ConvaTec revenue up despite fall in sales during pandemic

Liam Roche
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ConvaTec revenue up despite fall in sales during pandemic

ConvaTec full-year dividend up to 5.7 cents per share

ConvaTec (LON:CTEC), the medical technology company, confirmed a rise in full-year revenue along with a fall in earnings during 2020.

For the year ending in December 2020, ConvaTec’s revenue increased by 4% to $1.89bn, while pre-tax earnings fell by 1.1% to $350m.

According to a statement by the FTSE 100 company, ConvaTec’s performance during 2020 was driven by strong growth in the Infusion Care and Continence & Critical Care businesses, offsetting limited growth in Ostomy Care and a decline in Advanced Wound Care.

ConvaTec announced a dividend of 3.983 cents per share to take the full-year dividend for 2020 up to 5.7 cents. This was in line with the previous year’s figure.

ConvaTec is forecasting organic revenue growth of between 3-4.5% during 2021 and a constant currency adjusted EBIT margin of 18-19.5%.

The company’s share price rose by 2.33% to 193.2p in early morning trading upon the release of its financial results.

Karim Bitar, chief executive at ConvaTec, commented on the results:

“I am pleased with our strategic progress and how the business performed in 2020.  Against the backdrop of COVID-19 we set our new strategic direction of travel, responded well to the needs of our customers and improved our operational performance.  In addition our ongoing strategic transformation remains firmly on track.”

“The outlook for 2021 is positive although uncertainty surrounding COVID-19 persists.  We expect to see 2021 organic4revenue growth of between 3-4.5% and a constant currency adjusted EBIT margin of 18-19.5% as we continue to invest in our transformation, some of which was deferred from 2020, and as COVID-suppressed costs begin to normalise.”

“There is still further work ahead for the Group as we continue to strengthen our foundations and begin to pivot to sustainable and profitable growth, but I am confident in the inherent attractiveness of the markets we serve and in ConvaTec’s growth prospects.”

Triple Point Social Housing REIT acquires 58 new properties as profits rise

Liam Roche
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Triple Point Social Housing REIT acquires 58 new properties as profits rise

Triple Point Social Housing REIT will pay a dividend 5.18p per share

Triple Point Social Housing REIT (LON:SOHO) recorded an operating profit in 2020 of £30.2 million, up from £26.9 million the year before.

The profit came in addition to the company acquiring 58 properties (400 units) during the year at a total investment cost of £78.9 million. The trust’s total investment portfolio now stands at 445 properties.

The organisation’s portfolio was independently valued at £571.5 million on an IFRS basis, up from £471.6 million in 2019. This represents a valuation uplift of 7.7% against total invested funds of £530.7 million, according to the company’s financial statement released on Friday.

100% of rental income due and payable for the period ended 31 December 2020, and due and payable at 28 February 2021 has been collected.

Triple Point Social Housing REIT will pay a dividend on 26 March 2021 of 5.18p per share. This is around the same level as the previous two years.

On early morning trading the REIT’s share price is up by 0.47% to 107.5p per share

Max Shenkman, head of investment at Triple Point Social Housing REIT, commented on the results:

“Despite the challenges of 2020, Triple Point Social Housing REIT had another year of strong performance, demonstrating that investments that have a positive social impact are often the most resilient – especially in times of difficulty. Our stakeholders rose to the challenge to continue the delivery of high-quality housing, the need for which is as great – if not greater – than ever before.”

“The fundamentals of our sector remain strong, and we look forward to what we can achieve in 2021 by working hard to deliver the housing that is so desperately needed across the length and breadth of our country.”

The trust was one of three organisations that presented investment opportunities at February’s UK Investor Magazine Virtual Investor Conference. 

The REIT’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.

Metal Tiger encouraged by progress at the Kitlanya East copper-silver project

Liam Roche
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Metal Tiger encouraged by progress at the Kitlanya East copper-silver project

Metal Tiger CEO looking forward to providing details of KML’s follow-on drilling activities

Metal Tiger (LON:MTL) gave an update on Thursday morning on “encouraging progress” at the Kitlanya East copper-silver project in Botswana, operated by Kalahari Metals Ltd (KML).

Airborne geophysics survey and soil sampling results highlight the potential for the South Fold target to host copper-silver mineralisation in a similar setting to Sandfire Resources’ neighbouring T3 and A4 deposits.

