Shares in London began Monday morning with a positive move upwards. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Investment in the US has helped Dechra (DPH) report another excellent set of results. Revenues rose 12 per cent at constant currencies while operating profits were up 22 per cent thanks to widening margins. Recent acquisitions are expected to drive further growth in the second half of the 2018 financial year so we retain our buy recommendation.
The Rockhopper Exploration (RKH) story may be largely focused on the commissioning of the Sea Lion development in the North Falkland basin, but events on the developments on the other side of the world have been positive. A trading update today confirmed current production at the Abu Sennan concession has grown to 880boepd net, supported by “strong realised pricing…at a small discount to Brent”, while a drop in Egyptian receivables has meant a deferred consideration to Beach Energy is fully paid. We remain buyers.
Secure payments specialist Eckoh (ECK) has won a $1.9m four-year contract to provide its CallGuard product to a US Fortune 250 retail company, and has also signed a partnership with a global payments company in the US. The former deal was won through Eckoh’s partner, West Corporation. This is one of 11 US payments contracts won this financial year, against nine in the prior year. Meanwhile, the US partnership should “significantly add” to Eckoh’s opportunity pipeline. Shares were up 2.7 per cent in early trading. Buy.
Hilton Food Group (HFG) has made changes to its joint venture agreement with Woolworths in Australia. Hilton will take over operations at two of Woolworth’s plants from July this year before it acquires them for AU$85m two years later, funded either through cash or an equity stake. The deal is meant to improve Hilton’s service to Woolworth’s stores across Australia. Shares were up nearly 1 per cent in early trading. Buy.
KEY STORIES:
Shares in Provident Financial (PFG) dropped 11 per cent in early trading, following the publication of media reports stating that management were sounding out plans to raise up to £500m to shore up its balance sheet. The sub-prime lender reports full-year results tomorrow.
Associated British Foods (ABF) is expecting sales growth at the full year across all its business units except for sugar, where lower prices mean that revenue and profit will be down on the previous year. Sales at Primark are expected to be 7 per cent ahead of last year at constant currency, though like-for-like sales during the second half fell 1 per cent due to unseasonably warm weather in October. Encouragingly, this trends appears to have reversed in the first quarter of the current financial year. Shares were up nearly 2 per cent in early trading.
Ascential’s (ASCL) full year results beat revenue and profit expectations and thus prompted a 5 per cent share price rise in early trading. Management has also announced a strategic review of its exhibitions business. Chief executive Duncan Painter thinks the eight brands in the division need digitising, or else they will be sold and the capital re-invested.
Shares in GlobalData (DATA) are up 10 per cent this morning after the information services company announced that group revenue increased by nearly a quarter during 2017 to £122m with adjusted cash profits up 14 per cent to £23.4m. The company is in ongoing “advanced” discussions to buy Research Views Limited, an energy, construction and financial services data and analytics provider.
OTHER COMPANY NEWS:
Worldpay (WPY) has announced the compensation arrangements for new co-chief executive Philip Jansen. Mr Jansen’s service agreement provides for a special long-term equity incentive award with a target award of 55,556 shares and a maximum payout of 300 per cent of the target. This is meant to align Mr Jansen’s goals with performance goals relating to the recent merger of the former Worldpay business and Vantiv.
This summer Ryanair (RYA) will begin flying from Dusseldorf and Berlin’s Tegal airport. Four new routes will fly to Mallorca along with flights operating from Nuremburg and Stuttgart. These new routes will operate from June to August. Shares were flat in early trading.
Vehicle tracking device specialist Quartix (QTX) has reported full year results this morning. Revenues grew by a healthy 5 per cent to £24.5m, although slightly higher cost base and a continued to shift to fleet instead of insurance work meant this only translated into a 1 per cent rise in operating profit. Chief executive Andy Walters said he was looking forward to developing the group’s business in the US this year as the customer base continues to grow.
