FTSE 100 dips on ex-dividend companies, GSK’s Haleon demerger sinks

Natasha Doris
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0
FTSE 100 dips on ex-dividend companies, GSK’s Haleon demerger sinks

A weaker US dollar dragged on blue-chip companies reliant on the currency as the FTSE 100 dipped 0.3% to 7,479 in early afternoon trading on Thursday.

“[Dollar] weakness [weighed] on the large number of UK stocks which earn revenue in that currency,” said AJ Bell financial analyst Danni Hewson.

“A stronger pound against the dollar creates a headwind for the big dollar earners on the UK market, and there are plenty of them, including miners and oil producers.”

Meanwhile, the FTSE 100 was pulled further down by a slate of companies trading ex-dividend, as Barclays dipped 1.1% to 167.8p, Rio Tinto dropped 4% to 4,799.2 and Astra Zeneca fell 1.5% to 11,064.6p.

Entain

Entain was the big riser on the market today, climbing 6.4% to 1,393.5p after the gambling company announced sparkling results, alongside its new Entain CEE partnership with EMMA Capital to expand across Central and Eastern Europe.

“Entain continues to find new flags to plant across the world, this time making moves on the Croatian market. The London-listed gambling group has found a recipe for success which can be replicated around the world, helping it build scale and market dominance,” said Hewson.

“The key test for Entain will be if a recession strikes in many of its operating territories. On one hand, this could threaten earnings if people are watching the pennies more closely and scaling back on spending.”

“On the other, history suggests a lot of people like to try their luck during hard times, in the hope of winning a big prize.”

The betting firm reported a 19% revenue growth to £2.1 billion as retail performance reopened to a strong rebound, offsetting a fall in online revenue.

Entain also unveiled a new dividend policy, including a FY 2022 dividend of £100 million to be split in half, per HY period, representing an 8.5p per share payout for HY1 2022.

“Positive performance and the rebound of retail has paved the way for a fresh and revitalised dividend policy. Starting at £100m over the current year, split between the first and second half, that’s expected to grow from here,” said Hargreavs Lansdown equity analyst Matt Britzman.

Haleon

On the other end of the index, GSK’s Haleon demerger continued to dent investor confidence, with the gamble failing to spark the attractive returns GSK had hoped to achieve.

GSK shares sank 8.2% to 1,428.9p and Haleon shares fell 5.5% to 263.9p.

“GSK’s demerger hasn’t quite produced the success story it expected. The demerged entity, consumer goods seller Haleon, continues to slip in price,” said Hewson.

“This might be down to GSK investors ditching the Haleon shares they were given for free as they are only interested in pharmaceuticals, rather than the latter’s toothpaste and headache pills. Or it could be investors nervous at Haleon’s growth prospects in a world where cash-strapped consumers can easily shun big name, expensive brands in favour of cheaper, supermarket own-brand products.”

“But perhaps the key reason for share price weakness in Haleon and GSK itself might be market worries over lawsuits concerning Zantac, a heartburn drug made by GSK and withdrawn in 2019 over fears it was contaminated with a chemical linked to cancer.”

US Markets

Across the Atlantic, US markets responded positively to Wednesday’s inflation figures, which came in below analyst expectations at 8.5% as a result of lower gas prices across the country.

The Dow Jones was up 0.4% to 33,424 in pre-open trading, with the NASDAQ rising 0.4% to 13,451.7 and the S&P 500 gaining 0.4% to 13,451.7.

Disney+

Disney+ also reported a banner Q3, with shares rising 8.5% in pre-open trading after it beat streaming giant Netflix for its crown by soaring to 221.1 million subscribers against Netflix’s 220.7 million.

“If you thought life was going badly at Netflix, along comes another blow, with Disney overtaking the streaming rival in terms of subscriber numbers,” said Hewson.

“Admittedly Disney’s 221.1 million subscribers (versus Netflix’s 220.7 million) are based on more than just its Disney+ platform, as they include Hulu and ESPN+.”

“Combined with a recovery in demand for its theme parks post-pandemic, Disney is sitting pretty.”