Michael McNeilly, chief executive of Metal Tiger, commented on the results:

“The processed results from the Q4 2020 airborne geophysics survey and soil sampling programme highlight the potential for the South Fold Target to host Cu-Ag mineralisation in a similar setting to the neighbouring Sandfire Resources T3 and A4 deposits as corroborated by a recently commissioned independent structural assessment.”

“With these encouraging results, in the heart of the rapidly developing Kalahari Copper Belt, we look forward to providing details of KML’s follow-on drilling activities planned for the Kitlanya East Project.”

Metal Tiger‘s share price closed 2.22% down at 22p.

Deliveroo aiming for $10bn valuation in London IPO

Liam Roche
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Deliveroo aiming for $10bn valuation in London IPO

Deliveroo committed to making London its “long-term home”

Deliveroo has its sights set on a $10bn valuation ahead of its initial public offering, which would be the highest valued new listing in London for a number of years.

The food delivery business, which saw demand rocket during the pandemic, is looking to benefit from new rules making it easier for companies to list in the UK’s capital city.

Deliveroo, which operates internationally, also committed to making London its “long-term home”.

Will Shu, who founded Deliveroo in London eight years ago, said the city was “a great place to live, work, do business and eat. I’m so proud and excited about a potential listing here”.

If Deliveroo is able to float at the level of its target range, the food delivery company will have a market cap in excess of £7bn.

Following a private financing in early 2021, Deliveroo was valued at $7bn, a figure that since Amazon led up an investment round n 2019.

In a private financing in January Deliveroo was valued at about $7bn, a figure that had already doubled since an Amazon-led investment in 2019.

Professor John Colley, Associate Dean of Warwick Business School and an expert on tech firm IPOs, commented on the prospective valuation.

“This valuation of Deliveroo seems excessive for a business which is still many years from profit, especially given that some hold significant doubt whether the home takeaway delivery model can become profitable outside of London.”

“Indeed, the sole basis for this valuation appears to be the immense amounts of cash looking for growth technology stocks.”

Colley also outlined difficulties in making profit in an already squeezed industry.

“Ultimately Deliveroo will have to charge customers and restaurants far more to make a profit, but that brings its own difficulties. For restaurants, margins are already narrow. And at what price do customers simply decide to collect their own meals?”

Revolution Bars is anticipating a surge in demand as it prepares to reopen

Liam Roche
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Revolution Bars is anticipating a surge in demand as it prepares to reopen

Revolution Bars expecting “significant pent-up demand” following the easing of restrictions

Revolution Bars (LON: RBG) confirmed today that it will be opening 20 of its locations when hospitality companies are allowed to serve customers outdoors in April.

The AIM-listed company, which owns 66 sites in total, is expecting “significant pent-up demand” following the easing of restrictions.

While the company would liked to have resumed business sooner, the roadmap out of lockdown has enabled it to prepare properly ahead of reopening, according to a Covid-19 update released today.

Revolution Bars has been getting through around £400,000 to £450,000 per week, according to the statement, which also stated that the company has £9.8m of liquidity.

The company’s share price soared today by 15.55% to 3,270p per share following its announcement. Year-to-date, Rovolution Bars’ share price is up from 2,100p.

Rishi Sunak confirmed yesterday during his budget announcement that retail and hospitality businesses will receive a special “restart” grant to help them reopen in April.

Rob Pitcher, chief executive of Revolution Bars Group, commented on the company’s outlook for thee remainder of the year and beyond.

“With the encouraging progress of the vaccination programme, clarity in the timetable to reopening, and the additional financial support measures announced by the Chancellor, the light at the end of the tunnel is getting brighter.”

“Notwithstanding that good news, our industry remains on the critical list and the continued support announced by the Government is required to ensure that we can be in a position to return to growth and be a driver of national job creation once again particularly for young people who are the lifeblood of our industry and who have been severely impacted over the last year.”

“We are excited at the prospect of welcoming back our colleagues and guests and providing fun and memorable experiences for them as lockdown restrictions ease.”

Construction sector rebounded in February on increase in commercial activity

Liam Roche
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Construction sector rebounded in February on increase in commercial activity

IHS Markit/CIPS UK Construction Total Activity Index was at 53.3 in February

Following a setback at the beginning of the year, UK construction companies delivered a robust return to growth in February, according to survey compiled by IHS Markit.

