Markets flat as Martin Luther King Day removes Dow Jones from play

Jamie Gordon
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Markets flat as Martin Luther King Day removes Dow Jones from play
European equities looked slow off the blocks on Monday as they mulled over the absence of their trend-setter. The Dow Jones will get to enjoy a day of reflection upon last week’s successes, alongside time to remember and heed the messages of one of the seminal figures in civil rights advocacy, Dr Martin Luther King Jr. One index which will be sad to have lost its momentum on Monday morning is the FTSE. Last Thursday was testing, with Pearson (LON:PSON) plunging nearly 9% and Whitbread (LON:WTB) falling 5%, though Primark (LON:ABF) performed well. Friday saw the British market hit a six-month high; it will hope to control any fall from grace today. Speaking on the week’s early knockings, Spreadex Financial Analyst Connor Campbell said,

“With the US off for Martin Luther King Day, it could be a quiet session, the European indices losing their de facto leader in the Dow Jones.”

“It doesn’t help that on top of its absence, the Dow ended last week by pulling back slightly from its all-time highs, the index seeming to settle at 29300. That means the momentum that seemed to be building has, for now, fizzled out, leading to a rather drab open.”

“The FTSE, which hit a 6-month peak on Friday, dipped 10 points after the bell, drifting from that high without going into a full reversal. The DAX was flat at 13500, a level it has hit its head on a few times in the last week or so. The CAC, meanwhile, slipped 0.2%, unable to keep up its assault on 6100.”

“As January 31st grows ever closer, the pound may see more and more mornings like this. Cable fell 0.3%, once again falling under $1.2985, while against the euro sterling shed the same amount, dipping below €1.1705.”

“It is probably going to take something unexpected – a rogue comment from a Davos attendee, perhaps – to prevent the session from being one to forget.”

Fever-Tree shares plunge after “challenging” Christmas

Dina Caruso
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Fever-Tree shares plunge after “challenging” Christmas
Fever-Tree (LON:FEVR) shares plunged on Monday after the business said that the Christmas trading period was a “challenging” one in the UK. Shares in the producer of premium drink mixers were down over 20% during Monday morning trading. The company revealed that group revenue is expected to amount to £260.5 million. However, Fever-Tree said that this result is below what it expected and reflects the “subdued” trading over Christmas in the UK. Fever-Tree highlighted that the wider retail environment in the UK was hit by a “challenging” Christmas. It said that the mixer category was “not immune” from the weak consumer confidence and slowdown in spending. “Whilst Fever-Tree remained the clear market leader, the expected improvement in trading during this important period did not materialise with the macroeconomic uncertainty leading to a subdued end to the year across both the On and Off-Trade,” the business said in a statement. Tim Warrillow, CEO, commented on Monday’s update: “Despite the subdued end to the year in the UK, we have delivered a strong performance across many of our regions in 2019 and begin 2020 with real momentum in a number of key growth markets.” “Whilst the UK mixer category has clearly not been immune from the consumer belt tightening seen in recent months, we remain the clear category leader and have a strong platform to return to growth during 2020 and beyond,” the CEO continued. “However this is a global opportunity which remains in its relative infancy in many markets.” The CEO said: “The trend towards premium spirits and premium long mixed drinks continues to gather momentum around the world. Fever-Tree is the no1 premium mixer globally and our performance in 2019 across US, Europe and as far afield as Australia and Canada highlights the fast-growing international strength of the business.” Fever-Tree had already given some indication of what to expect. The company warned at the end of November last year that “short-term headwinds” in its UK market were set to hit its revenue for the full year. In the past, Fever-Tree has benefited from the UK’s unquenchable thirst for gin. Indeed, the business has been boosted by the nation’s gin craze as its premium tonic water is often paired with the alcohol. Shares in Fevertree Drinks plc (LON:FEVR) were down on Monday, trading at -21.56% as of 10:07 GMT.

Calisen set to be first major IPO of 2020

Andrew Hore
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Calisen set to be first major IPO of 2020

Smart meters firm Calisen is set to be the first large company to come to the Main Market this year. It wants to raise £300m and at least some of that cash will go towards reducing debt.
The business is currently owned by private equity firm KKR and some existing shares will also be sold. Calisen could be valued at up to £1.5bn.
There is a large potential market in the UK for smart meters, but that has been true for many years and companies such as Bglobal have come and gone because business did not build up as it hoped that it would.
Smart meter roll outs have been delayed more than once. The...

