Three Stocks Under Focus: Dechra Pharmaceuticals PLC, London Stock Exchange Group PLC and InterContinental Hotels Group PLC

Dechra Pharmaceuticals PLC

Dechra Pharmaceuticals PLC (Identifier: DPH) is a Northwich, United Kingdom-headquartered international specialist veterinary pharmaceuticals products company, which is engaged in developing, manufacturing and marketing products for veterinarians. The portfolio of the group is well positioned in the therapeutic focus sectors, and it is focused on Companion Animal, Equine and Food producing Animal Products, which ensures a high margin, cash generative, specialist business. The operations of the group are differentiated in two operating segments, namely EU Pharmaceuticals Segment & North America (NA) Pharmaceuticals Segment and International Business.  The company’s operations are diversified according to products – Equine and Nutrition, Companion Animal Products (CAP) and Food producing Animal Products (FAP).

DPH-Recent announcement

The company will release its half year results for the six months period ended 31st December 2019 on 24th February 2020.

DPH-Financial highlights for FY19

Reflecting £447.6 million from its existing business and a £34.2 million from acquired businesses, the group reported consolidated revenue of £481.8 million, representing a rise of 17.5% on the prior year at constant exchange rate (CER) and 18.3% at actual exchange rate (AER). Consolidated underlying operating profit grew by 27.3% at CER (28.4% at AER) to £127.4 million, while consolidated reported operating profit increased by 13.5% at CER (14.4% at AER) to £39 million. Due to growth from both the existing and acquired businesses in EU Pharmaceuticals, underlying EBIT margin increased by 200 bps to 26.4%. Underlying EBITDA increased by 27.7% at CER (28.7% at AER) to £137.2 million. Reflecting the increased finance charges due to the financing of prior and current year acquisitions, consolidated profit before tax decreased by 4.8% at CER (and declined by 3.8% at AER) to £27.8 million, while reported diluted earnings per share declined by 19.6% at CER to 30.07 pence. Reflecting higher finance charges from the rise in debt and equity issuance, underlying diluted EPS grew by 16.6% to 90.01 pence, and dividend per share rose by 23.9% over the period to 31.60 pence

The company faces supply chain disruptions from Brexit as there is a threat of conflicting regulations and codes, which might result in increased product costs due to difficulties in procuring scarce materials on commercially acceptable terms. In several markets, to consolidate their purchasing, veterinarians are establishing buying groups, which may result in reduced margins. Generics or superior products or failure to meet regulatory requirements can impact the position of the group in the market.

DPH-Share price performance

Daily Chart as at October-18, 2019, before the market closed (Source: Thomson Reuters)

On 18 October 2019, at the time of writing (before the market close, GMT 2:50 PM), Dechra Pharmaceuticals PLC shares were trading at GBX 2,644 per share, down by 1.19 per cent against the previous day closing price. The stock’s 52-week High and Low are GBX 3,080.00/GBX 1,992.00.

London Stock Exchange Group PLC

London Stock Exchange Group Plc (Identifier: LSE) is a London, United Kingdom-headquartered company which engages in international markets infrastructure business, operating a wide range of equity, ETF, bond and derivatives markets. Analytics, Financial Indexing & benchmarking, and access to European capital markets are some of the domains in which company excels.

LSE-Q3 FY19 Trading update

The company’s total revenue surged by 12 per cent to £521 million in Q3 FY19 from £464 million in Q3 FY18. The company’s total income surged by 12 per cent to £587 million in Q3 FY19 from £522 million in Q3 FY18. The company’s gross profit surged by 14 per cent to £529 million in Q3 FY19 from £465 million in Q3 FY18. The company’s financial position remains strong.

LSE-Financial highlights for H1 FY19

The group reported its half yearly results for the period ended on 30th June 2019 on 1st August 2019. The group’s revenue recorded a growth of 7 per cent on a YoY basis and stood at £1,018 million and total income surged by 8 per cent to £1,140 million against the same period of the corresponding previous financial year despite challenging market conditions.

