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News & Tips: Oil slumps, Aston Martin, Redrow & more

Equities are mixed after oil slumped again
April 20, 2020

The oil price slumped, leaving equities mixed with blue chips in London slipping but smaller companies posting small gains. Our Trader writer Neil Wilson says: 'European equities were tentatively higher early on Monday but really going nowhere fast right now without any new drivers. The FTSE 100 is attempting to secure the 5800 beachhead. Near-term support seen at 5600. The index is starting to look pretty range-bound after rallying hard off the lows. Direction will start to come as we get a clearer estimate of the economic damage, how quick the recover is and whether the stimulus efforts have prevented a 1930s-like depression.

Overnight, the Nikkei 225 closed down more than 1 per cent in a mixed Asian session after data showed Japan’s exports fell 11.7 per cent in March from a year earlier, while imports were down 5 per cent.' For Neil's full article, click here

IC TIP UPDATES: 

Aston Martin Lagonda’s (AML) received acceptances representing 98 per cent of new shares offered under its rights issue, announced at the end of March, with underwriters Morgan Stanley, Deutsche Bank and J.P. Morgan Cazenove procuring subscribers for the remaining 2 per cent. The 4-to-1 rights issue, which was accompanied by a £171m private placing of shares with Yew Tree Consortium - led by new executive chairman Lawrence Stroll - was part of a £536m fundraising package. Sell

Uranium-holding vehicle Yellow Cake (YCA) said the value of its U3O8 climbed 30 per cent between the start of 2020 and 17 April. Uranium is one of the few materials that has gained in recent months, as major producers Kazatomprom and Cameco had to suspend some operations because of Covid-19. Yellow Cake is trading at 230p per share, compared to its net asset value (as of 17 April) of 288p. Buy

Redrow (RDW) chief executive John Tutte has delayed plans to step-back and take up the role of non-executive chairman until November in light of the disruption caused by the Covid-9 outbreak. However, Mr Tutte still intends to retire from the board ahead of the 2021 AGM. The housebuilder also announced that it had been confirmed as an eligible issuer for the Covid Corporate Financing Facility with an issuer limit of £300m and concluded negotiations with banks to extend its revolving credit facility by £100m. Buy

KEY STORIES: 

Secure Income Reit (SIR) has initiated action to recover outstanding quarterly rent payments from Travelodge, a tenant that represents 6.4 per cent of its annual rent roll. The commercial landlord said discussions with the hotel chain’s senior management team had been ongoing for a number of weeks and they had yet to provide proposals for dealing with the amounts due, although had said a plan would be forthcoming. Given Travelodge is “owned by large, multinational investment businesses in Goldman Sachs, Avenue Capital and GoldenTree”, the group said, it was “disappointed and surprised that they have not yet presented a proposal”.

Having just announced a five-fold increase in first quarter revenues, derivatives trading platform Plus500 (PLUS) has again surprised investors today by announcing that chief executive Asaf Elimelech has resigned with immediate effect. He will continue in a transitional role alongside chief operating officer David Zruia, who takes up the post of interim CEO until a full-time replacement can be found. 

OTHER COMPANY NEWS: 

Premier Foods (PDF) has announced a “transformational” agreement with its pensions scheme, entailing the segregated merger of all of its schemes. The group said that the agreement could lead to the net present value (NPV) of pensions deficit contributions reducing from £300-320m by up to about 45 per cent – landing at £175-185m. At the same time, Premier Foods updated on trading amid the coronavirus pandemic. It experienced a dramatic short-term peak in volumes across many categories during March and, while those volumes have started to decline, they are expected to continue to be higher than normal as people eat more meals at home. For the year to 27 March, trading should be at the top end of market expectations.

Abcam (ABC) gave an update this morning on the impact of Covid-19, now expecting that revenues for FY2020 will be £14-16m lower than plan. In the last few days, it has seen the reopening of labs in some countries within Europe and a gradual increase in customer activity. But it can’t give accurate guidance on future sales until there is more clarity.  The group has net cash of about £80m, and a £200m revolving credit facility providing extra flexibility. 

According to The Sunday Times, IWG (IWG) is exploring selling and leasing back more than ten buildings to raise between £200m-250m to “ease its coronavirus cash crunch”. Amid global lockdown measures, flexible workspace providers have been coming under pressure. IWG has already cancelled its final 4.8p dividend declared for 2019 and suspended its share buyback programme. An update from 23 March indicated it had a £950m revolving credit facility.

Future (FUTR) has completed its purchase of magazine and digital publisher TI Media, the owner of 38 brands including Country Life and Woman & Home.  The CMA found in March that the purchase of TI Media did not raise competition concerns, subject to the sale of World Soccer, Amateur Photographer and technology website Trustedreviews.com. The group has therefore agreed the sales of World Soccer and Amateur Photographer to Kelsey Media, and Trustedreviews.com to Incisive Media. Future noted that yields from its digital advertising have fallen, but this has been offset by audience growth. TI Media however expects a ‘more significant’ impact from coronavirus, with UK newsstand revenues down by around 30 per cent since the start of lockdown in March.