External factors continue to dampen investor enthusiasm for UK shares with equities off colour again in London in mid-morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in easyJet (EZJ) fell more than 5 per cent in early trading after the budget airline reported that costs for the full year are expected to increase by 12 per cent due to increased capacity, higher unit fuel costs, and adverse foreign exchange movements. Passenger numbers increased by 8.6 per cent to 96m, driven by an increase in capacity of 10.3 per cent to 105m seats, leading to a decline in load factor of 1.4 percentage points to 91.5 per cent. But full-year headline pre-tax profit is expected to be between £420m and £430m, the upper half of the previous guidance range, driven in part by increased demand due to strike disruption at Ryanair (RYA) and British Airways, as well as initiatives to optimise seat yield. Buy.
Hollywood Bowl (BOWL) reported a 7.7 per cent increase in revenue during the year to September, or a 5.5 per cent increase on a like-for-like basis. The leisure company expects to report an increase in pre-tax profit of more than 10 per cent, slightly ahead of market expectations. The board is also considering returning additional capital to shareholders, as the group has continued to be highly cash generative and has benefitted from its ongoing investment programme. Shares were up more than 1 per cent in early trading. Buy.
Shares in Impax Asset Management (IPX) are up this morning, after the sustainable economy-focused investor and fund group posted a four per cent rise in assets under management in its final quarter ended 30 September. Some £235m of net flows and £278m in positive market movements meant the period finished with £15.1bn ($18.5bn) under Impax’s direction, a 20 per cent increase on the same point in 2018. Buy.
KEY STORIES:
Hong Kong Exchanges and Clearing (HKEX) has dropped its £32bn bid for the London Stock Exchange (LSE), after attempts to engage the target’s board failed. HKEX said it continues to believe that a merger “is strategically compelling and would create a world-leading market infrastructure group”, but declined to say whether its discussions with regulators and shareholders gave it much confidence hope.
OTHER COMPANY NEWS:
Student accommodation landlord Unite Group (UTG) has posted a 0.6 per cent like-for-like increase in the value of its main fund portfolio, which comprises 25,177 beds in 21 university towns and cities in the UK. The group’s investment portfolio has been separately valued at £1.3bn, up 1.9 per cent on a like-for-like basis, having benefited from rent increases and a reversionary uplift at one of its larger properties. Unite also says 98 per cent of its bed spaces have been let for the current academic year, which “supports annual rental growth of 3 to 3.5 per cent”.
Jersey Oil and Gas (JOG) shares are off 11 per cent after Equinor passed on an option to take 50 per cent of the Buchan Blocks project in the North Sea. The initial share price drop was 28 per cent but Jersey recovered to 199p after the plunge. The company said Equinor’s decision gave it “greater flexibility” with the project, which includes the Buchan field and J2 discovery, although Panmure Gordon analyst Colin Smith said the setback showed the “challenges JOG is likely to encounter getting this project over the line”.
A first half trading update from Electrocomponents (ECM) sent its shares up by 4 per cent in early trading. The group expects its first half margin to be down year-on-year, but highlights for the period include a 56 per cent uptick in emerging markets turnover over the second quarter and a 10 per cent rise in revenues over the half for its RS Pro range.
It seems Motorpoint (MOTR) is still defying the weak car market. The group’s full-year trading update reports the auto-retailer expects to report 1 per cent revenue growth. While this is hardly eye-watering stuff, management said it is “a significant outperformance” of the wider used car market, representing a material increase in market share. The group has also announced a share buyback programme of up to £10m.
Digital advertising and marketing group S4 Capital (SFOR) has announced the merger of its MediaMonks business with Silicon Valley’s largest digital agency - Firewood. Some of Firewood’s well-known clients include Facebook, Google, LinkedIn and Salesforce. Sir Martin Sorrell - executive chairman of S4 Capital - described the merger as a “further step in creating a new era communications services leader”. The deal values Firewood at $150m on a debt-free and cash-free basis, and with normalised working capital - or at an enterprise value to cash profits multiple of around 13.2 times. Shares in S4 were up by around 7 per cent this morning.
