Click here for The Trader Nicole Elliott on Australian inflation data, Theresa May's message to Huawei and the latest market movements in this morning's Market Outlook.
IC TIP UPDATES:
The shake-up at the top of Aviva (AV.) continues. Following the recent appointment of Maurice Tulloch as chief executive, Andy Briggs is to step down as a group director and chief executive of the UK insurance division. Chief risk officer Angela Darlington will replace Mr Briggs on an interim basis, while Mr Tulloch has brought more business unit leaders into Aviva's senior leadership team, a move the chief executive heralded as "an important first step to bring greater energy, pace and commercial thinking to Aviva". Buy.
Legal and General (LGEN) has agreed its first pension risk transfer (PRT) deal in Canada for more than CAD$200m, taking the total PRT business written internationally by the life insurer to £2.5bn. The transaction is being written via its joint venture with Brookfield Annuity Company, under which Legal & General Reinsurance will provide quota-share reinsurance for Canadian PRT transfers. Buy.
CRH (CRH) reported a 7 per cent rise in like-for-like sales during the first three months of the year, benefitting from milder weather and pricing progress across major product lines. The building materials group has spent around €0.2bn on 16 bolt-on acquisitions and investments during the year to date and has reached agreement to divest of its European Shutters & Awnings business to StellaGroup for a total consideration in excess of €0.3bn. Buy.
Shares in Superdry (SDRY) are up 2 per cent this morning after it was reported that co-founder and interim chief executive Julian Dunkerton – who returned to the company in dramatic fashion earlier this month – scrapped plans for a footwear licensing deal with activewear and footwear group Pentland Brands, along with plans for a kidswear range. The move was widely expected as Dunkerton has been critical of the previous management’s strategy, but what remains to be seen is what he will do to drive growth. Sell.
KEY STORIES:
AB Dynamics (ABDP) shares rose around 7 per cent in morning trading, after pre-tax profits nearly doubled over the automotive testing systems specialist’s first half, compared with Q12017. AB made progress with its driving simulator programme, taking its second delivery from Kempten University in Germany after a first delivery to a customer in China. A new strategy founded on product development and the growth of its international footprint is now in place – 98 per cent of AB’s sales are currently exports. The company had expected lower margins owing to its investment in facilities and people – these have not yet materialised, and AB is now guiding for these over its second half.
Sales at Associated British Foods (ABF) were up 1 per cent to £7.53bn during the first half, with statutory pre-tax profits down 15 per cent to £515m. This profit decline was due largely to £79m of exceptional charges, and on an adjusted basis were in line with last year at £627m. Sales at Primark were 4.4 per cent of last year thanks to an increase in selling space, but fell 1.5 per cent on a like-for-like basis. Profits from the clothing store were up by a quarter with a “much higher margin”. Tough trading in sugar continued following the EU’s end to sugar quotas. Sales in this division fell 13 per cent to £769m, while operating profit fell from £106m last year to just £1m. Shares were up more than 1 per cent in early trading.
Shares in Boohoo (BOO) are up 4 per cent this morning following a positive set of full year results. The group posted sales and adjusted cash profits up by close to a half each. Management said sales were up across all brands and regions, but singled out PrettyLittleThing as having performed “exceptionally well”, with a growth rate of 107 per cent in the year. The outlook for the coming year is good, though sales growth is expected to slow to 25-30 per cent.
OTHER COMPANY NEWS:
Taptica’s (TAP) shares were down by around 8 per cent this morning following the news of a proposed secondary placing of up to 14.3m shares – representing around 10.6 per cent of the group’s issued share capital. The announcement – issued by finnCap – identified the selling shareholders as Eitan Epstein and Shirley Dahan Trust on Behalf of MTD PTE Ltd, Hagai Tal (formerly chief executive of Taptica), Ehud Levy and Smart and Simple Ltd. The sole beneficial owner of MTD PTE Ltd is Mr Tal and the sole beneficial owner of Smart and Simple Ltd is Mr Levy. The disposal of the placing shares will be through a placing to institutional investors, other professional investors and the existing company share buyback via an accelerated bookbuild offering. Taptica won’t receive any proceeds.
WANdisco’s (WAND) revenues for 2018 came in at $17m against $19.6m a year earlier, with second-half revenues up by 13 per cent to $11.3m. Adjusted cash losses came in at $9.4m, versus $24.5m. Operating losses expanded to $22.1m, from $9.7m. Meanwhile, cash as at 31 December sat at $10.8m (down from $27.4m), while debt sat at $3.9m. The group said it had made strong first-quarter progress with sales of $4m, up 38 per cent year-on-year. It completed a fundraise, raising gross proceeds of $17.5m, in February 2019. The shares were marked down by around 4 per cent in morning trading.
Platform provider Integrafin Holdings (IPH) increased its funds under direction by 8.7 per cent in the three months to March, thanks to net flow growth and a rise in global equity markets. However, chief executive Ian Taylor said political and economic uncertainty continues to "give rise to unhelpful background noise".
Chilean copper miner Antofagasta (ANTO) has fallen back to earth in the March quarter after a record end to 2018. Production of 189,000 tonnes of copper in the three months to 30 March was a 14.3 per cent fall quarter on quarter but the company’s overall progress is shown by the 22 per cent year-on-year increase in production. Costs followed the same pattern, climbing on the December and falling significantly on the March 2018 quarter. Chief executive Iván Arriagada said the company would produce 750,000 tonnes of copper in 2019.
