Shares in London are off the boil once more with small declines across all the major indices mid-morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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IQE (IQE) has taken complete ownership of CSDC, a former joint venture between its Singaporean subsidiary MBE Technology, WIN Semiconductors, Nanyang Technological University and individuals of the NanYang University. CSDC was established to help develop and commercialise compound semiconductor technologies for academic and industrial customers based on Molecular Beam Epitaxy technologies in Asia. IQE revenues will be unaffected by the transaction, but the company expects adjusted full year cash profits and operating profits to be affected by around £0.5m. Sell.
Mondi (MNDI) shares edged down around 3 per cent in early trading on the release of a third quarter trading update, in which the packaging specialist said that underlying cash profits of €383m would sit 18 per cent beneath last year’s comparable level. Like-for-like sales volumes were marginally lower on average as a result of lower industrial bags and uncoated fine paper volumes, although this was partly offset by growth in corrugated packaging. Buy.
XP Power (XPP) shares rose 3 per cent on the back of a positive third quarter trading update, which revealed an 8 per cent rise on orders compared with the same point last year. The group’s healthcare, industrial and technology segments continue to perform well on order intake, although as expected there has been no recovery in semiconductors, which comprised 18 per cent of XP’s first half revenues. Buy.
Shares in Castleton Technology (CTP) plunged by around 40 per cent this morning after the group warned that first-half trading has been behind expectations, largely because of product and professional services revenue being lower than expected. Recurring revenues increased on an absolute basis – representing 65 per cent of the top line – but this was not enough to offset the fall in one-off revenues. While revenues, cash profits and cash generation should see a “material improvement” in the second half, this won’t be enough to meet current market expectations. Management noted that weaker one-off revenues highlighted the importance of focusing on growing recurring sales. It remains confident in Castleton’s long-term prospects. Under review.
Shares in home-collect credit provider Morses Club (MCL) are off 8 per cent in early trading, a drop chief executive Paul Smith suggested to us was down to retail investors over-reacting to the headline figures in today’s interim results. Despite a 9 per cent fall in adjusted pre-tax profit, a slight decline in customer numbers and an 11 per cent dip in the return on equity, Mr Smith insisted that the figures were “extraordinarily positive” relative to the performance of other listed peers. Slower credit issuance has also been offset by lower impairments and an improved cost profile. Under review.
Active asset manager Polar Capital (POLR) may point to a 3 per cent rise in its assets under management in the six months to September, but that masks a disappointing recent quarter in which net outflows reached £598m. This was in part due to a change in management at the Japan Fund, which precipitated the fund’s merger with Polar’s Japan Value Fund, while the redemption of more than £500m from the technology and healthcare opportunities funds added to the headwind. Performance fees are also down sharply. Under review.
Shares in N Brown (BWNG) have risen 7 per cent this morning, following the release of the group’s half-year results announcement. The group swung back into profit, posting an operating profit of £14.7m in the period, compared with a loss of £28.3m in the same period last year. Management attributed the improvement to a focus on growing digital revenues at Jacamo, JD Williams, and other of the group’s digital brands. The shares still sit below our original sell tip, and we remain bearish on the long-term prospects. Sell.
Up until March, Premier Asset Management (PAM) had seen twenty-four successive quarters of positive net inflows to its funds. In the six months since, damp investor sentiment has led to a dip in assets under management, and net outflows of £246m. Little wonder that the group has chosen to merge with Miton, a deal which has now been approved by shareholders and is expected to complete by 14 November, a fortnight ahead of the publication of full-year numbers. Under review.
The water division of construction firm Galliford Try (GFRD) has landed a £340m contract to deliver several capital investment schemes on behalf of Southern Water, including water and wastewater treatment works, and a number of upgrades and network schemes across the utility provider’s joint ventures. A place on Yorkshire Water’s own framework, worth £100m to Galliford Try over a five-year term, has also been secured.
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Direct investor platform Hargreaves Lansdown (HL.) added £1.7bn of net assets in the three months to September, as direct back book transfers from JP Morgan and Baillie Gifford complemented flows into the group’s “active savings” portal. Rising stock markets also led to positive asset value movements of £0.8bn, though Hargreaves cautioned that the UK’s political situation and the broader global macro-economic picture have both contributed to weaker investor sentiment. Despite a 6 per cent uptick in net revenue in the period, shares are off 4 per cent in early trading.
Gold miner Avesoro Resources (ASO), in the midst of being taken private by its 73 per cent shareholder, has seen major drops in production in the September quarter through flooding and destruction of machinery at its two mines. The company has produced around 100,000 ounces of gold in the first nine months of this year, compared 175,000oz at this stage a year ago. The flooding at the New Liberty mine in Liberia in August and September was not the full extent of the issues, with a pit wall also collapsing this month. The security issues at the Youga mine in Burkina Faso, where intruders destroyed heavy machinery in August, saw workers evacuated and mining shut down for a period. The company has not yet set new guidance for the year. It had previously forecast 180,000-200,000 oz of gold for the year.
