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News & Tips: Moneysupermarket, RWS, Funding Circle & more

Equities in London have sold off this morning.
April 18, 2019

Shares in London are in consolidation mode. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES:

Shares in Moneysupermarket.com (MONY) were up by 8 per cent this morning on a positive trading update for the first quarter ending March 2019. Total revenues were up 19 per cent to £105m, or up by 12 per cent on an underlying basis, excluding Decision Technologies (acquired last August). Broker Liberum had expected the latter to come in at 7 per cent. Attractive offers and the announcement of the price-cap increase meant that energy switching was “exceptionally strong” over the respective three months. Home services’ revenues were up by 70 per cent to £19.6m. The group expects this exceptional performance to moderate through the year; it remains confident in meeting current market expectations. Buy.

A positive half-year trading statement from RWS Holdings (RWS) saw shares climb by around 4 per cent this morning. Underlying revenue for the period ending 31 March increased by 10 per cent on a constant currency basis to a record £173m. Driven by a stronger performance from Moravia and life sciences, adjusted pre-tax profit is expected to increase by 24 per cent to £35.5m. Making headway in the key APAC region, the PCT translation division saw like-for-like sales increase in China and Japan by 27 per cent and 20 per cent respectively. The group reports an “excellent pipeline of prominent new clients” and remains confident of achieving another record year. Buy.

Funding Circle (FCH) reported a 44 per cent rise in loans under management during the first three months of the year, while originations were up almost a quarter on the same time the prior year. Investor returns are also expected to grow from between 4.5 and 8.4 per cent in 2018 to range of 5.0-8.5 per cent in 2019. Shares were up 3 per cent in early trading. However, we remain sellers.

Shares in Drax (DRX) were down more than 4 per cent this morning following a shareholder revolt at their AGM on Wednesday. More than 40 per cent of shareholders voted against “Resolution 15”, a proposal to increase the limit on political donations. However, we remain buyers.

KEY STORIES:

Jadestone Energy (JSE) full-year results revealed the impact of a November 2018 shutdown of the Montara oil operation and failures at the Stag facility. The voluntary Montara maintenance and inspection shutdown ended on 11 January 2019 - Jadestone claims that adjusting for the impact of the shutdown at Montara, it would have had average production for the quarter of 10,272 barrels per day. Since restarting the facility, chief executive Paul Blakeley claims that Montara production “has exceeded our expectations and should be around 11,000 barrels per day for the first quarter”. Stag production was below plan at 2,644 barrels per day as two of its largest production wells suffered downhole pump failure, although overall production saw an increase of 69 per cent over the prior quarter.

Trifast (TRI) shares climbed five per cent in morning trading after an end of year trading update revealed underlying profits ahead of management expectations. The industrial fastenings manufacturer saw double-digit revenue growth across five of its seven European entities, although lower domestic appliance volumes in Italy offset some of these increases. Trifast’s investment programme across its business, while £80m in new banking facilities will give the business additional breathing space for mergers and acquisitions.

Shares in Unilever (ULVR) were up 3 per cent in early trading after the consumer goods giant released a trading update that beat expectations. First quarter underlying sales were up 3.1 per cent, led by 5 per cent growth in emerging markets. On a reported basis, sales fell 1.9 per cent to €12.4bn (£10.7m) due to the sale of the spread business which completed in July last year. Sales growth was said to come from a mix of price increases and improvement in the volume of goods sold. Underlying sales growth for the full year is expected to be in the lower half of the multi-year target range of between 3 per cent and 5 per cent.

PZ Cussons (PZC) stated that full year profit expectations remain in line with guidance given at the interim results in January. At the interim, "extremely challenging" market conditions in Nigeria drove down first-half profits by a fifth. Management expected adjusted pre-tax profits of £70m for the year ending 31 May 2019, compared to £80.1m in FY2018. Shares were flat in early trading.

OTHER COMPANY NEWS:

Cyber-security group Avast’s (AVST) adjusted revenues for the quarter ending March 2019 came in at $212m, up 6.1 per cent. Excluding foreign exchange, discontinued business and the sale of managed workplace, these came in at $209m. Adjusted billings rose slightly ahead of revenues. Adjusted cash profits rose 5.4 per cent to $118m. the group voluntarily paid down $200m of debt using cash on the balance sheet during March. Net debt to adjusted cash profits was 2.3 times at the period-end, in line with its expectations. Management’s outlook for the full-year hasn’t changed. The shares were up 2 per cent this morning.

In a full-year trading update, Aveva (AVV) said that the positive performance seen in the first nine months of its financial year continued into the fourth quarter. It saw low double-digit revenue growth for the full 12 months, on a pro-forma basis (using new accounting rules pertaining to revenue recognition). Operating margins improved, “albeit with additional costs being incurred due to the strong sales performance” and investment. The integration of Aveva’s “heritage” business and Schneider Electric’s software business has progressed well. The shares were up by around 1 per cent this morning.

First Derivatives (FDP) expects its performance for the year ending February 2019 to be in line with the current consensus forecast of £215.4m in revenues and £38.8m in adjusted cash profits. The final results will be reported on 21 May.

Rentokil’s (RTO) ongoing revenue increased by 8.9 per cent during the first quarter of 2019. With 4.9 per cent derived from acquisitions, the group remains committed to its acquisitive growth strategy. Eight acquisitions were made during the period, split evenly across pest control and hygiene. The group expects to spend between £200m and £250m on acquisitions in 2019. Organic growth improved in both pest control and hygiene. The high margin pest control division saw revenue from growth and emerging markets increase by 12.1 per cent and 11.5 per cent respectively. Shares were up by around 1 per cent this morning.