Analysts react to Tullow Oil turmoil

Jamie Gordon
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Analysts react to Tullow Oil turmoil
Multinational oil and gas producer Tullow Oil plc (LON: TLW) today saw analysts reaffirm their conservative stances on the Company’s stock, ten days on from the tumultuous departure of its Chief Executive. Speaking on the departure, interim Executive Chair Dorothy Thompson, stated, “Despite today’s announcement, the board strongly believes that Tullow has good assets and excellent people capable of delivering value for shareholders.”

“We are taking decisive action to restore performance, reduce our cost base and deliver sustainable free cash flow.”

“The board has, however, been disappointed by the performance of Tullow’s business and now needs time to complete its thorough review of operations,”

Today, the Company announced that it had exercised its back-in right for a 10% stake in Gabon’s Dussafu production-sharing contract (PSC), though the amount payable remains under dispute. Having signed a deed of novation and amendment, and conditional upon the deal being completed, other parties’ stakes will drop to 73.5% for BW Energy, 9% for Gabon Oil Co and 7.5% for Panoro Energy. Responding to the eventful couple of weeks from Tullow Oil, “UBS (SWX: UBSG) today reaffirms its neutral investment rating on Tullow Oil PLC and cut its price target to 60p (from 220p).” Further, “Jefferies International Group (NYSE: JEF) today reaffirms its hold investment rating on Tullow Oil PLC and cut its price target to 65p (from 168p).” If we try hard to search for a chink of light, it was offered courtesy of Jonathan Smith of Motley Fool, who was somewhat upbeat while comparing Tullow to another floudnering commidity company – Sirius Minerals (LON: SXX). Smith said, that Tullow Oil “still holds a market capitalization, which it can use to leverage (be it through bank funding, stock buybacks, etc).” “Further, Tullow could be a smarter play for an investor looking to buy on the cheap as it is a more diversified company than Sirius. Tullow has 67 producing oilfields, and so while output production forecasts have come lower, it will likely look to see how it can make up some shortfall from some of the oilfields that are performing well.” Following today’s events, the Company saw its shares dip 2.66% or 1.74p to 63.64p per share 19/12/19 14:03 GMT. Within the last few days, Peel Hunt analysts downgraded their stance on Tullow Oil stock, from ‘Add’ to ‘Hold’. The Group’s market cap is £900.64 million, their p/e ratio is 14.02 and an inviting dividend yield of 5.81%.  

Rolls Royce unveil one-seater electric plane

Ishen Patel
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Rolls Royce unveil one-seater electric plane

Rolls-Royce Holding PLC (LON: RR) have unveiled their one seater electric plane on Thursday to the global market.

Rolls Royce said that the aircraft will fly in late Spring, and become one of the worlds fastest all-electric aircrafts.

Over a week ago, the firm saw its shares in red as it announced a shareholder departure.

The firm said that announced that an executive from its largest shareholder, activist investor Value Act Capital, has resigned from from the engineer’s board.

Today, the firm said that it was looking to appeal to a market of aircraft where climate change and environmental concerns were met.

The additionally recent spread of ‘flight-shaming” movement on social media, and a promise by many big firms in the aviation industry to cut emissions has grown the need for electric aircraft.

Aviation accounts for over 2% of global greenhouse gas emissions and passenger numbers are growing but zero-carbon, long-distance planes carrying hundreds of people are still decades away, aviation experts say.

Rolls-Royce unveiled the electric plan, which it has been building and developing with YASA and Electroflight, should target a speed of over 300 miles per hour.

Rolls-Royce have named the electric plane “ACCEL” and the £6.5 million project will have the most dense battery pack every used for an aircraft.

The firm added that this battery pack provided enough fuel to fly 200 miles which is the distance between London and Paris, on one charge.

Over the coming months, engineers will begin to integrate the electrical propulsion system into the airframe before a first flight by an experienced pilot in late Spring 2020 at a location yet to be decided, but possibly in the Welsh countryside.

Industry rivals such as Boeing and Airbus have both made concerned efforts to build electric planes, however it seems that Rolls-Royce have beaten the competition.

