600 Group share price surges on positive trading update

Liam Roche
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600 Group share price surges on positive trading update

600 Group’s order book increased by 70% during March

600 Group’s (LON:SIXH) share price soared by 28.8% on Thursday, closing at 11.27p per share, following a positive trading update.

The machine industry company said it expects its revenue to fall by 20% to $53m due to the impact of the coronavirus pandemic.

Despite this reduction in revenues, the firm expects to report underlying EBIT of approximately $2.5m for the full year due to the implementation of operational cost savings and government assistance programmes.

The performance surpassed the AIM-listed company’s expectations, and a robust increase in activity during March, means the order book increased by 70% from the previous year to $14m.

So far in April, 600 Group has received another $4m worth of orders.

The improvement in the order book, the company said in its statement, was helped by a good performance from the custom laser side of the business, which has higher margins.

Paul Dupee, group executive chairman, commented on 600 Group’s response to the Covid-19 crisis:

“The particularly strong order activity over the last two months, supported by a level of government assistance, has enabled the business to maintain its skilled workforce during the pandemic. This has allowed us to respond quickly to recent demand and significantly improve the size and quality of the Group’s orderbook, leaving the business well placed as markets improve.”

Facebook now running entirely on renewable energy

Liam Roche
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Facebook now running entirely on renewable energy

Facebook will aim to reach net-zero emissions across its entire “value chain” by 2030

Facebook (NASDAQ:FB) said on Thursday that it has reached its target of powering its worldwide operations from renewable energy.

The social networking company, founded by Mark Zuckerberg in 2004, confirmed it fell short of reaching its initial 2020 deadline.

Facebook will now expand its efforts on reaching net-zero emissions across its entire “value chain” by 2030. This includes suppliers as well as actives such as travel and employee commuting.

The Nasdaq-listed company first disclosed plans to push for 100% renewable energy in 2018 as major technology companies made efforts to offset their impacts on the environment. That was two years after the Paris Climate Accord which saw 143 countries make pledges to keep global temperatures below 2 degrees Celsius.

Facebook also confirmed an agreement to purchase renewable electricity from a power plant in India as part of a wider plan to become a supplier of green power in the country.

The social media giant said it will buy electricity from a 32Mw wind power project in southern Karnataka state run by partner CleanMax.

The deal is one of several projects that CleanMax are working on and India is one of Facebook’s largest markets in terms of its user base.

Power usage by data companies and also bitcoin mining and how it affects the world’s climate are becoming increasingly important issues for companies such as Facebook.

Data centres such as those used by Facebook use up as much as 1% of the world’s total energy.

Fellow FAANG stocks – Apple, Amazon and Google – as well as Microsoft, have all put forward respective climate targets and spent vast sums in an effort to eliminate carbon-emitting generation.

Pressure could come from investors not only to abide by ESG principles but to maintain growth and so it could be a fine balancing act for the companies.

Deliveroo expecting slowdown in growth as restrictions ease

Liam Roche
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Deliveroo expecting slowdown in growth as restrictions ease

Deliveroo shares trading at 256.8p

Deliveroo (LON:ROO) is expecting its current rate of growth to slowdown as the easing of lockdown restrictions comes into effect, while the food delivery company could not say by how much its sales will be impacted.

The recently listed firm conceded that it was difficulty to say how much its recent performance was a result of “special circumstances”.

The company said on Thursday via a trading statement that its current situation remains uncertain and could remain that way as it unclear precisely how lockdowns will be lifted.

Following its stock market debut at the end of March, when its share price slumped by 30%, Deliveroo is now trading at 256.8p per share.

“Troubled investors who backed Deliveroo at its IPO will have been keeping their fingers crossed for a bit of kangaroo action with the share price following its latest trading update. Alas there is no hopping forward on this news, despite impressive growth figures,” says Russ Mould, investment director at AJ Bell.

“Chief executive Will Shu has thrown cold water over earnings expectations, taking a cautious view because the company doesn’t know how easing of lockdown restrictions will affect trading,” Mould added.

Mould argues that there are two ways of viewing Deliveroo’s current predicament:

First, Deliveroo could see a drop in demand as more people are able to get out and about, particularly going out for meals rather than sitting at home waiting for the food delivery driver to arrive.”

