Entain raises guidance as Brits return to bookies

Liam Roche
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Entain raises guidance as Brits return to bookies

Entain’s growth in the US hinges on regulation opening up on a state-by-state basis

Entain (LON:ENT), owner of Ladbrokes, increased its expected earnings for the full-year as it confirmed its revenues increased during Q2 on the easing of Covid-19 restrictions.

The FTSE 100 company said re-opened store volumes increased to just 10% below pre-pandemic levels, during the six month period from 1 January to 30 June.

Throughout the UK’s national lockdowns, Entain’s revenues were hit badly, however, the company said there has been ‘encouraging’ signs across retail as restrictions have been eased.

“Our platform provides us with a significant opportunity to align our business better with our customers and increasingly deliver a wider breadth of exciting products, content and experiences as the worlds of media, entertainment and gaming converge,” CEO Jette Nygaard-Anderson said.

“Over the last 4 years, Entain has been aggressively pursuing an acquisition strategy. Although its most recent offer for Tabcorp was rejected, Entain looks likely to table additional offers as it seeks to grow inorganically,” said Harry Barnick, Senior Analyst at Third Bridge.

“Whilst all eyes are on Entain’s potential acquisition targets, Entain itself may be back in the cross-hairs of MGM. Our experts say that once some froth has come off the market it is more a matter of when, rather than if, another bid is made for the sports betting and gambling company,” Barnick added.

Entain’s growth in the US hinges on regulation opening up on a state-by-state basis. New York looks promising but California remains challenging due to its strong tribal ties.

“The major operators, including Entain, Fandual and Draftkings are buying market share in the US to drive growth. They are haemorrhaging cash in the fiercely competitive market. The partnership with MGM helps Entain with these costs in the US because of access to better technology which can improve cost per acquisition.”

“Although Entain benefits from its proprietary stack in the US, BetMGM suffers from weaker branding when compared to peers like Fandual and Draftkings, which are both well established in the US market.”

B&M sales fall following outstanding year

Liam Roche
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B&M sales fall following outstanding year

Seven 7 new B&M UK stores opened during the first quarter while four closed

B&M (LON:BME) confirmed on Thursday that its revenue grew by 3.1% during Q1 on a constant currency basis.

The variety store company delivered two-year like-for-like revenue growth of 21.3% compared to pre-pandemic levels of FY20. On a one-year basis, like-for-like revenues were down by 4.4%.

Seven new B&M UK stores opened during the first quarter, while four closed.

Sales were up and down throughout Q1, supported by a boost in demand for gardening products, which aided sales at the end of the last financial quarter and the beginning of the new one.

Amisha Chohan, equity research analyst at Quilter Cheviot commented on the ‘natural’ decline in B&M’s sales.

“As an essential retailer, B&M was a standout winner from the Covid-19 pandemic, with group EBITDA up 83% to £626m,” said Chohan.

“Q1 UK like-for-like sales fell by 4.4%, compared with the 33% growth last year, but this isn’t really too surprising given the tough comparators and the fact that the economic reopening will spread demand across the retail sector and particularly to those places that have been closed recently.”

“B&M’s first quarter revenues suffered from a pull-forward of demand for gardening and outdoor products, and into this quarter revenue in this area has taken a hit due to the poor weather. The wet weather in June is believed to have reduced like-for-like sales by 12%.”

“That said, B&M’s discounter business model is still appealing, and it has retained new customers made during the lockdowns. However, as a Covid winner, it is only natural that earnings will fall after such a successful year.”

B&M European Value Retail share price is down by 2.91% on Thursday to 560.80p.

Greatland Gold confirms appointment of Christopher Toon as CFO

Liam Roche
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Greatland Gold confirms appointment of Christopher Toon as CFO

Toon will join in a non-board role and will begin on Monday 12 July 2021

Greatland Gold (AIM:GGP), the precious and base metals exploration and development company, announced the appointment of Christopher Toon as chief financial officer on Thursday.

