UK investors awoke to a continued downward trend for the FTSE 100, writes The Trader Nicole Elliott, as the index tested the lows of late July. The gold price recovered as investors searched for safe havens from volatility in emerging markets.
IC TIP UPDATES:
The fall-away in diamond prices continued to weigh on Gem Diamonds (GEMD) during the first half, along with liquidity concerns linked to the closure of Antwerp Diamond Bank. But the miner is on track to meet full-year production guidance following a successful processing upgrade at the flagship Letseng mine in Lethoso.
Imperial Tobacco (IMT) posted a 14 per cent rise in underlying net revenue from growth brands for the nine months to end-June as the cigarette titan grew underlying volumes by a tenth. However, total underlying revenue was flat and volumes fell 6 per cent. NHS agency Public Health England also released a report labelling e-cigarettes as 95 per cent less harmless than tobacco, which could pave the way for NHS prescriptions. We retain our income buy recommendation.
Shares in Juridica (JIL) slid 3 per cent after the corporate claims investor swung to a first-half loss of $34.2m. However, the group's life-to-date gross cash proceeds represent a 71 per cent return on total associated case investments of $168m. We downgrade our underperforming buy tip to hold.
Engineering consultancy Ricardo (RCDO) has struck a deal to buy UK-based environmental consultancy Cascade Consulting. The acquisition is expected to strengthen the group's foothold in areas such as water quality management, ecosystem services and environmental impact assessment. Buy.
KEY STORIES:
Jelf Group (JLF) confirmed it was in preliminary talks with peer Marsh regarding a potential cash offer for the company. Investors sent the insurance broker's shares up a fifth on the news.
Shares in Admiral (ADM) rose 5 per cent after the owner of compare.com and Confused.com grew its customer base by 6 per cent to 4.2m in the six months to June. Profits rose 6 per cent to £219m at the key UK car insurance business, and management narrowed the loss at the international car insurance segment to £11.2m.
In the week that US activist investor Harris Associates boosted its stake in Glencore (GLEN), the Swiss commodities giant revealed that first-half gross profits had halved to $1.65bn (£1.06bn). With troubles mounting, Glencore has responded by pulling the reins on next year’s capital spend and selling off underperforming mining assets.
FTSE 100 debutante Hikma Pharmaceuticals (HIK) reaffirmed full-year revenue guidance despite an 18 per cent slump in first-half operating profits to $194m. Management's confidence reflects the strong performance of the group's branded division in the key Middle East and North Africa markets, and the segment's tie-up with UK vitamin and supplement firm Vitabiotics.
OTHER COMPANT NEWS:
It has been revealed that Sirius Minerals (SXX) has upgraded its supply agreement with an existing Fortune 500 US agri-business customer. The revised deal will see the base amount of polyhalite supplied triple to 1.5m tonnes per annum. The initial contract term is extended from five years to seven years.
The UK's Oil & Gas Authority (OGA) announced that an initial tranche of 27 blocks are being formally offered to companies involved in shale gas exploration in the UK’s 14th Onshore Oil and Gas Licensing Round.
Petroceltic (PCI) said a tendering process had begun for the EPC (engineering, procurement and construction) contract for its key Ain Tsila gas project in Algeria. Four engineering groups have been invited to tender for the project, and it is expected that a recommendation will be made by the end of this year. That keeps Ain Tsila on track for first gas export in 2018.
Shares in EnQuest (ENQ) slid 5 per cent as a weak oil price weighed on first-half sales at the North Sea driller, driving cash profits down a fifth to $227m. On the bright side, management expects cost-cutting measures to lower unit operating costs from around $38 a barrel this year to below $35 in 2016.
