Shares in London are flat mid-morning as weak German economic data, continued UK political uncertainty and global trade fears continue to dominate traders' minds. Click here for the Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Craig Donaldson is to step down as chief executive of Metro Bank (MTRO) at the end of this month, after a calamitous year for the high-street lender. Filling his role on an interim basis will be recently-appointed “chief transformation officer” Dan Frumkin, who said the group is “working hard to evaluate the bank's future plans” and will update investors in February. Those plans will not include any more options or awards for Mr Donaldson, though the remuneration committee will consider whether he can keep unvested options and awards from before 2018. Sell.
Time Out (TMO) has said that it is encouraged by the early trading of the five Time Out Market sites opened in 2019, which have replicated the concept first launched in Lisbon. Because of the delayed opening of Time Out Market Chicago and Time Out Market Montreal, and further Market investment, the group expects a “modest impact” to full-year cash profits. It said that it remains on track to reach its milestone of profitability in 2020. The shares were down 2 per cent in morning trading. Buy.
Porvair (PRV) shares were up 5 per cent in morning trading as the filtration technology business signalled that it expects to beat full-year management expectations on earnings. Revenue growth will be around 13 per cent, driven by strong performance in its aerospace and industrial work. Buy.
The Petropavlovsk (POG) shareholder musical chairs have continued, with the Abu Dhabi Investment Authority taking a 4.5 per cent stake in the Russian gold miner. This is the latest in several major moves on the company’s register in the past week, with Sothic Capital Management selling down from a position of over 9 per cent of Petropavlovsk’s shares to 0.54 per cent and the Cayman-registered Russian Prosperity Fund increasing its stake from the 4.9 per cent announced last month to 7.4 per cent. That fund is included in another group called Prosperity Capital Management, which has a total stake of 14 per cent. Last month, the renamed CABS Platform entity, which helped reinstate Pavel Maslovskiy as chief executive last year, upped its holding from 4.55 per cent to 7.5 per cent at the beginning of November. Buy.
Dunelm’s (DNLM) shares have jumped 19 per cent this morning after the group said profits for the full year would be higher than previous expectations, as a result of the successful transition to a new digital platform and improvements in sourcing growing the gross margin. Buy.
Joules (JOUL) reported a 3.1 per cent increase in retail sales in the six months to the end of May, with improved margins thanks to a reduction in promotional activity. The group is continuing to see a good response to its “total retail” strategy, reporting a 9 per cent jump in its e-commerce and in-store channels. Buy.
KEY STORIES:
Shares in M&G (MNG) are down 7 per cent since yesterday afternoon, after the recently-listed asset management group suspended dealing in its M&G Property Portfolio fund. M&G blamed a combination of Brexit-related political uncertainty and UK retail sector woes for its inability to sell assets and meet the “unusually high and sustained outflows” experienced in recent months. However, this is the second time investors have been barred from trading in the open-ended fund since July 2016, in an incident which prompted a revision of the rules governing such funds.
A trading update from Contour Global (GLO) indicates adjusted cash profits (Ebitda) have increased by 19 per cent to $531.6m in the nine months to 30 September. This reflects the inclusion of the Spanish Concentrated Solar Power (CSP) acquisition and a sale of a minority stake in those assets in the first half of the year. Full year adjusted cash profits are now expected to come in “modestly below” the previously guided $720-770m range thanks to the delay in completing the acquisition of combined heat and power assets in Mexico.
Clipper Logistics (CLG) has seen revenue rise by 11.7 per cent to £255m in the six months to 31 October, benefitting from the contribution of new contracts won last year and growth in continental Europe. Operating profit has increased by 13.5 per cent increase to £12.1m, driven by a 34.2 per cent jump e-fulfilment and returns management services to £8.4m. The group has seen positive trading post-period with record volumes at certain sites over the Black Friday weekend. Full year earnings are expected to be in line with management’s expectations.
Victrex (VCT) full-year pre-tax profits slumped 18 per cent, as the polymer battled challenging automotive and electronics markets that offset gains in the aerospace, energy and medical spaces. Brexit and stock build hampered Victrex’s cash conversion, bringing the metric down to 87 per cent from 107 per cent in the prior year.
DS Smith (SMDS) half-year pre-tax profits grew 31 per cent, driven by strong growth in Europe. A decline in volumes in the packaging manufacturer’s industrial business impacted overall box volume growth though, while an unfavourable paper pricing environment reduced margin in North America.
The Daily Mail and General Trust’s (DMGT) statutory revenues were broadly flat for the year to September 2019, at £1.34bn, or up 2 per cent on an underlying adjusted basis. Underlying adjusted operating profits were up 6 per cent. Management noted that the group has continued to deliver on its three strategic priorities - increasing portfolio focus, improving operational execution and maintaining financial flexibility. In April, it returned £862m to shareholders, via Euromoney (ERM) shares and a £200m special dividend. Post-period-end, it acquired the ‘i’ newspaper for £50m. For FY2020, DMGT anticipates broadly stable underlying revenues, and ongoing investment. The shares were up 4 per cent this morning.
Though the growth in AJ Bell’s (AJB) assets under administration slowed to 13 per cent in the 12 months to September, the operational gearing in the investment platform’s business is such that pre-tax profits leapt a third, and net assets climbed by 35 per cent. Alongside full-year numbers, the group has proposed a multi-year corporate social responsibility initiative to award £10m-worth of shares to an internal charitable trust, should the group double its earnings per share in the next three years, and by at least 150 per cent over five years.
Spread-betting outfit IG Group (IGG) expects first-half net trading revenue to match its top-line from FY2019, a period which benefited from two months of trading prior to the introduction of wide-reaching European regulations. However, revenues from the group’s core markets division is expected to come in 6 per cent lower at £210m, despite an increase in the “size and quality of the active client base”. Numis reckons the second quarter was “subdued but nothing to worry about”, though the market has pushed the stock down 3 per cent in early trading.