Shares in London opened up the week positively. Click here for The Trader Nicole Elliott's latest views on the markets.
IC TIP UPDATES:
Following the announcement of Adam Crozier’s departure in early May, there has been much speculation as to who will take the top job at ITV (ITV). Paul Geddes, the boss at Direct Line and Dixons Carphone chief Sebastian James have had their names thrown into the mix. While it was suggested Ian Griffiths - the interim chief executive - may be asked to stay on a more long term basis amid rising rumours of a takeover offer from Liberty Global. This morning that speculation has been stemmed after ITV announced the appointment of Dame Carolyn McCall, currently chief executive of easyJet (EZJ). ITV’s shareholders seem impressed by the appointment, with shares up 2 per cent in early trading. Buy
After the departure of Carolyn McCall, easyJet (EZJ) is now on the hunt for a new chief executive. Chairman John Barton assured shareholders that she has left the company is good shape and stated that the company has continued to improve revenue per available seat and maintain strong load factors ahead of the third quarter update due on Thursday. Shares were up nearly 1 per cent in early trading. Buy.
Shares in beverages retailer and wholesaler Conviviality (CVR) rose 4.5 per cent on the back of a solid set of annual results this morning. Revenues grew by a staggering 85 per cent which, along with a 1.3 percentage point improvement in gross margins, helped lift pre-tax profits by 147 per cent to £22.5m. This means the dividend also rose by a third. Buy.
Inland Homes (INL) delivered a strong trading update for the year to 30 June, with the number of land plots sold up sharply from 425 to 780. At the same time, the short-term land pipeline saw its gross development value up to a record £1.34bn. Buy.
Shares in Lonmin (LMI) climbed this morning, after the platinum miner reported an improved operational performance in its third quarter. Total tonnes mined, sales and gross cash all crept up, despite a further 3 per cent fall in average prices to ZAR11,506 per ounce, only slightly above per-ounce unit costs of R11,278. However, we still think the group’s short-term ambition to remain “at least cash neutral” cannot be achieved without sacrificing much-needed investment in the mines. Sell.
President Energy’s (PPC) work-over programme onshore Argentina has successfully added production from Canada Grande, a field which has not seen any consistent activity since 2011. The Aim-listed company expects the CGr-20 well, which has not produced for 32 years, to produce 50 to 80 barrels of oil a day, without the need for stimulation. We remain buyers.
Finsbury Foods (FIF) reported in a pre-close trading statement that like for like revenue for the year to July was relatively flat at £314.4m, and on a constant currency basis fell by 1.1 per cent. Deflation in the UK retail food market pushed the UK bakery division down by 1.4 per cent on a comparable basis. The overseas division fared better but was largely aided by an exchange rate benefit, but grew by 2.2 per cent organically. Shares fell 2 per cent in early trading, but the company is still focusing on product innovation and improving efficiency, so we’re sticking with a buy.
Budget hotel operator easyHotel (EZH) is set to expand into Iran and Sri Lanka after it signed development agreements with 3SV Limited and MHA Hatfield Ltd. The agreements for Iran is expected to deliver around 500 rooms, while the Sri Lanka contract will results in 200 rooms. These deals take easyHotel’s pipeline of franchise rooms under developments to 1,936, in addition to 781 rooms being developed as owned projects. Shares were up 0.5 per cent in early trading. Buy.
Carillion (CLLN), the construction and support services firm which saw its share price plummet after a profit warning last week, made two key announcements. First, Carillion has appointed EY to ‘support its strategic review’, looking specifically at cost reduction and the collection of cash. Second, Carillion’s joint venture with Eiffage and Kier (‘CEK’) has won two HS2 contracts collectively worth £1.4bn. Shares in Carillion were up 12 per cent in early trading.
Newly-public Alpha FX (AFX) reported a buoyant first six months of trading during the first six months of the year, prompting a 2 per cent bump in its share price. The currency exchange service provider generated £6.3m in revenue during the period - ahead of expectations. As a result management expects to deliver revenue for the full year ahead of market expectations, due to higher new client numbers and an increase in trading by existing clients.
OTHER COMPANY NEWS:
Shares in model maker Hornby (HRN) plunged 9 per cent this morning as news emerged that Phoenix Asset Management - the group’s largest shareholder - has increased its stake to more than 70 per cent. Phoenix upped its stake above 50 per cent last month, which meant it had to make an offer for the remaining shares it didn’t own. The resulting offer of 32.375p per share offers only a slight premium on shares’ pre-offer price, but has already been accepted by just over a third of Hornby’s remaining shareholders, increasing Phoenix’s stake to 71.5 per cent.