Performance Updates Of Three LSE Scrips: BAB, MRO and BUR

Babcock International Group Plc

Babcock International Group Plc is a United Kingdom-based specialist engineering services and equipment building company. The company’s different business segments include, defence and security, marine technology, support services and international business. The Marine technology vertical provides support to the United Kingdom’s Royal Navy submarines, naval warships and support infrastructure. The defence and security vertical offer engineering equipment management, knowledge management, training support services consultancy, information and the Support Services vertical delivers services in both public and private sector segments across three business areas: technical training, civil nuclear and asset management.

The company was founded 128 years ago in the year 1891, it has its headquarters in London, and its shares are listed on the London Stock Exchange where they trade with the ticker name BAB. The shares of the company are also components of the FTSE 250 index.

News Update

The company on 12 September 2019, came out with a news update that its Babcock Team 31, has been chosen by the United Kingdom’s Ministry of Defense as the preferred bidder to build and deliver its newest fleet of warships the Type 31 general-purpose frigates. The program will provide the UK with a fleet of five next-generation frigate ships, at an average unit cost of £250 million per ship.

Insights from Financial Results

The company on 22 May 2019 came out with its full-year financial results for the year ended 2018-19 ending on 31 March 2019.

  • The company’s underlying revenue of £5.2 billion is in line with the guidance given by it in February 2019. Exits & disposals and lower activity in the short cycle parts of the company’s business impacted its revenue, whereas performance on long-term contracts continues to remain strong.
  • The Underlying operating profit of the company improved by 0.7 per cent to £588 million
  • The net debt of the company stands at £958 million, reduced by £157 million year-on-year representing 1.4 x EBITDA, which is in line with the guidance given by the company.
  • The combined order book and pipeline of the company stood at £31 billion as on 31 March 2019.

Source – Company’s Annual report published on 22 May 2019

Stock Price performance at the London stock exchange (YTD)

(Comparative chart of BAB and the FTSE 250 index, Source – Thomson Reuters    

Stock performance at the London stock exchange over the past five days 

Price Chart as on 12 September 2019, before the market close (Source: Thomson Reuters)

On 12 September 2019, at the time of writing the report (before the market close, GMT 1.15 PM), BAB shares were trading on the London Stock Exchange at GBX 549.4.

The stock has a 52-week High of GBX 733.80 and a 52-week low of GBX 410.10. The total market capitalization of the company was around £2.72 billion.

Outlook

The company has bagged some significant contract (United Kingdom-based) during the year of integration of new training technology overall its naval bases and air force stations (MARTASS). The Naval Design Partnership is beginning continuous production of Royal Navy’s missile launch tube assemblies, Test Reactor dismantling of Dounreay  Materials and a new ten-year Railways contract.

The present contract win by the company will keep it occupied till 2027 when the final ship is up for delivery. The company has a secured revenue base backed by a strong order book spanning over the next seven years.

Melrose Industries Plc

Melrose Industries Plc is a United Kingdom based company specializing in the buying of Underperforming companies, improving them and selling them. Since its inception in 2003, it has a history of successfully turning around many companies.

The company also owns manufacturing and industrial setups with leading market positions operating in multiple geographical regions and across sectors with a special focus on Aerospace, automotive and powder metallurgy.

The company’s shares were listed on the London Stock exchange on 31 August 2016, where they trade with the ticker name MRO. The shares of the company also form part of the FTSE 100 index.

News Update

The company on 5 September 2019 came out with its half-yearly results for the period ending 30 June 2019.

Insights from Financial Results

  • The Adjusted operating profit of the company for the period was £539 million, which after excluding the uplift from loss-making contracts stood at £494 million.  The statutory operating loss for the company was £11 million, and of the £550 million adjusting items, only £79 million were in cash.
  • The Net debt of the company stands at 2.3x EBITDA, which is better than what the management has expected. This was because of the stronger cash generation during the period. The adjusted free cash flow from the company’s continuing operations stood at £256 million.
  • The board of the company has declared an interim dividend of 1.7 pence per share which is a growth of 10 per cent in comparison to a dividend of 1.55 pence declared by the company for the half-year ending period 30 June 2018.