Toon will join in a non-board role and will begin on Monday 12 July 2021.

He has previously overseen the development of fast-growing mining businesses, including senior finance roles Sakari Resources, Aquila Resources, Iluka Resources and most recently with Sandfire Resources.

This is since he began his career as an accountant at PwC.

Shaun Day, chief executive officer of Greatland Gold plc, heaped prais on Toon ahead of his appointment: “We are delighted to welcome Christopher as our new CFO. An experienced and respected operator, Christopher brings considerable expertise in guiding publicly quoted mining companies through periods of rapid growth and transformation. This skillset will be an immense asset to Greatland as we progress Havieron up the value curve and develop the wider business.”

Commenting on his appointment, Christopher Toon said: “Greatland is regarded across Australia as one of the most exciting and dynamic companies in the natural resources sector. Underpinned by its world-class flagship asset, tier one partner and exploration profile, the business is now entering a key growth phase and is well placed to scale at speed. I look forward to working with Shaun, the Board and the wider team to support these ambitious plans.”

As part of his appointment, Christopher Toon will receive up to 2,000,000 performance shares subject to the achievement of certain performance criteria, Greatland Gold confirmed.

The Greatland Gold share price is up by 1.63% on Thursday to 18.09p per share.

New standard listing: Wise

Andrew Hore
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New standard listing: Wise

Cross-border payments business Wise chose to join the standard list through a direct listing where the share price is determined by the opening auction on the London market. This took until just after 11am and the starting price was 800p. There was significant trading in the following hour.
The share price ended the first day of trading at 880p, which values the A shares at £8.75bn. There were 61.74 million shares traded during the day. That should have been worth more than £500m.
There are two classes of shares and that is why this is a standard rather than a premium listing. The class A shar...

New AIM Admission: Saietta Group

Andrew Hore
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New AIM Admission: Saietta Group

Saietta has raised nearly £33m to complete the development of its aerial flux motor technology and build a production facility for the motors. The strategy is to focus predominantly on e-motorcycles, particularly in Asian markets.  
Saietta is already talking to four out of the top five motorcycle manufacturers in India. It is also talking with manufacturers in China.
Existing shareholders raised £2.2m through the placing. The share price ended the first day of trading at 125.5p, having reached 131p at one point.
Saietta is valued at more than £100m and it has minimal revenues. The instit...

Cora Gold share price flies after company discovers ‘world class’ intersection in Mali

Liam Roche
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Cora Gold share price flies after company discovers ‘world class’ intersection in Mali

Cora Gold Share Price

The Cora Gold share price (LON:CORA) is soaring on Wednesday, up by 37.50% heading into the afternoon session as the gold-focused company announced its latest drilling results. It is the first price move of such a sudden nature in approximately a year as the Cora Gold share price has been trading sideways since the beginning of 2021. Year-to-date the AIM-listed firm is up by 25%, largely down to the move today, which followed on from the announcement from its Sanankoro Gold Project in the south of Mali.

Drilling Results

Cora Gold found a “world class intersection” while drilling at the Sanankoro gold project in Southern Mali.

The company said it has been encouraged by its results to date with good widths and high-grade results in generally shallow oxides ore.

The company said that results at Zones A and C further reinforce the mineable quality of the Sanankoro gold structures. Highlights from Zone A include 19m @ 31.56 g/t Au from 65m, while the intercept began 50m below existing pit shell at Zone A.

At Zone C it reported 14m @ 8.54 g/t Au from 115m, in addition to three other intercepts.

Bert Monro, CEO of Cora, expressed delight at the results which caused the Cora Gold share price to rocket: “This drill programme continues to go from strength to strength. 19m @ 31.56 g/t Au is by far the most significant drill hole that Cora has ever drilled. This hole sits outside the existing inferred resource pit shell, starting 50m deeper than the current resource pit shell, so offers even greater upside to the Sanankoro Gold Project. This programme is continuing to deliver very high-grade oxide drill results from shallow depths, offering significant economic potential for the upcoming resource and DFS.”

