Homeserve shares rise on +17% H1 revenue
Homeserve shares (LON: HSV) were up on Tuesday morning after the group reported strong first-half results.
The FTSE 100 company posted a 17% increase in revenue from £457.7m to £536.7m.
Statutory profit before tax, however, fell 49% to £10.1m.
Richard Harpin, the founder and chief executive, commented: “What HomeServe stands for – making home repairs and improvements easy – has never been more important. The stresses of living and working through a pandemic mean that we are all more aware than ever of the value of home comforts. Our strong policy retention in the first half underscores the value our Membership customers place on the service we provide.
“Against this challenging backdrop, I am really pleased that the business continues to perform well. As we go into the busy winter months, our focus continues to be on delivering great service for our customers and a secure livelihood to our teams and trades. The latest wave of lockdowns has made no fundamental difference to our operations, and the good news for us and our customers is that engineers can continue to work in peoples’ homes. Based on what we see today, we are confident of delivering a healthy mix of organic and acquired revenue growth at the full year, with profits ahead of our prior expectations.”
Looking forward, the group said that it continues to expect strong demand and has increased profit forecasts for the full year.
Homeserve shares (LON: HSV) are trading up almost 3% at 1.273,80 (0849GMT).
Easyjet swings to red and posts £1.2bn loss
Easyjet (LON: EZJ) has posted its first-ever full-year loss, sinking £1.2bn into the red.
For the year ending 30 September, the budget airline saw passenger numbers half from 96.1m to 48.1m amid travel restrictions and social distancing measures.
Easyjet also said that it will only fly at 20% capacity for the first quarter of the next financial year.
Revenue 52.9% to £3bn, which was down from last year’s revenue of £6.4bn.
Commenting on the results, chief executive Johan Lundgren said:
“I am immensely proud of the performance of the easyJet team in facing the challenges of 2020. We responded robustly and decisively, minimising losses, reducing cash burn and launching the largest Cost Out and restructuring programme in our history – all while raising more than £3.1 billion in liquidity to date.
“easyJet has not only withstood the impact of the pandemic, but now has an unparalleled foundation upon which to emerge strongly from the crisis. Our unmatched short haul network and trusted brand will see customers choose easyJet when returning to the skies.
“While we expect to fly no more than 20% of planned capacity for Q1 2021, maintaining our disciplined approach to cash generative flying over the winter, we retain the flexibility to rapidly ramp up when demand returns.
“We know our customers want to fly with us and underlying demand is strong, as evidenced by the 900% increase in sales in the days following the lifting of quarantine for the Canary Islands in October. We responded with agility adding 180,000 seats within 24 hours to harness the demand.”
Since the vaccine news, shares in Easyjet have surged and bookings have grown by 50% since the news.
Easyjet shares (LON: EZJ) are down 2.57% at 757,60 (0817GMT). Over the past month, shares have increased from lows of 494,40.
Moderna vaccine news sees FTSE soar and value stock recovery continue
The FTSE was among the biggest index winners on Monday, led by a surge in the previously COVID-stricken equities, as Moderna (NASDAQ:MRNA) announced that its vaccine candidate had a 94.5% efficacy rate.
Logistical issues will remain an ongoing concern going forwards. However, the Moderna vaccine doesn’t require the same extreme cold storage as its Pfizer counterpart, and the UK successfully placed an order for 5 million units on the day of the results publication, taking its total vaccine units to 35 million. Even with these facts being true, mass roll-out will remain a challenge. As stated by Kingswood CIO, Rupert Thompson:
“Mass inoculation therefore looks unlikely before next summer. There is also the additional complication that while 80% of the population is supposedly willing to be inoculated in the UK, it is no more than 60% or so in the US.”
Similarly, infections have picked up in the US, and average daily infections increased from just over 22,000, to more than 25,000 in the UK. With lockdown part 2 now in full swing across European nations, a double dip recession now looks to be on the cards, with the economic activity stifled during the fourth quarter.
Despite the medium-term risk factors, the FTSE chose to chase the good news on Monday, up by 1.66% as trading closed. Up to 6,421 points, the index now stands at its highest level since the start of June.