Rolls-Royce recently bought Siemens eAircraft, and it seems that the acquisition has allowed the development to be made.

With Boeing announcing the halt in production to 737 MAX aircraft, the need for electric aircraft has never been so poignant.

The market and industry experts will be keen to see how the initial model performs.

John Lewis of Hungerford see shares dip over 4% despite recording revenue gains

Ishen Patel
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0
John Lewis of Hungerford see shares dip over 4% despite recording revenue gains

John Lewis of Hungerford plc (LON: JLH) have seen their shares dip despite reporting increased revenues.

The kitchen and bedroom firm said that they had reported an annual narrowed loss, as it alluded to wider retail challenges as a dampener on trading.

For the year ended June 30, the company’s pretax loss narrowed to £228,640 from £373,838 but revenue increased 24% to £8.3 million. The figures compared to the 10 months to the end of June 2018.

The firm said that financial 2018 revenue was lower due to a year-end change to June 30 from August 31.

For its new financial year, the company added that despatched sales and forward orders for the initial 24 weeks totaled £3.8 million, which fell 17% from a year ago.

Comments

John Lewis of Hungerford said the results reflect “mixed fortunes within the business”, with the many of the stores outperforming, though it acknowledged several showrooms were underperforming.

“The last twelve months have seen the company operating within an unprecedented retail landscape. Although the economy is not technically in recession, the current uncertainty within the economy, mainly resulting from Brexit and structural issues facing retail in the high street, has made it more difficult for retail than the recessions in 1990 and 2008,” Chair Gary O’Brien said.

“We have seen significant store closures: 2,868 stores have closed in the first half of 2019, and numerous financial restructurings during this period – with some of the High Street’s best-known brands being affected. We have seen this within our own sector of kitchen retail with several companies reporting challenging conditions,” O’Brien added.

Notable departures from the UK high street came as Thomas Cook collapsed in September. Earlier this year, the travel operator said that it was set to close 21 stores, placing 300 jobs at risk. It had been under pressure recently with falling profits – in May the travel group reported a £1.5 billion loss for the first-half of the year, and this led to its ultimate demise.

John Lewis of Hungerford said economic conditions are continuing to be difficult and the December UK general election has “further deteriorated the retailing environment”.

John Lewis of Hungerford said design quotation activity within the business is 10% up on the previous year. This, it said, “points to an underlying latent demand”, and noted decisions are being delayed by customers as a result of the current UK political climate. It expects to see order conversions to improve once there is more clarity around Brexit.

“Whilst the impact on consumer demand continues, we are reacting, by reducing costs in the business and increasing flexibility to respond to changing demand. The board continue to monitor the situation closely and work to improve efficiency and agility in the business to ensure the company is well set to benefit from any improvement in consumer confidence,” said Chief Executive Officer Kiran Noonan.

Shares of John Lewis of Hungerford trade at 0.5p dipping 4.57%. 19/12/19 13:58BST.

Volkswagen set to improve performance and post operating profits

Ishen Patel
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2
Volkswagen set to improve performance and post operating profits

Volkswagen AG (ETR: VOW3) have said that their core brand is set to post operating profits this year, after a tough year of trading.

At the end of October, the German firm saw both their sales revenue and profits grow in an update which would have pleased shareholders.

The carmaker said that, between January and September, sales revenue rose by 6.9% year-on-year, amounting to €186.6 billion. Operating profit before special items also increased, jumping 11.2% to €14.8 billion.

However, this optimism was short live as the firm in November saw its shares crash following its confirmed 2019 outlook.

Volkswagen highlighted that in 2020 operating profit will remain between 6.5 and 7.5%.

Frank Witter said: “The Volkswagen Group remains very robust in the face of increasingly difficult economic conditions. However, we will have to apply systematic cost discipline to reach our long-term goals.” Witter concluded “We also confirm our outlook for 2019,”.

Volkswagen joined Nissan in a list of firms who have been pessimistic on their guidance for 2019 amid tough market conditions.

The firm alluded to its cost saving strategies and increased sales of SUV’s, as mentioned by a firms senior manager.

