Equities in London received some support in morning trading. Click here to find out The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
Henry Boot (BOOT) expects numbers in the year to December 2017 to be materially ahead of expectations. Trading has been very strong, particularly in the property development and land promotion businesses and the speed with which big projects have been completed in September and October means more development schemes have been completed in the second half of the year than previously expected. The group has also managed to fill up the 2018 pipeline with new projects, but keeps longer term forecasts unchanged for now. Buy
Apple’s (US:AAPL) shares have jittered on global media reports that demand for the iPhone 8 is not particularly high. Analysts and journalists have pointed to the highly anticipated iPhone X as the reason for this low demand. The newest model is due to be launched in just a few weeks and so consumers appear to be waiting to upgrade their iPhone. Many have suggested that launching two new phones so close to each other has been a mistake, but Apple’s management team are not fools. Surely Tim Cook and his team took into account the overlap when they decided to launch two new phones in quick succession. If the super expensive iPhone X takes off as anticipated, there will surely be another surge in the share price which - even including this week’s fall - is up 34 per cent in the year to date. Buy
Shares in President Energy (PPC) have been on a bit of tear of late, doubling since the start of September. Apparently to take advantage of this turn in market sentiment, management at the Argentina-focused oil producer have decided to raise $8m in a new share placing - in which several directors will participate – in addition to a €5m open offer. Both are being made at 10p a share, or a 16 per cent discount to yesterday’s closing price. The fundraising, which analysts at Panmure Gordon called “a touch opportunistic”, will be used for a potential acquisition and to accelerate the work-over programme at the Puesto Flores and Estancia Vieja fields recently acquired from Chevron. Interestingly, another Aim-listed explorer with recent momentum behind it, Jersey Oil & Gas (JOG), also today announced plans to raise up to £24m through an accelerated bookbuild and a proposed offer, in a bid to keep a working interest in its Verbier oil discovery. We have no rating for Jersey, but remain buyers of President Energy, whose executive chairman Peter Levine we recently interviewed in a podcast which can be found here.
The remaining pieces are falling into place for Bacanora Minerals (BCN). Today, the prospective lithium miner announced the receipt of environmental approval from Mexican authorities for its proposed project at Sonora, following two years of on-site studies. The news, which was expected but hailed by Bacanora as “a major milestone”, was supplemented by comments on the forthcoming feasibility study, which should confirm that Sonora “occupies a favourable position in the industry cost curve”. Shares are up 3 per cent today, and remain a long-term buy.
KEY STORIES:
Carl-Henric Svanverg is to retire as chairman of BP (BP.) after chairing the oil major’s annual general meeting in May 2018 and more than 8 years in the role. A hunt is now on to identify and appoint a successor, who will be the first person to lead the board since the Deepwater Horizon disaster changed the course and size of the FTSE 100 giant. Reflecting on his first years in the job, Mr Svanberg said: “through that turbulent period we stayed focused on saving and restoring the company. Today I can say with confidence that BP is back and ready for the future.”
Shares in Acacia Mining (ACA) jumped by as much as a quarter yesterday afternoon, after majority shareholder Barrick Gold (US: ABX) announced it had reached a “proposed framework for a new partnership” between Acacia and the government of Tanzania. While the London-listed miner said it had received no formal proposal, Barrick suggested the “economic benefits generated by Acacia’s operations would be shared with Tanzania on a 50/50 basis going forward”, and that Acacia would pony up a goodwill payment of $300m toward settling $190bn of outstanding tax claims. Despite the draft agreement, we fail to see how the value of Acacia’s equity can be accurately quantified, and in any case, this now appears to be in the hands of Barrick, rather than minority shareholders. The ongoing impact on the concentrate ban was highlighted in third quarter results published this morning, which detailed a further drawn down in cash, net cash of $24m and cash profits of just $50m, down 60 per cent year-on-year.
Nothing to see here, guv. That’s the message this morning from Gulf Keystone Petroleum (GKP), which told the market that its operations in Kurdistan “continue safely and securely”, and have pumped an average of 34,525 barrels a day from Shaikan since the start of October 2017. Furthermore, the 200 trucks that transport Shaikan crude each day are passing through to Turkey without incident. For more on oil’s latest flash point, read our news spotlight today here.
Hotels that had previously been experienced a drop off in demand due to terrorism rebounded curing the third quarter for Intercontinental Hotels (IHG). Revenue per available room grew by 6 per cent in France and by double digits in Belgium and Turkey. The UK saw 4 per cent growth with outperformance in both London and the provinces. At a group level revenue per room available was up by 2.3 per cent with 4.1 per cent more rooms, the highest net rooms growth in seven years. The avid hotels brand was launched in the US, aiming to be another “brand of scale” for the hotel group.
UK pool betting operator Sportech (SPO) has put itself up for sale. The company is seeking a buyer after it completed the initial stages of a strategic review into options to enhance value for shareholders. Non-executive chairman Richard McGuire added that a potential sale is only one of the potential options open to the company.
