatility as compared to the benchmark index. The outstanding market capitalisation was around £5.86 billion, with a dividend yield of 12.59 per cent.

Facebook Comments