Already pricing in the harmful effects of a second wave in the week leading up to the US election, global equities managed to cling onto short-term excitement and long-term hope, and replicate the trends posted on the previous Monday. Mr Thompson adds: “If the sunlit uplands are visible on the horizon, investors are usually prepared to look through any short-term troubles.”
Outside the FTSE, the CAC rallied by 1.7%, the DAX rose by 0.5% and the Dow Jones hiked 1.3%. In particular, though, there are two trends worth looking at – prospects are significantly brighter for stocks than bonds, and with 7% growth last week, the FTSE will likely remain the location of notable equities recoveries in coming months. On the latter, IG Senior Market Analyst, Joshua Mahony, said:
“Once again we are seeing value outperform, to the benefit of the FTSE 100. With names such as Cineworld, IAG and Rolls-Royce all pushing sharply higher, there is a feeling that last week’s Pfizer announcement has provided a huge boost in confidence for traders to shift towards some of the hardest-hit stocks.”
“With over a quarter of the FTSE 100 attributed to energy and financial stocks, the prospect of an extended vaccine-led recovery does highlight the potential for UK market outperformance.”
More than half consider housing crisis to be a major UK issue
New research commissioned by bridging finance provider Market Financial Solutions (MFS) has outlined the growing concern over the UK’s housing crisis, with more than half of Brits considering it to be one of the biggest issues even amidst the Covid-19 pandemic and ongoing Brexit uncertainty.
The MFS survey – conducted across an independent, nationally-representative survey of 2,000 UK adults – found that 51% of Brits consider the housing crisis to be one of the main issues facing the UK, with 62% asserting that housing policy has been “neglected” by successive governments.
Concerningly, only 17% of Brits know who the UK Minister for Housing is. For the sake of clarity, Conservative MP Robert Jenrick currently holds that position.
Earlier this year, Chancellor Rishi Sunak announced a stamp duty holiday for properties valued at less than £500k as part of his July “mini budget” to boost the UK economy. Analysis by Zoopla predicted that consumers could save up to £1.3 billion in stamp duty payments, with savings of up to £14,999 for first time buyers.
However, new figures from Rightmove have pointed to another housing market dip on the horizon, as sellers rush ahead of the stamp duty holiday deadline in the spring.
Tim Bannister, Rightmove’s director of property data, commented on Monday:
“Given the ongoing mini-boom, prices might have been expected to rise again this month.
“But instead we have a slight dip, which could be a result of some new sellers pricing more realistically to have a better chance of agreeing a sale in time to benefit from the stamp duty savings on their onward purchase”.
Nevertheless, the MFS survey found that 49% of Brits are currently “satisfied” with Sunak’s Covid-19 support and stimulus packages so far.
Paresh Raja, CEO of MFS, insisted that the government still needs to do more to address the mounting problems in the housing market, stating:
“Over the coming months, the government must focus on the housing crisis. However, it is also up to those involved in the property market – lenders, estate agencies and brokers – to ensure they are doing everything in their power to help prospective homebuyers”.
Third of Brits still rely on cash for essential shopping
New research by travel cash provider Bidwedge has revealed that almost a third of Brits still rely on cash for essential shopping, even as UK retailers opt for card-only payments over concerns that coins and notes could aid the transfer of infectious Covid-19 particles.
The survey – conducted across 2,083 UK adults – found that 32% of Brits (roughly 15,570,000 people) still prefer to use cash for their essential shopping and goods despite nationwide efforts to prioritise card payments.
An additional 60% of adults – around 28,820,000 Brits – also said that they try to have some cash on their person at all times as it helps them to feel more “financially secure”.
When it comes to holidays, 55% of Brits (17,780,000 people) said that they would still be utilising cash as their main payment method, while 13% of Brits (a small but significant 5,476,000) say that cash is “essential to their livelihood” and prefer for their income to be paid in cash.
Shon Alam, CEO of Bidwedge, commented on the research:
“Despite all the calls from people to use cards, cash is still incredibly important to millions of Brits across the country. Communities rely on cash and for businesses, it is cheaper for them to process cash rather than card payments, so it actually can help thousands of firms that are struggling right now”.
