Join our community of smart investors

News & Tips: Bacanora Minerals, RBS, Entertainment One & more

Renewed banking sector concerns are weighing on sentiment
September 30, 2016

Equities have fallen sharply on renewed fears over Deutsche Bank which have led to wider concerns about the European banking sector. Click here for The Trader Nicole Elliott's latest thoughts.

IC TIP UPDATES:

Bacanora Minerals (BCN) has rejected an indicative reverse takeover offer from 19.8 per cent shareholder Rare Earth Minerals (REM). In dismissing the potential all-share bid, the board of Bacanora noted the offer was below the company’s six month volume-weighted average share price and came at a discount to the 100p-a-share price paid by REM in an off-market cash deal just last week. Bacanora’s non-executive chairman James Leahy added that the proposed offer “has the potential to impede the project’s development going forward”. Our recommendation is under review.

Despite ITV (ITV) walking away from a potential offer, Entertainment One (ETO) looks to be in good shape. The companies shares were up just over 1 per cent in morning trading after bosses sent out an in-line trading statement. The overall value of its content library, including the Peppa Pig series, increased to $1.5bn at the end of March, from $1bn a year earlier. Buy.

Our buy call Trinity Mirror (TNI) is down 2 per cent today despite a third quarter trading statement that reiterated profit expectations for the full year. Like-for-like revenue was expected to be down 9 per cent in the third quarter, compared with a fall of 8 per cent in the first half. The print advertising market has had a worse year than publishers expected. But we remain onboard with management’s restructuring efforts and its digital progress. Buy.

In a trading update for the six months ending 30 September, iomart (IOM) said that the recovery plan has stabilised the business and continues to drive performance. The Glasgow-based group notes the business “continued to perform strongly in the first half” on strong demand from business to move their services to the cloud. As a consequence, first half revenues and profits are likely to be “materially ahead” on the same period in 2015. Buy.

KEY STORIES:

Royal Bank of Scotland Group (RBS) has outlined its restructuring plans in order to comply with ring-fencing regulation due to come into force in 2019. The bank plans to create a holding company called NatWest Holdings for its ring-fenced investment banking operations at the start of next year. This will include its personal, private, business and commercial customer operations and the NatWest, Coutts and two Ulster bank divisions. Three divisions will sit outside the ring-fence, including the investment bank, which will be renamed NatWest Markets.

Equipment and plant hire services company Speedy Hire (SDY) revealed that revenue and pre-tax profit for the first half are expected to be ahead of the previous year, while profit for the full-year will likely be ahead of previous expectations.

It’s been a winning formula for Chinese technology and content company DJI Holdings (DJI) this year, with shares up 300 per cent in 2016. The company remains loss-making but backers must believe in the potential growth of the business, which is geared into the internet hungry Asian nation, given it has raised more than £40m through three share placings. Henderson Global Investors has joined its share register, one of several major institutions who have confidence in the company. A recent deal with Xinhuatong, through affiliate NewNet, which will see DJI providing a mobile payments service through the Zinhua News mobile app, represented a major development for the group given the rapid growth in paying for goods and services online. The move towards this sector is even more important given the group suffered a government freeze on China’s online lottery last year.

IG Group (IGG) has agreed to buy global news and research portal DailyFX from FXCM for $40m (£30.8m). The deal is expected to complete in October and management hopes it will help the trading platform’s ability to acquire new clients and retain existing clients.

Plus500 (PLUS) has been granted an operating licence in Israel by the Israel Securities Authority. Management for the contract-for-difference trading provider says the country is an attractive market given its regulated and developed financial market.

OTHER COMPANY NEWS:

Premier Foods (PFD) chairman David Beever will step down from the board next year. He will have spent nine years on the board of the group, which owns brands such as Bisto and Mr Kipling cakes, five of which have been served as chair. The board will now commence an external search for his successor, led by Ian Krieger, senior independent director.