The FTSE 100 is up a little in morning trading.
IC TIP UPDATES:
Costa-owner Whitbread (WTB) has announced that the coffee chain has acquired the remaining 49 per cent stake it doesn’t already own in its South China joint venture for £35m. This gives Costa, and thus parent company Whitbread, full control of the subsidiary, which operates 252 stores in the south of China, including 93 stores in Shanghai. Chief executive Alison Brittain said the deal represented an important step in the group’s international growth plans. We remain buyers.
Shares in luxury conglomerate LVMH (MC) continue to move north as the group reported better than expected third quarter numbers. A 12 per cent improvement in sales beat forecasts of 9.1 per cent, with only wine and spirits held back by a supply and demand imbalance. All other divisions reported double-digit growth, largely helped by new product launches. Buy.
It hasn’t been a great year for the Marston’s (MARS) share price, but the pub group’s stock actually moved up close to 5 per cent this morning following an in-line fourth quarter trading update. Across the group’s premium and destination locations, sales nudged up 0.9 per cent, while like-for-like sales across the taverns estate rose 1.6 per cent. Brewing has also had a good year thanks to the acquisition of Charles Wells in June. Management have also taken the decision to slightly curb new openings as market conditions soften - something the market has clearly interpreted as prudent. Buy.
Ted Baker (TED) shares might be slightly off this morning, but it’s nothing compared to the recent surge in momentum behind the share price. Interim results met analysts’ expectations, with half-year sales up 14 per cent to £296m or 9.5 per cent at constant currency. Retail sales - which include online revenues - rose 14 per cent too, although e-commerce as a separate entity reported a whopping 44 per cent rise in sales to £42.7m. Wholesale and licensing also did well, with profits and the interim dividend also rising. We remain buyers.
Shares in recruiter Robert Walters (RWA) are up 7 per cent in early trading following a Q3 update. Net fee income was up 21 per cent in constant currency in the period, driven by strong performance across many of its regions. The group’s strong performance in the UK continued in the face of Brexit uncertainty, up 15 per cent due in large part to its resource solutions business. Buy.
Elliott’s back! The activist investor which forced BHP Billiton (BLT) to pivot away from its onshore US oil portfolio is currently touring the miner’s biggest shareholders to force a “radical shake-up” of the FTSE 100 group, according to a report from Reuters. Undaunted, Elliott is reportedly still keen for BHP to scrap its dual listing structure. Shares are up slightly this morning, and remain a buy.
Shares in Volution (FAN) rose 2 per cent this morning, after the provider of ventilation products to the residential and commercial construction markets reported 20 per cent revenue growth and a 12 per cent rise in cash profits in the year to 31 July. That said, the group’s pre-tax profits declined by £0.5m because of a finance cost stemming from the revaluation of financial instruments carried at fair value, and because of increased amortisation costs from acquisitions. Buy.
Tharisa (THS) has been on a bit of a rollercoaster in the last year, largely due to the volatility of the spot chrome market. In general, the trend has been positive, with contracted metallurgical grade chrome prices up 27 per cent in the year to 30 September; well timed for a record year of chrome concentrate production. Production of speciality grades, which can command large premiums, was also up 20 per cent in the year, and is expected to grow by another 8 per cent in the current financial year. Despite its tricky operating conditions in South Africa, we are fans of Tharisa, and maintain our buy call.
KEY STORIES:
Shares in Domino’s Pizza Group (DOM) jumped more than 11 per cent in early trading following a better than expected third quarter update. Specifically, like-for-like sales in the UK have started to strengthen - by 8.1 per cent in the period under review. That compares to a forecast 3.5 per cent growth rate and a 1.6 per cent improvement in the preceding quarter. Given this momentum, analysts reckon that there needs to be no such underlying improvement in the final quarter for the group to hit annual sales growth targets. Internationally, where Domino’s spans Iceland, Switzerland and parts of the Nordic region, systems sales grew by a quarter.
Troubled support services business Capita (CPI) saw shares rise 3 per cent this morning following the appointment of Jonathan Lewis as chief executive. Mr Lewis was previously CEO of engineering company Amec Foster Wheeler and will be joining at the end of November to lead the turnaround of the group.
OTHER COMPANY NEWS
M7 Multi-Let Reit has announced its intention to float on the premium segment of the main market in November. The company aims to invest in a portfolio of UK regional light industrial and office assets and wants to raise £300m by way of a placing, offer for subscription and intermediaries offer. The offer opens today and closes on 7 November, with an issue price of 100p a share. The company is targeting a dividend equating to an annual yield of 6.5 per cent.
Telit Communications (TCM), the enabler of the internet of things, has announced a partnership with Husqvarna - a producer of outdoor power products for forest, park and garden care. A wireless sensor device produced by Telit and Wireless System Integration is being used to give Husqvarna real-time sensor data from its robot lawnmowers. Based in cities, these mowers collect data on the surrounding environment.
Shares in Mytrah Energy (MYT) fell 13 per cent in early trading, after the small-cap producer of renewable energy announced that a loan of $2.4m was made to chairman Ravi Kailas in September. This was for the purchase of a property, not connected to the company’s operations. The loan was made without the board’s prior approval, and Mr Kailas has arranged for the loan to be paid back by the end of next week. Because of this, the board is bringing in an independent law firm to help with a comprehensive review of the transaction; they will update shareholders when this has concluded.
Shares in 1Spatial (SPA) rose 4 per cent this morning after the software company reported 2 per cent revenue growth to £12.1m in the first half, strong recurring revenues and an increase in the gross profit margin from 39 per cent to 43 per cent. The group’s operating losses also contracted.
Shares in Premier Asset Management (PAM) rose to an all-time high since listing in October last year, after it reported a 17 per cent increase in assets under management during the 12 months to the end of September. Net inflows were £747m over the year, representing 18 consecutive quarters of positive net inflows. The asset manager specialised in a range of active investment strategies, including multi-asset, equity and absolute return funds.
We recently profiled Central Asia Metals’ (CAML) not-so-Central Asian acquisition of Macedonian zinc and lead miner Lynx Resources, but could the deal have a read across for others in the sector? Canaccord believes so, and has this morning published a note suggesting the comparable financial metrics of Griffin Mining’s (GFM) Caijiaying project could justify a 130 per cent premium to Griffin’s current listing price. Shares in the China-based group are down this morning.
