Shares in London retreated heavily in morning trading after a sharp sell off in the US overnight. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
With iron ore pellet premiums still “at the high levels of 1H 2018”, Ukrainian iron ore pelletiser Ferrexpo (FXPO) has announced a special interim dividend of 6.6c, double the 2017 award. The miner said cash generation has both enabled debt reduction and funded capital expenditure, and expects demand to remain strong in 2019 while supply is constrained. The special dividend goes ex-dividend on 13 December, and will be paid on 14 January. We remain buyers.
Amino Technologies (AMO) expects to report trading performance in line with market expectations for the year ending November. It said it continues to see excellent cash generation, and its cash position as at 30 November was $20.3m – up from $17.4m year-on-year. Non-executive chairman Keith Todd said management remains committed to increasing the dividend by at least 10 per cent for the full year, and to maintain the FY2018 dividend level in absolute terms for at least two more years. This update follows an announcement from the company in October, which revealed that full-year pre-tax profits would come in at $11.5m after an intensification of macro-economic headwinds – triggering earnings downgrades from analysts at the time and sending the shares plunging. This morning, the shares were up 2 per cent. Buy.
TimeOut (TMO) has entered into a management agreement with CRESTYL Group to open a new Time Out Market in Prague, Czech Republic. This marks Time Out Market’s second management agreement. The shares were largely unmoved in morning trading. Buy.
Boku’s (BOKU) shares fell nearly a fifth this morning on the news that it has agreed to acquire Danal for 26.7m Boku shares, $3m of Boku warrants exercisable at 141p, and $1m of cash, with deferred consideration of up to $64m in shares and warrants, subject to Danal’s future performance. The deal is expected to be earnings dilutive in FY2019, with earnings improving through FY2020 and earnings accretion from then on. Danal is a US-based provider of mobile identity and authentication solutions, enabling its clients to manage risk and fraud. Boku says the deal – expected to complete around 31 December, if approved – will accelerate the development of its own mobile identity service offering. Boku’s total payment volume for the 10 months to October soared 124 per cent to $2.8bn, with monthly active users up 83 per cent to 12.2m. Recommendation under review.
KEY STORIES:
Ted Baker (TED) shares enjoyed some momentary relief this morning after the group released a trading update amidst swirling allegations made against the company’s founder and chief executive Ray Kelvin. Mr Kelvin is accused of fostering an environment of “enforced hugging” around the office, with several employees accusing him of inappropriate behaviour. Today’s trading notice hasn’t addressed the claims directly, other than to say law firm Herbert Smith Freehills has been appointed to conduct an independent investigation. As for the underlying business, total retail sales (including e-commerce) rose by 2.3 per cent over the 16 weeks ended 1 December, as average retail square footage rose by 5.2 per cent. As weather turned colder in recent weeks, Ted says it saw a significant sales ramp-up towards the end of the period.
Ceres Power (CWR) has announced an additional investment from Weichai Power, doubling the Chinese energy group’s stake to 20 per cent. The announcement confirms media reports that sent the share price up 5 per cent on Monday. The shares are up another 1 per cent this morning. Trading is improving too, with revenues and operating income up 125 per cent in the six months to December. The group’s collaboration license agreement with Bosch has reached its first milestone, triggering a €5m payment. Net cash is expected to be at least £77m at the half-year mark.
OTHER COMPANY NEWS:
Phoenix Global Resources (PGR) has secured an additional $25m of financing from its major backer, Mercuria Energy, to “continue to support the group’s business plan” of exploring Argentina’s Vaca Muerta shale. The loan, which takes Phoenix’s convertible revolving credit facility with Mercuria to $185m, has a lower conversion price of 28p per share..
Half-year results from Versarien (VRS) revealed a 19 per cent increase in revenues and falling losses for the graphene specialist. The company has continued its raft of collaborative agreements in the Far East, signing nine over the half year. In what management claims is a world-first, Versarien has received its first order for the manufacturing of graphene parts for use by a major airline. Shares rose as much as 4 per cent.
Shares in DS Smith (SMDS) were indifferent to the news that the packaging group had posted a 27 per cent growth in pre-tax profit and 15 per cent growth in revenue in its half year. The company disclosed that it expects to complete its acquisition of packing group Europac before the end of 2018. Following the acquisition, the company has expanded its access to credit, agreeing a new £1.4bn five-year revolving credit facility to replace its existing £80mm RCF.
Despite news that the Committee of Advertising Practice (CAP) and the Advertising Standards Authority (ASA) won’t take any further action concerning boohoo.com’s (BOO) recent misuse of advertising around promotional offers, the shares have found little relief this morning. The fast-fashion company was accused earlier this week of misleading customers with time-sensitive promotional offers which didn’t end as originally stated. Regulators said it put inappropriate pressure on customers to make purchases. The company has said this morning that while it is taking feedback on the matter “on board”, and adjusting promotional offers accordingly, the matter is officially closed.
Shares in easyHotel (EZH) were up 5 per cent in early trading after the budget hotel chain announced a 34 per cent increase in sales to £11.3m, with adjusted cash profits up 29 per cent to £2.96m. But pre-tax profits increased just 1.4 per cent to £0.87m due to the loss of 70 rooms at the Old Street site and the closure of Franchise Hotel at Earl’s Court. Still, the company has £41.4m of net cash to continue to funds its planned expansion.
Clipper Logistics (CLG) reported a 14.1 per cent increase in sales to £228m during the six months to October, with operating profit up 16.1 per cent to £10.7m, driven mainly by its e-fulfilment and returns management business. It’s started managing deliveries for Pretty Little Thing in Sheffield and has continued contracts with Asda, ASOS and Wilko, as well as new contract wins with Browns and Silkfred.
Euromoney (ERM) has agreed to acquire The Deal, LLC, comprising BoardEx and The Deal, from its parent company TheStreet, Inc. The acquisition will cost Euromoney $87.3m. BoardEx is an executive profiling and relationship mapping platform, providing users with accurate, up-to-date and in-depth profiles for over 1m business leaders globally. The Deal provides data, news and intelligence on mergers and acquisitions, activist investing, private equity and restructuring. Euromoney says both products are highly complementary to its existing portfolio. Its shares were down 2 per cent in morning trading.
Anexo (ANX), the credit hire and legal services provider, said it has continued to trade strongly since its IPO and expects pre-tax profits for FY2018 ahead of current market expectations. Management is also confident about the outlook for FY2019 but is not currently upgrade forecasts for that year. The group also said that the new regional office for Bond Turner, its legal services division, became operational on 3 December.
