Traders in London are in downbeat mood as political concerns linger. Click here for The Trader Nicole Elliott's latest views on the markets.
IC TIP UPDATES:
Funding Circle (FCH) beat its revenue and loan growth targets for 2018, both of which were up 55 per cent on the prior year, compared with the 50 per cent expected at IPO. However, it now expects between 3 and 3.8 per cent of loans to default, compared with an estimate of between 2.5 and 3.5 per cent three months ago. Sell.
Though it received no VAT refunds from the Tanzanian government in 2018, Shanta Gold (SHG) managed to generate cash profits of $45.5m in the period, which in turn helped to bring net debt down to its lowest level in six years. In a trading update this morning, the gold miner said its fourth quarter set records for tonnes milled and mined from its underground operation at New Luika, helping to lift full-year gold output above guidance. We remain buyers.
Tracsis (TRCS) has bought Cash & Traffic Management (CTM) for an initial cash payment of £1.3m, and 26,334 shares valued at £0.15m, along with an extra payment of around £0.45m to reflect the business’s net current asset position. A further contingent consideration of up to £0.75m will be paid subject to CTM achieving certain financial targets. CTM is based in Coventry, and provides event traffic-planning, admission control and other event-related services. For the year to February 2018, it saw £5.5m in revenues and normalised pre-tax profits of £0.35m. Buy.
Ibstock (IBST) expects to achieve targeted profits for the year to December 2018, with revenue from clay and concrete products up eight per cent, reflecting both price and volume growth. There is also likely to be a £9.5m profit on the disposal of surplus property during the year. Buy
Shares in 4Imprint (FOUR) were up 6 per cent at the time of writing, following a positive trading update for the year to 29 December 2018. Group revenues for the full year were up 18 per cent at $738m, while underlying pre-tax profits are expected to be “at least at the upper end of the range of current market forecasts”. Net cash as at the year-end was around $27.5m, against $30.8m in 2017. 4Imprint is now ahead of schedule in its goal of achieving $1bn in revenues by 2022. So, the group has accelerated by one year its planned expansion of Oshkosh, Wisconsin Distribution Centre, at a cost of around $5m in 2019. Buy.
Tritax Big Box (BBOX) has revealed that its 54 big box assets is 100 per cent let or pre-let to 39 tenants and generating £161.1m in rental income. Eight new investments were made in the year to December 2018 including sevenpre-let forward funded developments. Buy
NewRiver REIT (NRR) delivered a strong performance in the three months to December 2018, which saw the completion of its largest pre-let retail development on Canvey Island. The integration of Hawthorn Leisure remains on track, and is expected to yield £3m in cost synergies. Occupancy rates were slightly lower at 95.5 per cent, mainly due to one tenant moving to larger premises and also a modest £1.6m effect due to CVAs . Like-for-like footfall was down 1.8 per cent, outperforming the UK benchmark by 180 basis points. Buy
Enquiries from new tenants is holding up well, according to flexible office space landlord Workspace (WKP). These rose to 907 per month compared with 858 a year earlier, with three new refurbishments completed and adding 80,000 square feet. Buy
GVC (GVC) announced in a post-close update that proforma underlying group cash profits for 2018 are expected to be between £750m and £755m – ahead of current market expectations. Group net gaming revenue was up 9 per cent, driven by a 19 per cent increase in online net gaming revenue. This helped make up for a 3 per cent decline in UK retail like-for-like net gaming revenue. Chief executive Kenneth Alexander said the group is “materially outperforming the market” and is “very well placed for a successful 2019. Shares were up more than 1 per cent in early trading. Buy.
Whitbread (WTB) announced an initial £500m share buyback programme following the sale of Costa Coffee to The Coca-Cola company for £3.9bn, which completed in early January. Further details about plans to return the majority of the proceeds from the deal to shareholders will be given at the capital markets day in February. The company is now a hotel business under the Premier Inn brand. So far 2,000 rooms have been opened during the FY2019 financial year with occupancy of over 80 per cent. Results for the full year should be in line with expectations. Shares fell 1 per cent in early trading. Buy.
Shares in Portmeirion (PMP) are up 6 per cent this morning after the group announced revenue and profit for the year to December would be ahead of market expectations. Sales are now expected to come in at more than £89.2m, driven by strong growth in its three key markets, the UK, US and South Korea. Operations in South Korea have struggled in recent years, so it is unsurprising to see investors welcome the improvement so heartily. Buy.
RWS (RWS) has acquired Alpha Translations Canada, a translation company specialising in legal and financial translations. RWS will pay a cash consideration of $6m. As with other deals RWS has made, this latest acquisition gives it access to a high-quality customer base, in this case many of the world’s top 100 law firms and fortune 500 companies. Buy.
