FTSE 100 up despite expectations of tax hike

Liam Roche
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FTSE 100 up despite expectations of tax hike

After lunchtime on Thursday the FTSE 100 was up by 0.35% despite news emerging of an oncoming tax rise. The index stands at 6,821.21 points as investors’ faith in the vaccine holds steady.

In an effort to restore the country’s finances, UK Chancellor, Rishi Sunak has hinted at an oncoming tax hike akin to the policies of Joe Biden. “It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” the Chancellor said.

FTSE 100 Top Movers

DS Smith (6.68%), Evraz (5.33%) and Anglo American (4.43%) all made significant gains as the top three risers on the FTSE 100. 

At the bottom end, Standard Chartered (-5.96%), Hikma Pharmaceuticals (-5.25%) and Polymetal International (-2.21%) are the day’s biggest fallers on early afternoon trading.

Standard Chartered

Standard Chartered will reinstate its dividend this year despite seeing a significant fall in its pre-tax profit. The bank also unveiled plans to significantly reduce its office space over 2021.

BAE Systems

BAE Systems, the FTSE 100 aerospace company, posted “strong” results on Thursday morning, announcing a 4% increase in sales over 2020, up to £21bn.

The company’s revenue rose to £19.3bn from £18.3bn, while operating profit climbed to £1.9bn. The underlying earnings per share is now at 46.8p.

Seeking out deep value with Miton Global Opportunities

Liam Roche
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0
Seeking out deep value with Miton Global Opportunities

Miton Global Opportunities

Founded in 2004, Miton Global Opportunities (LON:MIGO) has evolved to become a deep value and special situations fund. The fund’s aim is to buy discounted investment trusts that have a “catalyst for change”. Miton Global offers a diversified fund with a range of geographical locations and a variety of assets, including equities (37.7%), private equities (22.7%), property (17.8%) and mining (13.9%). The company sets itself apart by avoiding mainstream markets, instead seeking to buy esoteric, overlooked assets.

Buying trusts at a discount

Miton Global Opportunities aims to buy companies where the NAV (net asset value) both exceeds the share price and is growing over time. This can be achieved in a number of ways. For example, an asset class coming back into favour, or a company employing a new leadership team. One of Miton Global’s key strategies is to target the acquisition of assets worth £1 for as little as 70p.

In 2017, Miton Global Opportunities purchased Ecofin Global Utilities & Infrastructure Trust when its NAV exceeded its share price by over 10%. Due to poor performance levels by the management team, a discount had been created. A new management team was then appointed and became a “catalyst for change”, turning around the company’s prospects. New investors were found, narrowing the NAV discount, while the NAV rose by 23%. In January 2020 Miton Global sold and reaped the benefits.

Miton Global Opportunities Top 12 Holdings

Top 12 stocks Weight (%)Discount (%)
Baker Steel Resources Trust7.6-14.0
River & Mercantile UK Micro Investment5.6-9.4
Epe Special Opportunities5.2-39.1
Alpha Real Trust5.0-25.6
Dunedin Enterprise4.8-23.3
Vinacapital Vietnam Opportunity Fund4.8-8.5
Phoenix Spree Deutschland4.2-32.0
Atlantis Japan Growth Fund4.0-6.2
Third Point Offshore Investment3.7-22.0
Henderson Opport Trust3.4-8.5
Oakley Capital Investments3.3-27.5
New Star Investment Trust3.2-29.8
31/1/21

Performance

Over the past 12 months Miton Global Opportunities Trust’s share price has risen by 9.6% despite the pandemic, around the same level as its NAV. Over a five year period, the trust has seen a 95.9% increase in the value of its share price.

Baker Steel, the specialist fund manager, which is Miton Global’s top holding at 7.9%, was the trust’s best performer in January, announcing a 29% increase in NAV. This capped off a promising start to the year for Miton Global which saw a 3.69% rise in the company’s share price in the last month. 

Year-to-date, the top performers on the Miton Global fund are Artemis Alpha Trust, VinaCapital Vietnam Opportunity and River and Mercantile UK Micro. While the losers so far have been Real Estate Investors, Duke Royalty and Macau Property Opportunities. 

The trust has a total of £86.6m worth of assets under management. 

Triple Point Social Housing REIT: high yield with a high social impact

Liam Roche
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Triple Point Social Housing REIT: high yield with a high social impact

Triple Point Social Housing REIT (LON:SOHO) was one of three organisations that presented investment opportunities at February’s UK Investor Magazine Virtual Investor Conference. 