Earlier this year, the World Health Organisation made headlines for appearing to dissuade people from using cash during the peak of the coronavirus pandemic. The institution’s Cash Task Team published guidance in April advising anyone who comes into contact with cash to practice rigorous personal hygiene to minimise the risk of infection:
“Contact-less electronic or mobile payments should be the preferred option to reduce the risk of transmission. Where this is not possible, those handling cash should adhere to the basic preventive measures […] regular handwashing and avoid touching of the mouth, nose, or eyes when having been in contact with any surface that can potentially be contaminated”.
This advice was issued during the first wave of the pandemic, when information about the nature of Covid-19 was still sparse and general advice tended to err on the side of caution.
Alam nevertheless warns that there is still little room for complacency, and offers some tips on how to use cash safely during the pandemic:
“Most phone and tablet wipes will disinfect our new plastic notes quickly and, following guidance from the World Health Organisation, remember to wash your hands after handling physical money and don’t touch your face.
“Many cash dispensers are disinfecting money before it comes out of the wall, so try and find cash point that is doing this and try and pay as close to the total sum to avoid receiving too much change and passing on unnecessary coins”.
Gold could hit $2800 as uncertainty persists in 2021, says Direct Bullion
British precious metals dealer, Direct Bullion, stated on Monday that it believes the gold price will ‘break new records in 2021’, with lingering economic uncertainty driving demand for the commodity in the new year.
Despite a predicted 9% increase in production in 2021, Metal Focus expects gold to remain high, and above $2,000 per troy ounce. Blue Line Futures has forecast a ceiling of $2,500 by December 2021 and Goldman Sachs recently raised its 12 -month gold forecast to $2,300 per ounce.
Far ahead of these projections, though, Direct Bullion says that its research indicates a gold price increase of as much as 40%, with the potential to hit $2,800 per troy ounce over the first six to seven months of 2021.
Not settling for gold adding a tremendous amount to its price, Direct Bullion also predicts that platinum might also ‘surge’ in the new year, with the metal playing a ‘pivotal role’ in the global shift towards sustainable fuels, as precious metals act as a catalyst for hydrogen fuel cells.
Acting as testament to this fact, Hyundai announced in October that it plans to use around 70,000 ounces of platinum per year in its fuel cell stacks by 2030 – with this demand alone being equal to the total annual production of one of South Africa’s biggest platinum mines
Speaking on gold prices, and the demand for precious metals in the new year, Paul Withers, CEO of Direct Bullion, said: “Next year looks to be exciting for the precious metals market, particularly for platinum , silver and gold. With the gold price potentially reaching highs of up to $2,800, there has never been a better time to invest in physical gold as a safe haven asset.”
“The security provided by investment in physical materials is an attractive proposition to investors looking to avoid possible market volatility. We often hear our customers saying, ‘I wish I had bought more!’.”
Financiers and academics say Sunak’s green finance approach is too market-oriented
Chancellor Rishi Sunak has brought in a raft of green finance initiatives in an effort to de-carbonise the UK economy. However, in a letter sent to the Chancellor, think-tanks, academics, researchers and financiers have outlined their concerns, with all signatories agreeing that Sunak’s new measures rely too heavily on market mechanisms.
The Chancellor’s green finance plans include: making Taskforce on Climate-related Financial Disclosures aligned disclosures mandatory by 2025; the next Bank of England stress test taking place next June; and the FCA introducing new rules requiring premium listed companies to disclose climate risk consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures.
Following criticism and counter-proposals by Labour last week, today the Chancellor and BoE Governor, Andrew Bailey, have been sent a letter co-ordinated by the New Economics Foundation and Positive Money. The letter calls for the government to update the central bank’s mandate, so it is able to support a ‘fair green transition’.
The letter has 120 signatories, including former Bank of England Monetary Policy Committee member Willem Buiter, former White House adviser Nouriel Roubini and the founding director of the UCL Institute for Innovation and Public Purpose, Mariana Mazzucato, among other academics and civil society leaders.
