The US Federal Reserve released minutes from its July meeting. Nicole Elliott offers The Trader's view this morning.
IC TIP UPDATES:
Interim results from Oxford Biomedica (OXB) show an 18 per cent improvement in gross income, the direct result of higher bioprocessing and commercial development revenues from big pharma partner Novartis. Other income - which relates to licenses and grants - fell 13 per cent. Losses are narrowing and the group holds just over £10m in cash on its balance sheet following a smaller cash outflow year-on-year, but Novartis’ CTL019 leukaemia drug (for which OXB makes the delivery system) is still waiting to be given the full regulatory green light in the US. Approval is expected around October. Sell.
The only thing that might have improved KAZ Minerals’ (KAZ) half-year numbers would be a lower net debt figure. Even then a $227m reduction in the copper miner’s net borrowings to $2.44bn shows that gearing levels are reducing rapidly, propelled by flawless ramp-up at the Bozshakol and Aktogay mines, higher copper prices, and better-than-expected by-products. And while the full-year copper production target has been lowered to 235-260kt, costs could fall further. Our buy call is under review.
Ahead of its full-year results on Tuesday, BHP Billiton (BLT) has approved a $2.46bn capital expenditure project to extend the life of the Spence open-cut copper mine in northern Chile by 50 years. The latest bullish bet on the long-term future of copper has not moved the shares much, which we are keeping on a buy ahead of next week’s preliminaries. Buy.
Shares in sell tip Hikma Pharmaceuticals (HIK) are down 11.6 per cent this morning after the group cut guidance for full-year revenue to $2bn (£1.6bn). This is due to reduced guidance for the generics division, which is still in discussions with the US Food and Drug Administration over its generic version of asthma drug Advair. Despite this, core revenues for the group were up 5 per cent in constant currency to $895m. Sell.
Although group like-for-like revenue for Rank Group (RNK) was relatively flat, UK digital sales improved by 15 per cent to £111.5m with operating profit was up 63 per cent over the year to £22.7m. Venues had a more difficult year, where operating profit fell 9 per cent to £88.2m. Management said the gambling company is undergoing a review of its organisational structure to offset a challenging UK retail environment, the National Living Wage, and higher property rents added to costs. Shares fell more than two per cent in early trading. Our buy tip is under review.
KEY STORIES:
Clinigen (CLIN) has confirmed a possible takeover offer for Aim peer Quantum Pharma (QP). The deal would comprise both shares and cash, but further details haven’t yet been disclosed. Clinigen has insisted there can be no guarantee an offer will be agreed, and that negotiations are still in the early stages.
Shares in Kingfisher (KGF) fell more than 5 per cent in early trading after the company reported a 2 per cent fall in like-for-like group revenue to £3.15bn during the second quarter. The household goods provider stated that weather, weak sales in France, and continued business disruption from its One Kingfisher recovery plan were behind the fall. Chief executive Véronique Laury said the company already has self-help plans in place, but warned on the outlook for the UK and France in the second half.
OTHER COMPANY NEWS:
Allied Minds (ALM) reported that it had invested $22.4m into its portfolio companies in the first half. Revenues rose, partly helped by revenue from new contracts in 2017 at its HawkEye 360 company. But, the group’s restructuring plan led to higher costs of revenue as a percentage of revenue, along with greater selling, general and administrative expenses and personnel expenses. Pre-tax losses were $58.2m - greater than the loss of $52.2m seen in the first half of 2016. Shares were down over 5 per cent.
Idox (IDOX), which specialises in information management solutions, has acquired Halarose Holdings, a supplier of electoral back office software to UK local authorities. The acquisition price was £5m: £3.5m in cash and £1.5m in shares.
Wilmcote (WCH), which was recently founded and focuses on acquiring and developing target businesses in the downstream and specialty chemicals sector, successfully listed on Aim. On admission there are 20.8m ordinary shares with a market capitalisation of approximately £25m at the placing price. Wilmcote initially plans to make a platform acquisition in the UK, North America or Europe.
The full extent of Gem Diamonds’ (GEMD) lower mining and grades were made apparent in the precious stone miner’s half-year numbers this morning, which revealed a 15 per cent drop in revenues and a 70 per cent contraction in cash profits. The one piece of bright news concerned the Ghagoo mine, under care and maintenance but currently subject to an offer.
Victoria Oil & Gas (VOG) is up 18 per cent this morning, after recording an excellent result from its La-107 well. An additional 23m of net gas sand was located in the Lower Logbaba formation, extending the resource and giving the company confidence that the well will start producing by the end of September.
