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News & Tips: Saga, Rio Tinto & more

Equities have been positive in London in morning trading
September 22, 2017

The week looks like ending with small gains on the day in London. 

IC TIP UPDATES:

Saga (SAGA) reported a slight dip on statutory pre-tax profits for the six months to the end of July, due to fair value losses on derivative contracts. On an underlying basis, pre-tax profits were up 6 per cent to £110m. It also managed to net debt to 1.8 times cash profits, from 2.2 times the same time the previous year. Buy.

There is a big buyer for shares in Rio Tinto (RIO) in the market, and its name is Rio Tinto. Last night, the diversified miner said it would use the $2.5bn booked from the sale of its Coal & Allied division to accelerate its 2017 share buy-back programme even further. This will consist of $560m in an off-market tender, with the remainder added to the $1.5bn already earmarked for on-market share purchases. We recently turned buyers of the shares’ well-supported income case, and remain bullish.

Central Asia Metals (CAML) is going to need a re-brand. The hitherto Kazakhstan-focused copper producer has announced a $402.5m deal to acquire Macedonia-focused zinc and lead miner Lynx Resources. The Aim-listed group, whose shares are currently suspended amid the takeover, says the deal offers geographic and commodity diversification, operational growth opportunities, and creates “an attractive AIM quoted mid-tier base metals producer”. Our call is under review.

KEY STORIES:

DX Group (DX.) has agreed to a sale and leaseback of some of its properties to Chancery Gate for £4.5m. The parcel delivery group is planning to use the money to repay a loan with HSBC, the first step towards the company’s refinancing. Shares fell more than 3 per cent in early trading, and have still not made any recovery since November’s profit warning that wiped 70 per cent off the share price.

Impact Healthcare Reit (IHR) generated a £3m in pre-tax profits between and inception and June 2017. The care home investment group invested 96 per cent of the £160m it raised via IPO in March, acquiring 57 properties with 2,527 beds. Management recommended a dividend of 1.5p a share and says it is on track to payout