“Second, the company has no doubt been told by its advisers that it is better to under-promise and over-deliver in the first year as a listed company. Deliveroo’s reputation has already been shattered because of the big share price drop straight after listing. It doesn’t want to risk another slump by being too aggressive with earnings guidance and failing to meet it,” Mould continued.

“We have a lot of work ahead of us to both grow the business over the long term, and to prove ourselves to the markets,” chief executive Will Shu was reported as saying by Reuters.

In Q1 to March 31, its orders soared by 114% to 71m with GTV up 130% £1.65bn from the year before.

Deliveroo also grew its monthly active customer base by 91% to 7.1m compared to the same period a year ago.

Rio Tinto Share Price: long-term outlook for iron ore price in double digits

Liam Roche
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Rio Tinto Share Price: long-term outlook for iron ore price in double digits

Rio Tinto Share Price

Rio Tinto’s share price (LON:RIO) is up by 2.96% on Thursday to 5,959p. It is a continuation of a recent trend for the mining company which has grown by 6% over the past month, although Rio remains down from its all-time high of 6191.7p in February 2021. After shareholders in the mining company received their $5.17 per share dividend today, they will be wondering whether the company, founded in Andalusia, Spain in 1873, remains a viable investment option.

Iron Ore

A month ago UK Investor Magazine reported that the Rio Tinto share price could be vulnerable to its overweight iron ore exposure. However, in recent days and over the past month the FTSE 100 company has continued to benefit from its reliance on the commodity.

Iron ore prices have been picking up again on tight near-term supply, helping to drive up Rio Tinto. Benchmark iron ore futures in China extended gains for the third session in a row, closing at the highest price in over a month. Deliveries from Australia and Brazil – two of China’s largest suppliers – dropped by 4m tonnes to 24m tonnes as of April 9 from the week before, according to data from Mysteel consultancy.

“Domestic demand and consumption driven by overseas economic recovery also helped sustain iron ore prices,” analysts with Huatai Futures wrote in a note.

However, while iron ore was the best performing commodity during 2020, these supply and demand factors may not last, which could cause the Rio Tinto price to come back down. While iron ore prices are way way above the levels seen a year ago, they have eased since hitting levels last seen in 2011 in early March.

Furthermore, Australia’s office of the chief economist says there are a number of factors causing downward pressure on prices over the coming months. Firstly, Brazilian output is expected to recover towards the end of 2021. While the Chinese government could be phasing out some of its stimulus measures, thereby reducing demand-side pressure on the price of iron ore.

Prices are expected to halve by the end of next year and then gradually decline to reach $72 a tonne in real terms by the end of 2026. In that case Rio’s upwards movements over the past month, and its massive growth since the beginning of the pandemic, could come into question.

EasyJet boss gives hope to British holidaymakers ahead of summer

Liam Roche
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EasyJet boss gives hope to British holidaymakers ahead of summer

EasyJet expecting to fly up to 20% of its 2019 capacity in the coming months to June this year

The CEO of EasyJet (LON:EZJ) has given hope to British people itching to go on holiday this summer.

The airline said that, on the basis of current travel restrictions, it was expecting to fly up to 20% of its 2019 capacity in the coming months to June this year, on the presumption being that “capacity levels will start to increase from late May onwards”.

The government has suggested that international travel will return from its target date of May 17, however it does not expect to confirm as such until early next month. In addition, travellers to “green list” countries will be required to undergo rapid Covid-19 tests .

The situation is less clear in Europe where the pandemic is less under control. Nonetheless, CEO of EasyJet, Johan Lundgren, expects all European countries to open to British travellers by mid-May. Lundgren added that his company continues to hold talks with the UK government “to ensure that the cost of the required testing is driven down so that it doesn’t risk turning back the clock and making travel too costly for some”.

In its half-year trading update the airline said that it is anticipating a loss before tax of £690-730m for the first half of the year, up to 31 March, slightly above its initial expectations.

As reported a month ago, the EasyJet share price climbed back to 1050p per share following a devastating period for the industry during the pandemic. As economies around the world opened up, the prospects of the travel industry following suit gave cause for hope for investors in airlines with depleted share prices.

THG posts sizeable loss but makes positive start to 2021

Liam Roche
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THG posts sizeable loss but makes positive start to 2021

THG sales jumped by 41% thanks to beauty and nutrition businesses

THG (LON:THG) (The Hut Group) posted a substantial loss for 2020 after baring the cost of more than £300m for share-based payments to staff, although the company said its trading in Q1 had surpassed its expectations.

