London investors began the week with a spring in their step as prime minister Theresa May heads to Brussels hoping to seal a divorce bill deal. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
Alliance Pharma (APH) has acquired head lice treatment Vamousse from its Aim-traded peer TyraTech (TYR) for $22m. This follows the purchase of Ametop - a topical gel for numbing skin prior to an injection - late last week. Alliance has returned to its old buy-and-build strategy and investors seem impressed, sending shares up on the announcement of both acquisitions. Buy
Respiratory drug Tudorza has successfully completed a clinical trial to confirm its efficacy in patients with chronic obstructive pulmonary disease (COPD). That is good news for Circassia (CIR) - which recently acquired the US distribution rights to the drug - and AstraZeneca (AZN) - which owns it. The positive trial data means AstraZeneca will ask the US Food and Drug Administration for a label extension which should allow Circassia to boost Tudorza’s sales. We recommend investors buy both Circassia and AstraZeneca.
After it was reportedly blocked from hiring former Xstrata chief Mick Davis, Rio Tinto (RIO) has found a less controversial candidate to succeed Jan du Plessis as chairman. Step forward existing non-executive director Simon Thompson, a high-profile name in the world of commodities who previously ran Anglo American’s base metals division and was latterly chairman of Tullow Oil until April. Shares in Rio are up 1.5 per cent this morning, most likely driven by a bump in the iron ore spot price. Buy.
“I am pleased current production is over 7,000bopd,” states Amerisur Resources’ (AMER) John Wardle in an update issued this morning. The oil group’s chief executive would likely have been even more pleased had average production in November not been pegged back to 6,051bopd (barrels of oil per day), due to – yet again – “regional social issues”. These have now been resolved by the central government, and we continue to view Amerisur as a steady growth story. Buy.
Shares in VP (VP.) are down more than three per cent this morning after it emerged the Competition and Markets Authority is investigating the group’s recent acquisition of Brandon Hire. the company is fully assisting the CMA and will update the market “when appropriate”. We will be taking a closer look at the investigation and updating our recommendation accordingly.
Marketing services group Communisis (CMS) announced trading in line with expectations this morning, but its shares were still down more than two per cent following the abrupt departure of finance director Mark Stoner, who stepped down from the board today. He will stay on to work with his replacement, Steve Rawlins, through the first quarter of 2018. Buy.
KEY STORIES:
Copper miners have had a very good year, but it would appear there are still strong believers in the market’s fundamentals. For evidence, look to Atalaya Mining (ATYM), which today announced a £39m equity fundraising to expand annual output from the Proyecto Rio Tinto mine by 15,000 tonnes of copper concentrate. Construction for the upgrade – which will cost €80.4m – is due to start next quarter, and should come online in the second half of 2019. The stock is down 2 per cent today at 171p, a price in between Friday’s close and the 167p-a-share price of new equity.
OTHER COMPANY NEWS:
Back on 14 November, STM (STM) announced that certain of its Gibraltar regulated subsidiaries had received notice from the Gibraltar Financial Services Commission (GFSC) of the appointment of inspectors. The board of STM and its subsidiaries took legal advice about whether the GFSC could do this, and subsequently filed an appeal against these appointments. On 16 November, STM announced that the GFSC and subsidiaries had agreed a voluntary stay until the appeal against the appointments. Today, STM announced that it has received an order from the Gibraltar Supreme Court confirming the stay of the appointment of inspectors, under the Financial Services (information Gathering and Co-Operation) Act 2013, by the GFSC. This stay remains in place until the appeal against these appointments, which has been set for 22 January 2018.
WANDisco (WAND) announced a proposed placing this morning to raise a minimum of $10m (£7.4m), with the potential for the group’s directors to increase the size of the placing in the instance of significant excess demand. The placing shares will represent around 3.6 per cent of the company’s issued ordinary share capital. Certain existing shareholders - including directors David Richards and Yeturu Aahlad - have sold a total of 1m ordinary shares at 550p per share, representing around 2.8 per cent of the current issued share capital. By way of background, WANdisco notes its “strong organic revenue growth” which has been underpinned by its patented Fusion data replication technology. Proceeds from this placing are expected to “capitalise on this momentum” and drive growth. Shares were down just over 2.5 per cent in morning trading.
