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News & Tips: Greencore, Mariana Resources, BHP Billiton & more

Equities are taking a breather
April 26, 2017

Shares in London are relatively flat this morning despite the Nasdaq hitting a new record high in the US overnight. Click here for The Trader Nicole Elliott's latest thoughts on the markets.

IC TIP UPDATES:

Shares in Greencore Group (GNC) fell by 8 per cent yesterday after its largest US competitor Tyson Foods bought fellow packaged food maker AdvancePierre for $3.2bn (£2.5bn). Shareholders could be nervous that Greencore’s American business Peacock Foods could lose contracts as Tyson takes some of its outsourcing back in house. Our buy tip is under review.

In November, we tipped gold minnow Mariana Resources (MARL) on the belief that the world-class grades at its Hot Maden prospect in Turkey would attract the notice of larger peers. Today, the Aim-listed firm announced the receipt of a 110p a share bid from minority shareholder Sandstorm, representing a premium of 84 per cent to yesterday’s closing price. The cash and shares deal would give Mariana shareholders a 19 per cent stake in New York-listed Sandstorm, which perhaps explains why the takeover target is only up 36 per cent this morning. Our recommendation is under review.

Brooks Macdonald (BRK) reported a 6 per cent increase in discretionary funds under management during the first three months of the year. Overall net inflows were £0.3bn, while investment returns were the same amount. Funds under management stood at £9.9bn at the end of March. Buy.

Jupiter Fund Management (JUP) also recorded good net inflows during the first three months of the year. Net new business was £1.3bn, while it made £1.4bn in investment gains. Management reported particularly strong inflows in Asia and continental Europe. The shares are up 6 per cent on our buy tip, which we’re sticking with.

KEY STORIES:

Was Elliott Advisers’ long-running badgering of BHP Billiton (BLT) effective after all? In a quarterly operational update this morning, the commodities group announced that it will divest 50,000 acres of exploration land, and has placed its Fayetteville field up for review, just weeks after the activist fund manager stated that it had been pressing the miner to spin-off its US petroleum assets. As anticipated, full-year production estimates for copper has been hit by strikes at Escondida, while coking coal output is expected to be lower due to the effect of Cyclone Debbie.

Emerging markets-focused bank Standard Chartered (STAN) is enjoying more benign conditions in its core markets which has helped it to post a near-doubling in first quarter profits to $990m, boosted by falling bad debt impairments. This has led management to admit it is considering reinstating its dividend after a two year hiatus.

Full-year results from Boohoo (BOO) appear to have fallen flat despite a whopping 50 per cent improvement in annual revenues. Maybe that’s because the company upgraded top-line guidance four times this year, so investors are now immune to good news from the fast-fashion online retailer? Either way the shares fell in early trading. Of course, it could be an exercise in profit-taking after the shares soared close to 275 per cent over the last 12 months. Hardly much to complain about in the grand scheme of things.

Metro Bank (MTO) grew its loan book 11 per cent during the first three months of the year - on the prior quarter - to £6.5bn. Deposits were up 13 per cent during the same period, with the cost of deposits falling to 61 basis points from 66 basis points at the end of December. Meanwhile 72,000 customer accounts were added. The challenger bank reported £2m in adjusted pre-tax profits, up from £1.5m during the fourth quarter.

OTHER COMPANY NEWS:

As expected, gold production at Petropavlovsk’s (POG) mines fell in 2016, though several other key metrics moved in the right direction. Most encouragingly, all-in sustaining costs were down 8 per cent to $807 an ounce, while the refinancing allowed the net debt to fall to three times cash profits by the end of the year.

The worst of the flooding disaster that struck wallpaper manufacturer Walker Greenbank (WBG) appears to have passed as the company reported that sales last year rose 5.2 per cent to £92.4m. Its full year results for the year to 31 January 2017 included a £5.1m insurance payment that helped to compensate for lost sales following the factory flood in October 2016. Shares were up close to 3 per cent in early trading.