High impact investment strategy

The trust’s aim is to allow investors to get a solid long-term return while having a positive impact on society. Their mission is geared towards addressing the ongoing housing crisis by investing in the UK social housing sector. The REIT supplies homes adapted to the needs of vulnerable adults who require long-term care and support. Triple Point Social Housing generates a long-term investment stream for investors from tenants whose rent is ultimately paid by the government. 

The Department for Work and Pensions funds housing benefits for individuals in specialised housing. The relevant local authority will pay both the core rent, along with the service and management fee, to an approved provider. The approved provider keeps the service and maintenance charge while passing the rent onto Triple Point Social Housing. 

“Often when it comes to investing, money sloshes about and has no real impact but here the money we raise and invest is having a tangible impact on society,” said investment director at Triple Point Social Housing, Freddie Cowper-Coles.

Secure income stream

The nature of government subsidised housing means Triple Point’s annualised income of £28m is on a secure foundation. 100% of rent payments were collected by the trust over the first half of 2020, proving to be unaffected by the pandemic. In addition, inflationary increases in housing benefit have been achieved. 

Value

Triple Point Social Housing is trading at a 2.55% market premium which reflects a positive sentiment around the portfolio’s underlying assets. 

The company’s current IFRS valuation at £510.3m means Triple Point Social Housing has earned a 7.25% uplift against investment of £476.1m. In addition, its portfolio premium valuation, the amount the company would achieve if it sold off all of its assets, is at £548.5m. SOHO is therefore significantly undervalued by its IFRS valuation.

Properties

The trust has funded 404 properties, housing 2,872 people. Triple Point Social Housing has a geographically diversified portfolio with properties in every region of the UK. 

Since its initial public offering SOHO has funded 22 construction projects, committing £56.2m.

Triple Point Social Housing dividend

Triple Point Social Housing’s target dividend is at 5.8p per share for the company’s upcoming financial report, which is around the same level as the previous two years. In 2018 and 2019 the company’s dividend yield was 5% and 5.7% respectively. 

Debt

The REIT used debt to leverage its portfolio, which is secured against properties Trust Point bought. The company’s debt stands at £185.1m. However, it appears to be at a manageable level with a gearing of 33.1% LTV.

BAE Systems poised for growth in 2021 with sales up to £19.3bn

Liam Roche
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BAE Systems poised for growth in 2021 with sales up to £19.3bn

BAE Systems confirms dividend payout for year at 23.7p

BAE Systems, the aerospace company, posted “strong” results on Thursday morning, announcing a 4% increase in sales over 2020, up to £21bn.

The company’s revenue rose to £19.3bn from £18.3bn, while operating profit climbed to £1.9bn. The underlying earnings per share is now at 46.8p.

BAE Systems announced a final dividend of 14.3p per share, bringing the total payout for the year up to 23.7p per share. This is down from a total dividend payout of 37.5p per share for 2019.

Despite a slight dip due to the pandemic, demand for defence has proved resilient, according to Neil Shah, director of research at Edison Group.

“Whilst the company reported a small drop in its recent orders compared to 2019, BAE Systems has indicated that its order backlog is already 80% full. And, boosted by 2020’s £1.7-billion acquisition of Ratheon’s Airborne Tactical Radios and Military GPS, the company expects that sales in its higher-margin air and electronic systems will continue to offset the disruption in its commercial aircraft business and provide sales and underlying profit growth of 3-5% and 6-8% respectively,” said Shah.

Shah’s outlook beyond Covid-19 is positive for BAE Systems, specifically as a proposition for investors. 

“Consequently, BAE systems appears to be poised for appreciable growth as the global economy returns to some sense of normality post-Covid, and, after a bleak year for traditional UK equity income strategies, the stock should be an especially attractive proposition for investors looking for secure dividend pay-outs.”

BAE Systems’ share price is up by 0.93% to 500.6p since Thursday’s open. Year-to-date the company’s share value is up marginally from 493.9p per share. 

Charles Woodburn, chief executive at BAE Systems, commented on the groups results:

“Thanks to the outstanding efforts of our employees and close cooperation with our customers, suppliers and trades unions, we have delivered a strong set of results against a challenging backdrop of the global pandemic. Throughout 2020, we focused on keeping our people safe and supporting our communities, whilst continuing to deliver for our customers,” Woodburn said. 

