MOVERS OF WEDNESDAY 27 JANUARY 2021

Francesca Morgan
Market Report
16:30, 27th January 2021

Greencore Group (GNC FOLLOW) shares ticked up 12.12% to 126.6p after ‘resilient’ first quarter 

Shares in the manufacturer of convenience foods in the UK were up today following yesterday’s trading update covering the 13 weeks to 25 December 2020 where the group reported a “resilient” first quarter performance despite “challenging” trading conditions. 

Group revenue fell 15% year-on-year to £312.7m in the 13 weeks to 25 December 2020, as consumers stayed at home because of tiered restrictions and lockdowns during the period. 

Nevertheless, the company said it has focused on cost and cash flow mitigants to protect the business, which supported the delivery of positive profit and Adjusted EBITDA. 

“Although the difficult trading conditions are likely to persist in the near term, we remain confident that demand for our food to go categories will recover strongly as the effects of COVID-19 recede and mobility restrictions are removed,” said CEO, Patrick Coveney. 

Greencore will report its H1 21 results on 25 May 2021. 

GNC price chart

88 Energy (88E FOLLOW) shares rose 27.38% to 0.535p as it prepares to restart operations at Merlin-1  

Shares in the London-listed Alaskan-based explorer rose as much as 38.10% this morning to 0.58p after the group released an operations update detailing that field operations for the Merlin-1 exploration well are expected to re-commence in Alaska ‘in the next few days’. 

The news follows a six day delay after President Joe Biden signed an executive order placing a temporary moratorium on oil and gas activity in the Arctic National Wildlife Refuge.  

Nevertheless 88E said it has now received indication from the Bureau of Land Management ("BLM") that its permit is very close to being complete with only minor outstanding items. 

88E said it expects the process to be finalised by Thursday. Managing Director, Dave Wall, said, "We are fortunate to have strong local support in Alaska and, as a result, will soon be back on track for the drilling of Merlin-1, commencing in late February / early March 2021." 

88E price chart

IDE Group Holdings (IDE FOLLOW) shares continue to hold, rising 26.47% to 2.15p  

Shares continue to trade solidly following a jump in value after the cloud and IT managed services provider signed a significant new contract with an existing customer last month. 

The London-listed group said the existing partner, whose name remains undisclosed, had committed to procure services from IDE to a value of £22.5m over the next three years with the opportunity to extend for up to another two years if the commitment is not met.  

IDE said the contract - which adds £22.5m to the existing c.£5m per annum of revenue - was awarded ‘based on the excellent service provided by IDE’ to the partner over the years ‘with a commitment from IDE to reduce the cost of services across the partner's customer base.’  

At the time, Andy Parker, Non-Executive Chairman, said the contract win “further enhances” IDE’s existing relationship and is a testament to the “excellent services” provided by IDE.  

IDE price chart

Scapa Group (SCPA FOLLOW) shares were up 25.99% to 222.75p with £403m takeover offer  

Shares in the healthcare and industrial company jumped on Wednesday afternoon after receiving a takeover offer from US group Schweitzer-Maudit International (NYSE:SWM). 

Schweitzer-Mauduit said it has agreed to acquire Scapa Group or 210p per share in cash, an 18.6% premium to yesterday's closing price, valuing the company at around £403 million. 

SWM said it believes the acquisition of Scapa presents “an attractive opportunity” and that a merged entity will hold “significant capabilities and scale in the advanced materials segment” as well as a $250 million healthcare portfolio. 

The combined company is expected to generate annual revenues of approximately $1.5 billion with operations in over 80 countries, with expanding markets in AMS accounting for approximately 65 per cent. (approaching $1 billion) of annualised group revenues.  

SCPA price chart

AO World (AO.FOLLOW) shares fell 7.65% to 302p after warning investors of higher costs 

Shares in the electrical retailer have lost 20% in value since the beginning of the month.  

Despite a recent positive trading update highlighting a ‘significant increase’ in demand, AO incurred ‘significantly higher costs’ as it negotiated some of the operational challenges of working in a Covid compliant environment, particularly in the reverse supply chain, it noted. 

‘We have also seen a slightly increased rate of cancellation of individual consumers' long-term contracts in mobile and warranties, driven by Covid impacts on customers behaviour,’  

"This is AO World’s moment to shine given that the online market has seen a structural shift that could be permanent by consumers," Analysts at Shore Capital said in a research note. 

It added, "We note the outlook statement but also highlight both the increased Covid operating costs and infrastructure developments to further increase capacity.  

AO World has had a great run and clearly is another Covid winner and whilst the sales momentum continues, we also note the increased operating costs. 

The big challenge will be whether the revenue momentum can continue during (the first quarter of) 2022 given the tough comparatives that the business will start cycling." 

AO. price chart

 

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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