Shares in the main London indices sold off again this morning as US dollar strength and emerging market concerns continue to prompt profit taking. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Amino Technologies (AMO) plunged by over a quarter this morning on a trading update for the year to November 2018. Amino expects adjusted pre-tax profits of around $11.5m, “reflecting an intensification of external macroeconomic headwinds”, which has caused lower-than-expected orders and higher-than-expected component price rises in the second half. Customer decisions on orders were delayed in the second half because of instability in certain emerging markets’ economies, and planned trade tariffs in the US which “created confusion” among customers. Still, net cash is expected to improve against the May interim stage. And management still plans to lift the full-year dividend by at least 10 per cent, maintaining this level for at least two years. Recommendation under review.
Sirius Real Estate (SRE) has announced its intention to introduce an additional market quotation denominated in Euros on the London Stock Exchange. This is in response to a number of comments from existing shareholders who indicated that they would increase their investment if the shares were quoted in Euros. The Germany based business parks landlord also revealed that trading has been strong in the six months to 30 September, completing the acquisition of three assets for €39.3m. Buy
Mitie (MTO) has announced the acquisition of Vision Security Group from Compass for £14m on a debt free, cash free basis. VSG had revenues of £192.1m in the year to September 2017, though it made a statutory pre tax loss of £2.7m. It is expected to report modest profitability in the year to September 2018. The deal appears to signal Mitie’s management are looking to increase their focus on the security sector. Security accounted for 20 per cent of revenues in the last financial year, but has been growing quickly, and chief executive Phil Bentley said the acquisition of VSG would give the group “the leadership position we seek to maximise value from our technology-led solutions”. Shares in security group G4S (GFS) were more or less flat. Sell.
KEY STORIES:
Quiz (QUIZ), the fast-fashion retailer which listed last year, issued a profit warning at 2:30pm on Friday pushing the shares down 35 per cent as a result. The stock is down another 23 per cent this morning, as management blamed a combination of factors, but most notably lower sales to third parties like Next, and Debenhams, as well as the £0.4m provision previously announced in relation to the House of Fraser collapse. As such, cash profits are now expected to land around £11.5m (compared to previous estimates around £15m), but not lower than £5.5m (amounting to a £1.5m bottom-end downgrade).
OTHER COMPANY NEWS:
Shares in online grocer Ocado (OCDO) are slightly down this morning after reports emerged over the weekend that internet behemoth Amazon is considering opening some of its Amazon Go stores in the UK. These stores use technology to track customers, monitoring what they pick up and put in their basket so that they don’t have to queue at the check-out to pay, they just walk out and are charged to their account later. Ocado bulls argue Amazon is taking a “step back in time” but we see it as evidence that even the greatest online retailer still sees some merit in physical shopping.
Shares in Ceres Power Holdings (CWR) were up 2 per cent this morning, after the group unveiled plans to invest £7m in a new fuel cell manufacturing facility in the UK. The new plant, which will be based in Redhill, Surrey, will have a manufacturing capacity of around 2MW per year by the end of 2019, expandable to 10MW as customer demand grows. It will also become the “lead plant”, adding volume as the group pursues its strategy of licensing out its technology to partners in the development phase, to generate royalties once full-scale commercialisation is achieved.
Budget hotel chain easyHotel (EZH) reported a 25 per cent increase in total sales to £37.2m during the year to September. Revenue per available room at owned hotels was up 11 per cent, while like-for-like sales at franchised hotels increased 12 per cent. Five new owned hotels, including the first in continental Europe, and four franchised locations were opened during the period. These openings increased the group’s room count by 42 per cent, bringing the total network to 33 hotels and 3,068 rooms across 27 cities. Shares were up less than 1 per cent in early trading.
