A slide in the pound on renewed political uncertainty in the UK has given a boost to London shares in early trading. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
Vodafone (VOD) India and its soon-to-be partner Idea Cellular have both found a buyer for their respective telecoms towers businesses. The two companies – which are set to merge in the first half of 2018 – will earn INR78.5bn ($1.2bn) by selling their 20,000 telecoms towers to ATC Telecom Infrastructure. The money will be used to support the balance sheet of their combined business. Buy
Taylor Wimpey (TW.) has delivered an upbeat trading statement covering the second half of 2017, and remains on track to meet full-year expectations. Sales rates have continued to rise from the previous year, and the current order book is only marginally down at 8,751 from 8,981 at the same time a year earlier. Cancellation rates remain low and steady sat 13 per cent, and despite a 3-4 per cent rise in build costs, operating margins are expected to be higher. Significant progress has also been made at resolving the leasehold issue, with most customers with a ten-year doubling lease converting to an inflation linked structure. The shares currently yield 8 per cent, well above the sector average. Buy.
Ladbrokes Coral (LCL) reported a 2 per cent increase in group revenue at constant currency during the third quarter. Shareholders will be watching the UK retail space, as this is the part of the business that will be affected by the review into fixed odds betting terminals. Sales here were flat during the quarter but have fallen 4 per cent year to date. Digital was more encouraging with a 12 per cent improvement in revenue driven by double digit increases in Sportsbook sales and stakes bet. On the triennial review, chief executive Jim Mullen said that the combined Ladbrokes Coral company has “existed with the uncertainty caused by the review since we were created and hope that the announcement of a 12 week consultation heralds a positive step to reaching a final outcome”. Shares fell three per cent in early trading, but we’re encouraged by the growth in digital. Buy.
Bango (BGO) announced this morning that it has expanded its direct carrier billing services to Japanese customers of Amazon Prime, along with Prime Student membership programmes.This follows Bango’s original direct carrier billing launch for Amazon customers in Japan in June this year. Any Amazon customer with either an NTT DOCOMO or KDDI mobile phone subscription can now pay for their Prime membership fee via their phone bill. Buy
Softcat (SCT) has announced that Graeme Watts will join the board as chief executive as of April 2018. Graeme is currently senior vice president EMEA, Advanced and Specialist Solutions at Tech Data Corporation. He has held this role since March this year, after Avnet’s Technology Specialist Solutions business was acquired by Tech Data in early 2017. This follows Martin Hellawell’s decision to step down from his role as Softcat chief executive. Mr Hellawell will stay on as non-executive chairman. Buy
Shares in ground engineering specialist Van Elle Holdings (VANL) fell 11 per cent after former non-executive chairman Michael Ellis called on the company to convene a general meeting of shareholders with a proposal to elect himself and his son-in-law Thomas Lindup as directors of the company. A further resolution would call for the removal of Jon Fenton as chief executive and Robin Williams, senior independent director, as directors of the company. The company has until 29 November to send a circular to shareholders, and at this time, the board recommended that shareholders take no action. Mr Ellis founded Van Elle 33 years ago and guided the company through its flotation in October 2016 before retiring from the board on 31 December 2016. Our recommendation is under review.
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Shares in funeral provider Dignity (DTY) fell 4 per cent this morning following a third quarter update from the company. Analysts said the update contained few surprises - particularly in terms of the death rate and current progress with profits - but there is growing concern about rising competition in the market and thus potential pressure on prices. As such, adjustments have been made to the company’s expected compound annual growth rate (CAGR) from 10 per cent to 8 per cent.
Carr’s (CARR) suffered a decline in underlying operating profits of more than a quarter during the year to September. Its agriculture division was impacted by lower cattle prices in the US, while a delay in the start of a major contract and poor profitability of other contracts hurt the performance of its engineering business.
Cosmetics maker Warpaint (W7L) announced its acquisition of fellow makeup company Retra Holdings Limited for a maximum of £18.2m. The purchase will be funded through a placing of more than 11m new ordinary shares at 190p each, raising up to £21.2m. Shares fell more than 3 per cent in early trading.
OTHER COMPANY NEWS:
Telit Communications (TCM) issued a statement this morning following press coverage over the weekend about a possible new chairman.The company has confirmed that it is in discussions with Richard Kilsby regarding the possibility of him being appointed in this role. Mr Kilsby was formerly chairman at gambling group 888 until March 2015. Shares in Telit were up 3 per cent at the time of writing.
Zoo Digital (ZOO), which provides localisation and digital distribution services for the entertainment industry, reported 63 per cent revenue growth for the first half to $12.7m, with a reduction in net debt to $3.9m from $6.2m a year earlier. During the six months, the company also launched a new cloud-powered dubbing service and delivered its first dubbing projects for a global entertainment client.
STM (STM), a cross-border financial services provider, announced that its shares would be suspended from trading on Aim (as of 7.30am this morning), pending a further announcement. Earlier this morning, the company had announced that STM Malta has signed a sale and purchase agreement with the shareholders of Harbour Pensions to acquire the latter business’s entire share capital and pension trust schemes. The transaction is subject to the Malta Financial Services Authority’s regulatory approval, which can take a few months. STM notes the acquisition terms are confidential “for commercial reasons”, but it will be paid for from existing cash reserves.
Frontier Smart Technologies (FST) announced this morning that its smart audio platform has been chosen by HARMAN - a manufacturer of audio systems and speakers - for its new JBL Control Xstream wireless speakers. Shares in Frontier were up 4 per cent at the time of writing.
