CYBG PLC

CYB’s FY 2018- Focused Towards Organic Strategic Pillars, Acquired Virgin Money: CYBG PLC (ASX: CYB) had earlier reported the results for FY 2018 in which it stated that the company had managed to deliver the acquisition of Virgin Money. CYB had witnessed the rise of 4.7% with respect to the core lending on a YoY basis. Its customer deposits encountered the rise of 4.2% in FY 2018 on the YoY basis to £28.9 billion. It had stated that, in FY 2018, CYB had maintained the focus towards SME market and the favourable momentum was also witnessed in the specialist sector offerings.


CYB’s customer deposits (Source: Company Reports)

CYBG PLC happens to be in a strong position with respect to the efficiency ratio. At the end of FY 2018, it had an efficiency ratio of 112.2% which is higher as compared to the industry median which is 71.9%.

Mixed Outlook Moving Forward: CYBG PLC had stated that in FY 2018 it had worked towards its strategy and it had reflected favourable views with regards to the Virgin Money acquisition. As a result of this, the management stated that, CYB might witness positive momentum moving forward which would support the shareholders. In the upcoming months, the performance of CYBG would be sensitive to the news related to the Brexit as the company does not have its operation beyond UK boundaries.

However, as demonstrated by CYB’s preliminary financial results presentation, there are expectations that it would post the net interest margins (or NIMs) in the range of 160-170 basis points in FY 2019. This expectation of NIMs also includes the contribution from the Virgin Money.
 
Stock Recommendation: On the daily chart of CYBG Plc, Moving Average Convergence Divergence or MACD has been applied and default values were considered for the purposes. As per the observation, the MACD line has crossed the signal line and is moving upwards. This is a sign of the bullish momentum. However, the operating leverage of CYBG have witnessed a substantial fall on the YoY basis of 81.9% and ended FY 2018 with -59.7%. Talking about the stock performance, it had witnessed the fall of 43.99% in the span of previous 6 months.

Based on the above-mentioned factors, we maintain our “Expensive” recommendation on the stock at the current market price of A$3.280 per share.
 

Praemium Limited

Significant Inflows Witnessed in December 2018 Quarter: Praemium Limited (ASX: PPS) had released the update for the December 2018 quarter. As per the press release dated January 15, 2019, the company’s gross inflows in the December 2018 quarter stood at $768 million which reflects robust momentum. The release also stated that the gross inflows on the international basis stood at $183 million while the Australian gross inflows amounted to $585 million.

Praemium’s December 2018 Quarter (Source: Company Reports)

Duringthe December 2018 quarter, the company had stated that the extension with respect to the Asgard’s contract has been witnessed beyond November 2019.This extension has been achieved for six years and the minimum period stood at three years.
 
FY 2019 To Witness Deployments: As demonstrated by Praemium’s annual report of FY 2018, the company would be making deployments towards several initiatives so that the service experience can be further improved. These deployments would also benefit the adviser support. The company also has plans for the deployments towards field team. In addition, in FY 2019, the company would also be deploying towards brand as well as client communications.

Moreover, moving forward, the company’s platform might see further developments.

Stock Recommendation: On the daily chart of Praemium Limited, Moving Average Convergence Divergence or MACD has been applied and, for the purposes, the default values were taken into consideration. As per the observation, the MACD line has crossed the signal line and is trending in the upward direction. This signifies the bullish momentum. Therefore, there are expectations that the company’s stock might encounter upward movement moving forward.
Considering the above-mentioned factors, we maintain our “Hold” rating on the stock at the current market price of A$0.775 per share (up 6.897% on 16 January 2019).  
 

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