London shares continue their upwards climb ahead of the US Fed's scheduled meeting this evening at which it is expected to raise rates again. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Supply constraints have continued to impact Convatec’s (CTEC) advanced woundcare and ostomy divisions in 2018. Management expect these ongoing problems to constrain revenue growth to between 2.5 and 3 per cent this year, while heavy operating expenditure will dent profits. Peers Smith & Nephew and Coloplast report tomorrow which will give some indication of the competition in the market. Sell
Aim-listed prospective uranium miner Berkeley Energia (BKY) has announced its intention to re-list its shares on London's main market, as well as a listing of its shares on the Spanish stock exchanges. Berkeley believes a listing in Spain, where its Salamanca project is being developed, will give the company access to "increased liquidity for its investor base" and "significant new pools of capital". Buy.
KEY STORIES:
Shares in Standard Chartered (STAN) were down 2 per cent in early trading despite the emerging markets-focused bank reporting a 7 per cent increase in operating income and an rise in pre-tax profits of a fifth for the first three months of the year. That was behind some analyst expectations of a double-digit rise in income. Net loans were up 3 per cent, while its common equity tier one ratio also improved by 26 basis points 13.9 per cent since the end of 2017.
Investors have cheered a return to growth in Inmarsat’s (ISAT) maritime business and continued strong demand in the aviation and enterprise divisions. Shares were up 10 per cent in early trading as the group reported a 5 per cent leap in revenue - a stark turn around to the 4 per cent fall reported in the final quarter of 2017. That’s not to say it’s all been plain sailing. Rising costs hit group profits and are likely to continue to bite for the remainder of the year.
The Financial Times reports that Glencore (GLEN) has won a temporary injunction against Dan Gertler, over $2.3bn the Israeli businessman claims he is owed from the miner's operations in the Democratic Republic of Congo. Glencore, which denies it has breached any of its obligations to Mr Gertler, convinced a judge in London that the royalty on the Kamoto copper mine falls under the jurisdiction of the English courts.
Apple (US: AAPL) has proved its doubters wrong with a stellar set of interim results. After the markets closed in the US last night, the world’s biggest company reported a 14 per cent leap in iPhone sales (driven largely by the heady price tag on the iPhone X) had helped lift overall revenues, while net profits were up 25 per cent. Shareholders will benefit from a 16 per cent dividend hike (the largest dividend ever paid by a US company) and a $100bn share buyback.
OTHER COMPANY NEWS:
Sage’s (SGE) shares had already been marked down on 13 April, when the accounting software group cut full-year organic sales guidance by one percentage point to 7 per cent – after “inconsistent operational execution” for the half-year to March. Today’s interim results revealed underlying revenue growth of 6.3 per cent to £908m, around £5m below management expectations. There were execution issues in the UK on cloud-connected products, along with contract “slippage” in the enterprise division within the Africa Middle East and USA. Other regions grew in line, or exceeded, expectations. Among other areas, Sage is now focusing on leadership; 30 senior executives have left. The shares were up 2 per cent this morning.
After market-close last night, EVR Holdings (EVRH) – the creator of virtual reality music content – announced the completion of its share placing. It successfully raised £20m via the placing of 125m shares at 16p each, while chairman and chief executive Anthony Matchett, and chief operations officer Steven Hancock, each sold 15.6m shares worth £5m in total. This morning, EVR announced the public launch of its flagship platform MelodyVR at Facebook’s f8 conference. This is now available in the UK and the US, launched with a new $199 hardware device from Facebook’s Oculus business called ‘Oculus Go’. The group’s shares were down 8 per cent in morning trading.
Analysts have been left disappointed by a first quarter update from online gambling group Paddy Power Betfair (PPB). Cash profits fell by 6 per cent at constant currencies thanks to flat net revenues, the annualisation of new betting taxes and start-up losses in the US businesses. Exclude these headwinds however, and cash profits would still have been flat year-on-year. Customer activity in the UK and Ireland was adversely affected by a string of bookmaker-friendly sports results between November and February and a high level of racing fixture cancellations due to poor weather. The group says it still expects full-year cash profits to land between £470m and £495m.
Shares in Ocado (OCDO) moved up in early trading following news that the group has signed another retail deal in Europe, this time with Swedish supermarket chain ICA. The agreement marks a third named partner for Ocado: it announced a deal with Canadian chain Sobeys in January, and French group Casino two months before that. It also signed a separate deal with an unnamed European partner last summer, although this was not ICA. Ocado will build the first warehouse in the Greater Stockholm area, and the project will take three years to build.
Shares in Direct Line (DLG) fell over three per cent after the motor and home insurance provider revealed that its full annual weather budget will be used to cover the increase in claims so far this year caused by the bad weather. Written motor insurance premiums were slightly higher, and while the flagged exit from Nationwide and J Sainsbury partnerships reduced written premiums by £48m, this will be offset by a new partnership agreement with Volkswagen.
