Click here to read this morning's Market Outlook from The Trader with a look at Apple and yesterday's news from the Bank of England.
IC TIP UPDATES:
Keywords Studios (KWS) expects first-half revenues to be up 72 per cent to €110m, with a 66 per cent rise in adjusted pre-tax profits to €15.9m. This momentum came despite the integration of the lower-margin VMC business, and the weakening of the dollar. (Around 60 per cent of revenues are denominated in the US currency). All acquisitions made last year and so far this year are performing in-line with expectations. And, management anticipates a strong second-half, in line with current full-year market expectations. But the shares tumbled this morning. Some may have hoped for upgraded guidance, while others may have been taking profits. We’re still positive. Buy.
Cosmetics company Warpaint (W7L) has bought its US distributor Marvin Leeds Marketing Services for $2m in cash up front, and two further payments of $80,000 due on 30 September and 31 December. Around two thirds of the distributor’s revenue come from the distribution of the Warpaint’s W7 products, with the remainder from the sale of other branded cosmetics. Management believe the deal will give the company better control over its North American sales and give the opportunity to expand into Central and South America. Shares were up more than 2 per cent in early trading. Buy.
Serica Energy (SQZ) has announced another major North Sea deal, this time to acquire 42.25 and 25 per cent interests in the Bruce and Keith fields from Total. The purchase, for $5m up-front and a further $15m in three tranches in the two years after the deal completes, is subject to finalisation of last November’s takeover of BP’s interests in the Bruce, Keith and Rhum fields. That deal has faced complications involving Rhum’s 50 per cent ownership by a subsidiary of the sanctions-hit Iranian National Oil Company. Serica and BP have submitted applications to renew a waiver from the Office of Foreign Assets Control, a US enforcement agency. Buy.
KEY STORIES:
Royal Bank of Scotland (RBS) has reinstated dividend payments after a decade, recommending a 2p a share interim dividend. The group’s common equity tier one ratio rose to 16.1 per cent by the end of June, which included the settlement with the Department of Justice, the £2bn pension contribution and the planned dividend. The group reported an attributable profit of £888m, 5 per cent down on the comparable period last year, after absorbing higher litigation and conduct costs.
S&U (SUS) tightened the acceptance levels to 25 per cent of applications during the first-half, following high levels of expansion in the motor finance market, down on 31 per cent the prior year. Customer numbers were up almost a fifth to 58,100, while collections were up by around the same proportion. Although impairment continued to run at higher levels than last year, recent underwriting refinements have led to early indications of an improvement in both new customer quality and early repayment performance, management said.
Shares in Pets at Home (PETS) have jumped 10 per cent in early trading following the release of a better than expected first quarter trading statement. It was even enough for brokerage Liberum to upgrade their view from ‘Sell’ to ‘Hold’ as analysts there noted this now marks the fourth consecutive quarter of like-for-like growth in excess of 5 per cent. However, caution is still advised. The group continues to operates in a highly competitive pricing environment, with continued risk around gross margins. In fact, gross margins are still expected to fall by as much as 75-125 basis points this year. Liberum has also dubbed the group’s veterinary practice model as “cash exhaustive”
Revenue at International Consolidated Airlines (IAG) was up 3.1 per cent to €11.2bn during the first half, with operating profit before exceptional items up 17.4 per cent to €1.12bn. The British Airways owner added 5 per cent to available seat kilometres at 155bn, though passenger revenue per available seat kilometre fell 1.3 per cent to 6.43¢. Air traffic controller strikes in France added €20m in disruption charges, primarily affecting its Vueling airline. Shares fell more than 3 per cent in early trading.
OTHER COMPANY NEWS:
Ion has received antitrust clearance from the Competition and Markets Authority (CMA) regarding its acquisition of Fidessa (FDSA). The bidder announced this morning that its offer for Fidessa has now been declared unconditional in all respects. The offer will remain open for acceptances from shareholders until further notice. It’s expected that Fidessa’s listing on the London Stock Exchange will be cancelled no earlier than 3 September.
FanDuel, the US-based subsidiary of Paddy Power Betfair (PPB), has partnered with Boyd Gaming to access its sport betting and online casino markets. FanDuel will provide Boyd Gaming with technology and related services to operate Boyd Gaming-branded mobile and online sports betting and gaming services. Boyd Gaming will also take a 4 per cent equity stake in FanDuel Group and have an option to purchase a further 1 per cent stake. Shares in Paddy Power Betfair were flat in early trading.
Canadian independent oil and gas firm Jadestone Energy (Ca:JSE) has announced plans to list on Aim next week, after raising $110m in an upsized placing to fund the $80m acquisition of the Montara project, offshore Australia, the partial funding of Stag infill well, and the cancellation of a $15m convertible loan facility.
In a full-year trading update, computer vision technology group Seeing Machines (SEE) said revenues rose 127 per cent to A$30.7m, within management’s previously-guided range. Gross profits improved from a A$nil position in FY2017, thanks largely to a higher proportion of revenues coming from the high-margin automotive, off-road and rail markets. But the gross margin was dampened by previously-announced delays to shipments of – and higher-than-expected hardware costs of – the group’s second-generation fleet product, Guardian Gen 2. The gross margin is expected to come in below bosses’ full-year expectations, with a knock-on effect on gross profits. The shares were down 5 per cent this morning.
Argo Blockchain (ARB) - a UK-based provider of cryptomining services - joined the main market this morning, following the placing of around 156.3m shares at 16p each to raise £25m. The placing, which was significantly oversubscribed, gave Argo a market cap of £47m on admission. Argo was founded in December 2017 and covers four cryptocurrencies - Bitcoin Gold, Ethereum, Ethereum Classic and Zcash.
