Shares in London are finishing the week on a downbeat note. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
A mild profit warning this morning from GKN (GKN). Despite good organic sales growth, the global engineering group today informed shareholders that it is facing two probable (though undisclosed) claims against its aerospace and driveline divisions, respectively. The fourth quarter is therefore expected to be hit by a charge “of around £40m”, meaning full-year pre-tax profit is now likely to be only marginally above the 2016 figure. Our buy call is under review.
Royal Dutch Shell (RDSB) has announced plans to buy one of Europe’s largest electric car charging companies, NewMotion, in a further sign of the oil major’s gradual pivot towards hydrocarbon-free vehicle technology. The deal, the biggest move into the EV refuelling market by an oil giant was made for an undisclosed sum. We rate Shell as a long-term buy, and will review our call in quarterly results in early November.
KEY STORIES:
Shares in Provident Financial (PFG) bounced 17 per cent in morning trading after management announced details of its recovery plan for the home credit business. In order to re-establish relationships with customers, it will move away “from the overly prescriptive routing and scheduling of customer interactions, which were embedded in the new operating model” and “restore the ability of local management to prioritise and allocate resources to meet customer needs”. In practice this will mean increasing its UK divisions from two to four and doubling the number of regional managers, appointing assistant managers to support compliance and arrears, and employing 300 part-time customer experience managers. Collections improved to 65 per cent in September from 57 per cent in August. However, receivables were still down a third on the end of June.
Ashmore (ASHM) reported an 11 per cent increase in assets under management during the three months to the end of September. Its blended debt strategy grew assets the most at 14 per cent to $18.8bn (£6.6bn), although this was partly due to the reclassification of some assets into this theme. Overall net inflows were $4.3bn, while a rally in emerging markets meant investment gains of $2.3bn.
Man Group (EMG) is another asset manager that has rebounded of late. Funds under management stood at $104bn at the end of September, up from $96bn three months earlier. This equates to a year-on-year increase of more than a quarter. Net inflows were $2.8bn, the majority of which were into its quant alternatives strategies. However, its funds of funds and its discretionary alternatives strategies suffered net outflows of $0.4bn.
