Click here to read The Trader Nicole Elliott's take on the morning's trade in today's Market Outlook.
IC TIP UPDATES:
Uranium storage vehicle Yellow Cake (YCA) has completed an oversubscribed placing, raising £25.9m to fund the purchase 1.18 million pounds of uranium, at $25.88 per pound. At 215p per share, the placing is a 5.3 per cent discount to yesterday’s closing price, though the group said the placing represented a 4 per cent discount to its net asset value as of 31 March. Chief executive Andre Liebenberg sought to justify the discount saying the recent pullback in the spot price had created “an excellent window to add to our uranium inventory at an attractive price”. Buy.
Though Highland Gold Mining’s (HGM) total payout for 2018 exceeded the minimum amount prescribed in the company's dividend policy, a third interim dividend of 2.4p per share has today been declared with full-year results, bringing total distributions to 13.4p. That’s despite a 14 per cent dip in net profit, though plans to expand this year’s production by up to 11 per cent – or in the range of 290,000 to 300,000 ounces of gold and gold equivalent – presumably give directors confidence. Buy.
After market-close yesterday, Entertainment One (ETO) announced its acquisition of Audio Network – a leading independent creator and publisher of original high-quality music for use in film, TV, advertising and digital media, with streamlined owned rights. The deal will set eOne back by £178m, comprising around £169m in cash and the issue of eONe common shares to Audio Network’s key management shareholders on completion, equal to around £9m. The group also announced a share placing to raise gross proceeds of around £130m. A placing price of 450p represented a 5.6 per cent discount to yesterday’s closing price. The acquisition will, additionally, be financed by a £52m term loan provided by JPMorgan Chase. The shares were down by around 2 per cent this morning. Buy.
National Express (NEX) has acquired a 60 per cent stake in WeDriveU, an employee shuttle company in Silicon Valley, for $84.3m (£64.5m). The deal is expected to be earnings accretive as soon as the transaction is completed, and gives National Express the option to acquire the remaining shares over the next three years. Management said the deal further diversifies the North American business and gives exposure to a fast-growing region. Shares were up more than 1 per cent in early trading. Buy.
KEY STORIES:
Games Workshop (GAW) shares jumped on news that second half sales and profits are ahead of expectations, leaving pre-tax profit guidance in the range of £80m for the year ending 2 June 2019. The board has also declared a dividend of 35p per share – taking the total dividend up to 155p for the year – to be paid on 31 May 2019, having turned ex-dividend on 25 April 2019.
Plus500 (PLUS) reported an 82 per cent reduction in revenue for the first quarter, with management blaming “subdued financial markets”. Average revenue per user fell 60 per cent to $550m, while active customer numbers were down more than half. Management said it was too early to predict the outcome of market conditions on trading figures for the full-year, but the shares were down by around a quarter in morning trading.
OTHER COMPANY NEWS:
Apollo Global Management has confirmed what we all already knew, and is formally out of the running for RPC (RPC). The private equity investor has lapsed its offer for the packaging group, which is set for takeover by US packaging specialist Berry Global (US:BERY). RPC shares were flat on the announcement.
