Fishing tackle retailer Angling Direct (LON: ANG) has coped with the past year relatively well. Call and collect helped to bolster store sales and online demand soared.
In the year to January 2021, retail store sales were 15% higher at £32.3m, although that does include newly opened stores. Online sales were two-fifths higher at £35.3m, taking over as the larger generator of revenues. Overall revenues were 27% higher at £67.6m.
Angling Direct moved back into profit helped by improved gross margins. Pre-tax profit was £2.6m and there was £6.9m of cash generated from operations. However, it shou...
After a positive opening to the week for the Cineworld share price (LON:CINE), it dropped by 4.11% on Tuesday, down to 92.34p. It has lost a lot of ground from its highest point of the year of 122p, its level on 19 March. Since the turn of the year the Cineworld share price is up by 44% despite today’s retreat. This comes as the chain is reopening its cinemas in both the US and the UK in April and May respectively.
Cineworld Clashing with Major Investor
Ahead of its AGM on May 12, Cineworld is coming to blows with one of its major shareholders, Legal & General Investment Management (LGIM), as the firm announced its intention to vote against the re-election of the cinema chain’s incumbent chairman, in addition to its renumeration committee.
LGIM said in a statement that it has “strong concerns about the structure of the long-term incentive plan granted to the executives, and its misalignment with the long-term interests of the company, its shareholders and other stakeholders”.
“In particular, we note the impact of COVID-19 on the company’s financials and stakeholders, including furloughs for employees and the suspension of dividends. We also take into account the current social sensitivities around income inequality”, LGIM said.
The timing is not ideal for Cineworld as it looks to reopen its locations across the UK on May 17 in line with the government’s roadmap out of lockdown.
The Tesla share price closed 7% down yesterday as it was revealed the company’s sales fell in China during April while the electric vehicle manufacturer faced a PR crisis. If the stock falls again today it could reach its lowest point in two months, when Tesla crashed from $863 to $563 in the space of a month. It has been a testing year so far for Elon Musk’s company which is just under 11% down since the end of 2020. As investors turn away from high-valued growth stocks, and Tesla faces ongoing issues in China, now is an opportune time to analyse the stock’s present outlook.
Tesla Halts Plans to Buy Land in Shanghai
Elon Musk appeared to curry favour with China back in March in an effort to secure Tesla’s market position for the long-term. More recently the Nasdaq-listed company was exploring plans buy land to expand its Shanghai plant and make it a global export hub. However, according to reports by Reuters, the plan is no longer going ahead.
Tesla’s factory in Shanghai was built to produce up to 500,000 vehicles every year, and is currently manufacturing the Model Y and 3. According to sources close to Reuters, Tesla is, for now, not looking to boost China production capacity significantly.
Although its sales dropped during April, Tesla made $3bn in revenue in China during the first three months of this year, amounting to 30% of its overall revenue.
Subsequently, the stock fell 3.74% to $605.50 in premarket trading on Tuesday, while shares dipped by 6.44% in Monday’s tech selloff.
PR Issues in China
Tesla is in the midst of an ongoing and significant crisis of confidence in the car maker in China, a market seen as vital for the company’s long-term growth.
In April, a lady climbed onto a Tesla at an auto show to protest against the brakes of the cars not working in her car. The protest went viral on Chinese social networks and state media.
Chinese state media issued a firm disavowal of Tesla’s handling of the women in questions compensation demands.
“The arrogant and overbearing stance the company exhibited in front of the public is repugnant and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market,” the state-backed tabloid Global Times said in a separate opinion piece published Wednesday.
A significant portion of Tesla’s growth is coming from China, and the company’s continued success depends on this remaining so. As Elon Musk knows, if the Chinese people or government turn against Tesla, then it will face a major and immediate obstacle. Investors will do well to pay attention to Tesla’s progress in the country in an effort to maintain its meteoric success.
The BP share price (LON:BP) is down by 2.09% on Tuesday following a period of solid gains in April when it reached as high as 318.5p. The FTSE 100 oil giant’s upwards movement came alongside increases in the price of Brent crude oil and West Texas Intermediate. Over a longer period BP’s share performance holds up well. Since the beginning of the year its stock value is up by 21.4%. With the company’s much anticipated annual general meeting tomorrow, and its recent announcement of its intention to buy back shares, investors will be paying close attention.
Annual General Meeting
BP’s annual meeting is scheduled for tomorrow, Wednesday 12 May, when there will be calls for the oil giant to redo its carbon emissions plan to make more significant reductions which more closely follow the Paris Climate Accord. While BP’s aim is to slash its production by 40% by 2030 in line with its net-zero target, along with increasing its renewable capacity, its emissions are expected to rise over the same period of time.
