ZOO Digital raised its performance expectations for 2022 in its pre-close trading update for the financial year ending 31 March 2022, where it expected revenue to be $70m compared to the previously announced $65m on Monday.

ZOO Digital announced in March that revenue was expected to be at least $65m and EBITDA at least $6.5m. The group has raised its estimates for the year ending March 31, 2022.

ZOO Digital says that revenue for 2022 is now estimated to be about $70m compared to $39.5m in 2021, representing a 78% increase in organic growth over the previous year.

The group’s EBITDA adjusted for share-based compensation is likely to be considerably ahead of previously updated projections, coming in at over $8m in 2022, up 78% from the preceding year when it amounted to $4.5m.

Despite major investment in South Korea, India, Turkey and Denmark, to increase capability and underpin future revenue growth, net cash on March 31, 2022, was $5.4m compared to $2.9m in 2021, indicating excellent cash creation despite significant expenditure to expand capabilities and sustain future income according to ZOO Digital.

ZOO Digital supports big names such as Disney, Netflix, Amazon, NBC Universal, HBO, ViacomCBS, and Paramount with its major Hollywood studios and streaming services to globalise their content and reach audiences everywhere.

“It has been an outstanding year for ZOO with growth materially above expectations, with our last quarter being a record period. We continue to benefit from streaming launches in new territories around the world, while also increasing market share through new service offerings and seeing strong demand from customers across all of ZOO’s operating segments,” said Stuart Green, CEO of ZOO Digital.

“The board has invested heavily in capacity to support further growth and the group has expanded its international footprint in regions that are strategically aligned with our major customers. With a strong pipeline of projects in place, we are confident of delivering further sustainable growth in the year ahead.” 

ZOO Digital shares gained 5.75% to 119.5p on Monday after the company raised its performance expectations for the year.

British Land said it sold 75% of its stake in the Paddington Central assets to GIC for £694m on Monday.

British Land completed the sale of 75% interest in the majority of its Paddington Central assets to GIC.

This transaction creates a new joint venture in which GIC and British Land share 75:25 ownership where the completion is unconditional and will take three months.

The entire consideration of £694m is 1% less than the book value in September 2021 and represents a 4.5% NIY for the sale of Paddington Central assets by British Land/

This acquisition satisfies one of British Land’s core strategic aims, which is to aggressively recycle money from mature businesses where it has produced significant value.

The transaction’s proceeds will be used to invest in value-adding development possibilities across the group’s portfolio, as well as growth sectors such as development-led urban logistics in London and innovation campuses.

British Land’s recent collaboration is another example of how the group uses its operating platform to find new ways to add value.

The group will continue to serve as asset manager for the campus as well as development manager for prospects, such as 5 Kingdom Street, for which it will be compensated.

Paddington Central was purchased for £470m in 2013 and consisted of three buildings, a retail and leisure cluster, and two development sites at the time.

British Land completed the acquisition of 1 Sheldon Square for £210m in 2015, and the development of 4 Kingdom Street in 2017, which generated rentals 40% higher than the top rents on campus at the time of acquisition.

Since its acquisition, the campus has generated an average total property return of 9% each year.

The assets of the joint venture between British Land and GIC will be 2 and 4 Kingdom Street, 1 and 3 Sheldon Square including the retail and leisure component, the Gateway development site, and neighbouring moorings at first.

Currently, the Novotel at 3 Kingdom Street and the development site at 5 Kingdom Street are not part of the Joint Venture.

GIC will be granted an unconditional option via a separate joint venture machine established for this purpose to purchase 50% of 5 Kingdom Street, a 438,000 sq ft development opportunity for £68.5m plus a share of CAPEX, which includes some contingent consideration, for six months after completion.

GIC will also be given an unconditional option to purchase 3 Kingdom Street at current market value through the joint venture that will expire five years after completion.

On a 100% basis, the gross asset value of the properties acquired by the joint venture between British Land and GIC was £936m as of September 2021 and the net rental revenue attributable to those assets was £39m in FY 2021.

Before reinvestment, the group expects the deal to cut EPS per share by 1.6p on an annualised basis.

The acquisition will lower leverage by 500bps and reduce NTA per share post fees and taxes immediately upon completion, with revenues to be reinvested in development and growth opportunities by strategy.

As of September 2021, the gross asset values for 3 and 5 Kingdom Street were £62m and £122m, respectively. The net rental income from 3 and 5 Kingdom Street was insignificant.

Simon Carter, CEO of British Land said, “We are delighted to be partnering with GIC again and this second joint venture with them demonstrates the success of our relationship at Broadgate as well as the quality of the assets and the opportunity at Paddington Central. Paddington has been an excellent investment for British Land and this transaction is a great illustration of our strategy in action.”

“We are pleased to invest in Paddington Central, a high-quality office-led mixed-use campus with retail and leisure uses. It is very well-located with connectivity to national rail services and key transport links to Heathrow, West London and Oxford. Our earlier investment in Broadgate has demonstrated the high value of acquiring central London campuses and we are confident that this asset will generate resilient long-term returns,” added Lee Kok Sun, Chief Investment Officer of Real Estate, GIC.

