Mitchells & Butlers shares fall as group seeks equity

Safiya Bashir
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Mitchells & Butlers shares fall as group seeks equity

Mitchells & Butlers shares plunged on Thursday morning after the group revealed it is exploring a potential equity raise.

The group said that it was looking at various options including raising money from investors amid the disruptions from the pandemic. For every month that pubs and restaurants are forced to close, Mitchells & Butlers lose £40m.

“As a result, the directors believe it is prudent to explore an equity capital raise, to give the group increased financial and operational flexibility,” said the group in a statement. “No decision has yet been made with regards to the timing, size, or terms of any such equity capital raise.”

Last year, the pub chain axed 1,300 jobs due to the impacts of the pandemic.

Phil Urban, the chief executive, commented: “We are now in a third national lockdown. I am consistently impressed by the resilience and energy of our teams as we repeatedly open and close businesses that we have invested in to make Covid secure and urge the government to better understand the huge impact these restrictions are having on the hospitality sector.

“The Job Retention Scheme is temporarily protecting some employment but there is a real and pressing need for support for businesses themselves if we are to return to being the vibrant sector and important employers that we were.

“Mitchells & Butlers was a high performing business going into the pandemic and with the support of our main stakeholders I have every confidence that we can emerge in a strong competitive position once the current restrictions on us are lifted,” he added.

In the first quarter of the year, the group saw a 67.1% drop in sales. The group operates about 1,700 pubs across the UK, which includes chains such as All Bar One, Nicholson’s and O’Neill’s.

Mitchell & Butlers shares are trading 7.58% lower at 219.50 (1032GMT).

Sainsbury’s shares rise on strong Christmas sales

Safiya Bashir
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0
Sainsbury’s shares rise on strong Christmas sales

Sainsbury’s has posted strong sales over the Christmas period thanks to the growth in online shopping.

Like-for-like sales surged by 11% over the period, with sales in the supermarket’s premium Taste the Difference range growing by 11%. Premium champagne sales also increased by 52%.

The supermarket has raised its profit guidance and has said that in the financial year to March 2021, it expects to make an underlying profit before tax of at least £330m.

“We made a strong start to delivering our Food First plan and we are also clear on the opportunities to further improve our offer as we look ahead for 2021. Many customers had to change their Christmas plans at the last minute and we sold smaller turkeys and more lamb and beef than normal,” said the Sainsbury’s chief executive Simon Roberts.

“While people had smaller gatherings, they still treated themselves, with Taste the Difference sales up 11 per cent. Premium champagne sales were up 52 per cent, Taste the Difference party food was popular throughout December and people did more home baking than usual with mincemeat sales up 24 per cent. Customers still wanted New Year’s Eve at home to feel special and we sold a record number of steaks.

“More customers bought their food online than ever before and we delivered 1.1 million orders in the ten days to Christmas, double the number of last year. Argos sales were up over eight per cent with Fast Track home delivery and Click & Collect beating expectations for Black Friday and Christmas.

“We remain focused on delivering the plan we outlined in November and look forward to providing a further update on early progress at our Preliminary Results in April,” he added.

Sainsbury’s was one of the top risers on this morning’s FTSE and shares are trading +3.44% higher.

Smith & Wesson shares rally on Capitol siege

Jamie Gordon
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Smith & Wesson shares rally on Capitol siege

On Wednesday, gunmakers and shooting accessory equities watched their shares rally, as the Democrat Party take the upper hand in the US Senate. Among these equities was US consumer favourite Smith & Wesson (NASDAQ:SWBI), famous, among other things, for their revolver pistols.

The company watched its shares rally by more than 18% on Wednesday. Now standing at $22.52, the stock is more than three times the value of valuation in January 2020, where it sat at just over $7 a share.

With the Democrats taking two additional Senate seats in Georgia – courtesy of wins by Warnock and Ossoff – the Party looks to have stolen a marginal ‘Blue Wave’ victory, having already captured the presidency and Congress. As stated by Lou Whiteman in The Nasdaq:

“On Tuesday night, the Democrats appear to have flipped two Georgia Senate seats, creating a 50-50 split in the Senate that gives Democratic Vice President-elect Kamala Harris the deciding vote. That has triggered investors to buy into an expected rally in gun sales, causing the stocks to push higher.”

