Broking group TP ICAP enjoyed growth in their FX & Money Markets and Energy & Commodities in the first half of 2023 as revenue on a statutory basis increased to £1,132m from £1,080m in the same period a year ago.

TP ICAP is becoming an increasingly digital business and is focusing on its electronic trading platforms in the face of falling cash equity revenue. Cash equity revenues sank 22% in the first half.

Energy & Commodities revenue was up 12% while FX & Money Markets gained single digits.

TP ICAP Group shares were 15% higher at the time of writing as the release of strong first-half operational performance was accompanied by a £30m share buyback and a 7% dividend increase.

Nicolas Breteau, CEO of TP ICAP Group, commented:

“Our focus on productivity, contribution, and tight cost management, generated an uplift in profit and EBIT margin. Energy & Commodities delivered a strong performance, as energy markets normalised. Overall, Group revenue increased by 1%, following a strong performance last year, when the revenue base was up 7% (excluding the Liquidnet acquisition).”

“Our transformation, and diversification, initiatives are going well. The rollout of Fusion, our award-winning electronic platform, is on track, with an increasing focus on client adoption. Liquidnet now has two major banks connected to the Dealer-to-Client Credit proposition, with a third in the final stages. Parameta Solutions has launched energy-related indices, in partnership with General Index, a leader in this sector. Energy & Commodities is growing in Environmentals; there are more opportunities in the provision of energy-related data to Parameta Solutions, and voluntary and mandatory carbon credits.

“Dynamic capital management is a key element of our strategy. The £100m of cash we targeted in the first half last year has been freed up 6 months ahead of schedule; it will be used to pay down debt. We are also announcing, starting today, a share buyback programme of £30m, and will continue to assess opportunities to free up cash to further invest in the business, pay down more debt, and/or return more capital to shareholders. An interim dividend of 4.8 pence per share, up 7%, will be paid to shareholders on 3 November 2023.”

TUI shares were shining on Wednesday morning after the travel group revealed robust trading in the third quarter as holidaymakers scrambled to book overseas breaks despite the cost of living crisis.

Shares had given up gains and were trading negatively in the early afternoon.

TUI continued its rebound from the pandemic last quarter, with 5.5 million customers using the company for their holidays, an increase 9% versus the prior year. It also presents 95% of pre-pandemic customer levels in Q3 2019 on a comparable basis. TUI recorded an average load factor of 93% compared to 92% in Q3 2022.

Group revenue hit €5.3 billion the last quarter, up 19% compared to Q3 2022 thanks to higher volumes and prices. This performance brought Group revenue to 11% above pre-pandemic levels in Q3 2019, driven by improved pricing.

TUI’S Group underlying EBIT was €169.4 million, a strong improvement of €196.5 million and €122 million excluding prior year flight disruption costs.

“Demand is looking brighter as travel rebounds, and flight capacity at the start of the important summer season has been firing on all cylinders. A total of 5.5m customers enjoyed a holiday with TUI in the quarter, up by 9% on the prior year. And supported by these higher volumes of sun-seekers as well as price hikes, revenues soared upwards at double-digit rates,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

“TUI doesn’t just run flights, it has a much wider package holiday business. In some ways that makes it more defensive – there’s more to offer and plenty of cross-selling opportunities. But the drains on cash when you have planes, huge hotels and even cruise ships to fill are enormous. So returning to pre-pandemic levels is key and good progress is being made on this front.

“Debt levels have improved significantly over the year, helped by a recent €1.8bn rights issue as well as positive free cash flows. But standing at a mighty €2.2bn, the debt level’s still eye-watering compared to profits, meaning dividends are likely off the table for now.”

The FTSE 100 was firmly in the red on Tuesday as the index felt the pressure of more poor Chinese economic data.

London’s-leading index is dominated by companies with exposure to China and performance is often driven by perceptions of Chinese growth.

The FTSE 100 was down 0.5% at the time of writing on Tuesday after Chinese exports fell 14.5% in July compared to a year ago.