VW’s core brand in 2019 has gained market share and has increased its operating profit substantially, Chief Operating Officer Ralf Brandstaetter said on Wednesday in comments embargoed for Thursday.

He added that the division had increased its shares of SUV’s sold to 42% in the US and 37% in Europe.

Of envisaged cost savings of 3 billion euros (£2.58 billion) by 2020, 2.6 billion euros have been realised at the end of 2019, Brandstaetter said.

“On this basis, we can secure profitability so that we can systematically invest in the electrification and digitisation of our products,” the executive said, referring to both cost cuts and the increased share of SUVs.

Volkswagen have seemed to make a swift recovery after the firm saw their shares dip in November.

At a time where competitors are struggling, including Suzuki who reported a slump in quarterly profit, it seems that VW are doing okay considering market conditions.

Many automotive firms will have to look to shift their business into the electric car scene as well, as Tesla (NASDAQ: TSLA) continues to report strong demand for its environmentally friendly cars and vehicles.

However, for now VW shareholders should be sufficed and hope that the firm can continue this renewed optimism through to 2020.

Shares of VW trade at €177, (-1.22%). 19/12/19 13:35BST.

Stock Spirits’ shareholder Western Gate pursues special dividend

Ishen Patel
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0
Stock Spirits’ shareholder Western Gate pursues special dividend

One of the biggest shareholders of Stock Spirits (LON: STCK) has called for the firm to pay a special dividend.

At the start of the month, Stock Spirits saw their shares rally following strong revenue gains.

Stock Spirits said said for the financial year ended September 30 its revenue rose 9.2% to €312.4 million from €282.4 million in a comparative period a year ago.

Another impressive figure which caught shareholder interest was that pretax profit had risen 24% from €282.4 million to €312.4 million.

The update that was given was impressive as the firm had won business in a time where competitors such as such as Fever-Tree (LON:FEVR) saw its shares crash following a modest update in November.

Western Gate Private Investments, has repeatedly pledged Stock Spirits to change their strategy and management across the last three years.

Francisco Santos, director of Western Gate, said: “We have previously requisitioned the company for change, and this has resulted in an improved recent performance. “The company has plenty of headroom to increase leverage to 1.25x EBITDA, well inside the management target of 0.5x – 1.5x EBITDA and as such we believe should be rewarding shareholders with a special dividend. “We demand a review of the capital allocation policy and the payment of a special dividend to align shareholder returns to the sector peers.”

The investor said on Thursday that while Stock Spirits’ management was improving operating performance, the board was “unwilling” to return cash to investors and had overseen a “poor performance” since its stock market listing in 2013.

Western Gate also added that Stock Spirits offers one of the lowest cash returns to shareholders among its peers, with a current dividend payout of 60.5% versus an average across the sector of 71.29%, which does raise an answer to why Western Gate have been pursuing the dividend lift.

Stock Spirits are set to undergo what looks to be a very positive time of trading, as the British pub and restaurant industry appears to be picking up.

Henceforth the question as to whether Stock Spirits could pay a special dividend may be dependent on the companies performance across the festive period.

Stock Spirits, in an e-mailed response to Reuters, said it continued to assess a range of “more meaningful and value-creating M&A opportunities” in existing and new categories and markets.

“However, as we have consistently said, if such opportunities are not realised, we will of course consider making additional shareholder distributions,” the company said.

Western Gate holds a 10% sake in Stock Spirits, called a dividend of £0.1047 per share and also asked the firm to consider a restricting program of how it allocates capital.

“Since 2017, the company has spent 47.5 million euros on three acquisitions. Despite this investment, shareholders will not see any returns on this invested capital until 2023,” Western Gate said.

Panmure analyst Matthew Webb said that institutional shareholders were likely to support the management’s current strategy.

“This proposal (by Western Gate) is much less aggressive than previous episodes,” he said.

Shares in Stock Spirits trade at 201p (+0.75%). 19/12/19 13:22BST.