Revolution Beauty runs into problems with its auditors

Andrew Hore
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Revolution Beauty runs into problems with its auditors

More bad news from cosmetics supplier Revolution Beauty (LON: REVB) from its auditors and the share price has nearly halved to 8.73p. The company joined AIM less than 13 months ago at 160p a share, so the share price has slumped by nearly 95%.

Revolution Beauty had already warned on 2 August that its 2021-22 results would be delayed and cut its expectations for 2022-23. Poor retail demand in the US and the loss of £9m of Russian and Ukraine revenues hit the early part of the new financial year. Online demand is switching to store sales and cost increases have hit profitability. That led Zeus to slashing its 2022-23 pre-tax profit forecast by 64% to £6m.

However, the auditors have come up with more problems, which will have a material effect on the 2021-22 results and significantly reduce the estimated pre-tax profit of £9.9m. Revenue recognition, bad debt provisions and stock provisions are involved.

It may be difficult to finish the audit in time to report the results by the end of August as was previously promised.

Management says that net debt at the end of July 2022 will still be £21.2m and the estimates for 2022-23 figures will not be changed.

Disney+ steals streaming crown from Netflix

Natasha Doris
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1
Disney+ steals streaming crown from Netflix

Netflix awoke to find its streaming crown stolen by former new kid on the block Disney+ after the House of Mouse reported 221.1 million subscribers in Q3 against Netflix’s 220.7 million.

The news comes as the latest blow to the struggling streaming giant, who reported its first loss in subscribers in a decade this year as competing services carved slices out of the web service pie.

Disney+ recorded 14.4 million new customers in the quarter, smashing analyst expectations as the company tore ahead of its competition.

It should be noted that the figures from Disney+ include its Hulu and ESPN+ operations, alongside its original streaming platform.

However, Netflix has found itself struggling to retain subscribers in recent months, despite lucratively expensive offerings such as Bridgerton, Stranger Things and its latest big project, Neil Gaiman’s The Sandman.

Disney+ has a marked edge on Netflix, due to its ownership of massive franchises including Star Wars and the Marvel Cinematic Universe, with the service offering exclusive access to shows linked to the respective universes.

Despite its strong results, Disney announced a plan to launch an ad-funded version of the streaming service at the current price plan of $7.99, while ad-free content will cost customers $10.99.

The ad-supported edition of the platform is scheduled to launch outside the US in 2023, however Disney said it didn’t expect the higher price tag to dissuade consumers.

The company confirmed a $1.1 billion loss in the quarter, with management assuring investors its losses were expected to peak in FY 2022.

Meanwhile, Disney revenues grew 26%, driving profits to $1.5 billion year-on-year.

“If you thought life was going badly at Netflix, along comes another blow, with Disney overtaking the streaming rival in terms of subscriber numbers,” said AJ Bell financial analyst Danni Hewson.

“Combined with a recovery in demand for its theme parks post-pandemic, Disney is sitting pretty. However, the high-ticket price for visiting its parks makes it vulnerable to a drop in demand in an economic downturn.”

“And we all know the world of streaming is only as good as the quality of the content, which means consistently spending big bucks to create new shows and films.”

Disney shares rose 8.5% in pre-open trading on Thursday.

AIM movers: MJ Hudson falls below placing price and ex-dividends

Andrew Hore
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3
AIM movers: MJ Hudson falls below placing price and ex-dividends

MJ Hudson (LON: MJH) announced a £9.22m placing and PrimaryBid offer at 30p a share as the market was closing on Wednesday afternoon. The share price of the asset management services provider declined 8% to 28.75p today. The cash will be invested in the ESG division, help to pay deferred consideration and provide additional regulatory capital for the growing operations. The company wants to change the terms of its LTIP so that there is a 30p floor on the issue price of shares. Cenkos has adjusted its 2022-23 pre-tax profit forecast from £5.7m to £6m, although earnings have been cut from 3.1p a share to 2.8p a share.

