Relatively gloomy economic figures which suggest the UK is struggling for any significant economic growth, coupled with ongoing global concerns about the impact of the coronavirus, have failed to dent sentiment today with London shares up across the board. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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The Competition and Markets Authority has provisionally found JD Sports Fashion’s (JD.) takeover of Footasylum could substantially lessen competition in the sports clothing market. The findings are not yet finalised, but nonetheless house broker Peel Hunt described them as “disappointing”, adding that a sale of Footasylum seems to be the only option for JD at this stage. Management has criticised the findings, arguing they “do not reflect the intensive and dynamic competitive reality of the UK sports retail market today”. Luckily, Peel Hunt also saw fit to upgrade its earnings expectations for the group, on the back of strong trading through January. Buy.
William Hill (WMH) has announced a partnership with CBS Sports, making the gambling group CBS’s official sportsbook and wagering data provider for all of its platforms. The deal is a big step for William Hill’s ambitions in the US, and should help to bolster growth in the region. Shares in the group have jumped 3 per cent following the announcement. Buy.
AA (AA.) is guiding that trading cash profits (Ebitda) for the 12 months to 31 January will be in line with market expectations – Liberum forecasts put the full year total at £347m. In roadside, the paid membership base returned to growth during the second half and this growth is expected to continue into 2021. Having retained or extended all key business-to-business contracts due for renewal in the 2020 financial year, the group also secured new work with Admiral and Uber (US:UBER). In the insurance business, both the motor and home books have expanded. However, the group has debt maturing in 2022 that will need refinancing and Berenberg believes this will place pressure on free cash flow. Meanwhile, we remain wary of the overhanging risk of the FCA’s review into pricing in the insurance market. Sell.
S&U (SUS) says lending activity in both its specialist motor finance and property bridging arms has improved since the general election, and that management expectations will be met for the financial year to 31 January. Robust pricing and exchanges in the second-hand car market mean Advantage Finance’s net receivables are up by around 8 per cent on last year at around £280m. A change in leadership in the division has also proceeded “very smoothly”, which perhaps explains the board’s decision to raise the second interim dividend to 36p per share, despite a softening in the rate of profit growth. Buy.
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Ocado (OCDO) has posted massive pre-tax losses for the year to December 1, ballooning from £44.4m in 2018 to £215m in 2019. However, shares in the online grocery group were up following the announcement, thanks to strong growth in the retail division - Ocado Retail was the fastest-growing grocer in the UK - and a 38 per cent increased in fees invoiced by the international solutions business, to £81.4m.
Cranswick (CWK) has acquired a Yorkshire pig farming and rearing business that has been one of its suppliers for over 25 years. It has also bought the family business out of a pig production joint venture set up in 2018, purchasing their 50 per cent stake. The group has not disclosed the value of the transactions. Together with the acquisition of Packington Pork in December, Cranswick’s self-sufficiency in UK pigs processed is now more than 30 per cent. Shares are up over 1 per cent this morning.
