Investors in London have reacted to a sharper than expected rise in inflation to 1.8 per cent and a solid 2.2 annual rise in house prices as a sign of consumer confidence potentially dragging itself out of the doldrums and have marked equities up across the board with all the main indices in positive territory. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Metro Bank (MTRO) are down today, despite what appears to be a rare piece of good news for the lender: the appointment of turnaround specialist Dan Frumkin as the group’s chief executive, effective immediately. Mr Frumkin has been in the role on an interim basis since the start 1 January, having joined in the post of chief transformation officer in September 2019. “This is a business with robust foundations and real potential to shake up British banking,” said Mr Frumkin. “I am excited about the opportunity and look forward to updating the market on our plans on 26 February." He will be paid a salary of £740,000 a year, with an opportunity to triple his pay through bonuses. Sell.
Moneysupermarket.com’s (MONY) chief executive Mark Lewis is stepping down to “pursue his career in a new direction”. No date for his departure has yet been agreed, but Mr Lewis wishes to ensure a smooth transition to his successor. The group has started a formal search process for his replacement. It noted that in the three years since he took the helm, Mr Lewis has helped households to save more than £6bn, returned £250m to shareholders, launched new personalised customer experiences and developed new capabilities. Moneysupermarket’s results are due out tomorrow (20 February) and the group says it will announced that it met market expectations for 2019. Under review.
Gooch & Housego (GHH) shares rose 7 per cent on an AGM trading update, as the photonics technology company said that it was looking at expanding capacity after securing a full order book for its ‘hi-reliability fibre coupler business’. The group observed a challenging macro backdrop for its industrial laser work and also said that the impact of coronavirus was thus far “difficult to quantify at this stage, given factories in China are only just reopening” after a prolonged New Year holiday, but added that “it may act as a 'drag' on this sector's short term performance”. Sell.
Supermarket Income Reit (SUPR) has acquired Sainsbury’s (SBRY) store in Hessle for £34m, excluding acquisition costs, reflecting a net initial yield of 5.5 per cent. It is being purchased with an unexpired lease term of 14 years and annual, upward-only, RPI-linked rent reviews. Included in the purchase price was an adjoining Homebase store comprising 21,000 sq/ft net sales area with an unexpired lease term of four years. Buy.
Avon Rubber (AVON) has appointed former Diploma (DPLM) chief executive Bruce Thomson as chair-designate with effect from 1 March 2020. Buy.
Gamma Communications (GAMA) announced last night that it is acquiring VozTelecom - a leading provider of IP telephony services in Spain - for about €25.3m (£21m). Gamma will fund this via its existing cash resources (£53.8m as at December). VozTelecom’s net debt as at December was around €5.2m, implying an enterprise value of €30.5m. Shares in Gamma were up by around 1.5 per cent this morning. Buy.
KEY STORIES:
Pendragon (PDG) has appointed a new chief executive with immediate effect. Bill Berman will take up the role, having served as a non-executive director on the board since April and interim executive chairman since October. He will remain chairman while the group recruits a non-executive chairman. Mr Berman previously served as president and chief operating officer of Autonation, America’s largest auto retailer.
OTHER COMPANY NEWS:
RPS (RPS) has seen its statutory pre-tax profit plunge from £41m to just £4.8m in 2019, weighed down by a £19.8m goodwill impairment on its Australian business. As described at the half year stage, state elections in Australia disrupted infrastructure spending while the federal election delayed the release of major defence projects. Meanwhile, adjusted operating profit from the consulting business in the UK and Ireland was broadly flat year-on-year at £15.1m as political uncertainty delayed clients’ investment decisions and hit higher margin business lines. Energy was the only division to grow during the year, with adjusted operating profit rising by over a fifth to £11.1m thanks to a recovery in oil and gas markets. Shares are down 14 per cent.
Strix (KETL) shares rose 8 per cent in morning trading after the provider of kettle safety controls and other water temperature management components released an update on coronavirus. Two-thirds of its workforce have now returned to its facility, which is near Guangzhou, while the company has no immediate concerns over its supply chain, given that more than 80 per cent are based near Guangzhou and were able to restart production last week.
