The Mail 12/02/19 - Vox Markets | Vox Markets

The Mail 12/02/19

TUI AG Reg Shs (DI) (TUI) shares fell today after the holiday company reported its losses widened in the first quarter. Like its competitors, Tui blamed unusually warm weather over the summer and a weaker pound for the loss, which rose to €111.9million in the three months to the end of December, from €68.3million a year earlier. Most losses came from its tour operator business and airlines, but this was partly offset by profits in its cruises division and holiday ‘experiences’.However, Tui, which slashed its annual profit forecast just last week, said its growth strategy is still ‘intact’, and anticipates profits to be largely stable in 2019. Turnover in the quarter rose 4.4% to €3.7billion.

Debenhams (DEB) shares jumped this morning after the struggling department store secured an extra £40million of funding from its lenders. The cash injection is a temporary reprieve that should cover a major rent payment due on March 25. The company said this new 12-month credit facility will allow it to continue trading while it works out a longer-term refinancing and recapitalisation package.

Shares in Plus500 Ltd (DI) (PLUS) lost nearly a third of their value today after the Israel-based online trader issued a profit warning. Plus500, which benefited from the craze for bitcoin and other cryptocurrencies, has now warned that this year’s profits will be ‘materially lower’ than City forecasts. This is largely due to an EU crackdown on so-called contracts for difference (CFD) products, which account for a big chunk of its turnover. The firm has allowed traders to gamble on whether bitcoin prices will rise or fall since 2013, but demand took off a couple of years ago amid frenzied interest. As a result, shares in AIM-listed Plus500 have gone from strength to strength, rising from 390p at the start of 2017 to an all-time high of 2040p in August last year. But they have been in decline since, and today crashed by nearly 33% to 1,099p.

Selfridges will shell out £17.4million on business rates for its flagship shop in Oxford Street this year – almost triple what it paid in 2018. The upmarket department store is one of 8,000 properties in London’s West End braced for a £45million hike to their combined rates bill for 2019/20. Burberry’s store on New Bond Street will suffer one of the biggest increases, with its bill soaring from £935,770 to £2.6million, according to property consultant Altus Group.Meanwhile, the rates contribution for Debenhams’ Oxford Street shop will hit £5.4million – a 60 per cent rise on a year earlier. The department store group is scrambling with lenders to secure a lifeline and stave off collapse. Bosses have blamed rising costs, including business rates, for contributing to its troubles.

British Airways’ owner has blocked investors outside the European Union from buying its shares – sparking fears UK traders could also be frozen out after Brexit. International Consolidated Airlines Group SA (CDI) (IAG) announced last night that it has capped the maximum number of its shares that can be held by non-EU investors at 47.5% and that this threshold has been reached. It means IAG will prevent any investor from outside the EU from buying shares. Any investor who does acquire shares will have voting rights removed and be forced to sell them within ten days. A spokesman said: ‘There can be no assurance as to when, or if, the permitted maximum will be removed.’ Under EU rules, airlines must prove they are 50% EU-owned to have flying rights within the bloc. Last month, EasyJet increased the cap on ownership by non-EU investors to 49%. IAG, which also owns Iberia, Vueling and Aer Lingus, insisted it had no plans to freeze out UK shareholders after Brexit, but said it would inform investors if this changed. But analysts warned that the announcement demonstrated the amount of work needed to be done to protect British shareholders after leaving the EU.

A long-standing Barclays (BARC) shareholder has blasted US activist investor Edward Bramson’s plans to trim back the business’s investment bank. Bramson, who is chief executive of New York investment company Sherborne, last week confirmed that he is forcing the bank to hold a shareholder ballot at its annual meeting in May on his plan to become a non-executive director. Fund manager Richard Buxton, who has invested more than 3% of his Merian UK Alpha Fund in Barclays, said: ‘We have a holding in Sherborne, so Bramson does communicate with us and has come in to see us. ‘But we don’t agree with what he’s trying to do. The idea that this is the right moment to significantly downsize the investment bank is wrong. ‘We also think it’s wrong [to think] that if you were to do so, you would magically release vast amounts of capital to shareholders.’

