The surge in London's shares proved to be short lived with equities largely down across the board by mid-morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Following a “a year of transition” in retail and online, William Hill’s (WMH) group net revenue increased by 2 per cent for the 17-week period to 30 April. An 8 per cent increase in online net revenue reflects the completed acquisition of Mr Green, offset by enhanced customer due diligence measures and a return of gross win margins to more normal levels. With strong sports betting throughout the period, retail sportsbook net revenue increased by 2 per cent whilst the introduction of the £2 machine gaming stake limit saw gaming revenue decline by 15 per cent. Doubling the sports wagering handled, US total net revenues surged by 48 per cent. With full year outlook in line with expectations, we remain buyers.
As promised, pub operator and brewer Marston’s (MARS) has maintained its interim dividend of 2.7p a share, despite a rise in net debt to £1.44bn – equivalent to 4.8 times underlying cash profits – in the 26 weeks of trading to 30 March. Half-year numbers also revealed a five per cent rise in the top-line, an eight per cent jump in operating profits in the brewing division, and stable group-wide margins. Plans to reduce the borrowing pile by disposing assets – à la Ei Group – are progressing well, supported by strong bids. Under review.
The first-quarter figures from Aston Martin Lagonda (AML) point to “softness” in the UK and European markets. Wholesale units dropped 9 and 4 per cent, respectively, in the period, though demand in APAC and the America’s helped push total units up by a tenth. However, gross margins slipped 230 basis points to 42.1 per cent, leaving gross profits flat on last year. Management maintained their expectations for the full year, noting that the “significant weighting” of specials to the final quarter would be a major driver of profits. Sell.
Experian (EXPN) has announced a 7 per cent increase in statutory pre-tax profit to $957m for FY2019. With notable performances in North America and EMEA/Asia Pacific, group revenue increased by 9 per cent on a constant currency basis to $4.85bn. Aided by a rapidly growing product portfolio and new customer relationships, consumer services saw organic revenue growth of 6 per cent. Meanwhile, good take-up rates for new sources of data and product innovation in the business-to-business division boosted organic revenue growth by 9 per cent. Hailing a year of “considerable progress”, the group is targeting organic revenue growth of 6-8 per cent in 2020. Buy.
SSP’s (SSP) revenues rose by 6.8 per cent to £1.26bn in the first half, with like-for-like sales up 2 per cent – helped by air passenger travel and retail initiatives. Like-for-like sales growth in the second quarter was 1.5 per cent, affected by the timing of Easter (which fell into the second half) and by the “Gilet Jaunes” protests in France. Excluding these factors, growth in the second quarter would have been above 2 per cent. The group delivered net contract gains of 4.1 per cent over the six months, and now expects net gains for the full year to sit between 4 and 5 per cent (up from expectations of 3 per cent). Pre-tax profits came in at £51.4m, up by 6.2 per cent. Buy.
Challenger bank Charter Court Financial Services (CCFS) saw its loan book leap 18 per cent in the year to 31 March, backed by new loan originations of £710m in the first three months of 2019. That’s a first quarter record, while the loan-to-deposit ratio has narrowed slightly thanks to a 30 per cent increase in customer deposits in the period. Buy.
Speedy Hire (SDY) has hit its target of 57 per cent utilisation for its equipment, a level chief executive Russell Down previously described as “optimal”. However, he now thinks that judicious use of data may allow the group to squeeze out further improvements. In any event, the group’s full year figures appeared to impress, sending the shares up three per cent in early trading. Buy.
KEY STORIES:
British Land (BLND) suffered a 6 per cent decline in adjusted net assets during the year to March at 905p a share, even after a £200m share buyback contributed 10p to that figure. That followed a 4.8 per cent reduction in the valuation of the portfolio, dragged down by retail assets. However, like-for-like net rental income was up £15m, with offices offsetting the £14m impact of company voluntary agreements in the retail sector.
Crest Nicholson (CRST) announced that sales per outlet week remained steady at 0.78 during the six months to the end of April. Total sales value achieved to date and forward sold for 2019 was up 4.2 per cent, after including commercial and land. However, residential sales were 4 per cent lower than the same time the prior year. However, dividend and earnings guidance for the year remains unchanged.
Cineworld (CINE) reported weaker revenue so far this year due to the timing of major releases, although overall the cinema chain still reported a 6.6 per cent rise on the prior year. The release of the Avengers: Endgame film produced a record breaking performance over the last three weeks. Four new sites were opened during the period, while the Unlimited loyalty scheme is also due to launch in the US soon.