PMI data also revealed that new orders had regained momentum, as well as more projects beginning, amid economic optimism.

The seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index was at 53.3 in February, up from 49.2 the month before. Any measure above 50 signals a an increase on overall construction output.

Despite lockdowns, the index has registered above the 50.0 no-change mark in eight of the past nine months.

Residential work remained the strongest area of growth, although the speed of recovery eased slightly since January.

FTSE 100 construction companies, including Persimmon and Taylor Wimpey, have propped up London’s blue-chip index in recent months, as other sectors have struggled through the pandemic.

The industry received a boost yesterday as the Chancellor pledged to “stand behind home buyers” during his budget speech in the House of Commons.

Tim Moore, Economics Director at IHS Markit, commented on the survey’s findings:

“Construction work regained its position as the fastest-growing major category of UK private sector output in February. The rebound was supported by the largest rise in commercial development activity since last September as the successful vaccine rollout spurred contract awards on projects that had been delayed at an earlier stage of the pandemic,” Moore said.

“House building is still the engine of recovery for the construction sector, although there was a loss of momentum since January as adverse weather and longer wait times for materials contributed to some temporary delays on site.”

“Stretched supply chains and sharply rising transport costs were the main areas of concern for construction companies in February. Reports of delivery delays remain more widespread than at any time in the 20 years prior to the pandemic, reflecting a mixture of strong global demand for raw materials and shortages of international shipping availability. Subsequently, an imbalance of demand and supply contributed to the fastest increase in purchasing costs across the construction sector since August 2008.”

Are the house builders a stock pickers dream?

UK Investor Magazine
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Are the house builders a stock pickers dream?

Alan Green joins the Podcast to explore the recent moves in the FTSE 100 and we pay particular attention to the house builders following the Budget.

With the Stamp Duty holiday being extended and the government guaranteeing 5% mortgages, the market has reacted positively sending the shares of house builders higher.

In addition, we question other underlying factors at play in the shares of house builders and how the FTSE 100 could soon become a market for the stock picker.

We discuss EQTEC (LON:EQT), Xpediator (LON:XPD) and Mirriad Advertising (LON:MIRI).

Why the Scottish Mortgage Investment Trust share price is sinking

Liam Roche
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Why the Scottish Mortgage Investment Trust share price is sinking

Scottish Mortgage Investment Trust Share Price

The Scottish Mortgage Investment Trust (LON:SMT) was down by 7% in morning trading on Thursday. It is a continuation of a recent trend for Baillie Gifford’s flagship investment trust which saw sharp falls throughout February. Since the middle of February, when the Scottish Mortgage Investment Trust was valued at 1,415p per share, its value has plummeted by 29% to 1,095.7.

Scottish Mortgage Investment Trust share price

Investors have been monitoring the trust closely as the dip could represent an ideal opportunity to buy in. This article will take a closer look at the trust’s holdings and the causes for its recent drop-off in value.

Rising bond yields

Bond yields are rising and it is causing concern for investors. The benchmark 10-year US Treasury bond yield climbed to 1.477% through the night, having reached a one-year high of 1.614% a week ago.

The yields, which are adjusted for expected inflation, have jumped recently as investors anticipate Joe Biden’s stimulus package will result in stronger US price growth.

Rising bond yields have begun to have an impact on US stocks, in particular those held within the Scottish Mortgage Investment Trust.

“The higher the yield on bonds, the more we see this push to move out of stocks,” said Jeffrey Carbone, managing partner at Cornerstone Wealth, North Carolina.

US tech stocks

The S&P 500 dipped by 1.31% on Wednesday, losing 50.51 points, as investors sold off their technology stocks following the continued news of rising bond yields. Tesla, the Scottish Mortgage Investment Trust’s fourth largest holding, has been particularly affected in recent weeks by the move away from technology and high-growth stocks.

In January, Tesla was close to breaking the $900 mark following massive growth during the pandemic. However, the electric car manufacturer has since plummeted, now trading at $653.20 per share.

Tesla’s share price from 7/1/21 to 4/3/21

Amazon, one of the notorious FAANG stocks, and the Scottish Mortgage Investment Trust’s third largest holding, also bore the brunt of investors’ move away from tech. From 3,380p per share on 2 February, the online retailer has since dropped to 3005p per share, a fall of 12%.

