UK investors awoke to early gains across most of the world's major markets, perhaps reflecting relief that the leaders of the world's 20 largest nations have committed to shoring up global economic growth in the face of significant uncertainty. Following a parliamentary inquiry, a report has been published today about Sir Philip Green and his role in the downfall of BHS. Read The Trader Nicole Elliott's morning update here.
IC TIP UPDATES:
The newsflow is coming thick and fast with bookie William Hill (WMH), which just days after its chief executive James Henderson suddenly left the company, has been approached by rivals 888 (888) and Rank Group (RNK). The duo have not made a formal offer, so details are scant, but they believe there is “significant industrial logic in the combination, through consolidation of their complementary online and land-based operations”. William Hill has said it will listen to any offer but that it is “not clear that a combination of William Hill with 888 and Rank will enhance William Hill's strategic positioning or deliver superior value to William Hill's strategy which is focused on increasing the group's diversification by growing its digital and international businesses”. That said, shareholders in WMH will be aware that the company has been a wallflower at the gamblers' dance, which has seen many of its rivals tie the knot in major deals. The stock is up 9 per cent this morning, highlighting the market's preferred outcome. Buy.
Investors sent shares up 2 per cent in response to a second-quarter operational update from Atalaya Mining (ATYM), after the Spanish copper producer announced a 15 per cent increase in ore processed, at consistent grades. Atalaya added that it was continuing to evaluate funding options to support its short-term working capital needs, ahead of a production ramp-up. Buy.
Falcon Oil & Gas (FOG) stock rose 5 per cent this morning, following news that it had successfully re-entered and cased the Amungee NW-1H horizontal well and spudded the Beetaloo W-1 vertical well in the Beetaloo Basin in Northern Australia. The explorer’s chief executive, Philip O’Quigley, said the ongoing drilling programme “could go a long way towards proving up the resource potential of the Beetaloo Basin”. We remain optimistic about Falcon’s carried, long-term potential. Buy.
A subsidiary of Cohort (CHRT) - Marlborough Communications Ltd - has been awarded an MoD Airborne Tactical Communications Support Contract valued at up to £7.7m. The contract is to provide support to certain specialist equipment and includes options covering additional development activities. Buy.
Speedy Hire (SDY) shares rose 2 per cent this morning following news that the hire company’s largest shareholder Toscafund has requested a shareholder meeting to remove the company’s Executive Chairman Jan Astrand and install turnaround specialist David Shearer. Hold.
Abcam (ABC) has continued to drive the top line upward in the second half of its financial year, reporting that revenues are likely to be up a fifth on last year. The growth has been particularly strong in the new RabMAB division - sales were up 29 per cent, far exceeding expectations. Non-catalogues products and Chinese operations have both been towards the upper end of forecasts. Buy.
KEY STORIES:
The cuts in airlines’ UK growth plans keep coming after low-cost carrier Ryanair (RYA) said it would pivot its growth away from UK airports and “focus more on growing at our EU airports over the next two years”. It added that in winter it would cut capacity and frequency on many London Stansted routes “where we are already significantly ahead of our multi-year traffic growth targets". No routes would close though, it added. Elsewhere, its first-quarter performance appeared robust, with passenger numbers up 11 per cent to 31.2m and pre-tax profits up 4 per cent to €256m (£214m). Perhaps one of the key metrics was its costs, which even excluding fuel fell 4 per cent thanks to various factors including cheaper financing, discounted airport growth deals and a weaker sterling, which was partly offset by slightly higher staff costs as five-year pay deals kicked in across its 84 bases and headcount rose in line with fleet growth.
Pork and chicken producer Cranswick (CWK) has seen its revenues for the three months to 30 June rise 11 per cent compared to the same period last year. Volumes rose 12 per cent as lower input costs fed through to customers. Encouragingly, export volumes to Far Eastern markets were 60 per cent ahead of the same period last year, reflecting both ongoing demand from the region and increased output from the group's two primary processing facilities. Management said the integration of Crown Chicken, which it acquired in April for £39m, is progressing well. Elsewhere, the group has sold its small sandwich business for £15m to IC buy tip Greencore (GNC). At Cranswick’s full-year results in May, the group pencilled in a £4.6m impairment in the sandwich division due to the loss of a sizeable contract although it had replaced this with a similar-sized one.
Image Scan (IGE), the AIM-listed specialist supplier of X-ray screening systems to the security and industrial inspection markets, has received another significant order for its ThreatScan®-LS1 portable X-ray system. The new contract, at just over £750k, is of a similar size to the order announced in June and comes from the same Asian territory.
Shares in CityFibre (CITY) climbed 2 per cent after the UK fibre optic infrastructure specialist revealed brisk trading in the first half of 2016. It inked contracts with a total initial value of £53.8m - more than double the value of deals signed in 2015. It also ended the period with 49 relationships with service providers such as Level 3 and SSE Enterprise Telecoms, compared with 33 a year ago.
Gross written premiums climbed 18 per cent at specialist insurer Hiscox (HSX) in the first half of 2016, propelling pre-tax profits up 52 per cent to £206m. Hiscox Retail contributed the most to group profits, while Hiscox USA grew strongly and Hiscox London Market benefited from expertise in niche areas and new types of business.
OTHER COMPANY NEWS:
Perhaps wary of investors cashing out after the payment of a $22m (£16.7m) maiden dividend, Randgold Resources (RRS) chief executive Mark Bristow this weekend remarked that the gold miner’s geologists had “defined the potential for additional resources below the Tongon pit” in Côte d'Ivoire, in addition to some near-mine satellites, which could collectively extend the mine’s life. The shares fell 2 per cent this morning, along with a slight decline in the gold price.
Rough diamond prices may have been down by an average of 6 per cent in the last year, but Petra Diamonds (PDL) can’t be faulted for trying to make up the difference in production. The precious gems miner produced 3.7 million carats in the 12 months to June, 16 per cent up on 2015 and above previously stated guidance. Despite a sharp increase in net debt and operational capital expenditure, investors were buoyed this morning by plans to increase this year’s production by as much as 30 per cent.
Amur Minerals (AMC), the nickel-copper sulphide explorer based in far-east Russia, has announced an update to its definitive feasibility study for the Kun-Manie project. The company now believes it can sustain 15 years of operations at a rate of 5Mt of ore a year, across four open pits, and between two and three underground operations.
US telecoms giant Verizon (US:VZ) has reportedly struck a deal worth nearly $5bn to acquire the core business of internet giant Yahoo (US:YHOO). It plans to merge Yahoo with AOL, which it bought for $4.4bn in 2015, in a bid to create the third-largest digital advertising titan after Google and Facebook.
Shares in Nintendo (JP:7974) slumped 18 per cent after the video game titan declined to raise full-year earnings guidance, despite the phenomenal early success of Pokémon Go. Although Nintendo has stakes in both of the mobile game’s developers - Google spin-off Niantic and The Pokémon Company - the implication is that it won’t contribute significantly to the group’s bottom line.