The letter argues that the Treasury and Bank of England’s green finance initiatives – the disclosures and stress tests – are ‘insufficient’, and it warns that reliance on these policies amounts to no more than “leaving it to markets to self-regulate when it comes to climate risk”.
It also argues that the approach being used applies the same logic applied during the 2008 crash and the subsequent policy response. It adds that there has been a continued mismatch between rhetoric and action on the BoE’s part, which it says has a corporate bond portfolio “currently aligned with this 3.5 degrees pathway, well above the Paris Agreement goals”.
Commenting on the measures currently being proposed, Positive Money’s Director, Fran Boait, said: “The Bank of England could be doing much more to support the green transition, but is held back by a restrictive mandate that is no longer fit for purpose. The Chancellor must expand the Bank’s remit at the earliest opportunity, to enable it to take obvious and urgent actions like ensuring its quantitative easing programme is aligned with the government’s climate objectives.”
Responding to these apparent failures, signatories offer four suggestions to improve Sunak’s green finance push. First, the letter suggest that the BoE should encourage private financial flows towards green, job-creating projects to support the economic recovery and the net zero transition. Second, it should climate-related financial risks into its collateral framework and asset purchases.
Third, the Treasury should permit the Bank to help capitalise a new Green Investment Bank (GIB) to support lending to sustainable projects. On the latter, signatories suggest that the BoE could reinvest the maturing proceeds of the Covid Corporate Financing Facility into a GIB, which wouldn’t increase the net debt burden of the government.
Fourth, the letter calls for green taxonomy to not just classify green activities but also carbon-intensive and other unsustainable activities. Through a transparent and consultative process – comprising perspectives from across civil society and academia – the UK could avoid definitions of what is considered ‘green’ from being shaped by industry lobbyists behind closed doors.
Concluding, the New Economics Foundation’s Chief Executive, Miatta Fahnbulleh, added: “The UK needs to be a global leader in green finance, but the measures announced lack ambition – and place too much faith in the efficiency and self-regulation of financial markets. The incalculable human cost that came with the 2008 financial crisis was a crude reminder of what happens when financial markets are left to their own devices. A business as usual approach is simply not an option for the people and places left behind and hardest hit by the last recession.”
“To build back better we need a financial system that provides the vital patient strategic finance to support jobs, businesses and local communities in line with a low carbon transition. Changing the mandate of the Bank of England will help reshape our financial system and harness its benefits to support a green and socially just recovery.”
Kainos shares surge on 23% revenue growth
Kainos shares (LON: KNOS) were up over 4% after the group released a trading statement for the six months ended 30 September.
The IT provider reported a 23% growth in revenue from £86.9m to £107.2m. Pre-tax profit surged 100% from £12m to £24m.
The group said it had a “very strong performance” during the pandemic and the contracted backlog grew 38% to £180.9m.
Kainos is building up a presence in North America and in the UK, the group had significant ongoing engagements in UK government’s digital transformation programme, including the support of the NHS as it responded to Covid-19.
Brendan Mooney, the group’s chief executive, commented:
“Against the backdrop of Covid-19, we recognise that our strong business performance during this period has been a result of the hard work and flexibility of our people, and the support and trust of our customers. We remain immensely grateful for their ongoing engagement.
“We operate in digital transformation markets that have delivered strong growth over many years, which has added to the resilience our business has demonstrated through the pandemic. We anticipate that Covid-19 will continue to accelerate the already strong demand from customers for digital transformation and Workday services as organisations adapt to the changes that the pandemic has brought.
“We have maintained good progress on our early-stage investments, including our Artificial Intelligence and Machine Learning Practice, our Adaptive Planning acquisitions, with the Workday Extend platform (formerly Workday Cloud Platform) and the launch of our Intelligent Automation Practice. While these initiatives are at the beginning of their development journey, we believe that they have the potential to add significant growth opportunities in the future.”
Looking forward, Kainos remains confident for the second half of the year thanks to the contracted backlog.
Kainos shares (LON: KNOS) are trading +4.04% at 1.236,00 (1600GMT).