Just Eat has again come under fire from 2 per cent shareholder Cat Rock Capital, which has called for a merger and complained about recent board appointments. The US hedge fund, which previously described the company as ‘the worst-performing public equity in online food delivery globally’, said Just Eat should merge with a ‘well-run industry peer’. The statement comes less than a month after the abrupt departure of boss Peter Plumb, who was forced out as his expansion plans ate into the company’s profits. The open letter by Cat Rock Capital reads: ‘Since Mr Plumb’s departure, we have attempted to work with the board constructively and privately to achieve the best possible outcome for all Just Eat (JE.) shareholders. ‘Unfortunately, recent developments have made it clear that the board is squarely on the path to repeat the serious mistakes that led to Mr Plumb’s appointment. ‘Cat Rock argues that a merger with a well-run industry peer would be a far better outcome for shareholders than relying on the board to choose a new CEO.’

Asda and Sainsbury (J) (SBRY) proposed £14billion merger is to be scrutinised by watchdogs for an additional two months. The Competition and Markets Authority has extended its deadline because it needs more time due to the deal’s complexity. It will deliver a final verdict on April 30 instead of March 5. Frozen food chain Iceland is believed to be considering making a grab for any stores the chains have to sell as part of the tie-up.

Petrofac Ltd. (PFC) faces a lawsuit from investors that is expected to be worth at least £400million. The legal action comes after the oilfield services firm’s former sales executive David Lufkin pleaded guilty last week in a Serious Fraud Office (SFO) case to handing out more than £39million in bribes to secure £3.4billion-worth of Middle East contracts. Litigation funder Innsworth and lawyers Keystone Law are getting ready to launch the case on behalf of institutional shareholders who say they have suffered significant losses on their investments in Petrofac since at least 2010.

Immersive virtual reality firm Immotion Group (IMMO) sees revenue surge into six figure. Immotion Group, which only joined AIM last summer, makes immersive virtual reality ‘pods’ and the content that goes with it. Customers can put on one of the Immotion headsets, sit in a pod or a racing car, for example, and take in experiences that range from rollercoaster rides to supercar racing right through to fighting alien invaders in space. The company, which is still a relative tiddler at £12million, also has an ‘edutainment’ – education and entertainment combined – divisionAs a small company pioneering a whole new field of entertainment there are financial and execution risks. But if Immotion delivers on its targets the potential upside from the current 6.5p share price look to be substantial.

Shares in Stride Gaming (STR) were in demand after the owner of Kitty Bingo effectively put itself up for sale. The price of 111p – after it climbed 7.3%, or 7.5p yesterday – values the business at around £83million. Floated in May 2015 at 132p, it raced to more than £3 before hitting reverse gear when it incurred fines for compliance failures. With around 11% of the £2.8billion-a-year online bingo market, the company should attract attention from the industry’s big wheels.

Deals are clearly on the agenda for Smith & Nephew (SN.), according to JP Morgan Cazenove, which recently had a sit-down with the top brass of the FTSE 100 med-tech giant. But a £2.3billion dart for US surgical instruments group Nuvasive looks unlikely, the investment bank reckons, addressing reports the two companies had held talks. However, analyst David Adlington and the team at JPMC think S&N still may be winding up to something quite ambitious on the takeover front. In a note to clients, they said: ‘Management clearly believe that, historically, the company has been too conservative on mergers and acquisitions and are planning to be more active going forward.’

Royal Dutch Shell ‘B’ (RDSB) is one of the top picks in the oil and gas sector for Barclays Capital. Barclays pointed out that investors can expect a 6% dividend yield (far better than keeping cash in a bank or building society), while the Anglo-Dutch giant has also pledged to buy back a slug of its own shares. Shell has seen its shares pick up real traction in the run-up to, and the aftermath, of its full-year results. Both it and BP benefited from the upturn in the value of a barrel of oil. In all, oil stocks have advanced around 19 per cent in the year to date, Barclays pointed out.

 

There was some pep in the step of investors in Futura Medical (FUM) as the shares rose a further 16.8%, or 3.12p, to 21.75p. Futura has developed a gel that acts quicker than Viagra and has fewer side-effects than the little blue pills.

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Mentioned in this post

BARC
Barclays
DEB
Debenhams
FUM
Futura Medical
IAG
International Consolidated Airlines Group SA (CDI)
IMMO
Immotion Group
JE.
Just Eat
PFC
Petrofac Ltd.
PLUS
Plus500 Ltd (DI)
RDSB
Royal Dutch Shell \'B\'
SBRY
Sainsbury (J)
SN.
Smith & Nephew
STR
Stride Gaming
TUI
TUI AG Reg Shs (DI)