ONS posts deflated retail figures but exclude Black Friday sales

Jamie Gordon
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ONS posts deflated retail figures but exclude Black Friday sales
Retail sales fell suddenly by 0.6% in a monthly comparison according to ONS, representing a fourth consecutive month of decline. “All main sectors saw their sales fall with the exception of food stores,” ONS statistician Rhian Murphy said. The data group did note, though, that its stats didn’t include Black Friday sales, as it said November 29th fell outside of its reporting period for the month, which concluded on the 23rd. It did state however, that it had adjusted for where in the calendar Black Friday fell when drawing up its on-year comparison. Regarding the discount period, ONS reported growth of 1%. This was far below the 2.1% growth predicted by economists, and the lowest annual growth since April 2018. Commenting on the results, Thomas Pugh, UK economist at consultancy Capital Economics, said, “At face value, November’s further drop in retail sales is pretty concerning”. Looking at the broader picture, some have espoused a more positive outlook in light of Boris Johnson’s election win. Duncan Brewer, a partner at consultancy firm Oliver Wyman, said “the general euphoria of a Conservative majority and a better exchange rate for the pound may lead to more spending over Christmas and in the New Year.” However, Brewer then doubled back and concluded that consumer spending “will likely only be short-lived”. “Despite more temporary political stability and low unemployment, we expect that at least two major well-loved British retailers will go bust over the course of next year, and that 100,000 jobs will be cut across the sector due to a combination of overall stagnated spending, cost-cutting and increased automation,” he said. Chief UK economist at Pantheon Macroeconomics, Samuel Tombs, added that inflation “is set to hover about 1.5% over the next nine months, while a revival in corporate confidence following the election should lead to stronger growth in employment.” “Disposable incomes also will be boosted by the recent sharp fall in mortgage rates and a big increase in the threshold for National Insurance contributions in April”. In more positive news outside of retail, the Star Wars Origins film boosts British companies, Bidstack Group PLC (LON: BIDS) shares surged on new contract win, and Focusrite PLC (LON: TUNE) acquired Martin Audio.

British Airways see a decline in their public image according to Which survey

Ishen Patel
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0
British Airways see a decline in their public image according to Which survey

British Airways, who are owned by International Consolidated Airlns Grp (LON: IAG) have seen a decline in their public perception in the most recent public survey.

The former flag carrier was ranked third bottom short haul airline operator, two plans above rival Ryanair (LON: RYA).

British Airways were named the best short haul airline in 2015, but has seen a decline in public ratings according to the survey conducted by Which.

The business dropped another two places this year, ahead of speculation about how the firm can improve its services.

On an overall customer score basis, Which said BA scored 55% on short-haul, only 1 percentage point behind last year, and 55% on long-haul, not far behind the 58% it scored last year. Ryanair’s score actually rose to 44% from 40%.

A spokeswoman from British Airways contested the findings. “Our own data shows customer satisfaction scores have increased, and continue to increase,” she said.

Ryanair was seen to be the worst short haul airline the consumers had engaged with, which saw a repeat of its 2018 performance. Rival easyJet (LON: EZJ) who are another budget airline came mid table.

A notable performance came from Jet2, who were one of the best performers in the short haul category.

Holiday makers made complaints about Ryanair charging extra fees for add-ons and luggage, while they gave BA low scores for the quality of its food and drink, the comfort of seats and general value for money.

BA will see this report and raise caution about their performance in the airline industry, where competitors such as Wizz Air (LON: WIZZ) are notably expanding their routes, and reporting increased passenger numbers across 2019.

BA have seen their reputation hit following strikes and political action in September, which caused thousands of flights to be cancelled.

It was noted that 6,535 members completed the survey in 2019 and the results will give BA a reason to review operations and turn fortunes around.

XLMedia give shareholders a cautious update as shares fall over 22%

Ishen Patel
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0
XLMedia give shareholders a cautious update as shares fall over 22%

XLMedia PLC (LON: XLM) have seen their shares crash over 22% as the firm gave shareholders a cautious outlook.

XLMedia Plc is a provider of digital marketing services, using proprietary tools and methodologies to generate high-value engagement for our customers.