Speaking on the effect this has on gun stocks like Smith & Wesson, Whiteman added that: “Politics is almost never as simple as pundits try to make it, but the conventional wisdom is that the Democrats favor gun control. For that reason, we tend to see a surge in firearm sales when the Democratic Party is in control, on consumer fears they need to either buy now or miss their opportunity.”

This represents a bumper start to 2021 and a continuation of 2020 success, as far as gun manufacturers are concerned. Indeed, firearm sale background checks were already up 34% year-on-year in December, and up 40% year-on-year during the full year, according to the FBI.

If there was already a suspicion that political tensions would lead to an increase in firearms sales, then today’s siege on the Capitol would have only stoked the fear among prospective gun-buyers that the Democrats might be in favour of further gun controls.

Following the updates, Smith & Wesson currently boasts and consensus ‘Buy’ stance from analysts, a target price of $23, and a 58.06% “outperform” rating from the Marketbeat community. The company has a p/e ratio of -98.77, and a dividend yield of 1.10%.

Those entering UK may need negative Covid test

Safiya Bashir
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0
Those entering UK may need negative Covid test

To tackle the rise in new cases, the government has said that travellers entering Europe may need to show a negative test on arrival.

Boris Johnson said at a press conference on Tuesday that the government will be “bringing in measures to ensure that we test people coming into this country and prevent the virus from being readmitted”.

It is understood that travellers may be required to provide a negative PCR test that was taken no more than 72 hours before flying.

The Department for Transport (DfT) said the new measures will be to “prevent the spread of Covid-19 across the UK border”.

“Additional measures, including testing before departure, will help keep the importation of new cases to an absolute minimum,” it added.

Under current rules, people arriving in the UK have to isolate for 10 days. The quarantine period was first introduced in June.

Labour shadow home secretary Nick Thomas-Symonds wrote to the Home Secretary Priti Patel, urging the UK to do more to contain the virus. He wrote: “It is especially worrying given the concerns regarding mutation of the virus that emerged in South Africa, which the health secretary rightly said is ‘incredibly worrying’.

“However, the lack of a robust quarantine system as a result of shortcomings from the government mean that it is virtually impossible to keep a grip on this spread or other variants that may come from overseas, leaving the UK defenceless, and completely exposed, with the nation’s doors unlocked to further Covid mutations.”

Car sales slump 29% to 1.63m

Safiya Bashir
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0
Car sales slump 29% to 1.63m

UK car sales have slumped to the lowest level since 1992.

New data from the Society of Motor Manufacturers and Traders (SMMT) revealed the biggest slump in new cars since the second world war – despite the rise in electric cars.

Sales dropped by 29% to 1.63m. The main factor in the decline was the first lockdown where car showrooms were forced to close.

Mike Hawes, the chief executive of SMMT, said: “2020 will be seen as a ‘lost year’ for Automotive, with the sector under pandemic-enforced shutdown for much of the year and uncertainty over future trading conditions taking their toll. However, with the rollout of vaccines and clarity over our new relationship with the EU, we must make 2021 a year of recovery. With manufacturers bringing record numbers of electrified vehicles to market over the coming months, we will work with government to encourage drivers to make the switch, while promoting investment in our globally-renowned manufacturing base – recharging the market, industry and economy.”

Sales in electric cars have almost trebled this year whilst sales of petrol and diesel cars have plunged. Demand for battery electric vehicles increased by 185.9% to 108,205 units. Sales of plug-in hybrids increased by 91.2% to 66,877.

The SMMT explained for the continuing demand for battery and hybrid vehicles: “Market share for battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) continued to grow significantly, up 122.4% and 76.9% respectively.

“BEVs recorded their third highest ever monthly share of registrations at 9.1%, while PHEV share increased to 6.8% – a combined total of more than 18,000 new zero-emission capable cars joining Britain’s roads.”

Boris Johnson said in November that new cars and vans powered only by petrol and diesel will not be sold in the UK from 2030.

Norway has become the first country in the world where the sale of electric cars has overtaken those powered by petrol, diesel and hybrid engines.

Informa remains confident for 2021, shares rise

Safiya Bashir
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0
Informa remains confident for 2021, shares rise

Informa shares rose on Wednesday as the group shared an update.

Profits at the events group plunged over 70% in 2020 and profits are expected to fall from last year’s £933m down to somewhere between £250 and £270m.

