Shares in London began the week with modest gains after the falls of late last week. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Qatar’s defence ministry has signed a letter of intent to purchase 24 Typhoon jets from BAE Systems (BA.), in a move that could anger Saudi Arabia the chief protagonist of the ongoing trade boycott against Doha. The Typhoon (Eurofighter) deal is estimated to be worth at least £2bn across the four-nation consortium behind the jet, to which BAE supplies nearly 40 per cent of the components. Buy
Amino Technologies (AMO) announced a contract win with Deutsche Glasfaser, Germany’s largest provider of fibre-to-the-home networks. The Amino VIEW Aria 6 device will provide next-generation hardware capabilities to the German company, while supporting software will include Amino’s ENABLE platform. Buy.
Macfarlane Group (MACF), the packaging and distribution company, announced that it has conditionally agreed to acquire Greenwoods, a UK-based packaging distributor, for up to £16.75m paid in Macfarlane shares and cash. This acquisition is expected to be earnings enhancing during the first year of ownership. The companies have “minimal customer overlap” and Greenwoods could provide exposure to the clothing and apparel markets, while Macfarlane products would be sold to Greenwoods customers. Additionally, Macfarlane announced that it plans to raise £8m through a placing, to fund part of the acquisition. Buy.
Higher prices for cream have been challenging for the butter business at Dairy Crest Group (DCG) during the first half. The increase in input costs forced the group to scale back promotional activity on its Country Life butter brand. Management said this has impacted sales volumes but the impact on margins has been largely mitigated. Strong volume growth across its other brands, especially the Cathedral City cheese, helped to offset weakness in Country Life, and so group profit is expected to be ahead of the same time last year. Shares were up nearly 1 per cent in early trading. Buy.
Xeros Technology ( XSG), a developer of polymer based technologies with multiple commercial applications, has signed its first Symphony Project development agreement with a leading manufacturer of commercial washing machines, which enjoys “a significant presence in many major markets across the world”. The Symphony Project enables manufacturers to sell their own-branded products as well as receiving a share in the long-term savings that the Xeros technology delivers. Buy.
Shares in redT Energy (RED) were up by nearly a third after the producer of vanadium redox industrial batteries signed partnerships with Central & Eastern European and Southeast Asian distributors to place redT energy storage machines into their existing pipeline of 300 units, whilst making an initial commitment for 12 redT units. Buy.
Petra (PDL) shares are down nearly another 10 per cent this morning as the group revealed last week’s diamond export block by the Tanzanian government could lead to a breach in the company’s banking covenants. Debt levels are on the rise for Petra and the $14m (£10.3m) seizure could impact group loans - covenants on which have already been granted an extension until the end of the year. Production at the group’s Williamson mine was halted for four days, but sales need to resume by the close of 2017 to avoid further issue. Our recommendation is under review.
Impax Asset Management (IPX) has significantly scaled-up its operations by agreeing to acquire US-based Pax World Management for an initial $52.5m, plus $37.5m payable in 2021 and dependent on Pax’s performance. Pax has £3.5bn in assets under management, invested in actively and passively managed equity and fixed income strategies. The combined group will have assets under management of £10.3bn. Buy.
Shares in Dalata Hotel Group (DAL) were up more than 3 per cent in early trading after the company announced that it had acquired the long leasehold interest of 33 suites in the Clarion Hotel Liffey Valley in Dublin, which it has completed the acquisition of earlier this month. The €8.6m (£7.6m) cash transaction, expected to complete this month, will result in Dalata owning and operating 257 bedrooms in the property which it intends to re-brand as a Clayton Hotel in the final quarter of 2017. Buy.
City of London Investment Group (CLIG) increased its funds under management by 17 per cent to $4.7bn during the 12 months to the end of June. Market gains offset net outflows of $306m from its core emerging market strategies. That meant net fee income increased by almost a third to £29m. Buy.
KEY STORIES:
Shares in Ryanair (RYA) fell around 3 per cent this morning after the airline announced over the weekend that it would cancel between 40 and 50 flights, or around 2 per cent of its total flights, every day over the next six weeks due to an error in scheduling for its pilots’ holidays. The budget airline is aiming to improve its operational reliability since punctuality has fallen by around 80 per cent in recent weeks. Analysts at Liberum trimmed forecasts by just under 5 per cent to reflect the financial impact of refunded tickets and compensation but do not expect any long term impact.
OTHER COMPANY NEWS:
Shares in Mytrah Energy (MYT) rose 5 per cent, after the renewable energy company announced that Piramal Group has invested approximately $277m into Mytrah’s Indian subsidiaries via non-convertible debentures. These debentures have a seven-year tenor and will be used to replace other existing investments including those from Merrill Lynch and Goldman Sachs.
Learning Technologies (LTG) reported a 68 per cent uplift to its top line in the first half, with 33 per cent organic revenue growth. Revenues deriving from outside the UK rose 41 per cent. The recent acquisition of NetDimensions led the adjusted cash profit margin to fall by 3.8 percentage points to 19.2 per cent, while pre-tax losses widened.
Bermuda based Lloyd’s of London insurer Hiscox (HSX) expects to sustain claims of around $150m (£111m) from the damage caused by Hurricane Harvey. This is well within the modelled range of claims for such an event, with a majority of claims likely to come from flood damage. As a result of recent weather related claims, insurance premiums are now expected to harden after a long period of downward pressure.