Metro Rod propels Franchise Brands

Andrew Hore
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Metro Rod propels Franchise Brands

Franchises owner Franchise Brands (LON: FRAN) has grown strongly in 2019 with positive contributions from all the group. Metro Rod is the main driver of growth, though.
Revenues are expected to be £40.6m, while underlying earnings per share of 4.26p are anticipated – around one-quarter higher than the previous year. The full figures for 2019 will be published on 5 March.
Franchises
Franchise Brands has a portfolio of franchise brands. It started on AIM in August 2016 with car paintwork repair business ChipsAway and domestic oven cleaner Ovenclean. Later in the year, Barking Mad, which offers ...

Rent in London soars

Dina Caruso
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Rent in London soars
Data revealed on Friday that 75% of income is required to rent in the nation’s capital. The latest research by the lettings and sales agent Benham and Reeves revealed that the amount of net income needed to pay rent has increased to 45.5% in England, and accounts for 74.8% of the average salary in London. At the start of the millennium, the average rent made up 28.7% of the average income in England, and 41.1% of income was needed to cover the cost of rent in London. The political and economic uncertainty to prevail in the UK over the past year has caused concern for the housing market. Indeed, with several extensions to the nation’s Brexit deadline, an attempt to prorogue parliament and a general election all happening in the space of one year, the UK’s political landscape has been rather chaotic, to say the least. The housebuilding company Taylor Wimpey (LON:TW) said earlier this week that it welcomes the “increased political stability” to come following last year’s events. “There’s been plenty of positive changes to the rental market in the last 20 years with better codes of practice and improvements through technology allowing for a fairer, more transparent process for both landlords and tenants,” Marc von Grundherr, Director of Benham and Reeves, said in a statement. “Unfortunately, the one thing this can’t address is the huge demand for rental properties and the resulting increase in the cost of renting as a result and with wage growth failing to keep pace, the proportion of our earnings required to cover rent has spiked notably since the turn of the millennium,” the Director of Benham and Reeves continued. Shares in Taylor Wimpey plc (LON:TW) were up on Friday, trading at +0.81% as of 09:22 GMT.

Dow Jones beats expectations and leaves European indices in the dust

Jamie Gordon
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Dow Jones beats expectations and leaves European indices in the dust
I can already picture the excited hand gestures from POTUS Donald Trump as he lauds the Dow Jones success story on Thursday. The index hit 29,200 points, beating the record set the day before and exceeding the 29,100 projection set by analysts before trading began. This followed yesterday’s completion of phase one of the US-China trade deal, which, although very expected, was an opportunity for the US to blow its own trumpet. The real challenge now will be seeing whether either the US or China will have the appetite for further negotiations, and the potential for more substantive – rather than superficial – terms. For now, though, President Trump will enjoy his victory lap, and milk phase one for all it’s worth. Unfortunately, European equities couldn’t match the excitedness of their peers over the pond. One of the sad cases was the FTSE, doubling back on its modest early gains on account of poor company news, a stronger Pound and corporate updates. Speaking on the Dow Jones and other movements on Thursday, Spreadex Financial Analyst Connor Campbell stated,

“Flaws be damned! The Dow Jones decided to keep celebrating the signing of the US-China ‘phase one’ trade deal, with momentum firmly on the index’s side. The same couldn’t be said for its European peers, however.”

“Additionally bolstered by a strong core retail sales figure – jumping from 0.0% to 0.7% month-on-month as the regular reading remained unchanged at 0.3% – the Dow added 165 points after the bell. That allowed it to strike 29200 for the first time in its history, sparking ripples of excitement that it could well reach 30000 before the month is out (Trump permitting, perhaps).”

“Normally Europe takes its cue from the US. However, investors across the pond just couldn’t muster the same level of enthusiasm. The DAX nudged 0.1% higher, continuing to lurk between 13400 and 13450, while the CAC added a handful of points.”

“The FTSE actually went into reverse, dropping half but just about clinging onto 7600. Part of the problem was that the pound’s rebound gathered strength as the session went on. A 0.2% against the dollar put cable at $1.305, while a 0.4% increase against the euro left sterling above €1.172. This as Swedish foreign minister Ann Linde claimed Britain and the EU could reach some kind of trade deal before the end of 2020.”

“Adding to the FTSE’s misery was a raft of weak corporate update. Chief among the losers was Pearson (LON:PSON), which plunged nearly 9% after it warned operating profits would fall once again in 2020. Whitbread (LON:WTB) was also on the losers pile, dropping 5% thanks to regional weakness at Premier Inn. At least Associated British Foods softened the blow to the UK index, climbing 5% thanks to a decent showing at Primark (LON:ABF) and a sweet performance from its Sugar division.”

Atalaya Mining strikes record quarterly copper production

Jamie Gordon
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Atalaya Mining strikes record quarterly copper production
Copper mining company Atalaya Mining (LON:ATYM) marked an impressive end to FY19 with the publication of its Q4 results. The Company reported record copper production of 13,527 tonnes during the fourth quarter, up from 11,172 tonnes year-on-year and 10,568 tonnes the previous quarter.

