The trend of weak purchasing managers' surveys continues, with weakening readings from Japan and China this morning. But the FTSE 100 index shrugged off the gloom to post gains in morning trading. The Trader reports.
IC TIP UPDATES:
Barclays (BARC) is to sell its 89 bank branches in Italy to CheBanca! as it continues to shed non-core assets. The group will book a £200m post-tax loss on the disposal, which will reduce its risk-weighted assets by £0.8bn. Meanwhile, Blythe Masters, who worked with Barclays' new boss Jes Staley at JPMorgan's investment bank, told Bloomberg she was "fully committed" to her current role, following a report suggesting she could be the next head of Barclays investment bank. We keep our buy rating.
BG (BG.) confirmed that the recommended cash-and-shares offer from Royal Dutch Shell (RDSB) has received approval from the Australian Treasurer through the Foreign Investment Review Board. This follows unconditional approval by the Australian Competition and Consumer Commission earlier this month and completes the regulatory review process in Australia. We retain Shell on an income buy.
Our decision to back travel group Go-Ahead (GOG) seems to have paid off, with the shares having rallied nearly 10 per cent over the past month. This morning the group reported some more good news: the Department for Transport has decided that its 65 per cent-owned train operating company, London Midland, will continue to run the West Midlands franchise until October 2017. Buy.
Early-stage pharma group Redx Pharma (REDX) has identified a fourth drug development candidate in 12 months. The group believes the so-called 'Porcupine inhibitor' molecule has the potential to target an embryonic signalling pathway implicated in the growth and resistance of cancer stem cells in pancreatic, triple negative breast and head and neck cancers. The shares jumped 5 per cent on this news, and given Redx's strong, wide pipeline, we continue to rate the shares a buy.
Engineering consultancy WYG (WYG) revealed pre-tax profit of £2.1m during the first half of the year, compared with a £0.4m loss in 2014. Its UK business led the way, with a 15 per cent increase in sales, largely thanks to improved infrastructure and planning markets. Buy.
Packaging group DS Smith (SMDS) announced an acquisition in Turkey alongside half-year results that showed solid growth partially undermined by currency movements. Organic volume growth for the six months to October clocked in at 3 per cent. Combined with rising prices and margins, that boosted adjusted operating profit by 12 per cent at constant currencies. But the pound's strength reduced this to 5 per cent at actual exchange rates. Buy.
KEY STORIES:
Purplebricks, an estate agent and lettings business, has raised £58.1m through an institutional placing, and is expected to be admitted to Aim with a market capitalisation of about £240m. As well as offering traditional services, the company hopes to use technology and software to "exceed customers' expectations" while undercutting traditional estate agents. Since its regional launch 18 months ago, the company now has the fourth-largest number of fee-paying customers in the market. Trading in the shares is expected to start on 17 December.
It could be 'bargain bin' time for the global brewing industry as SABMiller (SAB) eyes the potential sale of some of its European brands in order to overcome anti-trust issues connected to its impending takeover by rival Anheuser-Busch InBev. The marques up for sale include Peroni and Grolsch and their associated businesses in Italy, the Netherlands and the UK - and, "given the brand's premium positioning", UK-based Meantime.
It's playtime at toy maker Character (CCT) this morning after the group saw pre-tax profit rise 72 per cent to nearly £12.3m and turned a net debt position of £4.5m into a net cash one of the same magnitude. Management said the domestic market had traded "ahead of expectations" while international sales were "hampered by currency and the generally difficult economic climate". But the group said it expected its international trade to return to its "recent pattern of growth".
Aim-traded Midatech Pharma (MTPH) has had its merger with US group DARA Biosciences approved by the target company's shareholders. The deal was first announced back in June but will now move into the final closing stages. At that time Midatech said it would issue 5.4m new shares in exchange for outstanding DARA shares, which represented an initial consideration of more than £15m. In late November, Midatech said it was considering upping that offer to cover the cost of an additional new product.
Mercia Technologies (MERC) invested £4.4m into 11 portfolio companies including VirtTrade, Crowd Reactive and Edge Case Games in the six months to 30 September. Since listing on Aim a year ago, the UK technology investor has directly invested over £20m.
OTHER COMPANY NEWS:
Soft drinks company AG Barr (BAG) has posted some positive numbers this morning, thanks in part to its recent acquisition of Funkin. The group said that, including that business, sales for the 18 weeks to November 28 increased by 3.9 per cent compared with the equivalent period last year. That follows a difficult period, however, and year-to-date revenue is still 0.2 per cent behind the comparative figure. As ever, Christmas trading will be crucial.
Texas oil explorer Pantheon Resources (PANR) has completed drilling at the VOS#1 well, where pre-flow testing data indicates a "significant reservoir in the Eagle Ford/Woodbine sandstone". The shares are up 17 per cent today and more than fivefold this year so far, following a string of successful drilling results.
Impax Asset Management (IPX), which is a little too small for regular coverage, released its results today for the year to September 2015. Its assets were flat at £2.8bn with £77m of net inflows. The company hopes this week's Paris climate talks will be an "effective catalyst" for its resource efficiency and environmental investments.
Speedy Hire (SDY) has announced Chris Morgan as interim finance director. Mr Morgan was previously finance director at Go Outdoors and Focus DIY.
Fast-growing e-commerce specialist Clipper Logistics (CLG) posted very strong numbers for the six months to October. Sales rose 27 per cent to £142m as the company started a click-and-collect deal with John Lewis. But margins are thin, and costs are also rising fast.