“In 2021, we will continue to drive operational performance, progress our sustainability agenda and invest in high-end discriminating technologies to meet our customers’ priorities, which will ensure we are well positioned to grow the business and contribute to the economic prosperity of the countries in which we operate.”

St James’s Place to reduce staff following fall in profit

Liam Roche
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St James’s Place to reduce staff following fall in profit

St James’s Place has a record £129.3bn worth of funds under management

St James’s Place reported a “robust” performance as the wealth management company reinstated its dividend. 

The company’s cash income took a hit as St James’s Place confirmed around 200 jobs will be lost during the pandemic. 

Operating profit fell by £33m to £919m while the underlying cash result was £264.6m against £273.1m in 2019. 

St James’s Place confirmed it now had a record £129.3bn worth of funds under management in 2020, up from £117bn the year before. 

The board confirmed a dividend for 2020 of 38.49p per share. This follows the company’s decision to withhold the final 2019 dividend due to the pandemic. 

An hour into morning trading the company’s share price was up 0.65% to 1,236p per share. Since the beginning of the year the wealth management group has seen just under a 100p rise in its share price from 1,143p on January 4. 

The wealth management group also revealed steps to streamline the business to ensure it is “agile and dynamic” moving forward. The measures to be taken during 2021 will lead to the loss of around 200 jobs. 

Andrew Croft, chief executive of St James’s Place, outlined the company’s strategy during the pandemic.

“Our operations and performance during 2020 were inevitably disrupted by the lockdowns and social distancing. However I am very pleased to report that our business has demonstrated real resilience and made further progress with net inflows of £8.2 billion for the year and funds under management closing at a record £129.3 billion. This outcome was possible because of high client engagement levels, our recent major investment in technology platforms, and the agility of our advisers and employees. Overall, I am very pleased with both our new business and financial results for 2020,” Croft said.

“At the outset of the pandemic the Board made the difficult decision to withhold 11.22 pence of the 2019 final dividend, until such time when the financial and economic impact of COVID-19 became clearer. I am pleased to report that we have not needed to utilise those funds and, whilst the pandemic is still on-going, we now have the confidence to pay this withheld amount as a further interim dividend during the first quarter.”

Standard Chartered to reinstate dividend despite fall in profit

Liam Roche
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0
Standard Chartered to reinstate dividend despite fall in profit

Standard Chartered to cut office space in coming years

Standard Chartered (LON:STAN) will reinstate its dividend this year despite seeing a significant fall in its pre-tax profit.

The bank also unveiled plans to significantly reduce its office space over 2021. 

Standard Chartered confirmed it will payout a dividend of 9p per share having been stopped from doing so by the Bank of England last year. The bank will also buyback shares worth $254m (£179m) in the coming year.

The announcement came despite the banking company’s pre-tax profit falling by 57% to $1.6bn. This figure is down from $3.7bn the year before. 

The fall in Standard Chartered’s profit can be put down in part to its significant credit impairment of $2.3bn, up by $1.4bn the year before, due to the pandemic. 

The bank has also announced plans to cut its office space by a third in the next three to four years.

Standard Chartered’s share price dropped by 4.77% on early Thursday morning trading to 485.1p following the results being announced. Since the beginning of the year the share price is up from 463.4p following a spike in early January.

Bill Winters, chief executive of Standard Chartered, acknowledged the difficulties faced by the bank in 2020. “We are weathering the health crisis and geopolitical tensions very well, our strategic transformation continues to progress and our outlook is bright. We remain strong and profitable, although returns in 2020 were clearly impacted by higher provisions, reduced economic activity and low interest rates, in each case the result of COVID-19,” Winters said

Winters remains optimistic over Standard Chartered’s exposure across the world ahead of an anticipated recovery.

“I am proud of the way our colleagues around the world have responded to the challenges of the pandemic by supporting each other, our communities and our clients. Looking ahead, our unique exposure to the most dynamic markets in the world puts us in a great position to benefit from the clear signs of recovery there.”

Standard Chartered results follow a string of announcements by the UK’s major banks – Lloyds, Barclays, HSBC, Natwest – as drops in revenue and the reappearance of dividends are a reoccurring theme.

Pound keeps climbing against the dollar and the euro

Liam Roche
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0
Pound keeps climbing against the dollar and the euro

Pound at $1.42 on Wednesday before retreating

The pound reached $1.42 on Wednesday, building on the UK currency’s ongoing surge.

