Continued strength in the US overnight has filtered through to UK equities this morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Kier’s (KIE) largest institutional shareholder, Woodford Investment Management, has reduced its holdings in the group from 20.01 per cent to 15.87 per cent. The fund had been buying shares as recently as 16 May. Following Kier’s profit warning issued on 3 June, Prudential has similarly trimmed its stake from 10.31 per cent to 9.8 per cent, having last purchased shares on 24 May. Sell.
Mondi (MNDI) has extended deadlines for the simplification of its dual-listing structure, which will see it exit the South African stock exchange, “given all regulatory consents have not yet been received”. The packaging group still expects to complete the process in the second half of 2019. Buy.
Shares in Somero Enterprises (SOM) plunged by around a fifth this morning after it warned on full-year profits. Trading during the five months to May 2019 fell below bosses’ expectations, because of bad weather in the US – where some areas endured the highest levels of rainfall on record. This slowed down the pace of equipment purchasing among customers during the group’s traditionally strong months of March and April. Trading improved towards the end of May, and Somero expects weather and US trading to improve over the rest of 2019. But, it doesn’t expect to recover the shortfall fully. Management now anticipates revenues of around $87m, cash profits of around $28m and net cash of around $18m. Recommendation under review.
Games Workshop (GAW) has reiterated its expectation that pre-tax profits for the year to June will be “not less than” £80m. The group had originally floated the figure in mid-April, prompting analyst upgrades. All sales channels delivered growth, and royalties received from licensing are expected to be around £11m, up on last year’s figure of £9.89m We remain buyers.
Ferrexpo (FXPO) has added a new director in the midst of its self-investigation into the foundation set up to manage its charity work in Ukraine. Mary Reilly and Bert Nacken quit the iron ore miner’s board in April after auditor Deloitte resigned over the timing of the probe into Blooming Land, which the company said could have misappropriated donated cash. The new board member is Graeme Dacomb, who worked on EY’s extractives team. The company said he would join the audit committee and independent review committee looking at Blooming Land. Ferrexpo also said it expected earnings for H1 2019 to “increase materially” over the previous year because of higher prices. The company has yet to hire a new auditor. Sell.
KEY STORIES:
Reinsurance giant SwissRe has announced plans to spin-off ReAssure, its UK-based closed book life insurance consolidator, and seek a main market listing in London. The subsidiary focuses on the acquisition and management of closed book life insurance policies, meaning it does not write new business other than increments on existing policies to existing customers, but with £68.7bn of assets under administration, it believes it can generate enough cash to pay out a £265m-a-year dividend.
Codemasters’ (CDM) game GRID has been announced as a launch game for Stadia, Google’s soon-to-launch game streaming platform. This will afford Codemasters greater visibility, but more importantly, proves that it can monetise its back catalogue as game streaming platforms gain in popularity - Microsoft, Tencent and others are reportedly working on platforms of their own.
OTHER COMPANY NEWS:
Invesco Asset Management has sold 38 million shares in AJ Bell (AJB), just six months after the investment platform provider’s initial public offering. The placing, which was managed by Numis Securities, saw Invesco cash in more than a third of its stake, raising £144m at 380p per share. That’s 21 per cent down on last month’s all-time high, but 138 per cent up on the float price, though Invesco still holds 16.1 per cent of outstanding shares.
With the dust mercifully settling on Non-Standard Finance’s (NSF) fruitless bid to acquire Provident Financial (PFG), directors of both doorstep lenders are back in the market buying shares. Yesterday, NSF chief financial officer Nick Teunon splashed out £8,480 on 20,000 shares, while Everyday Loans CEO Miles Creswell-Turner and his wife Fusca Millo coughed up £34,044 and £8,480 respectively, presumably to throw their support behind a share price which is down 12 per cent since Monday. Meanwhile, Provvy chairman Patrick Snowball has dropped £0.5m on 96,477 shares in his firm, showing he thinks the future will be much rosier without the noise of
Smiths Group (SMIN) has appointed a chief executive for its medical division, which is soon to demerge from the rest of the group. JehanZeb Noor will begin overseeing the separation o Smiths Medical from the technology group of 1 July, and joins from medical packaging specialist Amcor.
