Shares in London rose a little in morning trading despite further global trade war fears. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Debenhams (DEB) has been forced to call in experts from accountancy firm KMPG to help it draw up a restructuring plan. High street trading has proved challenging for several retailers this year, and this suggests Debenhams could be the next victim. The department store chain is mulling its options, including entering into a company voluntary arrangement (CVA) which would help them terminate leases on underperforming stores ahead of schedule. It’s a scheme used by many this year, including Mothercare (MTC), Carpetright (CPR) and House of Fraser shortly before its collapse. The connection to House of Fraser doesn’t end there - Mike Ashley, who bought House of Fraser out from administrations currently owns roughly a third of Debenhams’ shares, with many stores giving over some proportion of their square footage to Sports Direct fascia. We remain sellers.
Ted Baker (TED) has announced the acquisition of No Ordinary Shoes via its footwear licensee Pentland Group for £13m. The transaction amounts to the acquisition of the companies that held the exclusive global licence to manufacture and distribute footwear under the Ted Baker brand since 2001, and is expected to complete will complete on 31 December 2018. Analysts at Liberum expect the entire outlay will total closer to £20m, and be earnings enhancing by FY2020. We remain buyers.
KEY STORIES:
Shares in RPC (RPC) were up more than a fifth in early trading after the packaging specialist confirmed weekend reports from Bloomberg that it was in early stage talks with private equity groups Bain Capital and Apollo Global Management over a potential offer. The groups have until 8 October to announce its intention to make a firm offer or walk away.
Litigation finance provider Vannin Capital has announced its intention to list on the main market of the London Stock Exchange, via the issue of £70m in new share capital and a partial sale by existing shareholders. Part of the net proceeds will be used to repay a £27.2m shareholder loan note to Litigation Funding, owned by co-founder Dan Craddock. Admission is expected to take place in October. Alongside the offer, Vannin announced it had appointed former Allen & Overy managing partner David Morley as chairman.
Steadying production at the Shaikan field, together with average cash operating costs of just $3 a barrel, enabled Gulf Keystone Petroleum (GKP) to generate operating cash flow of $61m in the first half of 2018. Profit generation for the period was also a record for the Kurdistan-based driller, though an expansion of Shaikan’s 55,000-barrel-a-day upgrade programme has resulted in a 10 per cent uplift in capital expenditure to $200-230m gross.
Associated British Foods (ABF) reported that profits from Primark, grocery, agriculture, and ingredients are expected to compensate for lower sugar prices in the EU. Sales at Primark for the full year are expected to be 5.5 per cent ahead of last year at constant currency, driven primarily by more selling space but offset by a 2.2 per cent like-for-like decline. But strip out the impact of currency and sales are expected to be 6 per cent ahead. A Primark store in Belfast burned down during the period, which analysts had estimated would cost around £75m, but today management said all costs were covered by insurance. Shares fell 2 per cent in early trading.
OTHER COMPANY NEWS:
Shares in Velocys (VLS) are down heavily today, after the renewable fuels group said operations have been suspended at a plant where Velocys’ Fischer-Tropsch technology is used. ENVIA Energy, which runs the Oklahoma City facility, has said it will undertake “a review of strategic alternatives in order to preserve the value inherent in the facility”, though the stock is off 12 per cent, and around 40 per cent in the last month.
888 Holdings (888) has launched its 888sport brand in New Jersey, making it the first time the company has broken into the US market. Chief executive Itai Frieberger called the move a “major milestone” for the company’s plans to expand further in the US and in regulated markets generally. The gambling company now has now has sport, casino and poker products all operational in the US.
Ahead of its annual general meeting later today interior designer and manufacturer Victoria (VCP) announced that like-for-like sales were up more than 3 per cent during the five months to August. This was aided by the “competitive pricing positioning” it had introduced in the UK to drive volume and market share growth. New products are set to launch during the second half of the year, which management said had good feedback from early marketing. Shares were flat in early trading.
