Shares in London continue to gain on the back of US strength and slightly improved European economic data. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
WPP (WPP) has agreed the sale of 60 per cent of Kantar with private equity group Bain Capital, valuing the stake at around $4bn (£3.2bn). The proceeds to WPP on completion after tax and continuing investment in Kantar are expected to be $3.1bn, which will partly be used to reduce debt to the low end of the target range of 1.5 - 1.75 adjusted cash profits for 2020. Around $1.2bn will be returned to shareholders. Buy.
KEY STORIES:
Shares in Thomas Cook (TCG) fell nearly 50 per cent in early trading after the struggling holiday company announced that Fosun Tourism Group, its largest shareholder, will provide a £750m capital injection to provide enough liquidity for the company to trade over the Winter 2019/20 season. Under the recapitalisation proposal a “significant amount” of the group’s existing debt will be converted into equity, meaning that existing shareholders will be “significantly diluted”. This plan would replace the £300m facility that was agreed in May. The strategic review of the airline has been paused.
Shares in Hiscox (HSX) were down around 5 per cent in early trading after the insurer warned of deteriorating markets from 2018 catastrophe events, including Typhoon Jebi in Japan and Hurricane Michael in Florida. As a result, the group has strengthened reserves for prior year claims from Typhoon Jebi, Hurricane Michael and for the risk excess book, totalling $40m. The group expects pre-tax profits for the first-half of between $150m-170m. This includes an estimated investment return of $150 million to the end of June, having benefited from further market movements in the second quarter.
Lookers (LOOK) shares tumbled by more than a fifth after management warned that trading during the three months to June had become “increasingly more challenging”, with a 4.6 per cent decline in new car registrations. As a result, underlying pre-tax profits for the first-half are likely to be below previous expectations at around £32m, compared to £43m the same time last year.
OTHER COMPANY NEWS:
Emerging markets-focused investment manager Ashmore Group (ASHM) grew its assets under management by 7.6 per cent in the three months to June, thanks to even contributions from net inflows and positive market movements. That means in the past year, the group has boosted its asset pile by 24 per cent, to $91.8bn. In the final quarter of that period, debt products were particularly in favour in the period, and chief executive Mark Coombs reckons the outlook for emerging markets is positive, if “supportive economic fundamentals, attractive valuations in fixed income and equities [and] limited opportunities in developed markets” remain as they are.
John Menzies (MNZS) has announced that chairman Dermot Smurfit is to step down with immediate effect. He is succeeded by current non-executive director Philipp Joeinig who has previously worked in a number of senior executive roles at Swissport International.
Pan African Resources (PAF) has returned gold production to 2016 levels, even as protests hit its most important operation. The miner and tailings retreatment company produced 172,442 ounces in the 12 months to June 30, a 54.1 per cent increase on continuing operations and a 7 per cent increase if the shuttered Evander Mines underground production is included. Pan African did not give its costs for the period. The company said protests at its Barberton complex, which have disrupted production, were “initiated and supported” by “criminals” trying to extort jobs and cash out of the mine. Barberton provides the majority of Pan African’s production, with almost 100,000 ounces of gold produced there in the 12 months to June 30. Pan African shares were up 4 per cent on the news to 10.95p.
