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News & Tips: Moneysupermarket, Debenhams, Unilever & more

Today's market overview

News & Tips: Moneysupermarket, Debenhams, Unilever & more

London shares have had a subdued morning amid ongoing political uncertainty. Click here for The Trader Nicole Elliott's latest view on the markets.

IC TIP UPDATES:

Forewarning the market that 2017 first half trading might be difficult seems to have been a good strategy at Moneysupermarket.com (MONY). A steady first quarter trading update, which revealed revenues up just 2 per cent, has sent shares up 2 per cent in early trading. The insurance and Travelsupermarket.com business divisions are performing well, but Money and MoneySavingExpert have struggled. We still like the long term prospects for the group. Buy

Shares in high street chain Debenhams (DEB) fell 4 per cent this morning despite half-year pre-tax profits of £87.8m reporting in line with market expectations. More important was the announcement of a turnaround strategy by new chief executive Sergio Bucher - who’s been in the role since last October. A possible 10 stores will close, and investment in store cafes, restaurants, and beauty services stepped up. Mr Bucher said he also plans to exit some international markets, although further details won’t be forthcoming until later this year. With analysts proposing further downgrades to full-year figures, our recommendation is placed under review.

There’s a new chief financial officer over at Card Factory (CARD). Kristian Lee - who has served in the same role at The Edinburgh Woollen Mill Group for the last five years - will succeed Darren Bryant who announced his retirement in January. Dates of his appointment are yet to be finalised. We remain buyers.

Shares in Amerisur Resources (AMER) are up 7 per cent this morning, after the Colombia-based driller announced its Platanillo-22 well has been tested at 613 barrels of oil per day, “materially ahead of pre-drill expectations”. The result keeps the company on track to hitting its production target of 6-7,000 barrels of oil a day (bopd) and should advance the drop in operating expenditure once OBA throughput hits 5,000bopd. Buy.

Recent tip Inspired Energy (INSE) ticked up 1.5 per cent in early trading after the company acquired public sector energy procurement specialist Flexible Energy Management Limited for £2.2m and energy procurement consultancy Churchcom Limited, which focuses on the church sector, for £1.4m. The deal was financed by the group’s existing resources and increase the company’s procurement corporate order book to £30.9m. We stay at buy.

KEY STORIES:

Diploma (DPLM) has strengthened its healthcare business with the acquisition of clinical diagnostics company Abacus ALS Pty. The deal cost the technology distribution group £13.6m including net debt, but before acquisition costs. Shares remained more or less flat on the announcement, down less than 1 per cent in early trading.

Telecom Plus (TEP) has reported ‘modest growth’ in customer numbers and profits in its full year trading update, but has cut 2018 guidance by 3 per cent. The good news for shareholders however is that the £70m proceeds from the recent sale of Opus Energy Group will be returned to shareholders in the form of a special dividend over the summer.

Language translation tech group, SDL (SDL) is continuing with its streamlining strategy. This morning management has announced the disposal of its loss naming Social Intelligence Business for £1.The transaction is expected to lead to a loss on disposal of £0.5m, but new chief executive Adolfo hernandez has expressed “relief” in finding a home for the business.

Unilever (ULVR) beat expectations for the first quarter of the year after the failed takeover attempt by Kraft Heinz pushed the business to drop its spreads business and combine foods and refreshments. The consumer goods giant has begun to split out the spreads business in its results to show investors that it will be better off after the sale, as underlying sales growth was 3.4 per cent excluding the division compared to 2.9 per cent across the whole company. Shares remained stayed relatively flat after the announcement.

Shares in public transport provider Go Ahead Group (GOG) are up 5 per cent this morning after the company released a third quarter trading statement that suggests it has begun to recover from the strikes on Southern rail. Passenger revenue of 6 per cent for London Midland service helped to offset the 5 per cent loss of revenue on GTR. The group has also managed to maintain its full-year guidance this morning - something the market was clearly pleased to see.

Man Group’s (EMG) fortunes may be changing. The hedge fund manager reported net inflows of $3bn (£2.3bn) during the first three months of the year, driven by new business primarily in its discretionary long-only and fund of funds alternatives strategies. Along with investment gains of $2.2bn, this pushed assets under management up to almost $89bn.

The strain of the Tanzanian government’s ban on exports of gold concentrate is starting to show its mark on Acacia Mining (ACA). This morning, the company posted a strong production result for the first quarter of 2017, and has retained full-year guidance of 850-900,000oz, though the drop in net cash from $218m to $196m over the period suggests a steady build up in working capital. Given that Acacia estimated that every job at its mines supports 11 further jobs in the Tanzanian economy, the company is likely to highlight the potential loss of employment that would result from the forced closure of Bulyanhulu or Buzwagi.

Recruiter Gattaca’s (GATC) shares took a tumble last week after the group warned on profits, but they have stayed flat following the release of its interim results this morning. As warned, Net fee income was down 4 per cent in constant currency, driven by drops of 4 and 5 per cent in engineering and technology respectively.

There were few surprises in first quarter production figures for Rio Tinto (RIO), though there was a reduction in estimated copper production, from a range of 525-665kt to 500-550kt, due to the Escondida strike and Grasberg.

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By Graeme Davies,
20 April 2017

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