Shares in London have continued to slide backwards from their recent highs as concerns grow again that interest rate rises are back on the agenda.
IC TIP UPDATES:
Spirits company Diageo (DGE) has agreed to buy George Clooney’s tequila company Casamigos, or ‘house of friends’, that he set up with Rande Gerber and Mike Meldman in 2013. The transaction could be valued at up to $1bn (£79m), with an initial consideration of $700m and a further potential $300m depending on a performance linked earn-out over 10 years. The founders will continue to be involved with the company and promoting the brand. Shares in Diageo fell just over one per cent. Buy.
Ground Rents Income Fund (GRIO) saw rental income edge ahead in the first half to £2.1m, although pre-tax profits rose to £8m thanks to a £6.3m valuation uplift on the portfolio. Buy.
Defence company Ultra Electronics (ULE) saw its shares fall 1.5 per cent on a pre-close trading update ahead of its interim results, which backed up its previous prediction that performance this year would be weighted towards the second half. Delays to approving the US budget has meant orders from the country have been deferred. We maintain our buy call.
Inmarsat (ISAT) is fast becoming the ‘go to’ provider of airline wifi. This morning the satellite specialists announced its first contract with a Latin American airline. Avianca will adopt Inmarsat’s GX Aviation service on three of its plane models in a ten year contract. Buy
A spectacular trading update from Frontier Developments (FDEV) has smashed broker expectations, causing big upgrades and a near 10 per cent share price leap. Revenues from the video game maker have benefited from the successful launch of a new game - Planet Coaster. Buy
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Wizz Air (WIZZ) has opened its first UK base at London Luton and will increase its operations with 42 routes going to 18 countries from Luton, including new services to Tel Aviv, Pristina, and Kataisi. The low-cost airline also carried more than 5m on its Luton routes in 2016, making it the second largest operator at the airport. Shares rose nearly 1 per cent in early trading.
The worst of strikes on Southern Rail appear be behind for Go-Ahead Group (GOG), as there has been no significant industrial action in the past five months and service has stabilised. In a trading update West Midlands rail was the best performer with passenger revenue up 4.5 per cent on 4 per cent more journeys. In Southeastern, passenger journeys fell 0.5 per cent but cost efficiencies offset this hit and passenger revenue was up 3 per cent. Journeys on the bus service was flat, but revenue was up 1 per cent. Shares in Go-Ahead rose less than 1 per cent in early trading.
Imagination Technologies (IMG) rallied 20 per cent in early trading following the news that it has put itself up for sale. The UK-based chip maker has had a torrid few months after US-tech giant Apple (US: AAPL) - which contributes half of the group’s revenue - terminated its contract. The group had previously announced that it was attempting to sell two of its three divisions in a bid to shore up the balance sheet, but said it had, “received interest from a number of parties for a potential acquisition of the whole group”.
Shares in Chemring (CHG) are up more than 4 per cent this morning following the release of the group’s half year results. The group has continued to recover, increasing underlying profit to £17.2m for the six months to the end of April 2017, from £3.8m in the same period of 2016. The group has also restored its dividend, announced a 1p interim payment following on from no payment last year.
The merger of Standard Life (SL.) and Aberdeen Asset Management (ADN) moved a step closer today with clearance from the Competition and Markets Authority. Subject to final regulatory approvals, the merger should complete on 14 August.
OTHER COMPANY NEWS:
The Department for Transport has announced the companies shortlisted to operate the West Coast Partnership and South Eastern franchises. The companies in the running for WCP are First Trenitalia West Coast, a joint venture between First Rail Holdings under FirstGroup (FGP) and Trenitalia SpA, MTR West Coast Partnership Ltd, between MTR Corporation and Guangshen Railway Company along with various sub-contractors, and West Coast Partnership, with Stagecoach Group (SCG), Virgin Holdings, and SNCF C3. For South Eastern, bidders are South Eastern Holdings, a joint venture company that will be run by Abellio Transport Group and east Japan railway Company and Mitsui & Co, London and South East Passenger Rail Services, a wholly owned subsidiary of Govia which is owned by the Go-Ahead Group (GOG) and Keolis, Stagecoach South Eastern Trains, a subsidiary owned by Stagecoach Group, and Trenitalia UK, owned by Trenitalia SpA.
Hard and softwood importer James Latham (LTHM) pushed profits ahead in the year to March 2017, but competitive pressures and higher stock replacement cost squeezed gross margins. Hold
Gold and silver miner Polymetal (POLY) kept its head above the market after announcing a $140m loan from the European Bank of Reconstruction and Development to finance the remaining spend on its Kyzyl project, in north-eastern Kazakhstan.
FTSE 100 housebuilder Barratt Developments (BDEV) has appointed Jessica White, its current group financial controller, as its new chief financial officer.
The ongoing debt dispute which last month caused Redx Pharma (REDX) to suspend its shares is still ongoing. Management has put out an announcement stating that discussions with the administrators are in an early stage and while there is hope that the country will soon return to the control of the directors, there is no guarantee that the dispute will conclude successfully in the short term.
