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IC TIP UPDATES:
Rallying precious metals prices have helped Fresnillo (FRES) shares rise 24 per cent off their October lows, though the South American gold and silver miner is down 2.6 per cent today. The cause has been a 3.7 per cent drop in quarterly gold production, compared with the three months to June, which Fresnillo put down to a lower speed recovery rate at the leaching pads at Herradura, and lower ore grades and recovery rate at Noche Buena. Full-year silver production guidance has also been narrowed, though the company now believes gold production will be about 1.6 per cent higher on average. Buy.
Shares in Antofagasta (ANTO) jumped 3 per cent in early trading this morning, after the Chilean copper giant posted a 15 per cent quarter-on-quarter rise in production in the three months to September. While copper prices have been weak, the strength of the molybdenum market has also pushed down net cash costs by 15 per cent to $1.27 a pound. Chief executive Iván Arriagada also struck a more upbeat tone than previous trading statements this year, stating that the “physical copper market continues to look tight and the outlook for next year remains positive despite ongoing fears about disruptions to global trade”. We remain buyers.
Stobart Group (STOB) reported a 21.4 per cent increase in revenue to £151m, but the loss for the period widened from £11.9m (not including an exceptional item) last year to £17.5m this year. Pro-forma underlying cash profits were up in both aviation and energy, but this was unable to compensate for the loss in the rail division. The number of passengers flying out of London Southend Airport was up 37 per cent to 838,742, while easyJet and Ryanair are all expanding their operations there. Shares fell more than 4 per cent in early trading, but we’re encouraged by the progress made in the core aviation and energy businesses. Buy.
Metro Bank (MTRO) passed the 1.5m customer mark in the nine months to 30 September, and also delivered a 38 per cent increase in deposits to £14.8bn, while the loan book jumped 52 per cent to £13.1bn. Underlying pre-tax profits doubled to £39.2m, and the bank now operates from 60 branches. The shares were down over 6 per cent on these numbers, and with their very high rating remain a sell.
KEY STORIES:
Patisserie Holdings (CAKE) announced that the winding up petition against Stonebeach Limited, the company's principal trading subsidiary, was dismissed by the High Court. In a separate statement Patisserie said that it is investigating why the grant of options to chief executive Paul May and chief financial officer Chris Marsh in 2015 and 2016 have not been appropriately disclosed and accounted for in its financial statements. The company’s share are still suspended from trading at 429.5p, though a £15.7m share placing at 50p took place last week.
Shareholders proxy advisory firms ISS and Glass Lewis have both recommended investors in Randgold Resources (RRS) to vote in favour of the gold giant’s plan to merge with Barrick Gold. Yesterday, analysts at BMO suggested that the combined group could dispose up to $5bn-worth of mines considered outside the merged group’s “tier-one” focus.
One of those divestments, BMO reckons, could be Barrick-owned Acacia Mining (ACA), whose mountain of problems in Tanzania appears to be escalating. Yesterday, the company reported that a “senior manager of its Tanzanian business” has been arrested and charged by the country’s anti-corruption bureau. Amid what it has called the “increasing risks to the safety and security of its people”, Acacia said the most recent criminal charges stem from matters “now being considered in contractual arbitrations” launched in July 2017.
Yu Group (YU.) shares fell over 80 per cent in early trading after management revealed “several areas of significant concern” relating to its accounting. Revenue which had previously been booked as accrued income is not recoverable meaning annual profits are now set to be £10m lower than previous expectations.
OTHER COMPANY NEWS:
Shares in Photo-Me International (PHTM) were up 10 per cent in early trading after the company stated that restructuring efforts in Japan have been successful, and now expect its subsidiary in the region to return to growth in FY2019. New units deployed in the competitive market are less expensive to operate, and will offer a 35 per cent faster return on investment. The company now has 2,700 photo-booths in the UK and are on track to meet the 4,000 target by the end of the financial year. Group results for the full year are expected to be in line with last year.
