Equities in London continued to fall in morning trading as investor sentiment wanes. Our Trader writer Neil Wilson says: 'Stocks turned broadly weaker yesterday as investors reacted to some stinky data from Europe and the US. Overnight Asian data has also had the whiff of soft cheese that’s been left out too long. Stocks are softer once more, though most of Europe is on holiday so the focus is on London until New York opens.' For Neil's full article, click here. To find out what our wider team make of the potential ripple effect of the coronavirus crisis on banks and property and Phil Oakley's latest thoughts, listen in to our weekly Investment Hour podcast.
IC TIP UPDATES:
Frontier Developments (FDEV) has secured an exclusive IP licence from Games Workshop (GAW) to develop and publish a Warhammer game on PC, console and streaming platforms for release in its 2023 financial year. Management noted that it has seen an increase in demand for its products, starting in China from February and in much of the rest of the world from March. It therefore expects revenue to come in towards the top of its previously stated range of £65-73m for its current financial year ending May 2020. Buy.
KEY STORIES:
Ryanair (RYA) expects to record a first quarter net loss of more than €100m, with even more losses in the following quarter. The airline expects the recovery of passenger demand and pricing to take two years and will make up to 3,000 job cuts.
Shares in the Royal Bank of Scotland (RBS) are up this morning, after the state-backed lender’s first quarter results revealed a lower impairment charge than its domestic peers. Management put its £802m impairment down to limited exposure to unsecured lending, an absence of major one-off corporate losses and an “economic scenario overlay” which includes large falls in employment, GDP and house prices. Crisis lending has prioritised existing corporates and generally staved off defaults to date, though chief executive Alison Rose warned that “clearly not every business is going to be able to survive this period”. Separately, the bank has decided to can its expensive Monzo-like payment card experiment Bó, half a year after its launch, after attracting just 11,000 customers.
OTHER COMPANY NEWS:
Breedon (BREE) says the majority of its sites are closed with more than 80 per cent of employees in the UK furloughed or on temporary lay-off in Ireland with full pay. The group plans to progressively open some of its sites in the coming weeks where customer demand is supportive, including returning to clinker production at its two cement plants this month. As at 30 April, Breedon had £79m of cash and an uncommitted borrowing facility of £222m – this is up from £60m and £220m on 25 March. Its banks have agreed to relax their June 2020 lending covenants and the group has deferred £35m of loan amortisation to April 2022.
The drama is starting up again at guarantor lender Amigo Holdings (AMGO). After notifying his intention to sack the entire board earlier this week, majority shareholder and founder James Benamor has proposed two directors and ordered the company to post a notice of general meeting before 20 May.
Juan Colombás, Lloyds Banking Group’s (LLOY) chief operating officer, has agreed to delay his retirement by two months September, so he can “continue playing a key role in the group's response to the Covid-19 crisis”.