British Land shares fell 1.3% to 509p after the sale of 75% interest in its Paddington Central assets to GIC on Monday.

ITV shares gained the day after Netflix released its disappointing quarterly financial results, providing some reprieve to the stock which has been in a downwards spiral this year, giving up of 30% of their value year-to-date.

The sudden resurgence comes after streaming giant Netflix reported a loss in subscribers for the first time in a decade, with its shares consequently plummeting a heart-stopping 35% when the news broke on Wednesday.

However, as Netflix sank, the ITV share price soared, adding some 7% the day after Netflix posted their dismal update.

Streaming companies are aware that subscription-based entertainment is an increasingly fierce industry, and that most consumers have neither the financial capacity, nor the patience to sign up for every streaming competitor on the market. For one streaming company to succeed, another must suffer, making the market hyper-competitive and also making any new venture into the busy territory a risky gamble.

ITVX

ITV’s shares tumbled on the release of the company’s financial results after the group announced its intent to launch ITVX, a streaming replacement for its ITV Hub catch-up service.

Follow-up details revealed that ITVX would function as a streaming service for content before it aired live on conventional television, with thousands of hours of content for viewers to watch and 15,000 hours of material available upon the platform’s launch.

However, investors were critical of the company’s bid to break through into the heavily saturated ‘Squid Game’ of the streaming environment, and analysts sniped at the company’s attempt to jump into the ring with the established US heavyweights.

“ITVX is not as revolutionary as the company might like you to believe. It is effectively offering viewers a chance to see some of its programmes before they are broadcast on linear TV as well as its back catalogue of shows,” said AJ Bell investment director Russ Mould on ITVX’s unveiling in March.

“Viewers are increasingly switching on Netflix or Disney+ first and media groups like ITV need to find a way to make sure their brand also stays front of mind when someone is looking to put their feet up and choose something to watch.”

Analysts further cast doubt on the potential allure of ITVX’s slate of offerings, especially in light of smash hits including Netflix’s Bridgerton, Amazon Prime’s The Marvellous Mrs. Maisel or the entire catalogue of Marvel shows from WandaVision to Moon Knight on Disney+.

“Ultimately the proposition will only be as successful as its content, and here’s where ITV might have to dig deep to compete against the ever-growing number of rival streaming platforms. Yes, it has some classics, but will the lure of endless Carry On films be enough to get people to keep watching ITVX?”

The ITVX subscription would reportedly come with a tie-in subscription to Britbox, the streaming service which has proven popular in the US for its unfiltered access to UK content such as Doctor Who and Agatha Christie’s Poirot, which are in high demand across the Atlantic.

It was unlikely that the service would have made a great deal of headway against its juggernaut competitors such as Netflix, Disney+ and Amazon Prime without a major blow to the top tier streaming giants.

However, the gains this week were more likely attributed to the opportunity for ITV’s Studio business, as opposed to the hopes of gaining additional subscriptions at the expense of Netflix.

ITV’s Opportuntiy

ITV’s studio business posted strong growth in 2021 with revenue jumping 28% to £1.7bn. ITV Studios external revenue increased 30% to £1.17bn.

The FTSE 100 broadcaster and content creator provides content to streaming services such as Disney+, Apple TV+, Netflix, Hulu and Amazon.

If Netflix are to reduce spending on original content, they may turn to studios such as ITV for series and films to provide to their users.

ITV Studios generated 13% of total revenues from streaming platforms in 2021, up from 10% in 2020.

ITV says they expect this to grow to 25% of ITV Studios revenue by 2026, which is more than achievable given revenue from original commissions sold to streamers was up 95% in 2021.

Netflix strategy shift

Netflix reportedly cut its production costs to $2 billion last quarter, coming in below management expectations, and the service said it expects to reduce its spending further with an additional cutdown to $1.7 billion in the next quarter.

The company’s spending slowdown might make room for ITV’s content to find a home on Netflix’s roster as it spends less on original content and potentially seeks out existing options to fill the gaps in its streaming offerings.

Shows co-produced by ITV Studios including The Good Witch, Queer Eye, Snowpiercer, Bodyguard and Poldark have all found a home on Netflix in recent years, with new original content from partnerships between the two companies such as Cowboy Bebop hitting the platform, too.

Netflix Originals

Netflix may have bitten off more than it can chew with its ambitious content, with shows from The Crown and Bridgerton to Stranger Things and the upcoming Sandman adaptation making headline news for their sky-high production budgets.

Stranger Things, one of the shows which put Netflix on the map as the original home of binge-watching, has reportedly cost $30 million per episode, while Neil Gaiman adaptation The Sandman is set to cost $15 per outing.

The service might need to fall back on licensed content agreements if it wants to compete in quantity and value-for-money, especially now that the company has raised its subscription prices in a time of record-high inflation levels of 7% for the UK and 8.5% for the US.

ITV Financials

ITV released a glowing slate of results for the last year on 3 March, with revenues increasing 28% to £1.76 billion against £1.37 billion in 2020

The company announced an operating profit of £519 million compared to £356 million in 2020, alongside an adjusted EBITDA of £813 million against £573 million the previous year.

