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News & Tips: Brewin Dolphin, Morgan Advanced Materials, Provident Financial & more

Equities have regained some lost ground despite US tariff concerns
May 10, 2019

The US has raised the stakes in its trade stand off with China by unilaterally hiking tariffs, but the reaction of equity markets in London has been calm, regaining some of the ground lost in a volatile week. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES:

Three updates for Brewin Dolphin (BRW) today. First comes confirmation of the successful acquisition of Investec’s wealth management business in Ireland for €44m, less than a month after it was first reported. This will be supported by a £60m share placing, which has “broadly” received support from shareholders thus far, according to chief executive David Nicol. To enable those investors to get an up-to-date view of what they’re backing – or perhaps to bury an otherwise mediocre set of numbers – the investment management group has also released its half-year results, which show a 13 per cent dip in statutory pre-tax profits. Under review.

Morgan Advanced Materials (MGAM) retains its full-year outlook in a first quarter trading update, with group sales up 2 per cent on an organic constant currency basis. Its carbon and technical ceramics division fared particularly well, with sales 7 per cent higher than the prior year’s first quarter. The shares were flat on the announcement, but we retain our view. Buy.

Bunzl (BNZL) has announced the retirement of group finance director Brian May who will be stepping down at the end of the year. He will be replaced by Richard Howes of Inchcape (INCH), due to join the group in September as chief financial officer designate before assuming the role of chief financial officer on 1 January 2020. Our view remains unchanged. Buy.

StatPro (SOG) has won a three-year contract – including a “significant uplift in annual value” – with an EU investment manager for its Revolution Delta product, for a minimum contract value of €1.2m. The investment manager in question currently uses Revolution Delta for various purposes but has added on a module to cover the new EU money market regulations. Buy.

KEY STORIES:

Non-Standard Finance (NSF) may have received the backing of Neil Woodford, Invesco and Marathon Asset Management for its hostile bid for Provident Financial (PFG). But it is struggling to win over the remaining “independent shareholders”, according to the latest missive from the sub-prime acquisition target. Provident reckons 96 per cent of shares held by the independent group – including those of Schroders – are yet to assent to the offer, and has met with approximately 35 per cent of all shareholders since Tuesday in a bid to convince them to reject an offer it deems “opportunistic and value destructive”.

OTHER COMPANY NEWS:

VP (VP.) has announced the acquisition of Sandhurst Limited for a cash consideration of £3.325m. Engaged in the rental of specialist excavator attachments to the construction and civil engineering sectors, the business will add a new product specialism and complement VP’s piling business.

Premier Technical Services Group (PTSG) has reported “robust” sales during the first quarter of 2019. Contract renewal rates remain high and a number of “significant” three to five year contracts and framework agreements have been signed with new and existing customers. Notable sales wins include a fire solutions contract for London Underground, fixed wire testing for BMW and replacement fall arrest equipment for Morrisons. Shares were up more than 7 per cent in early trading.

Kin + Carta (KCT) has announced that chief financial officer Brad Gray is to step down from the board on 17 June and will be replaced Chris Kutsor. In addition, Charlie Wrench has been appointed the group’s first chief connective officer to lead its “go-to market strategy and overarching digital transformation proposition”.

Manx Telecom’s shares were cancelled from trading on Aim this morning, after the scheme of arrangement pertaining to its takeover by Basalt Infrastructure Partners became effective.

International Consolidated Airlines (IAG), owner of Iberia and British Airways, said that 2019 profits would sit in line with 2018 pro forma, with both fuel and non-fuel costs on the rise and passenger unit revenue falling over its first quarter. Chief executive officer Willie Walsh emphasised that “in a quarter when European airlines were significantly affected by fuel and foreign exchange headwinds, market capacity impacting yield and the timing of Easter, we remained profitable”, with the group securing an operating profit of €135m.

A first quarter trading update from BBA Aviation (BBA) disclosed that trading performance sits in line with expectations, with group revenue rising 23.1 per cent year-on-year. The aviation services group credits organic growth, along with the acquisitions of EPIC, Firstmark and Ontic licences during 2018.

Millennium & Copthorne Hotels (MLC) said that its first quarter performance was adversely hit by its refurbishment of major hotels in two of its key cities, London and Singapore. The Mayfair London property was partially closed in November 2017 and then fully closed in July 2018. The Orchard Hotel in Singapore has been under phased refurbishment since the middle of 2017. As a result, total revenue in constant currency terms fell £9m, with lower contributions from REIT hotels and property income also playing their part.

The long-awaited Sibanye-Stillwater takeover of platinum struggler Lonmin (LMI) is still moving forward despite the smaller miner’s struggles. While its earnings before interest, tax, depreciation and amortisation (Ebitda) for the October-March period were buoyed by stronger palladium and platinum prices, climbing from a $32m (£24.6m) loss a year ago to $78m, Lonmin said its production was hit by “low morale and management turnover” because of the delay in the takeover. Production was flat year-on-year for the six month period at 286,947 ounces of platinum. Despite this malaise, Sibanye-Stillwater confirmed this week it was going ahead with a shareholder vote on May 28 on the all-share tie-up. The Competition Appeal Court of South Africa still needs to deliver its verdict on the deal after an April 2 hearing for the deal to go ahead. Lonmin is trading at an 18-month high of 65p.