Shares in Kingfisher (KGF) have dropped 4 per cent in early trading, following the release of the group’s first-quarter figures. Having announced in March that chief executive Véronique Laury was planning to leave once a replacement could be found, the group announced a lacklustre start to the year. Total sales were up 0.3 per cent on the prior year, though this rose to 0.8 per cent in like-for-like, constant currency terms. Ms Laury hailed the group’s product launches and innovation, maintaining expectations for the full year, but it appears the market is unconvinced.
In its first set of full set of results since its takeover of Virgin Money, CYBG (CYBG) today posted what it characterised as a “resilient underlying performance in challenging market conditions”. Deposits grew by a meagre 1.2 per cent to £61.7bn, small business lending rose by a similar ratio to £7.6bn, and total underlying income was flat at £843m. But the UK’s sixth largest bank continued to reduce costs, cutting underlying outgoings by 3 per cent year-on-year to £480m – though the shine was reduced by an additional £33m provision for mis-sold payment protection insurance claims.
Shares in inter-dealer broker TP ICAP (TCAP) are two per cent adrift this morning, after a first quarter trading update revealed a six per cent decline in the core global broking revenues to £333m. That was offset by rises in the top-lines of the energy & commodities, institutional services, and data & analytics businesses. Chief executive Nicolas Breteau said Brexit uncertainty, a more dovish stance from the Federal Reserve, “and the potential for more QE in the Eurozone” had all impacted the group’s customers’ first quarter performance, weighing on volumes in the process.
OTHER COMPANY NEWS:
Payments company Finablr (FIN) has announced the offer price for its IPO: 175p, giving it a market capitalisation of £1.23bn upon admission to the London Stock Exchange. It said this price reflects “the more difficult market conditions during recent days”. The offer comprises 87.7m new shares issued by the company to raise gross proceeds of £153m and 87.3m shares being sold by the selling shareholders - equal to a total offer size of £306m, and representing a quarter of Finablr’s issued share capital on admission. A further 17.5m shares are also being made available by the selling shareholders pursuant to the over-allotment option. Conditional dealings in Finablr’s shares commenced this morning. The commencement of unconditional dealings is expected to take place at 8AM on 20 May.
Capita (CPI) has become the first FTSE 250 company in 30 years to appoint employees as non-executive directors to its board. Inviting its more than 63,000 strong workforce to apply for the role, Lyndsay Browne and Joseph Murphy have been selected to “provide an employee’s perspective and expertise, and input into strategic decision-making with the same level of authority as other directors”. Employee representation through worker directors was originally a key government initiative back in 2016, but the since watered down, non-binding proposals have had limited impact.
A number of news outlets are this morning reporting that Walmart is considering a public listing for Asda. Fresh from the failure of its tie in with Sainsbury (SBRY), management reportedly told Asda staff an IPO was under serious consideration. This is all very early stage, of course, but definitely one to keep an eye out for.
Mercia Technologies (MERC) life sciences direct investment, Locate Bio Limited, has received an extra £2m of investment. Locate – based in Nottingham – has received £1.8m of direct investment from Mercia. The balance has come from the Midlands Engine Investment Fund, which Mercia manages on behalf of the British Business Bank. Mercia’s direct equity stake is now 21.6 per cent.
A strong end to the UK’s tax year enabled Hargreaves Lansdown (HL.) to boost its new business by £5.4bn in the first four months of 2019, or £2.9bn after accounting for outflows and market movements. The investment platform provider has also reported an eight per cent rise in net revenues to £396m, which chief executive Chris Hill said had been bolstered by investments and the transfers of clients and assets from Witan Investment Services, JP Morgan and Baillie Gifford.
Ahead of today’s deadline for shareholder voting on an attempted hostile takeover by Non-Standard Finance (NSF), sub-prime lender Provident Financial (PFG) has confirmed that fees incurred from the approach will be “in the range of £19m to £21m”, narrowed from a previous estimate of between £17m and £22m. The majority of the fees have come from financial and corporate broking advice, with an additional £0.4m earmarked for “forensic accounting advice required to investigate NSF's unlawful shareholder distributions”.
A leaked document from the Labour Party has revealed plans to renationalise the UK’s £62bn energy networks and create a National Energy Agency. Companies mentioned include National Grid (NG.) as well as the transmission arms of SSE (SSE) and Scottish Power. Using Northern Rock as a template, the proposals involve purchasing energy companies using Government bonds at a value named by Parliament. RBC Capital Markets believes nationalisation is “not a credible threat” citing a lack of wider political support, potential damage to investor sentiment from paying below market value and questionable return on investment. With Ofgem and Ofwat focused on customer bills and a “significant fall in allowed returns”, they believe even public appetite for nationalisation has been greatly reduced.