“The Chinese economy continues to splutter and that’s bad news for a FTSE 100 chock full of companies which are closely tied to its fortunes,” said AJ Bell investment director Russ Mould.

“This time it’s trade data which has come in way short of expectations. China has been trying to move to being an economy driven by domestic consumption but the level of support provided to households during Covid and the country’s particularly stringent and long-lasting Covid restrictions didn’t match up to those seen in the West.”

In addition to disappointing Chinese data, sentiment was hit by a downgrade of US banks by Moody’s and weakness in Italian banks after the Italian government announced a 40% levy on excess profits earned due to higher interest rates.

It is safe to say markets were in a risk-off mood on Tuesday, with US equities falling and European stocks deep in the red.

The Italian FTSEMIB was down 2.2% and German DAX fell 1%.

FTSE 100 movers

One wouldn’t have been surprised to see the FTSE 100’s miners among the top fallers on Tuesday after markets learned of China’s dismal trade figures.

Anglo American, Glencore, and Antofagasta were among those most heavily impacted. The case for Glencore’s shares wasn’t helped by the 62% reduction in first-half net income released on Tuesday.

“Operating in what the company described as a “normalisation of commodity market imbalances and volatility” the group reported a 20% decline in revenues to $107bn and a drop of 62% in the group’s net income, to $4.6bn,” said Steve Clayton, head of equity funds at Hargreaves Lansdown.

“With debts equivalent to just two months of net income the group has decided to make an additional “top-up” distribution of $2.2bn to shareholders, taking total announced shareholder returns this year to $9.3bn.”

abrdn shares fell after the investment manager said a challenging macro environment has hit assets under management. Despite this, the company announced a fresh wave of share buybacks. abrdn shares were down 10% at the time of writing.

Tekcapital has received a 21.4p fair value target from Kemeny Capital based on a sum-of-the-parts analysis of their portfolio companies.

Tekcapital shares were trading 4.5% higher at 10.85p at the time of writing on Tuesday.

The report issued by Kemeny Capital highlights the disconnect between Tekcapital’s share price and the value of its portfolio companies Innovative Eyewear, Guident, Microsalt, and Belluscura.

Tekcapital commercialises university-developed technology and has built a portfolio of four publicly-listed and privately-held companies with the potential to improve millions of people’s lives. The report says Tekcapital is ‘underappreciated’ by the market.

Kemeny Capital said risks to the fair value target include a lack of portfolio company commercial traction and general macroeconomic headwinds.

The research report can be accessed here.

Disclaimer: Kemeny Capital is owned by the same parent company as UK Investor Magazine.

ECR Minerals shares were trading higher on Tuesday morning after releasing an update on their Lolworth project which has confirmed the presence of Gold, Niobium, Tantalum and REE,

Exploration company ECR has found visible gold and recorded encouraging pan concentration stream samples. The best results were 594 ppm and 138 ppm gold from streams near Reedy Creek in the centre of the project area.

ECR also found niobium, tantalum and the rare earth element neodymium in samples from Oaky Creek.

ECR said 28 out of 200 samples show values greater than 500 ppm in Niobium which they say may indicate a source rocks in the vicinity and possibly a significant discovery.

CEO Andrew Haythorpe commented: 

“Putting aside the fact today’s results add a further significant piece to the Lolworth jigsaw, the progress announced today also serves to illustrate the painstaking and methodical work by Adam Jones and the field team in mapping and logging a hitherto virtually untouched and unexplored area. The detail now provided by the numerous Gold, Niobium and Tantalum results generated from this work are enabling us to zero in on the sources and the high potential locations in order that we can delineate drill targets.”

“ECR’s Lolworth project continues to exceed expectations. Meanwhile we expect to report further results from our projects within a week.”

The company will now analyse rock samples taken in both areas and complete more soil sampling. It aims to delineate drill targets before the field season ends this summer.

Over 200 pan concentrate results were received so far from 628 samples taken since exploration began last year. ECR said visible gold keeps occurring during panning. It stressed the stream samples don’t indicate an in-situ resource.