Even prior to its flotation last September, equity participation for staff was commonplace, as most of the share plans have vested in full owing to the strong performance of the shares, which have jumped by 40% since listing.

Subsequently, the group booked a non-cash charge of £332m to reflect the value of the awards. In addition to the £105m impairment charge on assets held for sale, a £45m pre-exceptional profit wa turned into an operating loss. Sales rose by 41%, thanks in the most part to its core beauty and nutrition businesses.

Russel Pointon, director of consumer and media at Edison Group commented:

“Beauty and nutrition products helped THG return strong financials for the twelve months ending December 31. Excluding non-cash and one off adjustments, the online retailer had underlying profits of £45.5m for the year as against £33.5m over the course of 2019. It also registered growth across all divisions of the company. This has continued in Q1 2021 with revenue growth up 58.2% on 2020.”

“These figures paint an encouraging picture for the future, despite the fact that lockdowns ending will mean increased competition from brick and mortar retail. But what really catches the eye is the ICON studios the company will be shortly opening up. Based in Manchester, it will be the largest content studio to propel the group’s status as a global leader in the influencer marketing space – it will put the retailer one step ahead of major competition in the push to make online retail more exciting,” Pointon said.

THG, based in Manchester said it was too early in the year to change its forecast for the full-year, but the firm is more confident in its existing guidance of 30-35% revenue growth.

The chief executive of THG will also hand a £100m stake in the company to a new charitable foundation.

“Alongside founder Matt Holding’s substantial £100m share contribution to charity, the broader firm also strengthened its ESG credentials with the launch in 2020 of THG (eco), which includes a scheme whereby the packaging from beauty products can be returned at no extra cost and recycled, thus cutting down on plastic waste,” Pointon added.

THG began trading on the London Stock Exchange in September 2020, raising £1.88bn in the largest UK initial public offering (IPO) since 2015.

FTSE 100 returns to pre-pandemic levels

Liam Roche
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FTSE 100 returns to pre-pandemic levels

The UK markets opened strong on Thursday morning, though it was still a relatively quiet start to the session. Adding another 0.3%, the FTSE 100 found its way back to the pre-pandemic levels struck at the tail end of last week.

The FTSE 250 fared even better, climbing half a percent to 22,450 – that’s around 20 points off last Thursday’s closing record, and 140 points short of yesterday’s intraday peak.

“Following its disastrous debut a couple of weeks ago, Deliveroo delivered its first figures as a tradable entity on Thursday. And they were good, with a 114% increase in Q1 orders year-on-year to 71 million, and a 130% surge in the gross transaction value (GTV) to £1.65 billion,” said Connor Campbell, financial analyst at Spreadex.

“However, with lockdown easing, the company is set to enter a period of deceleration in growth, warning that for the year GTV is expected to climb between 30% and 40% – between a quarter and a third of what it managed in Q1,” Campbell added.

Elsewhere the Eurozone indices weren’t quite as lively. The DAX approached 15,250 as it rose 0.2%, but with the IBEX up just 0.1%, and the CAC unchanged at 6,215.

As for the US open, after missing out on a closing all-time high last night, the Dow Jones is set to be back in the hunt this Thursday. Currently the futures have the index heading for a 0.4%, 120-point, rise, pushing it above 33,860.

FTSE 100

Berkley Group (2.16%), Entain (1.98%) and Kingfisher (1.81%) made the most ground on the UK index in the morning session on Thursday.

While Legal and General (-3.84%), St James’s Place (-2.56%) and Standard Life Aberdeen (-1.72%) are the biggest fallers.

Entain

Entain, owner of Ladbrokes and Coral, has confirmed its revenue fell during Q1 as the closure of its betting shops outweighed an increase in online revenue.

While the FTSE 100 company’s net gaming revenue rose by a third during the first quarter ending on 31 March, its 21st consecutive quarter of digital growth, the firm’s overall revenue fell by 13%.

Wizz Air predicting gradual recovery of travel into late summer

Liam Roche
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Wizz Air predicting gradual recovery of travel into late summer

Wizz Air will not give financial guidance due to uncertainty

Wizz Air (LON:WIZZ), the low budget Hungarian airline, has said that it expects flying would recover gradually and towards the end of the summer as the industry remains constrained by the pandemic.

