IC TIP UPDATES:
Charles Stanley (CAY) has stuck an estimate on the restructuring programme announced earlier this month. The wealth manager used its full-year results to prepare investors for a £9.5m hit “over a two to three-year period”, though cost reductions are expected to be immediate and result in “annualised savings in excess of £4.5m from FY2022 onwards”. Otherwise, financials were pretty flat in what for many peers has been a buoyant market. Pre-tax profits dipped from £11.4m to £11m, while revenue from the core investment management services division edged up only 1.2 per cent. Chairman Sir David Howard added that “the extent of the equity market rally earlier this year” had downgraded expected returns over the remainder of the year. Under review.
Legal & General (LGEN) is to sell its general insurance business to Allianz in the second half of 2019, in a deal that will boost the investment manager’s solvency ratios and provide added capital to invest in growth elsewhere. Allianz will pay a base price of £242m, equal to the business’s book value, though potential additional payments could be made over a three-year period “from ongoing commercial arrangements”. Chief executive Nigel Wilson described the sale as “the right decision for our customers and shareholders”, though the market has reacted by pushing down the stock in early trading. We remain buyers.
KEY STORIES:
Capital and Counties (CAPC) has revealed that its Earls Court portfolio has suffered a further 10.5 per cent devaluation to £412m at the end of March, compared with three months earlier. The landlord attributed this to increased developer's margin and total development cost assumptions, as well as a more conservative view on gross development value.
Rank Group (RNK) is in talks to buy online gaming peer Stride Gaming (STR) in a deal worth £155.3m. At 151p per share, the bid represents an approximate premium of 29 per cent on Stride’s closing price on Thursday. Stride directors will unanimously recommend that shareholders approve the bid, while Rank claims that both parties have received backing from shareholders so far. The combined business would have pro forma digital net gaming revenues of around £185m and continue Rank’s forward march in digital gaming, following its acquisition of YoBingo last year.
Watches of Switzerland Group (WOSG) enjoyed a strong start to life as a public company yesterday. The luxury watch retailer saw its share price jump 13 per cent from its listing range of 250-270p to close at 306p. The group sells luxury watches in the UK and USA, with 13 boutiques dedicated to specific brands such as Rolex, Omega and Breitling.
OTHER COMPANY NEWS:
News that President Donald Trump plans to slap a 5 per cent tariff on all Mexican goods entering the US has hit the peso and pushed treasury yields lower overnight. Investors in doorstep lender International Personal Finance (IPF), which counts Mexico as one of its most important growth areas, appear to have noticed too, sell out of the stock and pushing the shares down 2 per cent in early trading.
Balfour Beatty (BBY) has announced that is has been conditionally selected as part of a joint venture to deliver a $1.7bn (£1.3bn) interstate project on behalf of the Texas Department of Transportation. The group has a 45 per cent share in the joint venture with Fluor Corporation. The full contract award is expected in the autumn with work commencing in early 2020.
