Global trade concerns continue to waft around, hitting investor sentiment at the start of the week in London. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Sales at Dairy Crest Group (DCG) during the first half are expected to be ahead of last year thanks mainly to revenue and volume growth across the company’s two largest brands, Cathedral City and Clover. Oil product Frylight is expected to see volumes decline as warm weather dampened demand for frying oils, but this has begun to turn around in the second half. The company will soon unveil a galacto-oligosaccharides (GOS) 'shot' for consumers, marketed under the Promovita brand name, that is a unique prebiotic dietary fibre. Shares were up nearly 2 per cent in early trading. Buy.
City of London Investment Group (CLIG) reported a 10 per cent rise in funds under management during the year to June, at $5.1bn. That boosted revenues - based on management fees - 8 per cent to $33.9m. While the core emerging market strategies underperformed net of fees, the developed and opportunistic value strategies both recorded positive relative performance. Management boosted the final dividend to 18p, taking the total for the year to 27p from 25p the prior year. Buy.
Sirius Minerals (SXX) has signed its largest binding offtake agreement to date, in a deal to supply up to 2.5million tonnes of polyhalite a year to Brazilian fertiliser distributor Cibra. This takes Sirius’ contracted supply beyond the 7mtpa level identified as key for second stage project and bank financing. The complicating factor is a requirement for Sirius to purchase a 30 per cent stake in Cibra, via an equity swap and the issuance of 95 million Sirius shares, which are up 5 per cent this morning in early trading. Buy.
After a difficult operating period which culminated in June’s emergency fundraising, Petra Diamonds (PDL) chief executive Johan Dippenaar is to step down once the board has identified a replacement. The effect of that rights issue has complicated full-year numbers somewhat, though finance director Jacques Breytenbach reports this morning that the company is in a better financial position than it has been in some time – even if net debt remains just below the value of the group’s equity. Under review.
Like-for-like sales at Finsbury Food Group (FIF) were up 2.4 per cent to £290m during the year to June, but on a reported basis fell 3.4 per cent to £304m. Management called the performance “resilient” in an “unprecedented inflationary environment”, and in a year where the company closed a loss-making bakery. The company acquired Ultrapharm Limited, a gluten free bakery manufacturer, for £17m cash at completion plus £3m of deferred consideration. Shares were flat in early trading. Buy.
Crude palm oil production at MP Evans (MPE) was up by nearly a quarter during the first half, though the average price of the product fell by 10 per cent to $663 (£506) per tonne. Operating profit fell $6.9m to $10.7m, £4.1m of which was due to foreign exchange losses. The company planted 1,090 hectares of new plants, helping to increase the number of crops by nearly a third. Shares were flat in early trading. Buy.
Shares in cosmetics maker Warpaint (W7L) are up 7 per cent in early trading after the company announced that sales curing the first half were up 38.7 per cent to £18.4m, with 35.9 per cent growth in own brand sales and 33.2 per cent growth in close-out sales. Gross profit was up by a third to £6.7m. Christmas orders are so far significantly ahead of last year. The company is focusing on international expansion after it bought its US distributor Leeds Marketing for $2.6m in August. Buy.
OTHER COMPANY NEWS:
Ahead of its half-year results on Thursday, SOCO International (SIA) has signed a new $125m, five-year, reserve-based lending facility, with another $125m available on request. Given the company was set to end the first half of 2018 with a strong cash balance and no debt, one can only assume that SOCO has identified an acquisition (or “acquisitions”, as this morning’s statement hints).
Boohoo Group (BOO) has appointed John Lyttle as chief executive with effect from March. Mr Lyttle is currently chief operating officer at Primark Stores Limited, a division of Associated British Foods (ABF). Current joint chief executives Mahmud Kamani and Carol Kane will remain on the board as group executive chairman and executive director, respectively.
An uptick in GDPR-related activity has been a boon for Restore (RST) in the first half of the financial year. Management reported a 15 per cent increase in adjusted operating profit for the period, on a strengthened operating margin of 20 per cent. The acquisition of TNT Business Solutions was held up for a few months after the Competition and Market’s Authority served an initial enforcement order, but the investigation was closed in August and the integration process has since been in line with expectations.