Sales at SSP Group (SSPG) were up 7.6 per cent at constant currency during its first quarter. This was made up of 2.5 per cent like-for-like sales growth, net contract gains of 3.8 per cent, with the acquisition of Stockheim adding a further 1.3 per cent to sales. Net contract gains were slightly ahead of management’s expectations and were driven by significant contributions from North America and the rest of the world division. Shares were up 1 per cent in early trading. Buy.
Experian (EXPN) has delivered a strong performance in the three months to December, with organic revenue growth of 9 per cent at constant currency rates. The group is one of the few in the business services sector to deliver a positive return over the last 12 months, largely due to its success in launching new products and improving how it works with data. The US was its strongest division, delivering revenue growth of 12 per cent. Buy.
KEY STORIES:
Charles Stanley (CAY) reported a 9 per cent decline in funds under management and administration during the final three months of the year, underperforming the MSCI WMA Private Investor Balanced Index, which was down 7.9 per cent over the same period. The wealth manaher suffered £0.2bn in net outflows and £2.2bn in negative market movements.
Shares in Sage (SGE) were up 6 per cent at the time of writing, on the back of a first-quarter trading update to December 2018. Group organic revenues increased by 7.6 per cent to £465m. This reflected 9.3 per cent growth to £380m from products that are within, or to be migrated to, the Sage Business Cloud, and a 0.6 per cent rise to £85m in products unrelated to Sage Business Cloud. Group recurring revenues rose 10.5 per cent to £387m, supported by software subscription growth of 27.7 per cent to £237m. Management reiterated its guidance from the FY2018 results.
Shares in Associated British Foods (ABF) were up 6 per cent in early trading after the group announced a 4 per cent increase in sales at Primark at both constant currency and actual exchange rates, and with a higher operating profit margin, profit was well ahead. This sales growth was driven by increased retail selling space, and was partially offset by a “modest decline” in like-for-like sales. As expected, the sugar business continued to suffer from the end of EU sugar quotas and the resulting surge of supply into the market, with revenue down 12 per cent at constant currency.
OTHER COMPANY NEWS:
West African gold miner Avesoro Resources (AVS) says it achieved full-year guidance from its mines, owing to a 44 per cent boost in gold output from its New Liberty operation in Liberia and despite a 4 per cent output decline from its Youga asset in Burkina Faso. Chief executive Serhan Umurhan said the focus for 2019 would be on “strong cash flow and further debt reduction, following the substantial reinvestment of cash generated by operations” in 2018.
Shares were unmoved by Lamprell’s (LAM) pre-close trading update, as revenue guidance for the full year held firm at around $235m (£182.5m). The specialist fabricator’s chief executive Christopher McDonald and his team stated its conviction in September that Lamprell will “return to growth” in 2019. A deal that could exceed $200m for work on the Moray East windfarm in Scotland, and a letter of intent from IMI (IMI) to build two jackup drilling units for use in Saudi Arabia, will help. Worse news came in Belfast, as Lamprell was forced to allocate additional resources to the East Anglia One windfarm project after subcontractor Harland & Wolff announced a restructuring of its business. Management anticipates a net loss of $71m for the full year.
Taptica (TAP) said the year to December 2018 closed in line with management’s expectations. It had net cash of $54.4m, after paying a $2.7m dividend to shareholders in November. This is up from $42.1m as at 30 June. The company remains in discussions with a previously-announced acquisition target. The shares were up by 3 per cent this morning.
XL Media (XLM) expects to report cash profits in line with market expectations for the year to December 2018, achieved against a lower revenue base of around $118m. The company is focusing on growing its higher-margin publishing business within gaming and personal finance. It has a “material cash balance” and continues to see strong cash flows from operations. The shares were down 3 per cent at the time of writing.
N Brown (BWNG) shares fell on the release of a third quarter statement from the online retailer, which showed a 1.6 per cent slip in group sales and a whopping 6 per cent drop in product sales. That means year-to-date revenues have only grown by 0.2 per cent, largely supported by a corresponding 11.5 per cent rise in financial services revenues. Splitting out the online performance makes the figures look better and gross margin guidance has been held for the current year (up to a decline of 100 basis points) but analysts admit the group is having to work hard in tough times.
Wincanton (WIN) announced contract renewals with three of its existing customers - Asda, British Sugar, and Lucozade Ribena Suntory. Chief executive Adrian Coleman said he was pleased to renew contracts with these longstanding customers, which demonstrates Wincanton’s “superior warehousing and logistic solutions”. Shares were up 1 per cent in early trading.
Revenue at Ten Entertainment Group (TEG) were up 7.5 per cent during 2018, or 2.7 per cent on a like-for-like basis. The company acquired four new sites during the year, which was at the upper end of the acquisitions forecast. Management said the pipeline of opportunities “remains strong “for the coming year and reiterated guidance for growth of two to four sites per year. Shares were flat in early trading.
