Equities in London are cautiously positive. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
According to reports, you can now buy Prince Harry’s old Audi and Madonna’s old Mini Cooper S Hatch on Auto Trader (AUTO). But these potential high-ticket sales hasn’t stopped the group from widening its horizons, announcing a new joint venture with Cox Automotive this morning. Together, the two companies will develop a “comprehensive online auction service” to the UK car market, called Dealer Auction. It’s believed it can provide fleet companies, manufacturers and retailers with a more efficient and convenient way to dispose of their stock of vehicles and buy others. The JV is still subject to regulatory approval. For now, we remain sellers.
Shares in On The Beach (OTB) are up more than 11 per cent after the company announced its bought Classic Collection Holidays, which sells luxury package holidays through a network of third party offline travel agencies. The £20m will be made up of £14.6m in cash, £2.7m cash deferred for 12 months, and £2.7m in shares. Management believe the acquisition will be earnings enhancing within the first year of ownership. The travel group also released a trading update, where lower marketing costs helped make up for suppressed holiday demand due to warm weather in the UK. Adjusted pre-tax profits for the financial year are expected to be in line with expectations. Buy.
Mining royalty firm Anglo Pacific (APF) has spent $50m (£38m) to acquire a 4.25 per cent stake in Labrador Iron Ore Royalty Corp, a Toronto-listed “passive flow-through entity” for a 7 per cent revenue royalty in IOC, the iron ore unit Rio Tinto (RIO) is reportedly considering floating. Buy.
In the last week, several investors in Genel Energy (GENL) have used a strong set of half-year results (and a dip in the price of Brent crude) to bank profits on the Iraqi Kurdistan’s share price rally. Shares are back up today, after DNO, operator of the Tawke asset, set a new production target from the Peshkabir field of 50,000 barrels of oil per day (bopd) by the year-end. DNO, which reinstated its dividends in half-year numbers out today, even expects the wider Tawke field to boost production. Buy.
Sales at Rank Group (RNK) fell 2.3 per cent to £691m during the year to June, with group operating profit 40.7 per cent per cent to £50.1m. Management said its Grosvenor Casinos were hurt by extreme weather, enhanced due diligence, and a low win margin. UK digital continued to grow, but at a slower rate. Sales in the division were up 9.9 per cent to £123m while operating profit fell 79#.9 per cent to £20.9m. Recently appointed chief executive John O’Reilly called the performance over the year “disappointing”, but said the group would focus on growth in digital and cost efficiencies as part of the transformation programme. Shares fell more than 2 per cent in early trading. Sell.
Like all precious metals producers, Shanta Gold (SHG) shares are suffering under the strain of dire prices. But investors have much to cheer from the Tanzania-based miner’s first half of 2018, including a post-tax profit of $7.1m, and a record production performance from New Luika’s underground mine. The group remains on track to hit annual production guidance of 82-88,000 ounces of gold. Buy.
The KAZ Minerals (KAZ) rollercoaster continues. In the last few weeks, the miner’s shares have been battered by plans to acquire the Baimskaya project in Russia’s far east, and a copper price slaughtered by trade war fears, but interim numbers tell a different story. A 20 per cent year-on-year rise in the copper price in the first half of 2018 pushed gross revenues 31 per cent higher, doubled free cash flow before interest payments, and helped the Kazakh group to shave 16 per cent off net debt. Most surprising of all, the dividend has been reinstated. Under review.
KEY STORIES:
Warn weather across the UK helped sales rebound for Kingfisher (KGF) during the second quarter. Group like-for-like sales in the second quarter were up 1.6 per cent to £3.26bn. This was driven in part by sales growth in both Screwfix and B&Q UK and Ireland, leading to a 4.2 per cent improvement in comparable sales in the UK and Ireland to £1.41bn. France continues to be a difficult market, with sales down 1 per cent during the quarter, with weaker footfall and impact of transformation-related activity at Castorama. Shares fell 2 per cent in early trading.
OTHER COMPANY NEWS:
Matomy Media (MTMY) announced after market-close yesterday that it has agreed the sale of its Whitedelivery email marketing activity to 1029 Holdings, for up to $8.5m - entailing a cash payment, and data-licensing and performance-based payments based on pre-agreed milestones. The company said the sale is in keeping with its strategy to focus on its core activities - domain monetisation and programmatic in-app mobile advertising. The shares were up around 3 per cent this morning.
Mercia Technologies (MERC) has announced that nDreams - in which it holds a 45.6 per cent direct equity stake - has won a multimillion dollar contract with a prominent virtual reality technology company. nDreams is a European developer and publisher focusing on VR gaming and experiences content. The latest deal marks its “most significant contract win to date”. Mercia’s shares were up around 1 per cent this morning.
Oil and gas driller Bowleven (BLVN) is “pleased to announce” the completion of drilling of the IM-6 appraisal well at Etinde in Cameroon. Unfortunately, the well did not make an additional commercial discovery, and Bowleven and its partners have decided to forgo the IM-7 well. Shares are off 18 per cent today.