Moderna vaccine and Janssen trial lift stocks hardest-hit by COVID
US biotech firm Moderna (NASDAQ:MRNA) announced on Monday that its vaccine candidate has an efficacy rate of 94.5%. Similarly, Belgian company Janssen, a subsidiary of Johnson & Johnson (NYSE:JNJ), announced that it would begin its phase three UK trials on Monday.
“It is really important we pursue many different vaccines from many different manufactures,” said Prof Saul Faust, the director of the NIHR Southampton Clinical Research Facility, who will run the Janssen trial.
“We just don’t know how each of these vaccines is going to behave and we can’t be certain vaccine supply will be efficient and secure from one manufacturer”, he added.
Janssen said it will recruit 6,000 volunteers across the UK, and a total of 30,000 people internationally, to test the efficacy of its two-part vaccine. However, the company noted that results could take between six to nine months to be available.
Meanwhile, in the more immediate term, the Moderna vaccine candidate will provide a huge boost of hope to populations and COVID-suffering stocks alike. Quoted as having a 94.5% efficacy rate against the virus, and 100% effectiveness in combatting ‘severe’ COVID, the new vaccine will compliment the Pfizer offering announced last week.
At present, the UK government has no pre-orders for the vaccine, but says it is in discussion with Moderna, to try and access some of the stock, should UK health services choose to use it. The EMA has said it has already begun evaluating the first batch of data on the mRNA-1273 Moderna vaccine, on the back of similar reviews on the AstraZeneca and Pfizer candidates.
Following these exciting developments, the COVID-stricken equities that enjoyed a Pfizer-backed rally last week, had something a renaissance this Monday.
Having fallen towards the end of last week, air travel stocks IAG and Rolls Royce rallied by around 11% and 8% apiece. Likewise, hoteliers have boomed, as seen with both Whitbread and Intercontinental Hotels rallying over 8% respectively.
The longevity of these spikes is likely to be short-lived for now, given that the myriad logistical challenges are likely to remain a worry for consumer and companies – and mean we are still far from ameliorating pandemic-related risk factors.
Crucially, the Moderna vaccine does not require the -80oc degree storage that the Pfizer candidate does. Unfortunately, it was the latter vaccine that the UK government placed a 30-million-unit order for.
Antofagasta shares rally as it commits to ‘responsible mining’ Copper Mark
FTSE 100 listed mining blue chip, Antofagasta (LON:ANTO), watched its shares rally during Monday morning trading, as the company announced that two of its projects would be committed to the Copper Mark.
The Centinela and Zaldívar projects will now be assessed versus the Copper Mark’s assurance framework, which the company says is designed to demonstrate the industry’s responsible production practices, and contribution to the UN’s Sustainable Development Goals. It adds that:
“The Copper Mark goes beyond compliance and focuses on the continuous improvement of responsible production.”To be granted the Copper Mark, the Antofagasta operations will have to comply with 32 criteria within two years of having stated their commitment to abiding by the framework. These criteria, the company says, ‘relate to issues important to all stakeholders’, including greenhouse gas emissions, safety and health, tailings management, biodiversity, business integrity, gender equality and human rights. If the company are granted the Copper Mark, its status will be reviewed via an independent assessment of its compliance every three years.
Speaking on the announcement, company CEO, Iván Arriagada, said: “We are starting this important process at Centinela and Zaldívar and will then extend it to the rest of our Mining operations. Application for the Copper Mark is a voluntary process that allows an external independent entity to review our sustainability practices and indicate our level of compliance and whether there are any aspects we must improve.”
René Aguilar, Vice-President of Corporate Affairs and Sustainability added: “This external independent review will help us to continue improving our responsible mining practices. We are working towards becoming leaders of sustainability in our industry and the Copper Mark is a further and important step forward in this journey.”
Following the news, Antofagasta shares rallied by around 3%, to 1,160.00p. This is the company’s year-to-date high, but also more than 20% above analysts’ target price of 917.69p a share. Analysts currently have a consensus ‘Hold’ stance on the stock; a p/e ratio of 34.22; and a 71.91% “underperform” rating from the Marketbeat community.