London shares were up mid morning after a strong rally in Chinese shares overnight. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
NMC’s (NMC) shareholders will no doubt be reassured by this morning’s revenue and profit upgrades after its shares endured a 28 per cent collapse since August. The lofty valuation seems to have spooked investors at a time of stock market wobbles and political uncertainty in the Middle East (NMC’s home market). Management has upgraded 2018 revenue growth forecasts from 22 per cent to 24 per cent and adjusted cash profits are now expected to hit $480m (from $465m previously). Buy
GB Group (GBG) has acquired Vix Verify Global Pty Limited (VVG) - an Australian provider of identity verification and location intelligence software - for AU$38.3m (around £21.2m) in cash. VVG has a similar business model to GBG and its services will apparently complement GBG’s IDV and Loqate solutions. For the year to June 2018, VVG had net revenues of AU$21.9m and pre-tax profits of AU$0.8m. The deal is expected to be earnings-accretive in the first year of GBG ownership. GBG’s shares were up 1 per cent this morning. Buy.
Shares in Provident Financial (PFG) dipped nearly three per cent after the non standard loan provider continued to deliver sub par collection performance on its home credit business. However, despite tighter lending criteria at Vanquis Bank, there were 103,000 new customer bookings in the third quarter, taking total customer numbers to 1.795m The refund programme to 1.2m customers using the repayment option plan is expected to be completed by early 2019. Buy
KEY STORIES:
AstraZeneca’s (AZN) novel cancer drug Lynparza has successfully halted the progression of ovarian cancer in patients with a BRCA-mutated gene. It’s the first time a gene therapy has improved the chances of progression free survival for patients who had not previously treated.
Late on Friday afternoon, after market close, discounter B&M European Value Retail (BME) announced the €91.2m (£80.5m) acquisition of Babou - a French chain of 95 discount stores. For the year ended 31 January 2018 the Babou Stores Group delivered revenues of €347.1m, cash profits of €24.7m and pre-tax profits of €0.1m. The deal was financed via cash, via an additional loan facility, is expected to be immediately earnings enhancing and has already completed. While analysts noted the “ambition” of the deal, brokerage Liberum has warned that “there is likely to be much work required to improve Babou's profitability and competition may well mean the group does not have it all its own way”.
Shares in Ryanair (RYA) are up more than 4 per cent in early trading after the budget airline reported half-year figures that weren’t as bad as expected. Group revenue was up 8 per cent to €4.43bn (£3.91bn), but profit after tax fell 7 per cent to €1.29bn. Average fares were down 3 per cent due to excess capacity in Europe, an earlier Easter, and repeated air traffic controller strikes and staff shortages contributing to an increase in cancellations. Revenue growth was offset by higher fuel and staff costs.
OTHER COMPANY NEWS:
Earthport’s (EPO) chairman Phil Hickman is retiring with immediate effect. Sunil Sabharwal, who was non-executive director, has been appointed interim chairman. And Hank Uberoi - non-executive director - is also retiring from the board with immediate effect. Mr Hickman has been chairman since 2011 and also acted as interim chief executive during the first half of this year. This morning’s update noted that the board thanks Mr Hickman for his loyal service. Mr Uberoi, who resigned as chief executive in December, was also thanked for his years of service. Mr Sabharwal will lead the search process, along with the other independent directors, for a new chairman. The shares were down 2 per cent at the time of writing.
Safestyle (SFE) has signed a commercial agreement with its co-founder, who is now involved with a competitor. The agreement with Mitu Misra - who was a party to the dispute with competitor NIAMAC Developments (trading as Safesglaze) includes a five-year non-compete agreement and the provision of services by Misra in support of “the continued recovery of Safestyle”.
