Shares in London dipped in morning trading, click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Lloyds (LLOY) has sold its Irish residential mortgage portfolio to Barclays (BARC) for £4bn. The sale will generate 25 basis points of common equity tier one capital when it completes during the second half of the year. However, the banking group will book a £110m pre-tax loss on the transaction in its first-half results. We retain our buy recommendations for both groups.
AstraZeneca (AZN) may have missed first quarter expectations, but investors didn’t seem too perturbed. That’s because the pipeline and recently launched drugs are key to the long term growth story. It’s good news that oncology drugs Tagrisso and Imfinzi performed well - both are well on their way to becoming blockbusters. Considering the recent share price momentum, we place our buy recommendation under review.
Yesterday afternoon, StatPro’s (SOG) chief executive Justin Wheatley sold 665,000 shares at 165p each via a secondary placing – equivalent to £1.1m. The proposed placing was announced just before 4pm, closing just before 5pm. Beforehand, Mr Wheatley held 7.48m shares representing 11.4 per cent of StatPro’s share capital. Mr Wheatley now retains a 10.4 per cent stake, plus shares held in family trusts. He doesn’t intend to make any further sales for 12 months. Two directors upped their positions via the placing – non-executive director Mark Adorian, and non-executive chairman Rory Curran. StatPro’s shares were down 2 per cent this morning. Buy.
Just Group’s (JUST) largest shareholder Permira has sold its stake in the life assurer, equivalent to 18 per cent of issued share capital. The investment group sold the shares via a placing at 143p each, a 5 per cent discount to the closing price the prior day. The placing raised £237m. Buy.
As we flagged in last week’s oil and gas feature, Rockhopper Exploration’s (RKH) Sea Lion project is starting to move ahead. An AGM statement out this morning assures us that a pathfinder bank “will be appointed imminently” to assist with the arrangement of senior debt facilities for the project. Chairman David McManus added that “with Brent oil prices currently above $75 per barrel, combined with the cost efficiencies secured through FEED and engagement with the contractors, the economics for the Sea Lion project are highly attractive”. The bullish tone has pushed the shares up another 5 per cent to 39p. Buy.
KEY STORIES:
S&U (SUS) grew its loan book by more than a fifth between February and mid-May to £258m. Customer applications rose to a record 80,000 a month, of which around 10 per cent are transacted. However, impairments rose again on the year-end to 25.8 per cent, from 24.6 per cent, against a 10-year average of 26.4 per cent. Meanwhile bridging finance specialist Aspen increased its loan book by £3m to £14m.
Things seem to be stabilising in the generics business at Hikma (HIK). An improvement in product mix means the group has retained its guidance for the current financial year - the first time for a while that it has not had to cut guidance. In the branded and injectables divisions, management continues to expect revenue growth.
Ophir Energy (OPHR) chief executive Nick Cooper is to step down, after seven years with the company. In an overview of Mr Cooper’s leadership, the oil and gas firm cited the 2011 initial public offering, the sale of its Tanzanian interests in 2013, the 2015 acquisition of Salamander and the proposed takeover of Santos' South East Asian assets. That list, as long-time backers will note, is marked by the absence of a green light on the Fortuna LNG project, which will have occupied most Mr Cooper’s time in recent years. He hands over to non-executive director Alan Booth, who will lead the company on an interim basis until a full-time replacement can be found. Shares are down 6 per cent in early trading.
OTHER COMPANY NEWS:
Mark Newton-Jones has re-joined Mothercare (MTC) as chief executive after he had left the same role in April. He’ll be taking a pay cut to take back his old role, with a basic salary of £480,000 compared to £612,000 he was in the year to March 2017. David Wood had taken over for Mr Newton-Jones during his absence, and will stay on with Mothercare as group managing director. Shares were flat in early trading.
Shares in Carpetright (CPR) are up more than 10 per cent in early trading after the company announced it would issue 232,463,221 shares at 28p each, a 15.8 per cent discount to the closing price of 33.25p on 17 May. The £60m (£65.1m gross) the company is looking to raise will be used mainly to pay down debt and fund the group’s turnaround plans.