Performance optimisation software provider Checkit (LON: CKT) grew annual recurring revenues by 48% to £10.2m. Interim recurring revenues were £4.4m out of total revenues of £5.4m. Non-recurring revenues continue to decline. Net cash is £19.5m and it could fall to £15m by January 2023. Securing deals is taking more time and this is worrying investors. The shares fell 5.17% to 27.5p.

Shares in rail infrastructure monitoring technology provider Cordel (LON: CRDL) rose a further 34.6% to 8.75p following the announcement earlier this week of a five-year contract with Angel Trains to install fully automated monitoring hardware and software on in-service passenger trains. The share price started the week at 5.25p.

Artemis Resources Ltd (LON: ARV) has returned from suspension after reporting additional results for drilling at the Greater Carlow Castle copper gold cobalt project in Australia. A review of the results has been completed. Crosscut zone results have identified an offset mineralised load to the west, while mineralisation is open to the north. Carlow West zone drilling has intersected two areas of mineralisation. A mineral resource calculation is planned. There will be a further announcement of assay results of ARC395 and ARC396 drill holes, but they are not considered material. The share price rose 11.9% to 3.3p having started the week at 1.5632p.

Buying by directors has pushed up the share price of recruitment and training provider Staffline Group (LON: STAF). There have been five director and management purchases since the interims on 2 August, including two today. Finance director Daniel Quint acquired 50,000 shares at 39.7p each, while Martina McKenzie, the managing director of the subsidiary in Ireland, bought 215,543 shares at 41.132p each. Interim revenues and pre-tax profit declined, although full year pre-tax profit is forecast to improve from £7.9m to £8.8m. The share price fell after the interims, but a 15.5% increase to 47.95p has more than recovered that loss.

Cell engineering company MaxCyte (LON: MXCT) increased interim revenues by 56% to $21.2m. The loss rose from $11.5m to $12.3m due to higher staff costs. There is cash of $240.9m. In July, LG Chem licensed the use of MaxCyte’s Flow Electroporation ExPERT platform to advance development of engineered cell-based therapies. Guidance is for a 30% increase in full year revenues. The shares rose 6.74% to 475p.

Electrical retailer Marks Electrical (LON: MRK) increased revenues in the first four months of the financial year by 14% to £27.7m. Marks is growing market share for major domestic appliances and consumer electronics. Televisions, vacuum cleaners, washers and air conditioning were strong categories. Rivals have been discounting prices and marketing costs are increasing, but management believes it can achieve profitable growth. The share price recovered 5.88% to 72p, which is still below the November 2021 placing price of 110p.

Ex-dividends

i3 Energy (LON: I3E) is paying a monthly dividend of 0.14p and the share price has declined by 0.125p to 29.175p.

Iomart Group (LON: IOM) is paying a final dividend of 3.6p a share and the share price has fallen 2p to 192.4p.

Quartix Holdings (LON: QTX) is paying an interim dividend of 1.5p a share and the share price is unchanged at 340p.

Riverfort Global Opportunities (LON: RGO) is paying a final dividend of 0.04p a share and the share price is unchanged at 0.875p.

M&G widens loss to £1bn on volatile market conditions

Natasha Doris
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0
M&G widens loss to £1bn on volatile market conditions

M&G shares climbed 1.8% to 221.6p in late morning trading on Thursday, despite a widened IFRS post-tax loss to £1 billion in HY1 2022 compared to £248 million the last year.

The company announced an adjusted operating profit drop to £182 million from £327 million as a result of current market conditions.

M&G reported an assets under administration fall to £348.9 million against £370 million, linked to adverse market movements, with net client inflows of £1.2 billion from £2 billion in outflows the year before.

Meanwhile, the group confirmed a total capital generation slide to £24 million from £869 million, alongside a Shareholder Solvency II coverage ration increase to 214% compared to 198% year-on-year on the back of increasing yields and falling equity markets.

“This is an encouraging set of results and provides evidence that M&G is continuing to build momentum. Improved client flows underpinned a resilient operational and financial performance despite a period of volatility when many investors reduced their exposure to markets,” said M&G CEO John Foley.

“The current macro-economic environment is creating uncertainty in the markets in which we operate.”

