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News & Tips: Lok'n'Store, SSE, Hansteen & more

London shares are mixed
April 29, 2019

Shares in London's main indices are largely unchanged in a mixed start to the trading week. Click here for The Trader Nicole Elliott's latest views on the markets. 

IC TIP UPDATES:

Lok’nStore (LOK) announced a 9 per cent rise in adjusted cash profits and 16 per cent increase in adjusted net asset value per share during the first-half. The self-storage specialist opened new stores in Dover, Cardiff and Exeter, while new sites in Stevenage and Wolverhampton were acquired and a further two are in progress with lawyers. Buy.  

Phoenix Spree (PSDL) reported an 11.4 per cent increase in adjusted net asset value per share last year, with 9 per cent like for like rental growth. The Berlin-focused development specialist acquired 222 apartments, for an aggregate €36.3m and value of €2,390 per square metre. The disposal of the Central and Northern Germany portfolio completed in April 2018 for €73.0 million, a 26 per cent premium to the Jones Lang LaSalle valuation pre-notarisation. Buy.

Fourteen per cent of all economically active UK businesses are now in “significant distress” according to the latest red flag report from insolvency specialist Begbies Traynor (BEG). The professional services outfit also noted a 17 per cent uptick in businesses in critical distress in the three months to March – which is “often a precursor to formal insolvency”. The property sector has been particularly hard hit, especially firms involved in buying, selling and letting. Buy.

Trevor Mather, chief executive of Auto Trader (AUTO) has announced his intention to retire in March next year. The group’s current chief operating officer and finance director, Nathan Coe, will become chief-designate at the beginning of May. Mr Coe has been with the business since 2007

KEY STORIES:

A report by Sky News over the weekend revealed that SSE (SSE) has approached a number of other utility companies, including broadband and telecoms supplier TalkTalk (TALK), about a potential sale of its household supply arm, SSE energy services. This follows a failed attempt to spin off the retail division into an independent listed entity with rival npower in December last year. At the time, the group said it would consider “other options”, including a standalone demerger and listing, a sale or “an alternative transaction”. Analysts at RBC value the pure retail business at about £1bn. The group has made no comment on the latest developments and shares were flat in early morning trading.

Urban multi-let investor Hansteen (HSTN) completed 201 new lettings and lease renewals at an average contracted rent of £4.56 per sq ft during the first quarter, up from a rate of £4.03 per let sq ft at the end of last year. Eight profitable sales were completed at an average yield of 3.4 per cent.

Non-Standard Finance’s (NSF) “plan for a brighter future” merged with Provident Financial appear may have received the backing of more than half of the target’s shareholder base, but the hostile takeover is still well short of the 90 per cent acceptances needed to clear the deal. Today, the NSF board urged the remaining shareholders “to accept our offer without delay”, by 15 May.

Deloitte resigned as Ferrexpo’s (FXPO) auditor last week because it thought the iron ore miner was too lethargic in investigating possible missing money at the foundation it set up to do its CSR work in Ukraine. Ferrexpo says the “delay” in the independent forensic investigation between November and January came because it was trying to work with Blooming Land. The committee looking into the issue since February is also now down two directors after Mary Reilly and Bert Nacken quit the board over the weekend. Ferrexpo has said the probe will continue alongside a search for new directors.

OTHER COMPANY NEWS:

A trading update from Marlowe (MRL) indicates “good progress” for the financial year ending 31 March. Revenue increased by 62 per cent to around £130m (from £80.6m) and current 12-month run rate revenues are approximately £150m. Adjusted cash profit is anticipated to be slightly ahead of expectations. The group notes that eight acquisitions were made during the year, alongside one non-core divestment, and that the future pipeline “remains strong”. Full year results are due on 18 June.

John Menzies (MNZS) has announced a series of contracts wins and renewals across its UK business. Renewed business includes a three-year contract extension with EgyptAir, a customer of 18 years and the fourth largest airline operating at the group’s Heathrow cargo warehouse. Notable contracts wins include becoming a passenger and ramp handling partner to Jazeera Airways at Gatwick following “a competitive tender process”. Interim chief executive Giles Wilson notes the “momentum across the UK business”, looking forward to “further successes as the year progresses”.

Shares in Mind Gym (MIND) were up by over 5 per cent this morning as the group announced that reported revenue is expected to increase by around 14 per cent to £42.1m for FY2019. Adjusted cash profit is also ahead of last year, likely in line with expectations. With improved working capital management in the second half, the group anticipates a net cash position in the region of £8.3m. Full year results are due on 25 June.

iEnergizer (IBPO) has announced that it has entered into a $45.5m (£35.2m) credit agreement with Main Street Capital Corporation, CSWC Capital Southwest and HMS Funding I LLC to be repaid over a period of five years. Alongside available cash, the loan has been used “to refinance and pay off in full the outstanding debt of US$45.1m which was due to mature in May 2019”. Additionally, Chairman Marc Vassanelli notes that the group can now reinstate its dividend policy, “a priority for the company”.  

Platform provider Nucleus Financial (NUC) saw its assets under administration grow 6.3 per cent quarter-on-quarter in the three months to March, thanks to “marginal” increases in adviser users and gross inflows. Customer numbers also climbed a modest 0.5 per cent on December, to 94,144.