Inflation data which has sent the pound into reverse and clouded expectations of a rate rise next month has failed to upset equities in London which are firmly in positive territory mid-morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Close Brothers (CBG) reported a 7 per cent rise - to £7.3bn - in the loan book for its core banking division during the 11 months to the end of June. The retail book remained broadly flat, offset by growth in the commercial and property businesses. The asset management business also increased managed assets by 14 per cent to £10.2bn. Buy.
Group net gaming revenue at GVC Holdings (GVC) was up 8 per cent during the six months to June. This was driven by 18 per cent growth in online net gaming revenue with new products launched over the period and a high-profile marketing campaign. UK retail like-for-like net gaming revenue fell 3 per cent, but saw improvements in the second quarter due to better weather. The World Cup was said to be good for the group with “better than expected” gross win margin and volumes and values of new customer deposits. Chief executive Kenneth Alexander said the integration of Ladbrokes Coral is underway. Shares fell 2 per cent in early trading. Buy.
Shares in NewRiver REIT (NRR) rose nearly four per cent after the retail landlord delivered an upbeat trading statement covering the three months to June. Better use of the portfolio means that there is the potential to develop around 1,300 residential units from existing assets. This is the key strong point, as the company generates more revenue from its existing portfolio which comprises non-discretionary convenience stores, discounters and pubs. Just 0.1 per cent of the portfolio comprises department stores. Buy
Analysts are impressed with a full-year trading update from confectioner Hotel Chocolat (HOTC) ahead of preliminary results in September. Sales growth of 12 per cent marks a significant outperformance against a tough retail market, one which hasn’t been helped by the recent heatwave. Brokerage Liberum believes there is “no doubt” that the “strength of the brand, its balance sheet and cash flow profile all point to what is a sustainable growth model”. We remain buyers.
KEY STORIES:
Shares in easyJet (EZJ) are up nearly 3 per cent in early trading after the budget airline announced that total revenue in the third quarter was up by 14 per cent to £1.6bn while ancillary revenue increased by 21.1 per cent to £328m. The airline carried 24.4m passengers during the period, a 9.3 per cent increase on the same period in 2017, bringing load factor up 0.3 percentage points to 93.4 per cent. This was driven by an increase in capacity of 8.9 per cent to 26.2m seats, though this was lower than planned due to disruption. Air traffic controller strikes in France forced the company to cancel 2,606 flights during the quarter, compared to 314 the year before, and is expected to cost around £25m.
Premier Foods (PFD) reported a 1.7 per cent increase in sales during the first quarter of its financial year driven mainly by growth in non-branded products. The results reflected a good performance from the recently re-launched Mr Kipling brand, where international sales have grown by more than a fifth over the two most recent quarters. The board reiterated its goal to deliver a £25m reduction in net debt per annum. Chief executive Gavin Darby may be using the update to demonstrate that he’s the right man for the job after an activist investor’s proposal to oust him. The vote will happen later today.
Shares in BHP Billiton (BLT) are three per cent to the good this morning, after the copper-oil-iron-coal giant said it “met or exceeded” production guidance for each of its four resource divisions. Costs are also expected to fall in line with guidance, and full-year iron ore output for the 12 months to June 2019 is expected to beat the production record set in the most recent period. Big year-on-year price rises for oil, copper, nickel and LNG may boost analyst expectations the company will announce a multi-billion dollar share buyback at next month’s full-year results.
OTHER COMPANY NEWS:
Shares in Carr’s Group (CARR) are down more than 5 per cent in early trading after the agriculture and engineering company after management expressed caution about Brexit given uncertainty around the nature of the UK’s future trading agreements. So far this financial year the UK agriculture division has benefitted from improvements in feed volumes, retail sales, machinery sales, and fuel sales. Management said the recovery in UK manufacturing is continuing with strong order books, and work is ongoing for the significant contract announced in July last year.
Wincanton (WIN) has appointed Dr Martin Read CBE as chairman of the company with effect from 1 August. He is currently chairman of two government owned companies, the Low Carbon Contracts Company and the Electricity Settlements Company, and will shortly be stepping down from his role on the franchise board at Lloyd’s of London.
On balance, Lamprell (LAM) put out a positive update today. Handily (or for once, depending on your cynicism), costs for the East Anglia One offshore wind project remain on track with previous guidance, while all other projects are “proceeding as planned”. The energy services group’s half-year balance sheet is likely to show a net cash position of $165m, while good levels of what Lamprell terms “walk-in work” means the bottom of the $225-300m forecast revenue range for the year should be easily met.
It’s not often that two London-listed stocks find themselves on opposite sides of a court room, but this morning brings news that an arbitration court has found in favour of Kosmos Energy (KOS) in its case against Tullow Oil (TLW) regarding liability for expenditures for a drilling rig offshore Ghana. Kosmos will not be required to fund its portion of the liability to Seadrill, saving it $50.8m. Tullow will also have to pay around $14m plus interest related to legal fees and amounts previously paid by Kosmos under protest.
Team17 (TM17) – a global video games label and developer – said first-half trading to June was strong. It expects to see full-year results in line with market expectations. The group’s back catalogue has performed well, with the launch of some new intellectual-property titles from label partners including ‘My Time At Portia’ by Pathea Games – Team17’s first independent partner in China. It also announced the launch date of Overcooked 2, (7 August 2018), which has been co-developed with independent developer Ghost Down Games. The group’s shares were up 3 per cent this morning.