Asia

The Scottish Mortgage Investment Trust has holdings in some of Asia’s top companies, however, even they could not escape investors’ renewed scepticism. Technology companies saw dips across the region yesterday. In Japan, the Nikkei 225 dropped by 2.3% to 28,930.11, while the the Shanghai Composite lost 2.05% to 3,503.49.

The Scottish Mortgage Investment Trust’s top holding, Tencent, the Chinese technology company fell by 4.56%, while Alibaba, the online retailer, and the Scottish Mortgage Investment Trust’s sixth top holding, fell by 2.56.

Both Tencent and Alibaba have seen dips over the past month or so, in line with their American counterparts. Tencent fell from 766.5HKD on January 25 to 690HKD today, a fall of 11%, while Alibaba dropped from 265HKD TO 227.2HKD, a fall of 17%, over a similar time period.

FTSE 100 suffers knock-on effect of rising US bond yields

Liam Roche
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0
FTSE 100 suffers knock-on effect of rising US bond yields

The FTSE 100, London’s blue-chip index, was hit hard on Thursday as it fell by 0.74% just after midday to 6,626.05. The index felt the knock-on impact of a rise in US bond yields which dragged commodity prices down, as well as causing a sell-off on US tech stocks.

FTSE 100 Top Movers

Aviva (2.53%), Sage Group (2.4%) and British Land Group (2.29%) headed up the index at midday on Thursday.

Mining giants Rio Tinto (-7.84%) and BHP (-6.10%) were the top two followers on the FTSE 100 at lunchtime closely followed by the Scottish Mortgage Investment Trust (-5.9%).

FTSE 100 Mining Companies

It was a tough day for oil and mining companies on the index as the price of oil came down. This followed a rally in recent weeks, particularly for mining groups, in anticipation of a commodities supercycle.

After a strong climb since early 2020, Rio Tinto shares plumetted by nearly 8% to 5,933p. Other FTSE 100 mining companies, including BHP, Antofagasta and Glencore also saw significant falls in the value of their shares.

Rio Tinto’s share price from 22/1/21 to 4/3/21

Aviva

Aviva confirmed on Thursday that the company is set to sell its Italian arm in 2021 as it looks to pay down its debt. The insurer also announced a net profit of £2.9bn, up from £2.7bn in 2019.

The FTSE 100 insurer proposed a final dividend of 14p per share, bringing the total dividend for 2020 up to 21p per share. This is up from 15.5p per share in 2019.

Schroders

Schroders confirmed on Thursday that its pre-tax profit fell by 2.3% in 2020, while its assets under management soared to a record high. The asset management company posted a profit before tax of £610.5m in 2020, down from £624.6m in 2019.

The FTSE 100 company now manages assets worth £574.4bn, up from 15% the year before.

Melrose posts operating loss as talks to sell-off Nortek commence

Liam Roche
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0
Melrose posts operating loss as talks to sell-off Nortek commence

Melrose operating profit down to £340m

Melrose Industries (LON:MRO), owner of GKN, confirmed on Thursday morning it had initiated the process of selling its Nortek air-conditioning division.

However, there can be “no certainty a disposal will be completed”, according to the company’s financial statement released today.

The manufacturing company also posted a sharp drop in its operating profits, from £1.1bn in 2019 to £340m.

Adjusted free cash generation was £628 million, 6% higher than 2019, prior to £172 million of restructuring costs.

Melrose’s strong cash generation resulted in the company’s net debt falling by over £400 million to £2.85 billion by the end of 2020. This is down from £3.3bn from the year before.

The FTSE 100 company has proposed a final dividend of 0.75p “given the excellent cash generation achieved in the year”, according to the financial statement. This follows Melrose’s decision to withdraw its dividend for 2019 on account of the global pandemic.

The Melrose share price was up by 1.1% on early Thursday morning trading to 178.9p per share following the company’s announcement. Year-to-date the value Melrose shares are up by 97p per share.

Justin Dowley, chairman of Melrose Industries, commented on the results:

“Whilst the COVID-19 crisis has had a major detrimental effect this year, Melrose has generated record cash flows and continued to invest to improve our businesses.  All of this positions the Group well for a good recovery and strong performance in the future. Amidst these difficult conditions, Melrose has also managed to significantly reduce the £1 billion GKN UK pension scheme funding deficit that we inherited at the time of acquisition.”

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