The Group has three divisions based on its primary marketing methodologies: content and search engine optimization through its Publishing, digital Media Buying and Partner Network.

XLMedia saw their shares rally in May as the company announced that it intended to continue its share buyback programme which it began in December 2018.

The company added that its trading has been in line with its expectations for the financial year, and that its focus remained on increasing its exposure to high margin publishing activities and opportunities.

Today, the firm gave a warning on next years profit on Thursday as it begins a structural reorganization which focuses on publishing activities.

The digital marketing firm appointed Stuart Simms as chief executive in October, who then began an internal review of operations.

XLMedia has come up with three decisions moving forward: investing into and expanding global publishing activities, reviewing its technology platform, and an organizational restructuring.

XLMedia is set to increase its spending on publishing, both organically and via acquisitions.

The overall one-off cost of transforming the organisational structure will be around $3 million over 2019 and 2020, the company added.

XLMedia added that trading for 2019 is in line with previous guidance, which would have sufficed shareholders.

The firm also reiterated guidance of $78 million of revenue and $32 million of adjusted earnings before interest, tax, depreciation, and amortisation. This compares to $117.9 million and $43.9 million respectively the year prior.

The US sports betting market, which is growing rapidly, has XLMedia “encouraged”, it said, though it did note regulatory headwinds are going to increase uncertainty.

Shares of XLMedia crashed 22.03% on the announcement to 46p. 19/12/19 12:15BST. In digital news today, Bidstack have seen their shares surge over 50% as the firm announced that it had secured a new contact with a global client.

The firm said it had entered a two year trading agreement with an undisclosed global marketing group.

Bidstack said Thursday the new agreement will start on January 1 and calls for £10 million per year in gross media expenditure.

XLMedia Comments

As a global business, XLMedia will seek to further deploy its online real estate and market knowledge to expand its geographical footprint in areas such as North and Latin America and APAC, and to broaden its growth potential,” it explained. “Owning strong publishing assets puts the group in a position to create better engagement and results than other traditional performance marketing, whereby consumers actively choose the content they want to consume, generating both greater value and increased levels of engagement.”

“The combination of increased spend on direct costs to support growth, further predicted regulatory headwinds and implementation of a transformation plan which prepares XLMedia for the next phase of growth means the board is today also updating market guidance for the year 2020,” said XLMedia.

“The initiatives are proactive measures designed to benefit the business in the longer term. As a result of those measures, the investment and costs budgeted for 2020 are significantly higher than previously anticipated and will consequently impact the overall performance of the group. Therefore, despite revenue for 2020 expected to remain broadly stable versus 2019, adjusted Ebitda is anticipated to be materially lower than previous management expectation,” the company continued.

“Having now spent a couple of months immersed in the business, I am excited to be leading it towards the next phase of growth,” chief executive Stuart Simms explained. “Whilst there are some clear near-term headwinds and operating issues (similar in many other companies of our size and stage of development), our core expertise, assets and market presence remain incredibly strong. “We have already identified and are investing in market opportunities which will generate sustainable growth in the future. I look forward to the coming months to continue to evolve our strategy, progress with the transformation program and execution of our strategic plan.”

Star Wars Origins gives British companies the force

Jamie Gordon
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Star Wars Origins gives British companies the force
British film company Velvet Film Productions and cyber technology firm VST Enterprises Ltd are joining forces to bring a new tech-enhanced experience to the recently previewed offering, ‘Star Wars Origins’. The film was announced prior to the upcoming blockbuster ‘Star Wars: Rise of Skywalker‘, and will feature VST Enterprise’s VCode technology, which is accessible from mobile devices. The technology will be embedded within the film and, “will allow fans access to a hidden treasure trove of content. As fans download the “VCode®” app, they can scan the “VCode®” and go on a “treasure trove” hunt to find hidden content, deleted scenes, directors comments and extras.” VST Enterprise’s statement read. The Star Wars Origins film will look into the beginnings of the saga’s story, and will apparently draw its roots from Earth during WWII. Elsewhere in film and media, Cineworld Group (LON: CINE) announced a Canadian acquisition, Netflix (NASDAQ: NFLX) loses subscribers, Speaking on the update, Velvet Films Exec Producer Gary Cowan said, “Star Wars: Origins has been three years in the making between myself and Phil Hawkins and a real labour of love as two lifelong Star Wars fans. Already the feedback we have had has been phenomenal. We would like to think that the film pays tribute and homage to George Lucas and what he has achieved and created with the Star Wars franchise.”