There is controversy heading into the meeting as prominent investor group, Calpers, decided to vote against BP’s climate resolution.
BP has previously said that its plan is in keeping with the goals of the Paris Climate Accord, saying it “consistent with the Paris goals” and was a drastic shift from the past. It added: “Going back to the drawing board on strategy, targets and aims would disrupt our business plans” as it rallied its shareholders to vote against the resolution.
While redrawing its plans could negatively impact its financial future, not going further put off investors who want to see a commitment to action in emissions. Whatever the outcome it will be interesting to see the response from investors.
Reduced Debt and Share Buybacks
In an effort to impress investors, BP stated its commitment to buying back shares this year as the company reduced its debt levels quicker than anticipated. The news came as BP announced earlier this month that it expects to reach its $35bn net debt target in Q1 of 2021.
The estimate is a result of earlier-than-expected proceeds from disposals and a “very strong quarter”, the oil company said last week. At the end of 2020, BP had a debt pile of $39bn. The company previously expected to reduce its debt to $35bn by as late as 2022.
“With the acceleration of divestment proceeds, together with strong business performance and the recovery in the price environment, we generated strong cash flow and delivered on our net debt target around a year early,” said Bernard Looney, chief executive.
Air Partner (LSE: AIR) 82p Mkt Cap: £52m
Today, Air Partners reported a record set of finals to January 2021. It is the only listed air charter broker and aviation safety & security consultancy and benefited from Covid stimulated demand for its socially distanced Group Air Charter and extra for freight.
Its gross profits increased by 31.3% to £44.9m and due to operational leverage the PBT increased 176.2% to £11.6m, which was also supported by cost cutting measures. Founded in 1961, Air Partner is a diversified global avi...
Ark’s major holdings have seen dramatic falls in recent weeks
The Ark Innovation ETF is down to its lowest level since November and has lost 16.5% of its value since the beginning of the year.
Since February, when the $21bn fund hit an all-time-high, the fund has fallen by 33%.
The company’s major holdings have seen dramatic falls in recent weeks, including Tesla, which is down by 6.44% today alone.
Cathie Wood’s flagship fund aims for a thematic multi-cap exposure to innovation across sectors, while seeking long-term growth of capital. This has made it vulnerable to a broader slide of high-valued growth stocks. As the Financial Times reported, this has come about as inflationary pressures have lessened the appeal of businesses which will see profits arrive in the future.
“The sector rotation today is violent,” Ted Mortonson, a technology sector strategist at Baird, told the Financial Times.
“From a performance anxiety on the upside — a fear of missing out — this is now fear of getting killed.”
The fund also broke below its 200-day moving average, a long term moving average that helps determine the overall health of a stock.
“The issue with ARKK and other speculative growth ETFs is that short-term rallies have been aggressively faded for three months now,” Frank Cappelleri, Instinet executive director, told CNBC. “The ETF will have to do more than just bounce for a few days to convince traders otherwise.”
“In other words, simply getting back above the 200-day moving average won’t mean much without upside follow through. That continues to be the biggest concern,” Cappelleri added.
Increased speculation over takeover of Morrisons by Amazon
Morrisons (LON:MRW) announced on Tuesday that customers are flocking back to supermarkets as they have become accustomed to making food at home.
The supermarket confirmed its sales rose by 2.7% for the 14-week period to 9 May, as it enjoyed busy holiday periods including Mother’s Day and Easter.
As the UK approaches normality following lockdown, Morrisons pointed to growth in sales of its snacks and takeaway food.
“The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape,” said Morrisons boss David Potts.
“Our forecourts are getting busier, we are seeing encouraging recent signs of a strong rebound of food-to-go, take-away counters and salad bars, and our popular cafés will soon fully reopen.”
Shoppers are now more adept and open to buying their groceries online, the supermarket said, as its online sales more than doubled compared to the year before.
“Morrisons is now at the point where it needs to think about the next stage of its career, and we’ll find out its refreshed spending plans in September. This will almost certainly involve boosting capacity to fulfil online orders and seeing how it can further expand as a supply partner,” says AJ Bell investment director Russ Mould.
Amazon Partnership
Ross Hindle, analyst at Third Bridge, noted the FTSE 250 company’s partnership with Amazon and its implications for the future.
“To avoid being stuck in an increasingly squeezed middle, Morrisons’ continues to foster its relationship with Amazon, triggering much speculation about a full-blown acquisition by Amazon in the near future.”