“However, our diversified sources of earnings and strong shareholder Solvency II coverage ratio protects our ability to invest in the business and, as today’s interim dividend of 6.2 pence per share shows, deliver attractive shareholder returns.”

M&G recommended a 2% dividend hike to 6.2p per share for the financial period.

Spirax-Sarco Engineering revenue grows 17% on volume growth and price increases

Natasha Doris
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0
Spirax-Sarco Engineering revenue grows 17% on volume growth and price increases

Spirax-Sarco Engineering shares gained 0.4% to 12,055p in late morning trading on Thursday following a 17% revenue growth to £750.1 million in HY1 2022 against £643.7 million the last year.

Spirax-Sarco Engineering linked its revenue increase to volume growth and price increases.

However, the firm reported a 7% operating profit drop to £142.1 million compared to £153.6 million and a 5% operating margin fall to 18.9% from 23.9%.

Spirax-Sarco Engineering highlighted an 8% pre-tax profit fall to £138.5 million against £150 million, as a result of restructuring its Electric Thermal Solution (ETS) business.

Meanwhile, the company announced an 11% basic EPS decrease to 131.8p from 147.6p in the previous year.

The engineering firm noted a £202.7 million net debt against £192.8 million year-on-year.

“These strong first half results were achieved against the backdrop of a weakening IP, supply chain and COVID-19 related disruption, as well as rising inflation,” said Spirax-Sarco Engineering CEO Nicholas Anderson.

“I am grateful to all colleagues for their tireless efforts to support our customers in a challenging first half. It is this excellent execution and resilience that underpins our improved full year outlook.”

“Our strong profitability and robust balance sheet support our continued investment in growth, including our sustainability, digital and manufacturing initiatives.”

Spirax-Sarco Engineering hiked its dividend 10% to 42.5p per share compared to 38.5p for HY1 2022.

Entain retail recovery offsets decline in online sales, new dividend policy

Natasha Doris
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0
Entain retail recovery offsets decline in online sales, new dividend policy

Entain shares gained 5.1% to 1,375.8p in early morning trading on Thursday, after the gambling company reported a 19% revenue climb to £2.1 billion in HY1 2022, alongside an 18% growth in net gaming revenue.

The gaming firm said its revenue increase was driven by a strong rebound in retail performance after Covid-19 lockdowns last year, which sufficiently offset its fall in online revenue.

“The resurgence of in person betting continued over the first half as a cost-of-living crisis and broader economic uncertainty don’t seem to be deterring players from heading out for a rush of in person gaming,” said Hargreaves Lansdown equity analyst Matt Britzman.

“The flip side of that trend is a drop in online gaming, though importantly activity’s stabilising well ahead of pre-pandemic levels.”

Entain confirmed a 31% growth in operating costs on retail reopening and new acquisitions, which fed into the cost base.

However, the betting group confirmed a 17% EBITDA climb to £471 million.

Entain commented it was on track to deliver on its FY 2022 profit guidance of £925 million to £975 million.

The company also noted its new dividend policy, including a total dividend of £100 million to be paid in FY 2022. The dividend will be split in half, representing an 8.5p per share payout in HY1 2022.

“Positive performance and the rebound of retail has paved the way for a fresh and revitalised dividend policy. Starting at £100m over the current year, split between the first and second half, that’s expected to grow from here,” said Britzman.

“Good news for investors, though that will put added strain of cash that’s already being snapped up in BetMGM and the acquisition led growth strategy.”

“Speaking of BetMGM, the group’s joint venture over the pond, performance remains strong. Profits should start to flow at some point next year and BetMGM management have recently upped their forecast addressable market to around $37bn, there’s a big slice of pie up for grabs.”

Entain partners with EMMA Capital and SuperSport, expands Central and Eastern Europe reach

Natasha Doris
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0
Entain partners with EMMA Capital and SuperSport, expands Central and Eastern Europe reach

Entain shares rose 2.9% to 1,346.5p in early morning trading on Thursday after the betting group announced the formation of Entain CEE with Czech Republic investment firm EMMA Capital.