While Boris Johnson’s roadmap out of lockdown hardly inspired eagerness within investors, it appears to have laid the foundations for a positive outlook.

The pound edged past $1.411 yesterday, its highest level in nearly three years, in a show of continued optimism surrounding the UK economy.

Michael Brown, senior market analyst at CaxtonFX, pondered over the cause of the the pound’s movements against the dollar. 

“In something of a parabolic move, cable jumped above the 1.42 handle, testing the bottom of the aforementioned double-top region. The move, seemingly driven by significant GBP demand with little news behind it, confirms that region as the next key resistance,” Brown said. 

The pound also strengthened against the euro, up to €1.17, a one-year high, before falling back to €1.16. 

This follows a heavy fall in the value of the pound in the lead up to an anticipated ‘hard Brexit’ from the European Union.

Simon French, chief economist at Panmure Gordon, said: “Brexit has given international investors an excuse since 2016 to reduce their holdings in sterling. As the UK progresses through 2021 it is likely to see more stability in its relationship with the EU as adjustment frictions begin to dissipate. This should translate to a greater upside for the pound against the euro than than against the dollar in our view.

Labour data also emerged this week, surpassing expectations. The claimant count dropped by 20,000, again better than expected, in a “tentative” sign that the UK labour market market is stabilising, according to Jonathan Athow, deputy national statistician at the ONS commented.

GRIT Real Estate Income Group virtual investor presentation 23rd February

UK Investor Magazine
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GRIT Real Estate Income Group virtual investor presentation 23rd February

Grit Real Estate Income Group is a leading pan-African real estate company focused on investing in and actively managing a diversified portfolio of assets in carefully selected African countries (excluding South Africa).

Particular attention is paid to the breakdown of the GRIT portfolio by sector, including insightful discussion around the retail sector and how Africa’s retail sector is adapting to online retailing.

Grit has its primary listing on the premium segment of London Stock Exchange main market (LSE: GR1T).

Download presentation slides here.

Novacyt share price jumps following R&D update

Liam Roche
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0
Novacyt share price jumps following R&D update

Novacyt to expand its product portfolio

Novacyt (AIM:NCYT), the specialist in clinical diagnostics, saw a 3% jump in its share price on Wednesday after the company provided an update on the progress of its research and development programmes. 

With a Novacyt share price of 704.59p, Novacyt confirmed the expansion of its product portfolio, clinical trial activity and the publication of independent validation of the company’s Covid-19 tests.

The announcement is positive news for Novacyt shareholders after shares in the company dropped by over 40% in the last month.

Novacyt will look to address the rapidly evolving diagnostics market by expanding its Covid-19 portfolio to include a range of tests, with the aim of targeting new variants at a faster speed. 

The company also confirmed it has successfully completed a clinical trial of rapid testing in care homes at Queen Mary University of London, as well as initiating the variant diagnostic surveillance study in the UK, US and Latin America.

Graham Mullis, chief executive of Novacyt, reasserted the company’s focus, while confirming upcoming announcements regarding long-term plans.  

“Novacyt remains focused on leveraging its innovative reputation and position in the rapidly changing COVID-19 testing market to continue to deliver value and support clinicians and laboratories in a global setting,” said Mullis. 

“Of note, following its launch, our PROmate™ test has been well received by users and opens up new opportunities for rapid PCR testing, including in private testing markets. In addition, we look forward to presenting exciting long-term plans for Novacyt during Q2 this year as we continue to define our strategy for delivering sustainable, long- term growth.”

Novacyt shares jumped more than 45% in March after it received approval from the U.S. Food & Drug Administration (FDA) for it’s COVID-19 testing kits.

UK banking shares: income attractiveness returns

UK Investor Magazine
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UK banking shares: income attractiveness returns

Alan Green joins the UK Investor Magazine Podcast to discuss the latest developments from UK banks.

Many UK banks have resumed paying dividends after the Bank of England eased restrictions on payouts by financial institutions. Natwest Group, Barclays, HSBC and Lloyds have announced payments with Lloyds paying 0.57p dividend per share after a drop in profits to £1.2bn.

We question whether income investors can expect more from UK banks or do the risks around competition from new entrants and ongoing economic strive will cap payouts.

We also discuss Mode (LON:MODE), Blue Star Capital (LON:BLU) and British Honey (LON:BHC).

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