“What makes this even more exciting is to have the VCode® technology embedded into the film for the first time, which we know fans will love. This clever new piece of technology, never seen before, allows Star Wars fans to have an immersive and interactive experience and to literally go on a treasure hunt, scanning the VCode® and finding hidden extra features, deleted scenes and directors comments, making this truly unique and a world first.”

Adding insight, Louis-James Davis CEO and founder of VST Enterprises Ltd said, “We are thrilled to be working with such incredibly talented film makers like Gary and Phil to create a world first using our VCode® technology. Star Wars; Origins is a truly epic block buster with high end Hollywood style production values. VCode® provides an immersive and interactive experience between the film and Star Wars fans.”

“VCode® allows film makers and the Hollywood studios an incredible interactive and immersive opportunity to engage directly with film fans across many different multi media platforms. Unique content interviews, director cuts, hidden extras and bonus features can all be uniquely tailored and delivered to audience age demographics and then by geographic regions.”

“VCode® also provides major luxury and lifestyle brands with a unique brand activation and product placement gateway into film audiences like never before.”

 

Bidstack secures a new contract with a global client as shares surge over 50%

Ishen Patel
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0
Bidstack secures a new contract with a global client as shares surge over 50%

Bidstack Group PLC (LON:BIDS) have seen their shares surge over 50% as the firm announced that it had secured a new contact with a global client.

Bidstack bridges the gap between gamers, game developers, and advertisers by enhancing the gaming experience with rich, real-world advertising.

In today’s update, the firm said it had entered a two year trading agreement with an undisclosed global marketing group.

Bidstack said Thursday the new agreement will start on January 1 and calls for £10 million per year in gross media expenditure.

Shares rallied as much as 54% before falling back throughout the Thursday’s trading session.

Bidstack’s in-game advertising platform will be made available to the unnamed marketing groups advertising clients.

Chief Executive James Draper commented: “This is a huge milestone for us as a business. This trade deal is a real show of faith from the advertising industry that we serve. On one hand, we are disappointed that none of this revenue will now be recognisable in 2019, but, on the other, this sets the company up well for 2020 and beyond.”

Following the share drop on Wednesday, the company added Thursday: “The board believes this agreement will give Bidstack’s stakeholders increased confidence in the value of Bidstack’s potential and will provide a persuasive rationale for some of the world’s biggest games developers and publishers, with whom the company is currently negotiating, to accelerate their adoption of its technology.”

Pubguard acquisition

In August, the firm announced it had acquired fraud prevention firm Pubguard to help increase the security of its systems.

Pubguard’s technology is established within the advertising industry and will be used to protect Bidstack’s digital gaming inventory against illegal, malicious and offensive ad content on in-app mobile and desktop formats.

Pubguard was acquired for a consideration of £300,000 which was satisfied by the issue of 869,565 Bidstack ordinary shares.

Esports growth potential

The potential for esport advertising provides significant growth opportunities and other London-listed companies are investing in the sector. Blue Star Capital (LON:BLU) has made an ensured effort to diverse into the e-sports industry with investments in six different esports companies.

In October Blue Star Capital raised £900,000 through a placing, in which directors participated, with the plan to invest £150,000 in each of the six companies. An example of these companies was an investment in Lords Esports plc which owns /www.cyqiqgaming.cc, a professional esports organisation which represents games such as Fortnite and Rainbow Six Siege. Blue Star Capital also has investments in payments services such as SatoshiPay but sees great potential in the $1.1 billion esports industry in which Bidstack operate. Shares in Bidstack surged 51.55% on the announcement to 11p. 19/12/19 11:51BST.  
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