Taking a lead from the US overnight, London shares are on the up today. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Unilever (ULVR) has announced its new chief executive. On Paul Polman’s retirement, Alan Jope will assume the top job from 1 January 2019. Mr Polman will help facilitate a transition through the first half of the year, after serving as the group’s leader for a decade. Mr Jope, who has led Beauty & Personal Care, Unilever's largest division, since 2014 and served on the company's leadership executive since 2011, said it was “a huge privilege” to step up to lead the company. Buy.
Polymetal International (POLY) has completed the acquisition of the 82.3 per cent of the Nezhda gold property it did not own. The deal, which paves the way for project construction at the start of 2019, is comprised of $18m in cash, and a further $134m in newly issued Polymetal shares. We remain buyers.
Tullow Oil (TLW) is to reinstate its dividend next year, after the exploration and production group said its operational and financial improvements warranted a $100m minimum annual payout,. The company said it would look to supplement the ordinary dividend with any surplus free cash flow generation. We are a little more bearish: sell.
Premier Asset Management (PAM) shares were up 5 per cent in early trading after the group reported £734m in net inflows for the year to September, representing 22 consecutive quarters of net inflows. However, investment performance was much lower, with just £44m in returns, compared with £342m the prior year. Pre-tax profits were up a third, prompting management to raise the total dividend by 28 per cent to 10.25p a share. Buy.
Phoenix Group (PHNX) generated £664m in cash so far this year, up from £653m the same time last year and exceeding its £1bn cash generation target for 2017 and 2018. The Solvency II ratio has improved to 164 per cent, from 147 per cent, while £400m of the £440m targeted synergies announced as part of its purchase of Standard Life Aberdeen’s insurance operations have been achieved. Buy.
Motorpoint (MOTR) shares were relatively flat on the release of interim numbers from the “nearly-new” car retailer. House broker Shore Capital said the group had managed to “keep the motor running” despite a “volatile and challenging UK consumer backdrop.” Total sales increased by 9.4 per cent, with tight cost control driving operating profit growth of 15.5 per cent to £12.7m. Meanwhile, pre-tax profits jumped by 13 per cent to £11.9m, against Shore Capital’s own forecast of £11.6m. We remain buyers.
Shares in CVS (CVS) are down after higher rates for locum staff weighed on cash profit margins. The group has also had to increase salaries for general veterinary and nurse staff to improve vacancy rates, which means like-for-like sales growth of 3.8 per cent is failing to show up at the bottom line. Net debt is also forecast to rise, as the group continues to spend on acquisitions. As the stock continues to lose momentum, we move to hold.
KEY STORIES:
Shares in Intu (INTU) collapsed by 35 per cent after the Peel Group, Olayan and Brookfield consortium withdrew its offer to buy the retail landlord. It seems that although Intu passed all due diligence, the consortium cited current macroeconomic uncertainty as the reason for not proceeding. In response to concern about mounting debt, Intu has announced that dividend payments will be cut substantially. Sell
Car auctioneer BCA Marketplace (BCA) reported a 31 per cent hike in half-year operating profit to £45.7m and a 22 per cent rise in the top-line to £1.43bn. Overall volumes were on the rise, including an increase in the number of vehicles sold under outsourced remarketing contracts in the UK Vehicle Remarketing division. Hold.
XPS Pensions (XPS) more than doubled revenue during the first-half, following the merger between Xafinity and Punter Southall, however associated amortisation of intangibles acquired meant operating profits were almost wiped out at juts £0.1m. On a pro-forma basis, revenue growth of 3.3 per cent was behind historic averages due to consultant time spent on the integration.
The Competition and Markets Authority (CMA) has announced a full investigation into the funeral sector, sending Dignity (DTY) shares plummeting in early trading. The regulator first started evaluating pricing across the industry six months ago, but has today announced it will move to a full investigation after “identifying serious concerns”, including “above inflation price rises for well over a decade – both for funeral director services and crematoria services.” Dignity has responded in a statement, saying it welcomes the work done by the CMA, as it “provides a significant opportunity to improve standards and protect consumers.” The company also said it believes the sector “will benefit significantly from proper regulation”.
Iron ore giant Rio Tinto (RIO) has approved a $2.6bn investment in the Koodaideri iron ore mine in Western Australia, which the commodities giant says will be its most technologically advanced mine yet. Once up and running, potentially in late 2021, the mine will have an annual capacity of 43 million tonnes.
OTHER COMPANY NEWS:
The Daily Mail and General Trust (DMGT) said results for the 12 months to September were in line with expectations. Revenues came in at £1.43bn, down 8.8 per cent year-on-year, while pre-tax profits came in at £692m against losses of £129m a year earlier, after reduced exceptional costs and impairment charges and including the gain on the disposal of DMGT’s stake in ZPG. Adjusted pre-tax profits, which exclude three-and-a-half months’ worth of ZPG profits and reflect the effects of the weaker dollar, fell 16 per cent to £182m. The company cited “challenging market conditions” facing its consumer media business. Advertising revenues here are “likely to remain volatile”. The shares were down 9 per cent in morning trading.
Shares in drinks company Britvic (BVIC) were up 6 per cent this morning on the back of a relatively strong set of full-year results to September, amidst a “challenging environment”. Revenues rose 5.1 per cent to £1.5bn with organic revenues up 2.7 per cent. Adjusted operating profits rose 5.4 per cent. Meanwhile, statutory pre-tax profits rose 5 per cent to £146m. The group cited “headwinds” over the period including the introduction of the soft drinks industry levy (SDIL), disruption from the temporary shortage of carbon dioxide in Great Britain and Ireland, and the effects of multiple business failures in its customer base. Still, revenues grew in all regions apart from France and Brazil.
Ahead of its takeover by Sibanye, Lonmin (LMI) released its last set of results as a listed company today. They show some signs of a return to sustainability, thanks to a 20 per cent rise in the average full basket price for the group's platinum metals. That came in above the 5 per cent rise in unit costs, which in turn pushed the company to a profit for the September year-end.
Shares in Paypoint (PAY) rose 7 per cent in morning trade on the news that revenues and pre-tax profits were up in its first half, with the company trading in line with expectations. Soft headwinds in the UK and Ireland partly owing to the closure of Department of Work and Pensions’ ‘Simple Payment Service’ were offset by strong growth figures in Romania.
