FTSE 100 Stocks In Focus: Standard Life Aberdeen PLC, National Grid PLC, and Auto Trader Group PLC

Standard Life Aberdeen PLC

United Kingdom Based-Standard Life Aberdeen PLC (SLA) is into financial services with global footprint spread across 54 locations. The group manages and administers various assets and offers a wide range of financial products for emerging as well as developed economies across America, Middle East, Europe, Asia, and Australia. The company operates in various segments such as asset management services, Insurance services & joint ventures.

SLA-Financial Highlights for H1 FY19

Due to positive sentiment across market assets under management surged to GBP 577.5 billion in H1 FY19 as against GBP 551.5 billion as at 31 December 2018. Due to unfavourable market movements in 2H FY18, fee-based revenue plunged by 16 per cent to GBP 815 million in H1 FY19 as against GBP 966 million in H1 FY18. In addition, the company’s adjusted operating expenses plunged by 5 per cent to GBP 673 million in H1 FY19 as against GBP 712 million in H1 FY18. The company was able to optimise costs and reduce staff-related costs. This was followed by a fall in revenue, which resulted in an increase in cost to income ratio to 72 per cent in H1 FY19 from 69 per cent in H1 FY18. Adjusted profit before tax from continuing operations of GBP 280 million was 10% lower than H1 2018, reflecting a fall of 43% in adjusted operating profit to GBP 142 million.

The company’s diluted earnings per share (reported) stood at 27 pence per share while diluted earnings per share (adjusted) stood at 8.9 pence per share. The company’s interim dividend remained flat at 7.30 pence per share, and the company held cash balances of GBP 1.9 billion at the end of the H1 FY19. Over the last 12 months, the group has returned shareholders a substantial capital and is focused on driving operational efficiency and cost control.

SLA-Share price performance

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

On 3 October 2019, at the time of writing (before the market close, GMT 3:52 PM), SLA shares were trading at GBX 266.5 and down by 2.23 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 345.60/GBX 208.85.

 

National Grid PLC

United Kingdom-based global electricity and gas company, National Grid Plc (NG) is engaged in the transmission and distribution of electricity and gas. The company operates in the US, UK and North Eastern countries.

NG-Recent development

A rate case order for company’s Massachusetts Electric business has been issued by Massachusetts Department of Public Utilities (DPU), according to which a five-year rate plan with new rates will be applicable effective from 1st October 2019. This will result in a revenue increase of $38 million and a Return on Equity of 9.6 per cent.

NG-Financial Highlights for FY19

During the year under consideration, the company’s reported revenues from continuing operations slumped by 2.1% to £14.9 billion against £15.2 billion recorded in the year-ago period, due to the decline in the UK Electricity transmission and UK Gas Transmission segments but increased in the US Regulated segment. The company’s operating profit (underlying) plunged by 2 per cent (AER basis) to £3.4 billion in FY19 as against £3.5 billion in FY18, this impact can be attributed to the taxation reform on US revenues (regulated), and certain UK Gas Transmission revenue allowances were returned.

The company’s profit before tax (underlying) surged by 3 per cent to £2 billion as compared to that of the financial year 2018. The company’s earnings per share (adjusted) surged by 7 per cent to 59 pence in FY19 as against 55.3 pence in FY18. The company’s earnings per share (underlying) stood at 58.9 pence in FY19, a surge of 5 per cent as against FY18. The company recommended full year dividend of 47.34 pence per share.

Amid growing uncertainties over the global recession and Brexit related uncertainties, the utility stocks are considered as a safer investment picks during the tough times, because consumers may reduce their spending on discretionary items, but they will keep paying their electricity bills, water bills and other utility payments.

The teach-in will highlight the company’s continued robust growth prospects in the US, where asset growth is anticipated to be more than 8 per cent for the medium-term. The US energy industry needs substantial levels of investment to improve ageing networks, and approximately 80 per cent of the total US gas and electric investment will increase asset health and reliability.

The company has continued to make decent operational progress in the FY19 while maintaining decent levels of reliability and safety. The group’s board supports prospects to embrace and adopt innovation and technology as the UK ESO (Electricity System Operator) now uses artificial intelligence to improve solar energy  and wind output, and the US gas businesses now offer innovative data to the field strength and use technology to increase work schedule. US business is set to improve as the company has received several rate cases recently, which will improve returns and increase the Rate Base from the last 3-years.

NG-Share price performance

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

On 3 October 2019, at the time of writing (before the market close, GMT 3:55 PM), NG shares were trading at GBX 859.8 and down by 0.52 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 892/GBX 744.50.

 

Auto Trader Group PLC

Auto Trader Group PLC (AUTO) is a Manchester, United Kingdom-headquartered digital automotive marketplace. The consumer helps in bringing together the largest pool of vehicle sellers in the country with a targeted consumer audience.

AUTO-Recent developments

On 2nd October 2019, the company announced the acquisition of KeeResources Limited. Incepted in 2000, KeeResources Limited is a provider of software solutions for the automotive industry, including classified information for new and used cars which is used by the company to power its platform.

AUTO-Financial highlights for FY19

In the financial year 2019, the company’s reported revenue surged by 8% to £355.1 million as compared with the financial year 2018 of £330.1 million, due to an increase in revenues from trade and manufacturer & agency segments but offset by a decline in revenues from consumer services. The operating profit rose by 10% to £243.7 million against the £221.3 million in FY18while operating profit margin increased to 69%. Profit before tax climbed by 15% to £242.2 million as compared to £210.7 million in FY18. Basic earnings per share increased by 18% to 21 pence as compared with the financial year 2018 of 17.74 pence.

Cash generated from operations increased by 13% to £258.5 million against the £228.4 million in FY2018. Amount returned to shareholders totalled to £151.1 million through share buy-backs of £93.5 million and dividends paid of £57.6 million. Gross external bank debt declined from £343 million in FY18 to £313 million in FY19. The Board proposed a final dividend per share of 4.6 pence as compared with the financial year 2018 data of 4.0 pence per shareThe total dividend per share increased by 14% to 6.7 pence against the 5.9 pence in FY2018.

From the perspective of the market, the used and new car market share reduced in the financial year 2019. As per the estimates, both markets will continue to decrease for the fiscal year 2019.
The company announced the intention of the Trevor Mather as CEO, to step down from the Board and retire from the group on 31st March 2020.

During the last financial year, new car sales fell by 3.7%, and a slow market leads to a decrease in the number of new or used car transactions, directly impacting the earnings of the company. In the latest quarter, the UK economy contracted by 0.2%, showcasing the impact the general economy would have due to impending Brexit. Being in a discretionary industry, the market for cars would be highly affected, which does not augur well for the group.

AUTO-Share price performance

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

On 3 October 2019, at the time of writing (before the market close, GMT 3:57 PM), AUTO shares were trading at GBX 488.1 and down by 1.98 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 606.80/GBX 375.60.