Shares in London are mixed in early trading as investors digest massive job cuts at Deutsche Bank. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Metro Bank (MTRO) are off 5 per cent in early trading, following a report in the Financial Times over the weekend suggesting members of the lender’s executive team could leave if chairman Vernon Hill fails to outline a succession plan by the end of the year. The view was echoed by “multiple people close to the bank”, according to the piece, which also quoted a source who said Metro’s links to a predominantly US-based share register could be preserved by putting a major shareholder representative on the board, in the event of Mr Hill’s departure. Sell.
Imperial Brands (IMB) announced it will scrap its policy to increase the dividend by 10 per cent per year following the 2019 financial year. The company stated that “the revised dividend policy will be progressive, growing annually from the current level, taking into account underlying business performance”. This is meant to provide greater flexibility in capital allocation that will allow for continued investment in areas of growth, including tobacco and next generation products. Imperial Brands also announced a share buyback programme of up to £200m by the end of the current calendar year. Shares were up 3 per cent in early trading. Buy.
Specialist investment group Impax Asset Management (IPX) posted another 10 per cent increase in assets under management (AUM) in the three months to June, four-fifths of which was due to positive movements in markets, foreign exchange and performance. By the end of the period, AUM stood at £14.5bn, which Peel Hunt said included the $200m the California State Teachers’ Retirement System had committed to the Impax Leaders strategy. The shares are down 2.7 per cent in early trading, but remain a buy.
Xaar (XAR) shares were up nearly 5 per cent in morning trading after disclosing that it anticipates reporting first-half revenues of £23m. Turnover for the period was actually £27m, but the inkjet technology specialist registered around £4m in revenue reversal as Xaar 1201 inventory is returned to the business for rework due to age - it expects to sell this inventory in its second half. There was growth in other printhead products, notably the Xaar 5601, which grew by 490 per cent. There was no news on Xaar’s stated aim of finding new external partners to invest in and help scale up its fledgling thin film product portfolio, which the company previously admitted has so far failed to live up to its potential. Sell.
Real Estate Investors (RLE) completed eight lease renewals and 14 new lettings during the first six months of the year. The portfolio was 96.2 per cent occupied, up from 92 per cent the same time the prior year. The Midlands-focused landlord had £25m in cash and available banking facilities, but said it had seen limited acquisition opportunities. Buy.
Ferguson (FERG) announced that in a continuation of its share buyback programme, it has instructed its broker JP Morgan to purchase up to $419.8m in shares. Having received shareholder authority to purchase up to a maximum of 23,185,045 of its ordinary shares on 25 April 2019, the plumbing and heating products specialist will continue to buy shares until the conclusion of its November 2019 AGM, where it will seek similar authority to continue the programme until no later than 10 June 2019. Buy.
BATM Advanced Communications (BVC) has applied for a secondary listing on the Tel Aviv Stock Exchange. The medical, cybersecurity and network solutions group is seeking the listing to provide a local trading platform for its Israel-based institutional shareholders, expand the accessibility of its shares, and improving the liquidity and tradeability of its shares. The group is not issuing any new shares in connection with the secondary listing.
Versarien (VRS) shares rose as much as 7 per cent in early trading off the back of its first graphene orders from the North American research and development wing of a Japanese automotive components company. The unnamed customer has placed ‘development orders’ for 1kg each of Versarien's high purity graphene nano platelets (GNP-HP) and Nanene. The news follows the engineering company’s first US graphene order in June, which was also for GNP-HP. While it’s encouraging to see another order for Versarien, both of its latest deals are disclosed without any financial details, so it’s very difficult to see how or whether these orders will translate into turnover at its imminent full-year results. Sell.
KEY STORIES:
In the midst of the Barrick Gold (CAN:ABX) takeover drama, Acacia Mining (ACA) has put in a strong quarter of production. Barrick owns 64 per cent of the the Tanzania-focused miner and has put in a preliminary bid to take the rest of the company, with the deadline for a final offer on Tuesday. The dispute has seen Barrick attack Acacia’s ability to manage its operations and tell minority shareholders the only hope of resolving the costly fight with the government of Tanzania would be to allow the takeover. Acacia produced 158,774 ounces of gold in the three months to June 30, a 19 per cent increase on the same time last year and 50 per cent higher than the first quarter of 2019. Over the weekend, Legal & General Investment Management (LGIM) told the Financial Times Barrick’s offer of 0.153 shares per Acacia share raised “serious questions” over minority shareholder rights. Sell.
The UK Information Commissioners Office (ICO) has issued British Airways a more than £183m penalty relating to the theft of customer data from the airline’s website, previously disclosed in September and October last year. Willie Walsh, chief executive of BA’s parent company International Consolidated Airlines (IAG) said the company would “defend the airline’s position vigorously”, and would make any necessary appeals. Shares in IAG fell 1 per cent in early trading.
OTHER COMPANY NEWS:
Shares in Inchcape (INCH) have fallen 5 per cent following a downgrade from broker J.P Morgan Cazenove. The broker cut its target price for the auto retailers 22 per cent to 627p. The auto retail market has been a difficult one recently, with Pendragon (PDG) recently warning it would be lossmaking in the full year and Lookers (LOOK) being investigated by the FCA over problems with its sales process.
