UK indices look set to end a testing week with a further lurch downwards as concerns over the spread of the coronavirus have been exacerbated by confirmation of the first cases in the UK. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Aston Martin (AML) has handed the keys to billionaire F1 team owner Lawrence Stroll and his consortium, who will inject £182m, including £55.5m in short-term working capital support, in return for a 16.7 per cent stake in the business at a price of £4m a share. Mr Stroll will replace Penny Hughes as executive chairman. The company will also tap shareholders for a £318m fundraise and abandon its plan to draw upon $100m in April 2022 notes. Aston will delay its investment in electric cars beyond 2025 from its original plan for 2022, while changes to its operating structure will be aimed at yielding £10m of annualised savings, delivering £7m during 2020. Aston shares rose by 25 per cent in morning trading. Sell.
TalkTalk (TALK) saw headline revenue (ex-carrier and off-net) of £383m over its third quarter, up from £377m in the second quarter but down from £386m a year earlier. It reported fibre net adds of 148,000, up from 146,000 a year earlier. On 21 January, the group announced the sale of its FibreNation business for £200m to CityFibre. Net proceeds of the sale are to be used to strengthen the company’s balance sheet. TalkTalk is also in talks with BT Openreach about a national full-fibre agreement. TalkTalk’s cash profit outlook remains unchanged. Chief executive Tristia Harrison said “TalkTalk enters 2020 a far simpler business with a structural advantage to accelerate full fibre nationwide”. For now, we’re erring on the side of scepticism. Sell.
KEY STORIES:
Is Hargreaves Lansdown’s (HL.) gravity-defying track record of growth finally starting to slow? While total assets under administration climbed to £105.2bn by the end of 2019 – a rise of 6 per cent in six months, or 22 per cent over a year – net new business of £2.31bn in the second half was 9 per cent down on the prior year period. Analysts at Peel Hunt described the result as “resilient”, though shares in the fund supermarket are down 5.5 per cent in early trading.
The London Stock Exchange (LSE) is facing renewed calls to curtail its trading day by 90 minutes, after the bourse launched a consultation into shorter market hours. The Association for Financial Markets in Europe (AFME), which represents banks, and the Investment Association (IA), which looks after the UK’s asset management industry – which together proposed the changes last year – yesterday formalised their appeal to the LSE while calling for a 12-month pilot across all major European exchanges to test the shorter trading day.
Investec (INVP) has formally filed its intention to float its Ninety One asset management division on the London and Johannesburg stock exchanges, in a move which the group believes will position both the core bank and the spun-off entity for “long-term growth”. Ninety One, which serves a global client base, counted £121bn in assets under management at the end of September 2019. When shares begin trading on 16 March, Investec group will retain a 15 per cent stake, existing shareholders will own 55 per cent, and a further 10 per cent will be sold to new investors.
M&C Saatchi (SAA) has been notified by the Financial Conduct Authority (FCA) that it has started an investigation following the accounting adjustments announced by the company – most recently on 4 December – and after the completion of management’s own independent review. M&C says it will cooperate fully with the FCA. Shares in the group were down by around 9 per cent this morning.
OTHER COMPANY NEWS:
Generating 6,934 gigawatts, SSE (SSE) has said that its renewables output for the first nine months of the year was just over 5 per cent behind plan. However, the group continues to expect adjusted EPS for the 2020 financial year will be 83-88p with a dividend of 80p per share. The transmission business has submitted its final plan for the RIIO-T2 price control, proposing £2.4bn of total expenditure and taking the regulated asset value to £5bn by 2026. Meanwhile, the sale of its gas production assets is ongoing but a deal is not expected this year.
Smart Metering Systems’ (SMS) total index-linked annualised recurring revenue rose by a fifth to £90.1m in 2019, with £38m coming from smart meters. Meters and data assets under management increased by 19 per cent to 3.7m with the smart meter portfolio expanding by 44 per cent to 1.2m meters. Full year net debt is expected to come in at around £220m, in line with the group’s expectations.
Ferrexpo (FXPO) has announced that a Ukrainian court has put a restriction on the sale of 50.3 per cent of its Swiss subsidiary’s shares held in Ferrexpo Poltava Mining (FPM). The group believes this measure is temporary and relates to businesses owned by Kostyantin Zhevago in Ukraine until 2015. Mr Zhevago “temporarily” stepped aside as chief executive of Ferrexpo in October. Ferrexpo has appealed the court order, suggesting it has “no proper or reasonable basis under Ukrainian law”, although says it has no intention to transfer its shareholding in FPM.
