Indications that US monetary policy remains on a tightening path have dampened enthusiasm today. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in AO World (AO.) fell on news that the group plans to acquire Mobile Phone Direct for a cash-free, debt-free enterprise value of £32.5m. The Reading-based company operates via two brands: Mobile Phones Direct and Smart Phone Company. For the year ended March 2018, the entire group reported revenues of £122m and cash profits of £5.5m. AO says buying the company will “significantly increase the scale and sophistication of AO’s mobile proposition”, adding services and other additional products, compared to just handsets at preset. But concerns about the resilience of the mobile phone market are mounting - Dixons Carphone (DC.) has struggled to fight off competition this year - and AO added to the announcement that it now expects trading to be second-half weighted. A lack of detail around how earnings enhancing the deal is expected to be has also put some analysts on edge. Sell.
In a statement regarding its reverse takeover of Ince and Co – an international network of law firms – Gordon Dadds (GOR) has said negotiations regarding the acquisition continue, together with associated legal and financial due diligence. Back on 29 October, Gordon Dadds announced that it had agreed terms for the acquisition of Ince & Co, and the merged organisation would comprise the largest listed law firm in the UK by revenue. Shares remain suspended.
Vitec (VTC) has acquired Amimon – a designer and developer of chipsets and modules for real-time wireless video transmission, for professional filmmaking and productions – for $55m in cash. The total expected investment is $59.9m, including employee retention, deal and integration costs. Amimon was founded in 2004; its headquarters are in California, and its research and development centre is in Israel, where most employees are based. Vitec also reported this morning that management’s expectations for the year to December 2018 remain unchanged, “with material EPS growth”. Buy.
Shares in Informa (INF) were up around 3 per cent this morning, after the events and specialist publishing group gave a ten-month trading update to October. Group underlying revenues rose 3.9 per cent over the respective period. For the standalone Informa business, pre-combination with UBM, underlying revenues rose 4.1 per cent. Reported revenue growth for the new combined business was 31.8 per cent. The performance was in line with Informa’s expectations, meaning it’s on track to meet its goal of 3.5 per cent or higher underlying revenue growth – even amidst macro uncertainties including US-China trade relations, Middle East political tensions and Brexit negotiations. Buy.
OTHER COMPANY NEWS:
The once ailing power and data cabling provider Volex (VLX) appears to have found its spark. The business announced underlying operating profit organic growth of 48 per cent in its half year results, stripping out the contributions from acquisitions made this year. Volex moved to AIM from the main market in January 2018 and credits this transition for its increased M&A activity. The placing of 48m new shares certainly helped, generating $46.7m in net cash proceeds - $10.8m of which was used in acquiring cabling business Silcotec. Management is looking to make more acquisitions, and a purchase in the UK is potentially on the cards.
Morgan Advanced Materials (MGAM) is meeting its expectations this year, according to a trading update this morning. On an organic constant-currency basis, sales up to October 2018 this year have beaten the same period last year by 7.2 per cent. Management’s outlook remains unchanged as the specialist manufacturer’s headline operating margins stay in line with those reported for the half year to 30 June.
A third-quarter update from Worldpay (WPY) – which has a secondary listing on the London Stock Exchange since its combination with US group Vantiv – revealed an 84 per cent rise in net revenues to $1.02bn against $554m in the standalone Vantiv business’s prior-year period. On a pro forma basis, as if the transaction closed on 1 January 2017, net revenues would have risen 9 per cent year-on-year. Reported net income per share declined 98 per cent on an actual basis (against Vantiv’s prior-year figures) to $0.01, dampened partly by transition, acquisition and integration costs. On an adjusted basis, this was up 17 per cent to $1.05.
