Shares in London are flat as traders look for direction amid mixed economic signals.
IC TIP UPDATES:
Britvic (BVIC) announced that it will close its manufacturing site in Norwich and transfer production of Robinsons and Fruit Shoot to its other sites in East London, Leeds, and Rugby. Management said the change was being made as part of the company’s efforts to improve efficiency and productivity of its manufacturing operations. In November 2015 Britvic announced a 3 year business capability programme which will see the company invest £240m of capital in its British manufacturing operations. Shares were flat in early trading. Buy.
Capacity at Wizz Air (WIZZ) increased by a fifth in September compared to the same time the year before with passenger numbers up by 23 per cent to 21.8m. This pushed load factor up by 2.6 percentage points to 88.6 per cent year on year. Seven new routes were added during the month, five of which fly to Poland, one to Hungary and the other to Bulgaria. Shares were up 1 per cent. Buy.
Full-year underlying profit and pre-tax profits are expected to be in line with expectations for Wincanton (WIN), but the supply chain provider will incur a £7m exceptional charge due to cost saving initiatives, mainly relating to redundancies in the industrial and transport business and support functions. The cost will be spread between the first and second half of the year, and will be partially offset by a pension credit. Shares were flat in early trading. Buy.
Burford Capital (BUR) has opened an office in Singapore, after the authorities amended the law to permit arbitration finance in January. In June the litigation finance group announced it had financed its first arbitration matter in Singapore, which management believes to be the first funded by a third-party. Buy.
Watkin Jones (WJG) has forward sold two properties for an aggregate £66.4m. The first is a 618-bed student development in Aberdeen, due for completion during summer 2019. Following this agreement Watkin Jones has now sold 2,599 of the 3,545 beds planned to be delivered during 2019. The second to be forward sold is the office element of a major project in Bournemouth for £15.3m. Buy.
KEY STORIES:
Why, despite their operational and pricing volatility, does it sometimes pay to own shares in diamond miners? Investors in Firestone Diamonds (FDI) were reminded of one big reason this morning: the recovery of a 134 carat gem-quality light yellow diamond at its Liqhobong mine in Lesotho, news of which pushed the shares up 16 per cent in early trading. Firestone’s board said the find, the company’s largest to date, reinforced the potential for large stone recovery.
Following January’s profit warning, marketing group St Ives (SIV) reported a statutory loss before tax of £44.1m for the 12 months to July 2017, up on the prior year’s £5.7m loss. The total dividend was also reduced to 1.95p a share, from 7.8p. However, it did manage to reduce its net debt to £54.6m, from £80.8m in 2016.
Revolution Bars (RBG) saw revenue improve by 9 per cent over the full year to £130.5m while like-for-like sales improved by 1.5 per cent. As hinted at in the profit warning in May, pre-tax profits fell by around a third to £3.6m, mainly due to costs rising faster than previously anticipated by management. The bar group is also in the midst of a bidding war. The board has recommended the 203p per share cash offer from Stonegate Pub Company, and Deltic has until 10 October to make a counter offer.
Sales at Greggs (GRG) were up 8.6 per cent over the third quarter while company-managed shop like-for-like sales improved by 5 per cent. The on-the-go bakery chain has opened 98 new shops year-to-date and closed 32. Management said that food ingredient cost pressures have been a headwind, although they continue to expect that the rate of increase will begin to ease towards the end of the year.
OTHER COMPANY NEWS:
Shares in Learning Technologies (LTG) rose 5 per cent in early trading, after the Aim-listed group announced a strategy update up to the end of the year 2020, ahead of today’s capital markets day. In its recent half-year results, the group said it had achieved its target run-rate revenues and cash profits, outlined when it floated in November 2013, a year earlier than planned. Now, management seeks to double run-rate revenues to £100m and to improve run-rate cash profits to over £25m, via organic growth and acquisitions “that will complement the current business”. They plan to minimise dilution of shareholders’ funds, instead drawing on internal operating cash flows and debt financing. The board also plans to expand operations in North America and Europe.
Recent flights cancellations don’t appear to have caused much turbulence at Ryanair (RYA). Passenger numbers were up 10 per cent during September to 11.8m while load factor improved by 2 per cent to 97 per cent. Rolling annual traffic to September grew 12% to 127.3m customers. These figures include the 2,100 flight cancellations announced for September and October.
