Shares in London are in reverse at the start of the week as sentiment dips. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
Trading in the first six months of the year has been stronger than expected for Quixant (QXT). The gaming technology company has therefore generated approximately $56m of revenue, 36 per cent up on the first half of the 2016 financial year. Shares jumped 3 per cent in early trading and we reiterate our buy recommendation.
Earthport (EPO) grew revenues by around 33 per cent to £30.3m for the full year to end of June 2017, according to a trading update from the cross-border payment company. Adjusted gross profit also rose to £20.7m, up by c. 30 per cent compared to a year earlier. Adjusted gross margin and the company’s cash balance were both slightly lower year-on-year. Shares in the company rose 3 per cent in early trading. Buy.
Characteristically strong results from media group Ascential (ASCL) seem to have dispelled any previous concerns about the performance of the group’s biggest event Cannes Lions. Revenue at the marketing festival rose 7 per cent on a like for like basis. This strong performance was reflected across all of the group’s events and its information services business where revenue rose 5 per cent. Buy
NewRiver REIT (NRR) has exchanged conditional contracts for the pre-sale of its entire residential elementat its regeneration project at Burgess Hill town centre. All 142 residential units have been bought by Delph Property Group for £34m. Buy
Tritax Big Box (BBOX) has paid £65m for the former Littlebrook power station that closed in 2015. The site is ideally situated by the south side of the Dartford Crossing, and the entire 124 acres has the potential to provide around 1.7m sq ft of logistics distribution space. Working in partnership with specialist logistics developer Bericote Properties, the site will be developed in phases, with site preparation costs estimated at £25m. Construction will be conducted on a pre-let basis. Buy.
Burford Capital’s (BUR) investment in Teinver’s claim against the Argentinian government has paid off, after the tribunal ruled in its favour. Argentina has been ordered to pay £324m in damages to the company, plus pre and post-reward interest. Burford’s interest in the matter was $13m at the end of June, carried on the balance sheet at a fair value of $30m. The litigation finance group expects to receive around $140m in the returns on the investment. Buy.
KEY STORIES:
Convenience chain McColl’s (MCLS) has managed to move like-for-like sales back into the black at the halfway stage supported by favourable weather and an improved mix of sold products. Underlying sales grew by 0.2 per cent for the six month period as a whole, and by 1.4 per cent in the second quarter. The recent acquisition of 298 Co-op stores also helped lift total sales by 7.6 per cent, and contributed to a 90 basis point improvement in margins to 25.4 per cent. Despite growing levels of opening costs to do with the Co-op revamp, cash profits also grew, and the interim dividend was maintained at 3.4p apiece.
Despite selling its food business to McCormick just last week for a staggering $4.2bn, it hasn’t been enough to distract the market from Reckitt Benckiser’s (RB.) recent cyber attack, which has forced the group to dial down its full-year revenue guidance. That said, a significant reduction in exceptional cost allowed for a considerable rise in adjusted pre-tax profits, while the company is hopeful it can return to like-for-like sales growth in the second half.
First quarter results from budget airline Ryanair (RYA) reflect similar tones struck at rivals EasyJet (EZJ) and Wizz Air (WIZZ) last week. Despite a modest 1 per cent increase in fare prices, the airline reported a 12 per cent rise in passenger numbers, and a 6 per cent fall in unit costs. This allowed for a 6 per cent margin improvement, and a 55 per cent rise in post-tax profits. But chief executive Michael O’Leary warned that figures had been boosted by the timing of Easter, and even the second quarter looks uncertain as more capacity enters the market. Politically, Mr O’Leary also re-iterated his strong stance on Brexit, urging the government to clarify arrangements with European air routes, otherwise the group would be forced to cancel flights and move aircrafts to Continental locations from April 2019.
Shares in Connect Group (CNCT) are up 2 per cent this morning following the release of the group’s latest trading update. The group reported a stronger second half for its news and media division, although revenues for news still declined 4.1 per cent to £1.13bn. Media revenue grew 6.1 per cent to £24.7m. Revenues for the parcel freight business increased 4 per cent to £157m, but management warned efficiency benefits expected to arise from investments were slow to materialise.
The picture painted by recruiter SThree (STHR) in its half year results is a familiar one. The group grew in Continental Europe and the US, while the UK business struggled in the face of a range of factors from Brexit uncertainty to changes to the rules surrounding public sector contractors. Profit before tax was up 5 per cent in constant currency, and the group remains in a net cash position, though down from its £10m year end figure at £5.2m.
OTHER COMPANY NEWS:
Eco Animal Health’s (ECO) novel antibiotic, which has been raking in sales across Europe, has been granted approval by US regulators. The drug has been in high demand due to the rising threat of antibiotic resistance in the western world. Eco’s drug Aivlosin is only used in animals and therefore helps to reduce the antibiotic resistance crisis. In the US, the drug has been approved for swine respiratory illness, but there is potential for further approvals, considering the wide range of diseases and animals it currently treats in Europe.
Microgen (MCGN) saw overall top-line growth of 45 per cent during the first half to end of June 2017, reaching £28.4m. Similarly, group adjusted operating profit rose by 42 per cent to £6.5m, and adjusted EPS grew by 36 per cent to 8.0p. The provider of business critical software announced an interim dividend of 2p per share, up from 1.5p for the first half of 2016. The company’s aptitude software division has successfully improved its recurring revenue base, though the ‘exceptional’ demand growth seen for services in 2017 is ‘expected to moderate’ in 2018. Shares in Microgen were down 3 per cent in early trading.
Shares in Mytrah (MYT) rose 4 per cent in early trading, following a trading update from the India-based renewable power provider. The firm has seen its first operational solar capacity launch during the first half, and added 65 MW of wind power (taking total installed capacity of solar and wind to 1,119 MW). Improved capacity led energy sale revenues to increase by 60 per cent during the first half.
Investors in Petra Diamonds (PDL) were already aware that production for the year to June 2017 would fall short of the bullish 4.4m carat target, but this morning’s trading update – which included details of higher-than-expected net debt and capital expenditure – has spooked the faithful. Shares are 10 per cent down at 100p.