 

Source – Company’s half-yearly report published on 5 September 2019

Stock Price performance at the London stock exchange (YTD)

(Comparative chart of MRO and the FTSE 100 index, Source – Thomson Reuters  

Stock performance at the London stock exchange over the past five days 

Price Chart as on 12 September 2019, before the market close (Source: Thomson Reuters)

On 12 September 2019, at the time of writing the report (before the market close, GMT 11.10 AM), MRO shares were trading on the London Stock Exchange at GBX 207.30.

The stock has a 52-week High of GBX 226.40 and a 52-week low of GBX 145.94. The total market capitalization of the company was £10.12 billion.

Outlook

The aerospace division of the company during the reported period performed significantly better than the corresponding previous half-year period. The share of this division in the group’s adjusted profits for the period rose to 34 per cent for the six month period ending 30 June 2019, making it the company’s largest division and profit driver.

Many operational enhancement programs and capital investment initiatives are underway to boost the company’s performance further, while sufficient progress is being achieved in resolving the GKN contracts issue.

The management believes that the performance of the company for the rest of the year will be in line with its expectations.

Burford Capital Limited

Burford Capital Limited is a multinational company providing financing services to legal professional companies and individuals. The company offers financing services to clients and lawyers engaged in arbitration, litigation, asset recovery and other legal finance and advisory practices.

The company’s shares are listed at the AIM segment of the London Stock Exchange where they trade with the ticker name BUR.  The company has been a recipient of the 2017 AIM award for the innovative fundraising for the year.

News Update

Burford Capital Limited on 2 September 2019 came out with disclosure document stating the chronology of its investments in Napo Pharmaceuticals. The document has been placed on the company website for reference of investors and the general public. It is to be noted that a US research firm Muddy Waters had levelled allegations that Burford Capital Limited has misled investors on its investments in the pharma company.

Insights from Financial Results

On 25 July the company came out with its interim financial results for the period ended 30 June 2019.

  • The profit after tax of the company for the six-month period ending 30 June 2019 grew by 36 per cent to $225 million over $166 million for the previous six-month period ending 30 June 2018. operating profit of the company for the period grew by 37 per cent to $251 million over $183 million figure corresponding to the previous six-month period ending 30 June 2018
  • Cumulative returns on the company’s core litigation investment portfolio grew to a 98 per cent return on the invested capital net of losses for the half-year, while for the period ended 31 December 2018 it stood at 85 per cent. The internal rate of return for the period stood at 32 per cent while for the period ended 31 December 2018 it stood at 30 per cent.
  • Investment management income swelled by 35 per cent with the SWF arrangement and Burford Opportunity Fund 25 per cent and 63 per cent committed respectively; Burford Alternative Income Fund saw a closing with $300 million in commitments.
  • The company will give out a dividend of 4.17 cents for the 1H19, which is a 14 per cent increase over 1H18 dividend of 3.67 cents per share. It is payable on 5 December 2019 to shareholders whose names appear on record on the close of the business day on 15 November 2019.

 

Source – Company’s half-yearly report published on 30 June 2019

Stock Price performance at the London stock exchange (YTD)

(Comparative chart of BUR and the AIM Allshare index, Source – Thomson Reuters           

Stock performance at the London stock exchange over the past five days 

Price Chart as on 12 September 2019, before the market close (Source: Thomson Reuters)

On 12 September 2019, at the time of writing the report (before the market close, GMT 12.35 PM), BUR shares were trading on the London Stock Exchange at GBX 799.5.

The stock has a 52-week High of GBX 2045.00 and a 52-week low of GBX 380.20. The total market capitalization of the company was £1.72 billion.

Outlook

Sir Peter Middleton, the chairman of the board while commenting on the results, said that company has an unbridled optimism about the future and that the company is well-positioned to continue to lead the legal finance industry into the next decade of growth.

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