The gambling firm is set to use the new venture to expand its reach across Central and Eastern Europe.

Entain will reportedly own 75% of Entain CEE’s economic rights, and will also acquire 75% of the economic rights to Croatian gaming and sportsbook operating SuperSport from EMMA.

The gaming company said the CEE region represented an attractive opportunity to widen its customer income, with the €5 billion betting and gaming market expected to grow at least 10% each year until 2025.

Meanwhile, SuperSport is set to provide access to Croatia with a 54% market share in the region and 70% brand awareness driven by sponsorship agreements, with 85% of FY 2021 revenue delivered by online sales.

“We are excited to create Entain CEE with EMMA to underpin our strategy across the CEE region, and to be acquiring the leading betting and gaming operator in the highly attractive, fully regulated Croatian market,” said Entain CEO Jette Nygaard-Anderson.

“We see Croatia as an exciting, dynamic country which Entain CEE is perfectly positioned to expand from – we are very much looking forward to growing our business responsibly within the country and the region.”

“By bringing together Entain’s global expertise and EMMA’s regional investment track record, we are creating a growth platform with considerable opportunity.” 

Entain confirmed a payment of €600 million in cash at completion and an additional contingent payment to EMMA in early 2023 based on SuperSport’s EBITDA for FY 2022, expected to be in the range of €90 million.

EMMA will contribute its 25% stake in the Croatian firm to Entain CEE at an initial implied valuation of €200 million, with the contingent payment implying a further €30 million in value contributed by EMMA.

The total acquisition is expected to value SuperSport at €920.

The transaction will be financed via a €700 million bridge loan from Deutsche Bank, Lloyds, Mediobanca, NatWest and Santander.

The agreement is scheduled to close in Q4 2022, conditional on regulatory approvals.

“I am looking forward to joining with Entain and further building on the significant opportunity presented in this region,” said SuperSport CEO Radim Haluza.

“The prospect of leading Entain CEE to drive expansion in fully regulated markets is an exciting opportunity, and EMMA’s investment expertise combined with Entain’s world-class platform will give us the competitive edge in delivering on the CEE opportunity.”

Antofagasta revenue and profits fall on low copper prices and operational chaos

Natasha Doris
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0
Antofagasta revenue and profits fall on low copper prices and operational chaos

Antofagasta shares slid 0.5% to 1,186.5p in early morning trading on Thursday following a 29.6% revenue fall to $2.5 billion in HY1 2022.

The mining company announced a 47.5% EBITDA drop to $1.2 billion, as a result of lower revenue and a 6.9% climb in operating costs.

Antofagasta mentioned a pre-tax profit slide of 61.9%, with a HY1 profit of $680 million.

The FTSE 100 giant attributed its lacklustre report to a volatile copper price linked to the volatile market environment, continued drought at its Chile operations, and an incident at its Los Pelambres concentrate pipeline.

Antofagasta reported its cash costs were higher, with its fall in production and higher input prices. However, cost inflation was offset by the weak Chilean peso.

The commodities group said it was confident in delivering its revised guidance of 640,000-660,000 tonnes of copper for FY 2022.

“Copper’s critical role in the development of low-carbon technologies is essential for the energy transition and the long-term fundamentals for copper remain favourable,” said Antofagasta CEO Iván Arriagada. 

“I am confident that Antofagasta’s strategy of developing mining for a better future is the right one and will deliver long-term value for all our stakeholders.”

Antofagasta cut its dividend by 61% to 9.2c per share in HY1 2022.

S&U beating expectations

Andrew Hore
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0
S&U beating expectations

Used car finance and property bridging loans provider S&U (LON: SUS) says group receivables increased from £340m to £370m and first half profit is greater than last year. The share price jumped 11.5% to 2320p, which is still 14% lower than at the start of 2022.
Motor finance provider Advantage Finance receivables are £280m and Aspen property bridging loans have reached £90m with an average size of around £875,000 for loans this year. The greater proportion of Aspen loans will lead to lower revenue margins.
Net debt increased to £154m by the end of July, but this is well within the borrowin...

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