ITV currently has a PE ratio of 5.1 and a forward PE ratio of 5.6, indicating analysts see largely earnings flat in the future. Nonetheless, a PE of 5.1 suggests significant value compared to historical averages.

The group also has a generous reported dividend cover of 4.6, meaning the broadcasting firm has the resources to pay out its dividend and potentially raise it over future shareholder payments.

ITV share price’s attractive valuation provided a solid base for investors to pick the stock up this week as they learned of the potential opportunity for ITV if Netflix, and other streamers, alter their content strategy and increase spending on ITV Studio’s productions.

The FTSE 250 and AIM dropped on Friday erasing the weeks gains with retail stocks taking a hit today as retail sales slumped 1.4% in March, however, companies including as Homeserve, Vivo Energy, WH Smith and Moonpig provided support for the small and mid cap markets.

Homeserve boosted the FTSE 250 when its shares soared 11.3% to 952p after the home repairs company announced that it is in conversation with Brookfield Infrastructure over a potential takeover offer.

Homeserve said it had received numerous bids from Brookfield since the end of March and now Brookfield has until May 19 to make a firm offer. The deadline for Brookfield’s firm offer was extended from Thursday.

Ferrexpo shares were up 3.6% to 181p following the company’s report of higher pretax profit due to a growth in production volumes through investments in high-grade production.

Ferrexpo saw its revenue climb 48% to $2.5bn from $1.7bn and pretax profit rise 43% to $1.07bn from $747.9m in 2021.

The company said the total dividend paid for 2021 was $0.46, 46% lower than the 2020s $0.85. Ferrexpo will consider whether to propose a further interim dividend for 2021. 

Ferrexpo reported a flat pellet production of 11.2m tonnes and sales volume fell 6% from 12.1m tonnes to 11.4m tonnes in 2021.

QinetiQ shares increased 1.8% to 347p as the group continued to attract investors throughout after announcing that its performance is exceeding expectations this week.

Broker ratings

Synthomer shares rose 1% to 301p despite Barclays cutting Synthomer’s price target to 420p from 460p.

Man Group gained 1% to 240p after Barclays raised Man Group’s price target to 255p from 240p.

Oxford BioMedica added 0.5% to 563p despite RBC cutting its price target from 1,340p to 1,070p.

EasyJet shares dropped 2.5% to 576p after Barclays cut its price target from 705p to 700p.

AJ Bell fell 0.2% to 283p following Jefferies’ amendment to its price target from 400p to 315p.

Retailers

Retailers are taking a hit today as retail sales have slumped again in March, except for the odd few like Vivo Energy, WH Smith and Moonpig.

Vivo Energy shares were up 1.4% to 140p as investors flock to the company which is in process of being taken over by Versor Investments.

WH Smith shares rose 0.2% to 1,505p after the company experienced “a recovery in travel activity and has a surprisingly resilient high street operation” according to Russ Mould, Investment Director, AJ Bell.

Moonpig shares gained 1.2% to 203p despite Mould’s view of how “its easy to cut back on items like greetings cards” which should lead to a decline in share price.

However, some retail companies suffered after poor retails sales data and saw their shares fall such as Frasers, Pets at Home, Currys, Dunelm and M&S, whose shares dropped between 0.4% to 1.6%.

Amongst the FTSE 250 fallers were Trust Pilot whose shares were trading down 7% to 123p, followed by Baltic Classified and Aston Martin down 4% to 147p and 864p respectively.

AIM Market

Nanosynth shares tanked 14% to 0.45p after the company confirmed its move for growth through acquisitions, scaring off investors.

Tungsten West shares dropped 11.3% to 41.5p after the mining company announced on Thursday that the recommencement of production at its Hemerdon tungsten and tin mine remains at a halt until the group evaluates alternative approaches to restarting mining operations.

Strategic Minerals reported a lower sales figure of $0.7m in its March quarter due to weaker January sales leading the company’s shares to lose 7% to 0.33p.

Uru Metals shares plummeted 25% to 300p and were the AIM’s top faller on Friday.

Rurelac shares soared 37% to 0.65p marking it as a top performer in the AIM market. Other top performers include, i-Nexus Global, Quadrise Fuel and Rockfire Resources whose shares increased 17.7% to 5p, 17.3% to 2.47p and 13% to 0.48p.

XP Factory shares rose 7% to 31.5p after the company announced it has made great progress, including completing the Boom integration, growing its UK base, and expanding the site pipeline.

One Media iP Group shares increased 6.3% to 6.75p the digital music company posted higher annual revenue for 2021, where revenue climbed from £4m to £4.4m. The group also noted a fall in pretax profit from £734k to £720k due to a £93k cost associated with asset disposal.

Blackbird announced that it will be showcasing sustainable cloud video editing on Microsoft’s booth at NAB 2022 resulting in the group’s shares gaining 6% to 17p.

Directa Plus shares were trading up 4.2% to 124p after the graphene nanoplatelets producer announced that it signed a non-binding Letter of Intent with a supplier of automotive interiors to Tier 1 manufacturers to develop products for the automotive industry.