PMQs, point-scoring and political flip-flop

Jamie Gordon
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PMQs, point-scoring and political flip-flop
Amid the standard back-and-forth of PMQ exchanges, Theresa May manages to goad the Leader of the Opposition into a heated remark and ultimately a failed opportunity to use his questions effectively. While one would think the Brexit debacle would act as a sort of barn door target – with the pound and shares of city firms tumbling, and incriminating legal advice – most remarks fell flat when compared to the orchestrated character attack on Jeremy Corbyn by Tory MPs. Starting on the back foot after postponing the ‘meaningful vote‘, the prime minister sat defending her position against the SNP and the Labour backbenches. While compelling cases were made about the quality of life, consumer confidence and the suitability of the proposed Withdrawal Agreement, the prime minister will take some solace in successfully calling to question the intentions and stability of the alternative. Whether directly involved in the conversation or not, PMQs saw May tactfully refer to her opposition counterpart at every possible opportunity. While such a tactic would seem both predictable and overplayed, its timing is salient. On the morning of another call for a vote of no confidence, the prime minister has already rallied support within her own party, with 121 Conservative MPs pledging their support on Twitter. Jacob Rees-Mogg has allegedly thrown his hat into the leadership ring once again, and as the meaningful vote campaign has urged the Leader of the Opposition to back a vote of no confidence, May’s rebuttals of Corbyn in the House’s most high profile debate could serve to lengthen her tenure in office. The prime minister’s remarks were bolstered by ‘helpful’ questions from her party lines, with rebels remaining quiet, and those toeing the party line doing well to question the opposition’s intentions for Brexit and leadership acumen during PMQs. After reminding viewers and members of the House of Corbyn’s Brexit ‘flip-flop’ and desire to ignore the 2016 referendum result, her party members went on to prognosticate ‘far left wing’ Armageddon, should Corybn’s party be allowed to take office. May has said she will fight the no-confidence motion with “everything [she’s] got”, with opponents in the remain and Labour camps perhaps rightly disappointed at Corbyn’s apparent lack of a proactive response to-date. Some have said that his media controversies have somewhat steered him clear of what many would have looked to the Labour party to provide – a proactive response to Brexit and alternative to the compromising Tory line – however, his recent moves look more akin to pandering party politics. Boris Johnson and Rees-Mogg amongst others will be keen onlookers of developments in coming days, with the prime minister somewhat conceding on her lack of success to-date. Corbyn’s calls for MPs to have a say on the form of a final deal will have received a mixed reception, and the SNP’s pointed comments will lose the ear of some listeners by following every criticism with a reference to ‘Scottish interests’. The fate of May’s government will only be decided after 5 pm today, but she will hope to retain support by playing the role of ‘the devil you know’, and the idea that nobody else offers a better alternative.

Frontera Resources shares rise amid financing update

Nicole Jeary
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Frontera Resources shares rise amid financing update
Frontera Resources shares (LON:FRR) ticked up on Wednesday after the company issued an update on financing. The oil and gas exploration company announced it had secured a loan of up to $60,000,000 with a New York based fund. Frontera Resources said the capital would be used to fund the development of its Block 12 license area in Georgia next year. According to the statement, the loan would be for a term of 5 years with interest rate ranging between 8% and 11%. Zaza Mamulaishvili, President and CEO, commented: “We are pleased to have signed this term sheet that sets basis for the new capital inflow in 2019. These funds would be used to accelerate our work programs in the Taribani field as well as throughout Block 12, and would be instrumental in reaching our goal to achieve commercial development of Block 12 in Georgia. We look forward to continuing working with the financiers to finalize the necessary due diligence and definitive agreements, and being able to start utilizing this funding for operations.” Frontera Resources is listed on the London Stock Exchange. Its operations are located in Eastern Europe in Georgia and Moldova. The company is headquartered in Texas, USA. Frontera Resources shares are currently up +4.79% as of 11:38AM (GMT) as investors react to the announcement.

