CYBG PLC

Q3 FY19 Numbers in-line with expectation Despite Macro Challenges: CYBG PLC (ASX: CYB) is engaged in the financial services such as corporate and retail lending along with customer deposits. Recently, the Company announced that two of its Directors had purchased CYB’s shares under the CYBG PLC Share Incentive Plan. Ian Smith, holding the position of Executive Director, purchased 129 shares at a price of £1.16 per share, followed by Fraser Ingram, holding the position of Group Chief Operating Officer, bought 130 shares at £1.16 per share on 1 October 2019.

3QFY19 Financial Highlight for the period ending 30 June 2019: CYB declared its third-quarter results for the financial year 2019 wherein the company reported Mortgage book at £60.4 billion, up 0.2% on y-o-y on account of higher redemptions in the period and lower new business volumes, in-line with the Group’s optimization strategy. The company reported Business lending at £7.7 billion, higher by 0.5% on pcp basis due to lower new business volumes in a subdued market, while the business has a strong Q4FY19 pipeline of new lending. Personal lending came in at £4.8 billion, grew 5.7% from the previous corresponding period, aided by the growth seen in the credit card segment. Customer deposit, on the other hand, reported a growth of 1.8% y-o-y to £62.8 billion during the quarter, driven by strong relationship deposit growth in the Business and Personal divisions. The company reported stable net cost risk, on nine months annualized basis at 21bps with asset quality resilient. NIM was reported at 168bps, came in 3bps lower on q-o-q primary due to the re-financing impact of a large volume of mortgage redemptions.


Q3 FY19 Performance Highlights (Source: Company Reports)

Outlook: As per the FY19 guidance, NIM is likely to be at the lower end of 165-170bps. The company also highlighted that despite the twin pressures of Brexit and the highly competitive mortgage market, the bank remains on track to deliver full-year performance, in-line with the previous guidance.

Stock Recommendation:The stock of CYB is trading at $2.020 with a market capitalization of $3 billion. The stock is trading close to the lower band of its 52-week trading range of $1.93 and $5.880. The stock generated negative returns of 42.42% and 43.97% during the last three-months and six-months, respectively. Thestock has corrected 18.04% and 0.95% in the last one month and five days, respectively, as on 2 October 2019.Price to book value of the stock stands at 0.3x on TTM basis as compared to the industry median of 1.0x. Despite the twin pressures of Brexit and the highly competitive mortgage market, the performance of the company remains on track, as per its earlier guidance. Considering the aforesaid facts, current price movements and business prospects, we recommend a ‘Buy’ rating on the stock at the current market price of $2.020, down 3.349% as on 03 October 2019.
 
 

amaysim Australia Limited

Decent Market Share Likely to Drive Growth: amaysim Australia Limited (ASX: AYS) operates in the delivery of simple and transparent mobile and retail energy plans.

FY19 Performance Highlights for the year ended 30 June 2019:amaysim Australia Limited announced its full-year results for FY19 wherein, the company reported a statutory revenue of $508.3 million, down 7.8% on y-o-y. AYS reported a statutory loss of $6.5 million as compared to the profit of $14.8 million during FY18. During FY19, the company reported a gross profit margin of 29.9% and EBITDA margin of 43.9%. Mobile subscribers of the business, during the year, came in at 624 million as compared to 655 million during the previous year. AYS’s energy subscribers came in at 8.3%, higher than FY18 at 207 million. The average revenue per user (ARPU) during the year stood at $25.3 for the mobile segment and $128.5 for the energy segment, respectively. Despite several macro challenges, AYS continued to hold 34% of MVNO (mobile virtual network operator) market during the year.


FY19 Financial Highlights (Source: Company Reports)
 
Outlook:As per the guidance, FY20 underlying EBITDA is expected to come in at $33 million - $39 million on ‘New GAAP’ basis, lower from $47.3 million in FY19. AYS also highlighted that the mobile market would remain highly competitive in FY20. The company will make new investments in marketing to increase the subscriber’s base.

Stock Recommendations:The stock of AYS is trading at $0.335 with a market capitalization of $94.44 million. The stock is trading close to the lower band of its 52-week trading range of $0.285 to $1.057. The stock has generated negative returns of 55.56% and 51.52% during the last three months and six months, respectively. The business has a decent market share within the industry and can utilize the growth of upcoming opportunities from the sector. The stock is trading at an enterprise value to EBITDA multiple of 2.8x on trailing twelve months basis (TTM) as compared to the industry median of 7.4x. Considering the aforesaid facts, recent price movements, valuation, business prospects, and current trading levels, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.335, up 4.688% as on 03 October 2019.

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