London shares fell a little in early trading today. Click here for The Trader Nicole Elliott's latest views.
IC TIP UPDATES:
Aviva (AV.) has increased its cash remittance target by £1bn to £8bn and has £3bn of excess cash to deploy in 2018 and 2019. Some of this will be used to fund bolt-on acquisitions and around £900m will be used to repay debt, with some returned to investors. Management also raised the operating profit growth target to more than 5 per cent annually from 2019. There was more good news for income seekers - the target dividend payout ratio was raised to 55-60 per cent of operating EPS by 2020. The shares were up 2 per cent in early morning trading. Buy.
Shares in On The Beach (OTB) were up nearly 7 per cent in morning trading, after the group reported a 17 per cent rise in revenues to £83.6m and a 25 per cent uplift in pre-tax profits for the year to 30 September. Sunshine.co.uk, acquired in May, has now been fully integrated. The UK business’s revenue was up an encouraging 17 per cent to £81.9m, and UK daily unique visitors rose by 14 per cent to 66m. Meanwhile, international revenue rose by 48 per cent to £1.7m. A slightly wider cash loss here stemmed from investment in growing market share in Sweden, and launching in Norway. Buy.
Clarkson (CKN) has become the latest company to be victim of a cyber-attack. Yesterday the shipping company stated that a single and isolated user account was behind the attack and has now been disabled. Additional security measures have now been put in place and management assured investors that the incident has not affected its ability to do business. Shares fell 3 per cent on the day but are up 1 per cent today. Buy.
Platinum-chrome miner Tharisa (THS) swung back to black this morning, after a strong year for earnings left the company with $4.8m in net cash as of September. The figure would have been higher, analysts at Peel Hunt suggested, if a $5m working capital outflow had not taken the shine off the numbers, though a solid operational performance, a good safety track record and profitable chrome concentration bode well for 2018 cash flows. We remain buyers.
KEY STORIES:
London commuters have reason to celebrate today’s Q1 trading update from Go-Ahead Group (GOG). The transport company has settled its dispute with trade union ASLEF over Southern rail and can now focus on improving service for customers and completing its Thameslink programme. Regional revenue for the bus business was in line with expectations, though it suffered a small net contract loss. Management also welcomed the strategic vision for railway strategy announced by the Department for Transport yesterday. Shares fell 1 per cent in early trading.
Citing a “steeper than anticipated” learning curve on its East Anglia One offshore wind farm project, Lamprell (LAM) this morning issued a profit warning. Though the services group expects to meet client expectations “in terms of schedule and quality”, costs will rise and the project will result in “a significant loss” and full-year earnings “materially below current market expectations”. Unsurprisingly, the shares are off more than 9 per cent.
There was better news for another company operating in UK waters this morning. In an operational update, EnQuest (ENQ) informed investors that the Kraken field is producing “on plan”, with rates recently extended from 23,000 to 40,000 barrels of oil per day gross and on track to pass 50,000bopd in the first half of next year. The stock is up 5 per cent.
As previously signalled in a trading update, Greene King (GNK) reported a 1.2 per cent fall in group revenue to £1.03bn in the first half, while adjusted pre-tax profits were down 8 per cent to £128m. Chief executive Rooney Anand called the period “challenging”, but actions to strengthen performance have resulted in improved trading since the period end. The pub group is on track to deliver between £40-45m of cost savings by the financial year end. Shares fell more than 3 per cent in early trading.
OTHER COMPANIES NEWS:
SolGold (SOLG) expects to close its 25p-a-share £45m private placing later today, a spokesperson for the company has confirmed to the Investors Chronicle. Since announcing the planned fundraise on 8 November, the copper-gold group has issued a flurry of resource and exploration updates.
Cosmetics company Warpaint (W7L) announced that it has completed its acquisition of Retra Holdings. It’s also admitted more than 12m new ordinary shares on AIM today, bringing the total number trading to 76.7m.
PPHE Hotel Group (PPH) has appointed Daniel Kos as chief financial officer from the beginning of 2018. He joined the company in 2011 and was previously vice president of corporate finance. Greg Hegarty has been appointed to the newly created role of executive vice president UK and chief commercial officer. Robert Henke has been appointed as executive vice president of corporate affairs and customer experience.
