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News & Tips: RBS, Pendragon, Bacanora Lithium & more

Pendragon's shares fall 2 per cent in early trading
October 26, 2018

For the latest on the yuan, US GDP data and this morning's Market Outlook, here's The Trader Nicole Elliott.

IC TIP UPDATES:

Investment management group Brooks Macdonald (BRK) pushed funds under management ahead by three per cent to £12bn in the first quarter of the financial year to 30 September. The rise was driven by £158m of net new business and a £211m positive investment performance. Buy.

Following last week’s profit warning, Pendragon (PDG) announced that group like-for-like sales were down 7.2 per cent during the three months to 30th September, with a decline in sales across both new and used cars as well as aftersales. Management stated that the introduction of Worldwide Harmonized Light Vehicles Test Procedure (WLTP) for new cars and investment in the used cars business has had a “short term dilutive effect on profitability”.  Full-year underlying profit before tax is now expected to be approximately £50m. Shares fell 2 per cent in early trading. Sell.

KEY STORIES:

In the last few months, shares in Bacanora Lithium (BCN) have been on a steady descent since the group pulled the plug on an attempted fundraising. Today, that trend has been bucked after the prospective miner said it had completed several milestones in the front-end engineering design for its Sonora project, which continues to receive visits “from potential strategic investors, at both the corporate and project levels, to secure outstanding development capital”. The company says that initial sample quality from the group’s Zinnwald site in Germany has shown signs of 99 per cent purity, which is indicative of potential battery-grade lithium. The stock is up 7 per cent.

International Consolidated Airlines (IAG) reported 5.1 per cent increase in revenue to €18.3bn (£16.2bn) during the nine months to 30th September, with operating profit before exceptional items up 7.3 per cent to €2.58bn. This was achieved despite a 15 per cent increase in fuel costs at constant currency. The airline also updated details around a data hack, stating that it has notified 77,000 customers who may have had personal information and payment details stolen that include a card’s CVV, and another 108,000 without a CVV. Shares were up nearly 3 per cent in early trading.

OTHER COMPANY NEWS:

RBS (RBS) increased third-quarter income by £485m from a year earlier, reflecting indemnity insurance recoveries and lower disposal losses. Risk weighted assets fell by £4.3bn, which helped to strengthen its CET1 ratio by 60 basis points to 16.7 per cent. However, net interest margins fell eight basis points to 1.93 per cent, and the shares fell 4.5 per cent to an 18-month low.

Shares in Aim small-cap VR Education (VRE) were down by around a quarter this morning, after a trading update revealed that the process of on-boarding its Titanic VR offering with PlayStation has taken longer than anticipated. This is where a significant percentage of sales are expected to be generated. VRE has reviewed its sales forecasts and now believes there will be an impact on FY2018 revenues, with a “significant proportion” delayed until FY2019. Revenues to December 2018 will be “materially below expectations”. So far, Titanic VR has launched on PC and the Oculus Rift, HTC Vive and Windows Mixed Reality platforms.