Filtronic shares plunge 56% as group expects annual loss

Safiya Bashir
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Filtronic shares plunge 56% as group expects annual loss
Shares in Filtronic plunged 56% on Wednesday after forecast sales Massive MIMO antennas are set to be much lower than previously thought. Sales in the six months to the end of October at the Antennas and telecoms filters maker were down from £12.8 million last year to £10.4 million. The group expects to make a loss for the current financial year. The group said in a statement: “Our predominant OEM customer, with whom we had closely collaborated in the development of this product range, has now significantly lowered its forecast demand below that which it had previously provided, having itself been advised that its lead client is now looking to deploy different frequencies to those it had originally indicated.” “As a consequence of this lower demand and the uncertainty it brings, the Board has decided to impair fully the net book value of the capitalised development costs of £0.5 million relating to the development of mMIMO in its half year results.” “The Company has made considerable efforts to diversify its customer base in recent years and despite this obvious set back to our mMIMO antennas business, we are pleased to advise that we were recently approved as a supplier of a niche antenna product to a Tier 1 Mobile Network Operator in South Africa. However, given the importance of mMIMO to our future plans in the antenna business, the Board has commenced a review of its options for this component of the Group.” Shares in Filtronic (LON: FTC) are trading down 56.06% at 7,91p (1127GMT).

Superdry posts 49% fall in profits, shares tumble 32%

Safiya Bashir
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Superdry posts 49% fall in profits, shares tumble 32%
Superdry shares collapsed more than 30% on Wednesday following a 49% fall in half-year profits. The retailer posted underlying pre-tax profits of £12 million in the six months to the end of October and expects full-year profits of between £55 million and £70 million. Analyst expectations were previously around £84 million. Superdry blamed the unseasonably warm weather for the dent in profits. The retailer is known best for its coats and hoodies. The chief executive, Euan Sutherland said: “Superdry had a difficult first half, impacted by unseasonably warm weather across our major markets, a consumer economy that is increasingly discount-driven and the issues we are addressing in product mix and range. “Superdry is a strong brand and has strong operational capabilities. We are focused on an intensified transformation programme to reset the business and address the legacy issues we face, particularly in product mix and range.” Tuesday saw the group’s former boss and co-founder Julian Dunkerton criticise the group in a note to Liberum. He said: “The interaction between stores and the internet is going to be so fundamental to the future of retail.” “Consumers have adopted the internet and by doing so have moved away from the limitations of the high street and towards a world of unlimited choice – the premise here is if one does not participate in this world you will get left behind.” Superdry is expanding dresses, skirts and women’s tops to end reliance on warm outerwear. The group also plans to invest more in digitisation to “adapt stores for a digital world”. Superdry hopes to save £50 million by 2022 and is considering closing stores to achieve this goal. Shares in the group (LON: SDRY) are currently trading down 32.38% (1104GMT).    

Dixons Carphone shares tumble on £440m loss

Safiya Bashir
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Dixons Carphone shares tumble on £440m loss
Dixons Carphone has posted a £440 million loss for the six months to 27 October, sending shares down 14%. The loss compares to a £50 million pre-tax profit in the same period a year earlier. Whilst underlying sales improved, the group paid out a £490 million for the restructuring of Carphone Warehouse. The new boss, Alex Baldock, said: “We believe that Dixons Carphone is now on the path to sustainable success. We have set a clear long-term direction that will deliver more engaged colleagues, more satisfied customers and a more valuable business for shareholders.” “We have powerful strengths, as a growing market leader with amazing people and capabilities no competitor can match. Our plan builds on those strengths. We’re focusing on our core, and on four things that matter most: two big profitable growth opportunities in online and credit; revitalising our mobile business; and giving customers an easy experience. We’ll deliver these through capable and committed colleagues, working in one joined-up business, with strong infrastructure.” “We’re underway and investing in all of these, including giving our colleagues at least £1,000 of shares, making every colleague a shareholder. We strongly believe aligning and energising the business behind our strategy in this way will benefit customers and shareholders.” “There are headwinds and uncertainty facing any business serving the UK consumer, we’ve had our own challenges, and our plan will take time. But, with this plan, we can now see the way to unleashing the true potential of this business. We believe in our plan, are underway making early progress and determined to make it a lasting success,” he added. The struggling retailer announced plans earlier this year to close 92 out of 700 stores. Baldock confirmed there are no plans to close more. The share price has fallen by 25% this year following various profit warnings from the group. Richard Hunter, head of markets at Interactive Investor, said: “Unfortunately, this statement has laid bare the fact that Dixons Carphone has many plates to spin at a time when competition in the sector is intensifying.” “The strategy to consolidate its competitiveness, which starts from a position of strength given its scale, will take some time to come through, even if successful.” Shares in Dixons Carphone (LON: DC) are currently trading -8.11% (1045GMT).    

