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News & Tips: Bango, Carillion, Safecharge & more

Equities are marginally underwater
January 15, 2018

Shares in London started the day negatively as the collapse of Carillion weighs on sentiment. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES:

Mobile payments company Bango (BGO) announced this morning that it has “expanded the use of its platform” in order to provide resale and bundling technology for Amazon Prime in India. Bharti Airtel, India’s largest mobile network operator, is the first to make Amazon Prime available to its customers within a bundled package. Bango gives customers uninterrupted access to Amazon Prime for the entirety of their subscription period. Bango has an existent relationship with Amazon in place in Japan, where it provides direct carrier billing – allowing customers to charge purchases to their mobile phone bills. Buy.

WANdisco (WAND) has announced the appointment of Ramki Thurimella as vice president of research in the group’s Silicon Valley headquarters. He has experience in algorithm design and information security, and was previously director of cybersecurity and the chair of computer science at the University of Denver. Buy.

Payments company SafeCharge (SCH) announced this morning that its wholly-owned UK subsidiary, SafeCharge Financial Services Limited, has been authorised by the Financial Conduct Authority as a payment institution. SafeCharge is already authorised as a European Electronic Money Institution. This new authorisation means SafeCharge can provide payments services here in the UK in keeping with the Payment Service Regulations. The group will be able to expand its services portfolio “as well as future proofing the business”. Buy.

First Derivatives (FDP) has announced that Donna Troy has been appointed as non-executive director. She is based in Austin, Texas and has previously held sales leadership roles at IBM, McAfee and Dell among other companies. Buy.

XLMedia (XLM) has spent €15m on a number of Finnish gambling websites as it continues to expand geographically. The websites - which recorded revenues of €1.66m in the year to November 2017 and generate adjusted cash profits - are expected to be immediately earnings enhancing. Buy

Premier Foods (PFD) issued a statement regarding speculation that it is in talks with Nissin Foods Holdings to sell its soup brand Batchelors’. The company stated that there is “no current situation where discussions have gone beyond an exploratory stage”. For now the company is focused on paying down its high level of debt, aiming for around three times cash profits. Shares were up 3 per cent in early trading. Sell.

Exposure to both copper and zinc has clearly been excellent news for investors in Central Asia Metals (CAML) of late, but the recently-acquired SASA mine in Macedonia is still an unknown quantity. Encouragingly, production from the site – under CAML ownership since 6 November – has been in line with management expectations, while guidance for the current financial year now sits at 21-23,000 tonnes of zinc and 28-30,000 tonnes of lead. We remain CAML bulls.

Rockhopper Exploration (RKH) is up another 4 per cent today, as the market digests last week’s confirmation that the 40 per cent-owned Sea Lion project is on track for sanction later this year. The development will require $1.5bn to get to first oil, though several letters of intent have been signed, and a mixture of including senior debt and subordinated contractor funding sources have been identified. We remain buyers.

KEY STORIES:

Support services group Carillion (CLLN) has reached the end of the road, announcing this morning it “had no choice but to take steps to enter into compulsory liquidation”. The move comes after the group was unable to secure short term financial support. It had announced late on Friday it expected to convert some of its existing debt to equity. We will be writing about this in more depth shortly.

Non-Standard Finance (NSF) Everyday Loans business grew its net loan book by more than a fifth during 2017 to £149m. The sub-prime lender opened 12 new branches and is on course to open a further 12 during the first half of this year. Doorstep lending business Loans at Home increased its net loan book by more than half to £51m, after recruiting a further 442 agents. However, a greater proportion of revenue will be recognised during 2018 due to the phasing of loan book growth.  

William Hill (WMH) is considering selling off some of its Australian business. The bookie announced this morning that it is undergoing a “strategic review” of the Australian business as management feel that “profitability will increasingly come under pressure” due to the credit betting ban and the possible point of consumption tax. At group level, adjusted operating profit is expected to be 11 per cent ahead of last year at £290m, beating analyst expectations, mainly thanks to trading in the US and UK. Shares were flat in early trading.

Continuing a much-needed decent start to the new year, shares in Gem Diamonds (GEMD) are up a tenth this morning, after recovering a 910 carat, D colour Type IIa diamond from the company’s Letšeng mine in Lesotho. The discovery, which should boost Letšeng’s credentials as the highest dollar per kimberlite diamond mine in the world, is the “fifth largest gem quality diamond” of all time, according to the miner.

Given the obstacles it faces, Acacia Mining (ACA) is holding its own. The Tanzania-based gold miner, which was forced to reduce output from its Bulyanhulu site, revealed all-in sustaining costs of $779 per ounce in the fourth quarter of 2017, a full 18 per cent down on the same period in 2016. The period also ended with a cash balance of $81m and total borrowings of $71m, all before the receipt of proceeds from the $45m sale of a non-core royalty this month.

OTHER COMPANY NEWS:

Software company Gresham Technologies (GHT) has announced the appointment of Paul White as chief marketing officer. He previously led marketing at Sword Group, Kana and Cyber adAPT. He also worked for 10 years within financial services at Capital One, Zurich and Travelex.

As management promised, the second half of the year has been significantly better than the first half at Sinclair Pharma (SPH). Investors seem to have been fretting about the likelihood of the group hitting its cash profit targets in 2017 following a disappointing first half, but sales growth rose to 25 per cent in the second six months of the year meaning management now expects modest adjusted cash profits. The news sent Sinclair’s share price up 7 per cent in early trading.

Last week saw a record number of bookings on Ryanair (RYA). The budget airline took more than 3m bookings in one week, with Wednesday 10th January the busiest day. Shares were flat in early trading.

Gaming Realms (GMR), the AIM-listed game developer, has signed a three year licensing and revenue share agreement with 888 Holdings (888) for the distribution of its “Slingo Originals” content. The games will appear on 888’s “Dragonfish” business-to-business platform.

Good news has rarely been in regular supply for Wentworth Resources (WRL), but today’s appointment of Eskil Jersing as its new chief executive appears to have cheered markets. Shares are up nearly 4 per cent on the appointment.