“Amazon Fresh helped boost online sales by 113% for the quarter. The Group has also recently expanded its offering into the brick-and-mortar channel , with three Amazon Fresh stores having opened in London already and all stocked by Morrisons. With consumers now well accustomed to online grocery shopping, Amazon has growing expectations for its Fresh concept. Our experts believe this partnership will prove a key differential growth factor for Morrisons.”
“Despite currently coming off a low base, the experts we are speaking to expect Morrisons to continue to develop its wholesale business and to increase its margin accretive non-food and clothing offer. Like the rest of the big four, Morrisons is having to look well beyond food to find some margin protection.”
After touching a fresh 14-month high on Monday, the FTSE 100 found itself below 7,000 as it fell by 2.16% during the morning session.
“This was accompanied-slash-prompted by a stark reversal from its previously buoyant mining sector,” said Connor Campbell, financial analyst at Spreadex.
A late collapse from the Nasdaq led to a nasty session for the Nikkei led to a really rough start for Europe on Tuesday.
“The tech slide not only gave the Nasdaq its worst day since March but prevented the Dow Jones from closing above 35,000 for the first time in its history,” said Campbell.
Ahead of Wednesday’s US CPI reading, it appears that investors’ inflationary fears have been reignited by surging commodity prices, something that will not be reflected in tomorrow’s figures, Campbell suggests. “It’ll be interesting to see how much the markets are reassured if Wednesday’s number does fall from 0.6% to 0.2% month-on-month as forecast,”he added.
The DAX’s decline was similarly severe, with a 1.7% drop knocking it back under 15,200 for the first time in 5 days. And the CAC found itself slipping below 6,280 as it tumbled 1.6%.
FTSE 100 Top Movers
At 0930 GMT on Tuesday, no companies listed on the FTSE 100 have made positive gains. Those which have fallen by the least are RSA Insurance (-0.044%), Pearson (-0.21%) and Just Eat (-0.28%).
While at the bottom, the biggest fallers of the day so far are Reinshaw (-6.22%), IAG (-5%) and Melrose Industries (-4.65%).
580m shares in the FTSE 100 bank were being offered to institutional investors as part of a placing that would bring the government’s holding down to 54.8%. At early morning trading the Natwest share price is down, as the news emerged yesterday via Sky News.
The government is aiming to secure a buyer for shares in Natwest worth up to £1.1bn, amounting to 5%, as it continues its sell-off of the bank rescued over ten years ago.
580m shares in the FTSE 100 bank were being offered to institutional investors as part of a placing that would bring the government’s holding down to 54.8%.
From the perspective of taxpayers, the deal comes at a loss of around £670m, with the shares nearly 40% below the value paid by the government for the bank then known as the Royal Bank of Scotland.
The government’s stake initially stood at 83%, however it has been gradually reduced over time. Most recently in March when the UK Treasury has announced it has finalised the sale of £1.1bn worth of shares back to Natwest.
Depending on the state of the market, the Treasury will seek to divest the remainder of its shares in the bank by March 2026, The Times reported.
City Pub Group revenue down by 57% as company posts results
The City Pub Group (LON:CPC), owner of nearly 50 pubs across the UK, confirmed on Tuesday that its revenues plummeted by more than 50% during 2019 as lockdowns battered the industry.
For the financial year gone, the City Pub Group brought in £25.8m, down from £60m in 2019.
City Pub took measures during the pandemic to offset its impact such as maximising outdoor seating for when the option presented itself. Across its locations, the City Pub Group has added more than 600 outside covers to allow them to open under the current government-imposed restrictions.
In addition, it acquired a 49% stake in the Kensington Park Hotel and increased its shareholding in Mosaic Pub and Dining group to 24%.
The AIM-listed company reported “encouraging trading” since outdoor reopening, with its 24 pubs currently open trading at 77% of 2019 levels, outlining the extent of the pent-up demand.
The group is expecting to benefit from an increase in domestic holidays as a number of international holiday destinations remain off-limits to Brits.
Clive Watson, Executive Chairman of The City Pub Group, added:
“The business has been significantly improved over the past year placing us in an excellent position to take advantage of the pent-up demand as the country reopens.”
“The early signs since we have been allowed to trade outdoors have been very heartening and it has been great to bring back our immensely talented staff and to see our customers enjoying our pubs once again.”
“We are a streamlined, well-invested business with a first-rate customer offer. Our pub estate is unique in terms of quality and, with the step change in the business, we have an ideal platform to grow successfully in the future.”
As its sites were quiet during lockdowns, the company made improvements to its City Club app which now has over 100,000 active members.
