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News & Tips: Finsbury Food, Lonmin, easyJet & more

Equities are ending a good week with another rise
October 6, 2017

Shares in London look set to end the week with another gain as the FTSE follows the lead of strong US markets. Click here for The Trader Nicole Elliott's latest thoughts. 

IC TIP UPDATES:

Finsbury Food (FIF) shares are down marginally this morning as the group warned that, although it’s still on track to meet adjusted profit targets this year, it would be forced to do so from a lower revenue base. Higher butter prices are to blame, which the group says it expects to recede in the coming years. But that still puts significant pressure on management to curtail costs to buck up the bottom line. The closure of the group’s loss-making Grain D’Or business - already factored into forecasts - is due to complete in early December. Buy.

Lonmin (LMI) is up 15 per cent this morning, after the embattled platinum miner’s banks gave their consent for the acquisition of the Pandora joint venture, and a pre-emptive waiver of covenants for the next six months. The group also reported a $14m increase in net cash in the fourth quarter of its September-end financial year. Our sell recommendation, predicated on Lonmin’s high operating costs and the outlook for the platinum market, is under review.

KEY STORIES:

Is easyJet (EZJ) the best of a bad bunch this morning? A trading update from the group, during which it said annual profits would land at the upper end of the £405-£410m range, revealed record passenger numbers over the summer. Profits are expected to fall year-on-year as a result of a Brexit-induced £100m currency hit, but it still makes for better reading when compared with the Ryanair (RYA) fiasco and Monarch collapse.

OTHER COMPANY NEWS:

Grim data from the Society of Motor Manufacturers and Traders (SMMT) yesterday bears little relation to the news coming out of car retailer Motorpoint (MOTR) this morning. Shares rose close to 5 per cent in early trading as the group revealed it expects to report interim sales growth of 18 per cent. It’s a mix of underlying growth mixed with new openings: two sites, Castleford and Oldbury, reached their first anniversary in the period, while Motorpoint's twelfth site opened in Sheffield in April. Margins have normalised year-on-year but it won’t stop the group reporting underlying pre-tax profits of £10.5m (2016: £6.4m). Half year numbers are due for release in late November.

Alpha Financial Markets Consulting has released pricing information ahead of its planned admission to the junior market on Wednesday. It will have a market capitalisation of around £163m, equivalent to 160p a share. It has already conditionally raised a gross £125m via placing with institutional investors. The group provides consultancy services to the asset and wealth management industries.     

It’s been just over a year since ten pin bowling operator Hollywood Bowl (BOWL) joined the London market. And there’s good news: the group says successful execution of its strategy post-IPO means it now expects full-year earnings to be ahead of expectations. Overall, group revenue for the full year grew 8.9 per cent, with like-for-like growth of 3.5 per cent. Despite declaring an interim dividend back in May, as promised, cash generation has held up well so a special dividend is still on the cards.

GlobalData (DATA) announced this morning that chief executive Mike Danson intends to sell approximately 1.4m ordinary shares via an accelerated bookbuild placing to institutional investors, at 540p each. This is in response to demand from investors. Mr Danson will still hold approximately 68.3 per cent of the company’s share capital.

Shares in RWS Holdings (RWS) are up more than 8 per cent this morning after the company announced its “best year ever”, expecting to beat consensus revenue forecasts of £162m by clocking up “not less than £163m”.