Shares in London were up a little at lunchtime but markets remain in a holding pattern.
IC TIP UPDATES:
BTG (BTG) has reiterated its double digit growth guidance for product sales in the first half of the year as demand for its speciality pharma products continues to strengthen. The interventional medicine division - BTG’s fastest growing - is expected to accelerate in the second half and will be complemented by Roxwood Medical - a US based company which BTG is set to acquire for $80m. Shares have hardly moved on this strong announcement: further demonstration that this fast growing, nice company is being overlooked. Buy
“The future is exciting. Ready?” Asks Vodafone (VOD) in its latest new ad campaign. It’s a tagline which bears uncanny resemblance to “The future is bright, the future is Orange”, but shareholders don’t seem too bothered by the slightly unoriginal new marketing strategy, sending shares in the British telecoms giant up in early trading. Vodafone has come through a tough few years and now looks well primed for growth in the exciting telecoms sector. Buy.
Shares in Morses Club (MCL) dropped 6 per cent in early trading as the sharp increase in customer numbers during the six months to the end of August was yet to translate to profit growth. The sub-prime lender has been recruiting additional home credit agents, which has meant paying commissions to cover lost earnings while they build their franchise. The upfront costs meant adjusted pre-tax profits were broadly stable at £8.7m. Impairments were also up to 26.6 per cent of revenue during the period, from 22.5 per cent year-on-year. Buy.
KEY STORIES:
DFS (DFS) investors have been put through the ringer this year, and today’s results announcement has managed to send the share price down another 4 per cent. The numbers were bad - as expected thanks to earlier profit warnings - but analysts now have doubts over near-term profit growth and underlying sales growth too. Lower expectations for cash profits (a result of the Sofology acquisition) have also prompted concern about the group’s dividend. More to follow.
Deltic has come back with a counter offer for Revolution Bars (RBG). The nightclub owner is proposing an all-equity merger where Deltic’s shareholders would own 35 per cent of the combined equity. This is in competition with Stonegate Pub Group’s 203p per share all cash offer. Shares in Revolution fell more than 2 per cent in early trading.
Tissue product manufacturer Accrol Group Holdings (ACRL) issued a profit warning and suspended its shares from trading this morning. Parent rolls, which are large batches of tissue it converts into products, have become more expensive and price inflation has not provided as much of a boost as previously hoped. The company is also facing a fine from a health and safety incident that occurred before IPO which could have a “material impact” on the group’s cash position. Earnings are expected to be well below market expectations for the full year and net debt will be significantly higher.
OTHER COMPANY NEWS:
EVR Holdings (EVRH), the virtual reality music content creator, announced that its subsidiary MelodyVR has entered music licensing agreements with Roc Nation LLC and Roc Nation Publishing LLC. Roc Nation, an entertainment company, was founded by artist Jay-Z (real name Shawn Carter) in 2008. The agreements are global and multi-year, allowing the distribution of VR content featuring artists signed to Roc Nation.
Shares in De La Rue (DLAR) are up 3 per cent this morning following the currency and identity specialist’s announcement it has won a ten-year contract to supply its “Safeguard” polymer substrate for use in the new English £20 note. The company will supply 25 per cent of the first call-off volume. There has been no word on the value of the contract, but it is expected to commence in the 2018/19 financial year.
Shares in Redcentric (RCN) rose 3 per cent this morning, after the managed IT services company appointed Chris Jagusz as chief executive and announced a trading update for the half year ending 30 September. Mr Jagusz has 25 years in the telecoms and managed services industry. Trading has been “in line with management expectations”, and the group has reduced net debt to £33.3m, ahead of expectations. Operating cash flows stemmed from better debtor collections and management of working capital.
Datatec (DTC) issued a trading update this morning for the six months ending 31 August. The company expects underlying earnings per share to be between 1¢ and 2¢, down 84-92 per cent against the first half of 2017 (12.5¢). The headline loss per share will be between 5¢ and 6¢, against 9.1¢ a year earlier. The information and communications technology group, based in Johannesburg, expects consolidated revenues for the first half to be $2.99bn, against $3.04bn a year earlier, with the gross margin down fifty basis points at 13.3 per cent. The earnings decline is largely attributed to “worse performance” from the group's Westcon-Comstor subsidiary. The forecasts given include the performance of Westcon North America and Latin America, which was sold to SYNNEX as of 1 September. So, these areas will be presented as discontinued operations in the half-year financial statements.
Shares in Mercia Technologies (MERC) rose 1 per cent this morning, after the investment group announced that the RisingStarts Growth Fund (one of its third-party managed funds, managed by Enterprise Ventures) has realised further cash from Blue Prism Group. This signifies a 55 times return on the fund’s initial investment. Blue Prism, which floated on Aim in March 2016, specialises in robotic process automation. Mercia does not have a direct stake in Blue Prism because it acquired Enterprise Ventures after its investment took place.
Budget airline easyJet (EZJ) carried 11 per cent more passengers during September than the same time last year at 7.7m, pushing load factor up 2.5 percentage points to 93.6 per cent. Overall easyJet has carried more than 80m travellers in the rolling 12 months to the end of September. Shares were flat in early trading.