FTSE Russell revenue expanded to £315 million in H1 FY19 from £290 million reported in H1FY18 and recorded a growth of 9 per cent on a Y-o-Y basis, due to rise in subscriptions and revenues derived from assets.

The company’s operating profit (adjusted) surged by 11 per cent to £533 million in H1 FY19 from £480 million in H1 FY18. The company’s operating profit was up by 2 per cent to £399 million on reported basis. The company’s pre-tax profit was recorded at £363 million.

The company’s earnings per share (adjusted) were up by 13 per cent to 100.6 pence per share in H1 FY19 from 88.7 pence per share in the same period of the previous year. The company’s basic earnings per share was recorded at 70.7 pence per share in H1 FY19.

The company’s board proposed an interim dividend of 20.1 pence per share, 17 per cent higher from the declared dividend in H1 FY18.

LSE-Share price performance

Daily Chart as at October-18, 2019, before the market closed (Source: Thomson Reuters)

On 18 October 2019, at the time of writing (before the market close, GMT 2:51 PM), London Stock Exchange Group Plc shares were trading at GBX 7,132 per share, up by 1.24 per cent against the previous day closing price. The stock’s 52-week High and Low are GBX 7,922.00/GBX 3,842.00. 

InterContinental Hotels Group PLC

InterContinental Hotels Group PLC (Identifier: IHG) is into hotel operations. The company owns, franchises, manages and leases hotels. The company has its operations spread-out worldwide. Currently, the company has 5,723 hotels and 855,915 rooms under its brand name.

IHG-Trading update for Q3 FY19

The company’s net system size grew by 4.7 per cent Y-o-Y to 865 thousand rooms, is expected to achieve 5 per cent growth for full year 2019. The company opened 13 thousand rooms taking the total tally to 42 thousand rooms on a year-to-date basis. The company signed 73 thousand rooms on a year- to-date basis and 25 thousand rooms in the third quarter for the current fiscal.

IHG-Financial highlights for H1 FY19

In the first half of the financial year 2019, the company’s revenue from reportable segments surged by 12 per cent to US$1,012 million against the US$900 million in H1 FY18, while on an underlying basis, it increased by 13 per cent. Revenue from fee business surged by 2 per cent to US$730 million against the same period in 2018. Operating profit from reportable segments stood at US$410 million as compared to US$413 million in H1 FY18, while underlying operating profit rose by 2 per cent year over year. Fee margin from reportable segments reduced by 0.2 per cent to 53.7 per cent as compared with the corresponding period of the last year. Adjusted EPS stood at 143.2 US cents, a decrease of 1 per cent from the corresponding previous year period.

The company’s total revenue increased by 8 per cent to US$2,280 million in H1 FY19 against the US$2,113 million in H1 FY18. Operating profit climbed by 14 per cent to US$457 million as compared to US$401 million in H1 FY18. The total revenue and operating profit increased because of an increase in System Fund from a deficit of US$12 million in the year to a surplus of US$47 million and a US$38 million decline in exceptional costs. Total gross revenue was up by 2 per cent (5 per cent at CER) to US$13.6 billion. The company’s Basic Earnings per share was 167.2 US cents in H1 FY2019 versus 122.6 US cents in H1 FY2018, an increase of 36.4 per cent. Interim Dividend per share increased by 10 per cent to 39.9 US cents against 36.3 US cents in H1 FY18.

IHG-Share price performance

Daily Chart as at October-18, 2019, before the market closed (Source: Thomson Reuters)

On 18 October 2019, at the time of writing (before the market close, GMT 2:52 PM), InterContinental Hotels Group PLC shares were trading at GBX 4,572, down by 3.48 per cent against the previous day closing price. The stock’s 52-week High and Low prices are GBX 5,770.00/GBX 3,861.31.