The FTSE 250 company said via a trading statement on Thursday that the speed of the recovery in the industry would pick up as national vaccination roll-outs were progressing in its core markets, which include Hungary, the UK, Poland and Italy.

There was discontent within the airline industry last week when the UK government did not confirm exactly when travel could resume nor which countries would be placed on its green list of low-risk destinations.

The airline said it would not be able to give financial guidance due to the ongoing certainty.

“The start of the year ending 31st March 2022 continues to be marked by travel restrictions across our region and we expect only a gradual traffic recovery into late summer 2021,” Wizz said.

For the full year ending on March 2021, Wizz said it would report an underlying loss of between €475m and €495m. The company is set to report the results on June 2.

The airline has cash reserves of €1.615bn and said it would be able to survive for years without flying.

Wizz spent €87m in the three months to the end of March as the company continues its focus on reducing costs.

The Wizz air share price is down by 0.53% on early morning trading to 4,839p.

Declaring the conclusions of the Global Travel Taskforce set up by the government to examine how leisure travel could be reopened safely after lockdown, Mr Shapps said foreign holidays would resume on 17 May at the earliest.

He told the BBC: “This is the first time I’m able to come on and say I’m not advising against booking foreign holidays.”

“But for the first time I think there is light at the end of the tunnel and we’ll be able to restart international travel, including cruises by the way, in a safe and secure way, knowing about the vaccinations, everything we know about the disease this year, and of course that abundance of caution – having the tests in place.”

Lockdowns hold Entain back despite surge in online gambling

Liam Roche
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Lockdowns hold Entain back despite surge in online gambling

Betting shops reopened on Monday following prolonged closures

Entain (LON:ENT), owner of Ladbrokes, has confirmed its revenue fell during Q1 as the closure of its betting shops outweighed an increase in online revenue.

While the FTSE 100 company’s net gaming revenue rose by a third during the first quarter ending on 31 March, its 21st consecutive quarter of digital growth, the firm’s overall revenue fell by 13%.

Entain’s storm, which includes Coral as well as Ladbrokes, have remained closed from January to March as a result of lockdowns in the UK.

Harry Barnick, senior analyst at Third Bridge commented on Entain’s results and outlook:

“With betting shops now open in the UK, Entain’s ability to capitalise on the barnstorming summer of sport will be viewed as essential to retail revenue recovery.”

“Investor sentiment will remain cautious whilst the Gambling Act review is underway in the UK. This could lead to major revenue declines in the online channel as strict restrictions are placed on stake limits”.

“The US market has grown faster than punters might have expected. Entain’s future growth now hinges on its ability to gain market share in this region. This will pose a significant challenge given the strong competition from DraftKings and FanDuel.”

Jette Nygaard-Andersen, chief executive of Entain, commented on what she described as a strange year while looking forward to normality when shops reopen.

“This has been another very successful and productive quarter with Entain making excellent progress across a number of our strategic priorities. This is testament to the hard work and dedication of our people across all aspects of our business. I am delighted that they will now have the opportunity to share in the future success of Entain through our new Share Save plan,” she said.

“We saw excellent growth across all our major markets other than Germany where regulatory changes have impacted the market. BetMGM continues to exhibit outstanding momentum with impressive market share growth. Our acquisitions of Bet.pt and Enlabs underpin further progress on our strategic expansion into new regulated markets.” 

“With some easing of Covid restrictions, we are delighted to be welcoming customers back into our shops. While it has only been a handful of days since the re-opening in parts of the UK on the 12 April, we look forward to returning to more normal trading across our whole business.”

Entain rejected a takeover approach from MGM Resorts International, its US partner, in January. MGM walked away after Entain said the proposal significantly undervalued its prospects.

Betting shops were allowed to open as of Monday this week following the prolonged closures.

Entain’s share price is up by 1.33% to 1,628p at 08:26 GMT.

New standard listing: Mast Energy Developments

Andrew Hore
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New standard listing: Mast Energy Developments

Reserve power will be increasingly important to the UK as the country becomes more dependent on renewable energy sources. The phasing out of coal-fired generation and reduced capacity for other baseload generation has left a requirement for flexible generation distributed around the electricity grid in order to cope with the intermittent electricity generation from wind and solar.
This will require significant capital investment over the next decade. Mast Energy Developments (LON:MAST) intends to develop a portfolio of reserve power assets. The first projects should be up and running this year...

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