This allowed the full year to end on a high. Full-year copper production bounced 6.7% on-year, from 42,114 tonnes to 44,950 – which was at the upper end of the company’s guidance.

The Group did note, however, that its annual copper recovery rate dropped from 88.30% to 87.09%, which was driven by lower recovery rates during Q4, which it attributed to the ramp-up of the SAG mill.

Atalaya Mining comments

CEO of the company, Alberto Lavandeira, stated,

“We are pleased to have completed the expansion at Proyecto Riotinto which is now successfully operating at the increased annualised capacity of 15Mtpa since January 2020. We are also pleased to have delivered production rates at the higher end of our expectations in the final quarter of the year. This track record gives us confidence in our ability to achieve our increased 2020 production forecasts.”

Investor notes

Elsewhere in mining; Serabi Gold (LON: SRB) finished with its highest quarterly production, AMG Advanced Metallurgical Group N.V. (AMS: AMG) announced a new appointment, ARC Minerals Ltd (LON: ARCM) uncovered high-grade copper assays and Lucara Diamond Corp (TSE: LUC) was pessimistic in its revenue guidance. Following the update, Atalaya Mining shares rallied 1.15% or 2.24p to 196.24p 16/01/19 14:41 GMT. Peel Hunt reiterated its ‘Buy’ stance on the stock, the Company’s p/e ratio is 8.93.

Cloudcall report revenue growth of 30% within impressive financial year

Ishen Patel
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Cloudcall report revenue growth of 30% within impressive financial year

Cloudcall Group PLC (LON: CALL) have told shareholders that they have had a brilliant year where the Chief departed but business has grown.

The firm said that it has seen double digit growth in revenue and user numbers, which contributed to a year of growth and progress for the firm.

CloudCall is a software and unified communications business that has developed and provides a suite of cloud-based software and communications products and services.

The firm added that revenue, cash and losses before tax adjustments are expected to be in line with market expectations.

Cloudcall said its revenue for 2019 grew by 30% to £11.4 million, with the US continuing to perform particularly strong, helped by a larger customer.

Total users also surged by 35% to over 42,300 year on year, which showed a net monthly user growth of 917 which was a 41% rise from 2018.

The average recurring revenue per user remained constant during the year, Cloudcall said, at £28 per user per month.

Simon Cleaver, Chief Executive Officer of CloudCall, commented:

“2019 has been another outstanding year for CloudCall. Not only has the Company once again delivered organic revenue growth of 30%, it also successfully raised new capital to fund future growth and strengthen the balance sheet.

The two standouts for the year are the quantum increase in interest from enterprise companies and the over-50% growth we delivered in the US.

It is worth noting that the US is now responsible for approximately 40% of our total revenue and with nearly half of the total funds raised in the recent placing coming from US investors, I have little doubt there is a huge, largely untapped, opportunity for CloudCall in the US and this is a key focus of our sales and marketing expansion.

CloudCall has a clear strategy to become the leading provider of ‘integrated communications’. We will continue to build out our product, integrate with more CRMs, expand our geographic reach and engage with ever larger customers – our 4 pillars of growth.

We are entering 2020 with significant opportunities and a well-funded balance sheet that is strong enough to capitalise on those opportunities. The Board continues to be confident in the future outlook for the Company.”

Building on higher revenues in July

In July, the firm saw its shares in red but reported that revenues had grown in an impressive half period update. The Company’s financials displayed comparative growth in H1 revenues, which were up 30% from 2018 to £5.2 million. Recurring revenues were up 34% on-year for the same period on-year, with the US market making up 40% of recurring revenues. New order volumes were up 44% year-on-year for the first half and users are up 37% versus H1 2018, to almost 37,000. In Q2 2019, monthly net user growth exceeded 1,000 per month. The Company added that it agreed terms with Shawbrook Bank for a £3 million debt facility, and that it had cash resources of £4.5 million through its own cash, its credit facility and its expected R&D tax credit. Cloudcall can be pleased with the year that they have reported, and will hope that the good form can continue across 2020. Shares in Cloudcall trade at 99p (+1.79%). 16/1/20 15:22BST.

Shanta Gold exceed production targets across productive Q4

Ishen Patel
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Shanta Gold exceed production targets across productive Q4

Shanta Gold (LON:SHG) has updated shareholders about its operations in Tanzania.

The firm said that full-year production at the New Luika mine in Tanzania has beat its target output range with annual tonnes mixed rising to a new company record.