Sterling hits 2-year low as May faces vote of confidence

UK Investor Magazine
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Sterling hits 2-year low as May faces vote of confidence
A vote of no confidence in Theresa May has been triggered sending the pound to the lowest levels since 2017 against the dollar before rebounding. Sir Graham Brady released a statement saying he had received in excess of 48 letters representing 15% of the parliamentary party, the threshold to trigger a vote confidence. Rumours of the threshold had been met started circulating last night with leading pundits tweeting they received word from senior sources the 1922 committee had received enough letters to a vote of confidence . The sheer volume of rumours last night was enough to send the pound into a downward spiral with sterling falling as low as 1.2476 against the dollar, the lowest level since April 2017. On the official announcement this morning GBP/USD stabilised slightly and traded tentatively above 1.2500. At the time of writing book makers and betting exchanges have Boris Johnson as the favourite for the next leader of the Conservative party. That would assume Theresa May loses the vote this evening. The vote has plunged the Brexit negotiations into total chaos with very little in the way of indication of a potential timeline for the meaningful vote or whether the next leader would seek to tear up May’s proposal. Major European leaders have so far said May’s deal was the only deal on the table. The big fear among economists and analysts is the UK leaves with no deal, plunging the UK into economic uncertainty. The immediate path of Brexit is highly dependant on whether Theresa May wins this evenings voye and the course of action the next leader decides on taking. The leadership contest is unlikely to happen for a number of weeks and parliament could take control of the Brexit process and revoke Article 50. Boris Johnson and Sajid Jarvid are considered front runners after embarking on personal PR missions in recent days. Boris Johnson led the Leave campaign and while Jarvid voted Remain, he has been seen to shift towards a harder type of Brexit than proposed by his peers. Having hit two year lows GBP/USD higher through Wednesday morning in tandem with the FTSE 100 which was up as much as 1% in early trade.

RWS Holdings reports 17% rise in annual profit

Dina Caruso
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RWS Holdings reports 17% rise in annual profit
RWS Holdings has released its financial results for the year ended 30 September on Tuesday. The intellectual property support services provider reported a 17% rise in annual profit. Shares edged up by almost 5% following the results.

RWS is a market leader in life sciences translations and linguistic validation.

The 17% rise in annual profit was driven by the acquisition of language services group Moravia. The acquisition was completed in November 2017. It also enhanced earnings and contributed to a 22% increase in adjusted earnings per share to 17.4p. This figure compares to 14.3p from the previous year. The final dividend was up 15% from 2017 at 6.0p per share. Chairman of RWS Holdings, Andrew Brode, commented on the results: “This has been a remarkable year in which we celebrated our 60th year in business and delivered our 15th year of unbroken growth in revenues, profits and dividends since flotation in November 2003.” “We were delighted to complete the transformational acquisition of Moravia and receive “Transaction of the Year” at the recent AIM Awards. The Moravia team delivered a very strong second half and we look forward to further growth from this business.” “The Group is now one of the world’s leading providers of language services, with a strong platform for taking advantage of the multiple opportunities afforded by our enhanced service offering, extended global presence and the growing markets for our intellectual property, life sciences and localization businesses. Backed by a strong balance sheet, we are also well positioned to take advantage of further acquisition opportunities as they arise.” “We have made a very good start to the new financial year and we look forward to 2019 with confidence.” At 16:42 GMT today, shares in RWS Holdings plc (LON:RWS) were trading at +4.92%. Tuesday’s market news also includes 888’s acquisition of All American Poker Network. Elsewhere, Superdry shares dropped ahead of a trading update and MySale shares dropped 50% amid a profit alert.

Stock picking considerations for 2019

UK Investor Magazine
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Stock picking considerations for 2019

Stocks markets enjoyed record highs during the early months of 2018 with investors cheering a business friendly US government lead by Donald Trump and the rest of world benefited from easy monetary policy with low interest rates and QE.

This was turned on its head throughout the year, leaving shares a lot cheaper towards the end of 2018 than they did at the beginning.

The selection of stocks for 2019 will be a process dictated by both geopolitical considerations and the relative valuations of individuals equities and wider indices.

The nature of the political backdrop in major global economies drove investor allocations throughout 2018 and this top down approach to equity selection will be at the forefront of stock pickers strategies into 2019.

