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News & Tips: Ryanair, Statpro, Foxtons & more

Markets remain downbeat
May 20, 2019

Ongoing trade tensions continue to dampen sentiment towards equities in London. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES:

Expectations for full-year profits for Ryanair (RYA) were already looking weak after the low-cost airline lowered its guidance in January. But a 29 per cent drop in full-year adjusted post-tax profits to €1.02bn is about as bad as investors could have reasonably anticipated, particularly on the back of a six per cent increase in the top-line. That was in part due to a €440m increase in the oil bill, and partly due to a five per cent rise in other costs. In a bid to arrest the slide in the shares, the airline’s board has approved a €700m share buyback, though the stock is down five per cent in early trading, and remains a sell.

StatPro (SOG) has secured a three-year contract with a top 20 fund administrator for its revolution product, with a minimum contract value of £2.44m. The fund administrator in question currently uses revolution to provide services for over 30 clients for performance, attribution and risk. The extension includes fixed income risk and attribution. The shares were up by around 2 per cent this morning. Buy.

McKay Securities (MCKS) reported a 1.2 per cent increase in adjusted net assets per share during the year to March, but a lower revaluation on the portfolio meant pre-tax profits were down more than two-thirds. The 30 Lombard Street development was completed in January, triggering the start of the 15 year pre-let secured in March 2018 for the entire building, at a rent of £3.4m a year. Buy.

Forterra (FORT) announced that revenue for the first four months of the year was 7.8 per cent ahead of the same period in 2018. The brick manufacturer said that it had received planning consent for its £95m project to build a new brick facility at its existing site at Desford, Leicestershire. Given this will lead to a significant increase in earnings over the cycle, the board has decided to increase the dividend payout to 45 per cent and maintain a progressive payout ratio after that. Buy.

KEY STORIES:

Foxtons (FOXT) said that while the performance during the first quarter was in line with management expectations, revenue in the sales business declined as conditions in the London market remained challenging. Group revenue was £23.8m compared to £24.5m in the first quarter of last year, with lettings revenue slightly ahead. The group also announced that chief financial officer Mark Berry would be stepping-down from 31 July, to be replaced by Laird financial controller Richard Harris.

OTHER COMPANY NEWS:

Softcat’s (SCT) management is “confident that full year results will now be slightly ahead of previous expectations”. The group said that it had “continued to perform well” over the third quarter, with year-on-year growth across all its income and profit measures. It added that it expects the opening of a new office in Birmingham to take place early next financial year. The shares were down by around 1 per cent in morning trading.

Visa said this morning that it has now acquired or received acceptances for over 90 per cent of Earthport’s shares (EPO) to which its offer relates – allowing it to start the compulsory acquisition process for the remaining shares. It said that “Earthport Shareholders who have not already accepted the Offer are encouraged to do so without delay”, in keeping with certain outlined procedures. On the expiry of six weeks from the date of the compulsory acquisition notices to shareholders, the shares held by those shareholders who have not yet accepted Visa’s offer will be acquired compulsorily on the same terms as the offer.

Further to the announcement on 15 May (last week) of its IPO offer price and the initiation of conditional dealings, payments group Finablr’s (FIN) entire issued ordinary share capital of 700m shares has been admitted to trading on London’s main market this morning.

With more than a fifth of shareholders voting against the directors’ remuneration report at its AGM last week, John Menzies (MNZS) is the latest company to face opposition to executive pay. The group’s annual report indicates that former chief executive Forsyth Black (who departed in March) received total remuneration of around £1.3m in 2018. Around 19 per cent of shareholders also objected to the re-election of chairman Dermot Smurfit.

A report from the Sunday Times indicates that gas distributor Cadent Gas is to cut up to 400 jobs (around 10 per cent of its workforce) through a voluntary redundancy programme. With pressure from Ofgem to lower costs and Labour’s looming threat of renationalisation, this latest move is part of a wider streamlining strategy. National Grid (NG.) is currently in the process of divesting its remaining 39 per cent stake in the business, with £2bn of cash proceeds expected in June.

DWF (DWF) has announced the completed acquisition of legal services business K&L Gates Jamka. The move will see the opening of a new office in Poland (its first since listing on the main market in March) adding a team of 85, including 11 partners.

Bacanora Lithium (BCN) looks to have found a path to production for its Sonora project in Mexico, after its first effort failed publicly last year. Chinese major player Ganfeng Lithium has said it will come on board as 29.99 per cent shareholder and 22.5 per cent owner of the lithium clay project itself.  The major stake in Bacanora comes at a price of £14.4m, and the company will make another £7m from handing over the 22.5 per cent of Sonora, which has an estimated capital cost of $420m (£329m). Bacanora had tried a mixed project finance approach but this fell down when a private placement for $100m was withdrawn in July last year. Ganfeng would join Japanese firm Hanwa, if the partnership goes through, as an offtake partner and shareholder. Bacanora’s shares were up 14 per cent in early trading to 30p, but this came back to 27.8p by mid-morning.

Majestic Wine (WINE) has appointed Katrina Cliffe as an independent non-executive director from today. Ms Cliffe is already a director of London & Country Morgages, Homeserve (HSV), and Shop Direct Finance, among others.