Shares in London are up after the Bank of England voted unanimously to keep interest rates on hold. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Like BP before it, oil and gas major Royal Dutch Shell (RDSB) has revealed the impact strong prices had on cash generation in the third quarter of 2018, as operating cash flow surged 59 per cent to $12.1bn, despite a $2.6bn negative working capital movement in the period. That was enough to cover the cash dividend, interest payments, share buybacks, and a further reduction in net debt. Having completed the first tranche of its $25bn share buy-back programme, Shell will purchase a further $2.5bn of shares by January, while the quarterly dividend remains unchanged at 47¢ a share. The shares, up 3 per cent this morning, are under review.
Trading remained strong in the four months to date at Morgan Sindall (MGNS), and full-year earnings are forecast to be in line with expectations. The group is also generating a lot of cash, and cash balances are now expected to be over £90m. A more selective approach to new business meant that the order book was down 11 per cent from the start of the year at £3.4bn. Construction and infrastructure are expected to deliver margins of over two per cent, while the Fit Out order book slipped 13 per cent. Partnership housing has performed in line with expectations while urban regeneration is achieving completions ahead of schedule. The shares are down three per cent on these numbers, presumably because of the smaller forward order book, but we still rate the shares a buy.
Trading at brickmaker Forterra (FORT) has been boosted by strong activity in the housebuilding sector, with brick and precast concrete products up from a year earlier. However, profits for the full year are expected to be lower than previously forecast because one of its brick kilns has been shut down for a rebuild. Buy
Citing today’s report from Tawke licence operator DNO, Genel Energy (GENL) notes that output from the Peshkabir field has ramped up to 50,000 barrels of oil per day (bopd), six months ahead of schedule. Total production at Tawke is now expected to hit “at least 130,000 bopd” by the end of 2018. Under review.
Provident Financial (PFG) have announced managing director of Vanquis Bank Chris Sweeney will step down from his role with immediate effect but remain employed by the sub-prime lender until April next year. Provident’s chief executive Malcolm Le May will replace him on an interim basis. Buy.
It’s been a continually disappointing year for shareholders of Centamin (CEY), so news that production has at least improved in the third quarter should provide some cheer. The Egyptian miner saw gold output climb 27 per cent in the three months to September, thanks to a sharp increase in average grades. Costs fell, and helped to offset the decline in the average realised gold price, though basic earnings per share declined 29 per cent quarter-on-quarter to 0.93¢, owing to the profit-share mechanism with Egyptian authorities. Recovery buy.
BT’s (BT.A) shareholders seem to have got onboard with Gavin Patterson’s restructuring plan just in time for his departure. Shares rose almost 10 per cent in early trading on the announcement of interim results which revealed major cuts to operating costs. But capital expenditure remains high and new chief executive Philip Jansen (who is known for his major restructuring) is likely to implement a whole new strategy when he arrives in February. Sell
After a terrible few weeks for Smith & Nephew (SN.), a solid third quarter results announcement has come as something of a relief for shareholders. The group confirms that it is on track to deliver revenue growth between 2 and 3 per cent in the full year. Buy
Stobart Group (STOB) announced that Stobart Air has reached an agreement to provide new aircraft, crew, maintenance, and insurance services for BA CityFlyer on routes to and from London City Airport. Stobart Air managing director Graeme Buchanan said part of the business’s growth strategy is to secure additional commercial relationships with airlines. Shares were up nearly 2 per cent in early trading. Buy.
Hilton Food Group (HFG) announced that it has made “significant strategic progress” with its recently announced joint venture with Dalco, the Dutch vegetarian product company. In the UK, its seafood business Seachilll has won new business to provide fish to Waitrose and Sainsbury’s. Operations in central Europe have begun to improve following previous initiatives taken. Shares were flat in early trading. Buy.
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Five or six years ago, a large miner suddenly in possession of $10.4bn in cash would probably look to splurge on acquisitions and mega-projects. But this is 2018, and BHP Billiton (BLT) has today announced plans to return the windfall from the sale of its US onshore portfolio to shareholders, by way of a $5.2bn off-market buy-back and a $5.2bn special dividend, to be paid in January 2019. The mining giant’s London-listed shares rose 2 per cent in early trading.
Third quarter numbers from online takeaway service Just Eat (JE.) revealed a slight beat to revenue growth. A 41 per cent top-line surge exceeded consensus estimates of 40 per cent, which bosses said reflected strong marketplace order growth, accelerating growth of delivery orders and the inclusion of acquisition Hungryhouse. Management now reckons full-year revenues will land towards the top end of the guided £740m to £770m range, although underlying cash profits will be towards the lower end of the £165m to £185m range, reflecting higher investment in Latin American markets and better delivery options.
Patisserie Holdings (CAKE) shareholders have approved the £15.7m share placing to save the company. The Patisserie Valerie owner announced this morning that it will not provide any new information at today’s general meeting, but said it’s still investigating the financial misstatements and potential fraud. If shareholders hadn’t approved the deeply discounted placing, then the company would likely have gone into administration.
OTHER COMPANY NEWS:
Retail chain Carpetright (CPR) has issued a brief update to the market this morning, warning investors that the 26 weeks ended 27 October 2018 were “heavily impacted” by previously announced restructuring plans. The implementation of the new strategy kicked of during the second quarter, and saw management close 67 underperforming stores, 65 of which were in the UK. A further six are expected to shut their doors for good before the end of December, which will help the group claw back a targeted £19m-worth of annual cost savings. Although like-for-like growth has remained largely negative during the second quarter, bosses admit that restructuring efforts have managed to improve the trend. Interim results are due on 11 December 2018.
Randgold Resources (RRS) has been given the all-clear from South African competition regulators for its merger with Barrick Gold. The companies are now awaiting approval from both shareholders and a Jersey court, the latter expected mid-December.
Shares in Equiniti (EQN) have jumped 4 per cent this morning after the group announced its acquisition of pension technology company Aquila. The deal will strengthen Equiniti’s life and pensions proposition. No financial details have been given. Hold.
Rank Group (RNK) has appointed William Floyd as chief financial officer. He was most recently the CFO for Experian’s business in the UK and Ireland where he was involved with a number of mergers and acquisitions.