In 2019, the group posted a revenue of £2.9bn. This is expected to fall to £1.6bn in 2020.

The group remains positive for 2021 and the return of events. It has resumed some events in mainland China and Asia and is on track to hit its target of £600m in cost savings by the end of the year.

“(2021) is likely to be a year of return for physical events, rather than full rebound and recovery,” said the company in a statement.

Chief executive, Stephen A. Carter, commented: “The Informa group enters 2021 with an intention to use the progressive return from Covid-19 to deepen our use of digital and data services, thereby ensuring our products and brands remain relevant in a post-pandemic world.

“The continued strength and growth of our subscription businesses and our prior decision to extend the physical Events Postponement Programme should serve us well as markets gradually open up and customer confidence recovers in the latter half of 2021. Equally important, will be our continued commitment to strengthening our digital and data capabilities.”

Informa shares are trading +4.05% at 559.80 (1100GMT).

Greggs expects first loss since 1984

Safiya Bashir
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0
Greggs expects first loss since 1984

Greggs has said that it is expecting its first annual loss since 1984.

As the pandemic has hit sales, revenues and closed stores, the group has said that it is forecasting a £15m loss for 2020. This is compared to the £108.3m profits made in 2019.

Sales have plunged by £300m and for the 53 weeks to 2 January reported a 30% decline in sales compared to the previous year.

Greggs has cut 820 jobs amid the Coronavirus crisis.

Since the pandemic, the group has been working to offer a delivery service alongside Just Eat, however, delivery sales in the fourth quarter were just 5.5% of what is normally sold in-store. Greggs has also partnered with Iceland to offer goods to bake at home.

Greggs’ chief executive Roger Whiteside commented: “With customers spending more time at home we have successfully developed our partnership with Just Eat to offer delivery services and have also seen strong sales through our longstanding partnership with Iceland, offering our products for home baking.

“We have resumed opening new shops where we see good opportunities, with those sites accessed by car performing particularly well. In light of the recent Government announcements, significant uncertainties remain in the near-term.

“We have taken action to position Greggs to withstand further short-term shocks and are optimistic about our prospects for growth once social restrictions are lifted. I want to thank everyone who has supported Greggs through 2020,” he added.

Ross Hindle, an analyst at the research firm Third Bridge said that Greggs has “cooked up a good fourth-quarter trading performance driven by a local town store footprint, keeping stores open during the second lockdown, drive-through capabilities, plus a big push into delivery and collect.”

Greggs shares (LON: GRG) are trading 8.03% higher at 1,923.00. In the year-to-date, shares in the group have fallen from highs of 2,550.00.

Oil prices hit an 11-month high, boosting FTSE

Safiya Bashir
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0
Oil prices hit an 11-month high, boosting FTSE

After an OPEC meeting where Saudi Arabia agreed to reduce oil output, the price of oil has hit an 11-month high.

In February and March, the world’s largest oil producer will reduce output by one million barrels a day. Following the news, the price of Brent Crude was up almost 1% to $54.09 a barrel. US crude was up to $50.24 a barrel.

Connor Campbell from SpreadEx commented: “With Saudi Arabia agreeing to a cut in output, oil was able to strike an 11-month high, prompting some rather larger gains for BP, up 4.4%, and Shell, rising 2.5%. And when those giants are in a good mood it tends to bode well for the FTSE – the UK index rose close to 1%, returning to the 10-month peak it fell from on Monday following the announcement of Lockdown 3.0.”

The reductions of oil by Saudi Arabia are an attempt to persuade other oil-producing countries to hold a steady output.

Saudi Energy Minister Prince Abdulaziz bin Salman told Bloombeg after the OPEC meeting: ”We have the responsibility of looking after the market, and we will take all necessary actions. I have said this repeatedly and even advised that no one should bet against our resolve. Those who have listened are now bearing the fruits; the others — good luck with their ouching.”

Energy stocks pushed the FTSE 100 higher on Wednesday, boosted by BP and Royal Dutch Shell.

Analysts from Goldman Sachs said in a note: “Despite this bullish supply agreement, we believe Saudi’s decision likely reflects signs of weakening demand as lockdowns return.”

Aldi reports record Christmas sales

Safiya Bashir
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0
Aldi reports record Christmas sales

Aldi reported a 10.6% rise in year-on-year sales in the four weeks to 24 December.