Brexit, Trump and rumblings from southern Europe are set to influence the allocation of capital between equity and fixed income as well as the picking of individual shares.

Brexit threatens not only the risk of sharp declines in shares in the case of a no deal but also the risk of missing out on any relief rally on a smooth transition that dispels the doom-mongers fears over the UK economy.

Those shares with significant exposure to the UK economy have had a risk premium built in their shares prices and now trade well below long term price-to-earnings ratios. This may well provide an opportunity for investors over the next 12 months.

On the other side of the pond, the Trump rally is all but dead but shares have fallen from all-time highs and could present opportunities for bargain hunters in the short term and long term value investors seeking out fairly priced growth companies.

Top Stock Picks for 2019

Free report containing the Top Stock Picks for 2019 designed to bring stability to a share portfolio in 2019

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While UK assets and economic activity have been depressed by ongoing Brexit negotiations and political uncertainty, Europe has managed to side step much of the fall out and is still providing the underlying growth to support share prices. Those shunning the over stretched valuations of the US and the political uncertainty of the UK may well be more comfortable with the relative economic stability of Europe.

No matter the geographical destination for your capital, one must be conscious of the stage of the market cycle we are in and consider selective stock picking is more important than ever.

Superdry shares down ahead of trading update

Safiya Bashir
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Superdry shares down ahead of trading update
Following criticism from its former co-founder, shares in Superdry have fallen 7% on Tuesday. In a note to Liberum, Julian Dunkerton criticised the retailer’s business model. “The interaction between stores and the internet is going to be so fundamental to the future of retail. Consumers have adopted the internet and, by doing so, have moved away from the limitations of the high street and towards a world of unlimited choice. The premise here is if one does not participate in this world you will get left behind,” he said in a stockbroker note. Shares in the group have fallen over 60% this year and the value could continue to fall after tomorrow’s trading update. In October, Superdry issued a £23 million profit warning after which Dunkerton told the BBC that he wanted to come back to the group to “turn it around”. Fall in sales was blamed on the hot weather and foreign exchange problems. To end its reliance on warm outerwear, Superdry is expanding dresses, skirts and women’s tops. The group also plans to invest more in digitisation to “adapt stores for a digital world”. Michael Hewson, a CMC Markets analyst, said: “The misery on the high street looks set to continue with Superdry shares plunging this morning ahead of their first-half numbers, which are due out tomorrow.” “Shares were already down 60% this year even before today’s declines, and tomorrow’s numbers could put management under further pressure.” Shares in Superdry (LON: SDRY) are currently trading down 6.23% at 579,94 (1340GMT). The retailer will release a trading update on Wednesday.

Justin King joins M&S to “navigate the challenges ahead”

Safiya Bashir
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0
Justin King joins M&S to “navigate the challenges ahead”
Justin King, the former Sainsbury’s boss will be joining the Marks & Spencer board as a non-executive director. The retail chief will join M&S at the beginning of January in order to “navigate the challenges ahead” for the retailer. King has worked for over a decade at Sainsbury’s. Before this, he was part of the turnaround strategy at Asda whilst also previously working for the M&S food division. King will work with M&S boss Steve Rowe and has said that he looks forward to “supporting Steve in the turnaround that he is leading”. “Having worked there 15 years ago, M&S has a very special place in my affections. I look forward to joining the Board and supporting Steve in the turnaround that he is leading,” he said. Rowe said: “As we navigate the challenges ahead it will be enormously helpful to have his experience, wisdom and insight on the board. Many colleagues remember his time at M&S and will warmly welcome him back.” M&S chairman, Archie Norman added: “Justin’s appointment completes a very significant reorientation of the board in the last year. He will be a great addition to a strong team.” M&S has reported a fall in sales this year amid tough trading and Brexit uncertainty. Pre-tax profits at the retail giant slumped 62% to £66.8 million in May after a restructuring plan cost £514.1 million that included £321 million to pay for the first phase of its store closure plan. Lee Wild, who is the head of equity strategy at Interactive Investor, said: “The Marks & Spencer PR machine is in full swing and Steve Rowe is telling investors exactly what they want to hear.” “The company has been in desperate need of a major overhaul for years and, under a new and more dynamic leadership team, is getting just that.” “M&S is admitting its shortcomings and promising to deliver what investors have been screaming at it to do for years.” Shares in M&S (LON: MKS) are trading +0.47% at 277,10 (1231GMT).      
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