For the year ended December 31, production rose by 3.2% year-on-year to 84,506 ounces, edging above the 80,000 ounces to 84,000 range.

In the fourth quarter, Shanta reported that output fell by 14% on a quarterly basis to from 22,726 ounces to 19,550 ounces.

Looking forward the firm saids that it expects annual production to be between 80,000 ounces and 85,000 ounces

On a good note for shareholders, all sustaining costs toiled $779 per ounce in 2019 which met the guided figure in its $740 to $780 range.

In 2019, Shanta’s net debt was trimmed to $14.3 million from $20.7 million the year before. It is setting its sights on achieving a net cash positive position in 2020.

Shareholders will be further pleased as the firm said it would be boosting its exploration budget in 2020 to $5 million.

Eric Zurrin, Chief Executive Officer, commented:

“The Company has achieved a number of important objectives in 2019, with gold production exceeding guidance and net debt expected to soon move to net cash.”

“I’m pleased to report that through low-cost exploration drilling we were able to add new reserves to the mine plan which more than replaced production during the year. Mine life at New Luika continues to be a priority and the Board have approved a significantly increased exploration budget for 2020 as we look to upgrade resources and identify new ounces.”

“The Company is well-positioned for another strong year and we anticipate entering a net cash position during 2020 as our deleveraging strategy enters its final phase.”

Shanta build on third quarter positivity

In October, the firm told shareholders that it had begun “rapidly paying down its debt” during a productive third quarter, which saw the Group’s production volumes and sales expand.

The Company booked an impressive reduction in net debt, dropping 23% during the quarter to US $20.7 million. Further, the Group’s net debt narrowed 15% during the same period, to $25.7 million.

This progress was led by improved production volumes, with 22,726 oz produced during Q3, up from 19,856 oz the previous quarter. Shanta Gold added that the average head grade of this output was also superior, at 4.5 g/t compared to 3.9 g/t for the previous period.

Further, while the Group reported that forward sales had dipped by 2,000 oz to 43,000 oz, their operating costs narrowed by $90 per oz to $474 per oz and adjusted EBITDA spiked from $10.5 million to $16.5 million.

Shanta Gold will be pleased with the results across the fourth quarter, and with the expanding exploration budget the firm has entered the new year with a motivation to drive forward across 2020.

Shares in Shanta Gold trade at 10p (-1.44%). 16/1/20 15:08BST.

Oil prices see stability following Trump’s Phase 1 deal with China

Ishen Patel
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0
Oil prices see stability following Trump’s Phase 1 deal with China

Global Oil prices have recovered on Thursday following a hectic few weeks involving Brexit negotiations, Chinese-US relations and tensions in Iraq.

Many analysts were initially skeptical as to whether the United States and China could hash out a trade deal following months of tariffs leading to business slumps and supply issues.

However, despite the odds a Phase 1 deal has alleviated the pressure on the oil markets, however any gains made hit the ceiling which the International Energy Agency said it expected oil production to surplus demand.

The phase 1 deal which Donald Trump announced to the media yesterday involved China committing to buy over $50 billion more of US oil, liquefied gas and other energy related products over a two year period.

There has been a period of stability for global oil prices, after the world had seen a feud between the US and Iran over the assassination of Qasem Soleimani which heightened political tensions between the two superpowers.

The International Energy Agency said that rising oil production from non-OPEC involved states tied in with abundant global reserves will allow the market to brush off further political tensions between the US and Iran.

The IEA also said it expected production to outstrip demand for crude from the Organization of the Petroleum Exporting Countries (OPEC) even if members comply fully with a pact with Russia and other non-OPEC allies to curb output.

Significantly, oil prices did see a dip yesterday following the EIA report showing that inventories across the country fell by 2.55 million barrels for the week ending January 10, this was a significant fall from the 474,000 figure expected by analysts.

UBS (SWX:UBSG) said in a note “provided Middle East tensions do not intensify and cause production disruptions, Brent should decline toward the bottom of a $60–65 per barrel trading range in 1H20 before recovering to the top of it in the second half of the year”.

In the weekly update provided by the EIA yesterday, gasoline inventories jumped by about 6.7 million barrels, compared with expectations for a build of about 3.4 million barrels.

Additionally, distillate stockpiles, jumped by about 8.2 million barrels, which crushed expectations of a rise in the figure of 1.2 million barrels. This was the biggest weekly build in distillates since September 2017.

The EIA also noted that US crude oil refinery inputs averaged 17 million barrels per day which was a rise of 76,000 from the previous week’s average. Refineries operated at 92.2% of their operating capacity last week.

U.S. crude oil imports averaged 6.6 million barrels per day last week, down by 179,000 barrels per day from the previous week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.5 million barrels from the previous week.

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