As the UK faced lockdown restrictions, supermarkets saw a growth in sales as more people spent time at home over the festive season.

Aldi is the UK’s fifth largest supermarket group. It reported a strong rise in alcohol sales and sold 4.5m bottles of champagne, sparkling wine and prosecco.

Giles Hurley, the chief executive, said: “We had a record Christmas with unprecedented demand for our award-winning products as customers pushed the boat out more than ever before.”

Aldi has in the process of introducing a delivery service over the lockdown period and aims to increase its number of stores from 900 to 1,200 by 2025. However, the group lost market share with sales up 6.3% as it lost out to supermarkets that are currently offering delivery.

In the four weeks to 27 December, consumers spent £11.7bn on groceries. In the three months to 27 December, grocery sales surged by 11.4%.

Fraser McKevitt, the head of retail at Kantar, said: “December is always an incredibly busy time for supermarkets, but take-home grocery shopping is usually supplemented by celebrations in restaurants, pubs and bars – with £4bn spent on food and drink, excluding alcohol, out of the home during the normal festive month. This year, almost all those meals were eaten at home and retailers stepped up monumentally to meet the surge in demand.”

Like Aldi, Morrisons also posted a rise in sales. Shares (LON: MRW) opened higher on Tuesday after the group posted an 8.1% rise in like-for-like sales in the 22 weeks to the 3 January.

Chief executive David Potts said: “The pandemic has had a severe effect on people and communities around Britain for nine months now but it has been especially hard at Christmas time.

“I’m very pleased with the way the Morrisons team has helped our customers across the nation enjoy their Christmas in the best way they could — with safe shopping, great service and outstanding stores even in the most difficult circumstances.”

Consider Trident Royalties for exposure to metal price gains

UK Investor Magazine
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Consider Trident Royalties for exposure to metal price gains

The mining royalty opportunity isn’t a new concept, having been popular North America for some time, but Trident Royalties’ (LON:TRR) move to AIM created one of the first London-listed vehicles with exposure to mining royalties and associated benefits of rising metal prices.

In June 2020, Trident Royalties listed on London’s AIM and in the process raised £16 million to begin building a diverse portfolio of mining royalties.

Trident Royalties’ business model allows investors to gain exposure to a diversified portfolio of metals without the challenges associated with junior miners such as high operating costs and risk of dilution.

Mining Royalties 

There are several royalty structures Trident operates that entitle them to payments over the life of a mine. Royalties can encompass features including fixed payments and sliding scale payments but generally earn a percentage of turnover from a mines’ production.

These mining royalties allow Trident to benefit from upside in metal prices by receiving royalties in return for investment in mining projects operated by an independent mining company.

In addition to upside in metal prices, mining royalties provide life-of-mine revenue upside in the form of increased reserves generated by exploration activity, and the possibility of revenue being earnt quicker than previously expected, if production increases, at no cost to Trident.

Indeed, Trident Royalties is classed as an investment company rather than a mining company by the exchanges. 

Through a series of well-timed acquisitions, Trident Royalties has built a portfolio of 11 royalties representative of the global metals markets including copper, gold and iron ore with future plans to acquire royalties for mines producing metals used in electric batteries.

Since listing on AIM in June last year, Trident has acquired royalties in a range of products including producing mines and those still in the exploration phase. 

Producing projects include the Koolyanobbing Iron Ore project in Western Australia from which Trident received A$2.1m in the first three quarter in 2020. Royalties that will start generating revenue for Trident in the future such as the Lake Rebecca Gold Royalty mean investors can look forward to higher revenues long into the future.

Low Operating Cost model

Trident Royalties is still very much in the growth stage of their business and is allocating royalty revenue to the acquisition of further royalties, a period the company sees as a rapid growth phase in an effort to achieve ‘critical mass’, following which investors can expect a balance of capital growth and dividend income.

The strength in Tridents model is derived from the ability of the company to increase revenue without increasing fixed overheads. This makes the prospect for margin expansion very attractive when compared to mining companies who would be see incremental increases in operating costs.

Trident avoids the increased costs of operating a mine entirely and enjoys only life-of-mine revenue. 

Although Trident has no plans to pay a dividend in the immediate future, it would be hard to imagine such a model not supporting a progressive dividend policy in the future.

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