“Zones A and C were historically lower grade than Selin, but these results demonstrate that there is potential for better grades in these deposits. The Company is aiming to complete the 35,000m drill programme over the next month with a resource update due to follow once all the assay results have been received.”

There could be further news on the Cora Gold share price once this has taken place.

Brits wary of investing emerging markets despite regularly using their goods and services

Liam Roche
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Brits wary of investing emerging markets despite regularly using their goods and services

Evidence suggests that investing in emerging markets could deliver favourable returns and opportunities for greater portfolio diversification longer-term

Goods and services from emerging market economies are vital to the every day lives of people across the UK. However, despite this being the case, UK investors are not actively investing in companies from these economies. This is according to research from Templeton Emerging Markets Investment Trust (TEMIT).

The research shows that 38% of consumers reported ‘positive feelings’ towards emerging markets, while a mere 11% actively invest in emerging markets. This is despite 93% of people confirming that they use at the least one product from an emerging market on a daily basis.

TEMIT provided examples including a TV or washing machine made by Samsung in South Korea, or a 5G chip for their mobile phone manufactured in Taiwan.

Detailed research concluded that usage of emerging market products found that 27.3m UK adults watch a Samsung TV (based in South Korea), while 19% of adults use Beko products in their home (a company based in the emerging market of Turkey).

ProductDaily Users of ProductNumber Hesitant to Invest in Emerging Markets
Samsung TV (South Korea)41%56%
Samsung Phone (South Korea)36%52%
Apple Phone (EM exposed)37%59%
Beko tumble dryer (Turkey)19%60%

Chetan Sehgal, Lead Portfolio Manager at Templeton Emerging Markets Investment Trust, commented on the opportunity cost of not investing in emerging markets: “Not actively investing in emerging markets could mean consumers are missing out on significant growth potential for their investments. Investing in emerging markets offers many benefits compared to their developed-world competitors. The strength in their economies is driven by innovative, high technology companies and strong consumption patterns, meaning that their growth potential is far superior.”

“But looking under the hood into what consumers think of emerging markets, we’ve found that perceptions are holding them back from investing in them. As a result, many opportunities to participate in the projected growth in some of the world’s fasted growing economies, while taking advantage of global diversification, are often overlooked.”

To provide additional context, TEMIT the returns on a cash savings account, the FTSE 100 and the passively managed MSCI Emerging Markets Index. With a monthly investment of £50 over a period of 18 years, equalling a total investment of £10,800, a cash savings account would return £11,176. While over the same period of time, TEMIT said the FTSE 100 would have returned £18,987, while the MSCI Emerging Markets Index would have returned £27,859.

“Overall, the evidence suggests that investing in emerging markets could deliver favourable returns and opportunities for greater portfolio diversification longer-term, in large part because of their exposure to innovation and a growing middle class, and thus growth potential,” Seghal said.

Construction sector growth at highest point in 24 years

Liam Roche
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Construction sector growth at highest point in 24 years

A number of firms reported supply shortages

The construction sector grew at its fastest rate in 24 years in June, as demand for new build homes and commercial property continued to soar.

That is according to the latest PMI data, which closely follows the construction industry.

The IHS Markit/CIPS construction PMI surpassed expectations, rising to 66.3 in June, up from 64.2 the month before.

With anything above 50 representing an increase in activity, it was the highest recording since 1997.

Survey respondents drew attention to a rapid turnaround in demand for new construction work, especially residential building and commercial projects related to the reopening of the UK economy.

A number of firms are finding it difficult to meet raised levels of demand. Shortages of raw materials and bottlenecks in supply chains are causing costs to pile up and adding to concerns over inflation.

Tim Moore, Economics Director at IHS Markit, which compiles the survey, commented further on its findings:

“June data signalled another rapid increase in UK construction output as housing, commercial and civil engineering activity all expanded at a brisk pace. The headline index signalled the fastest rise in business activity across the construction sector for 24 years. Total new orders expanded at one of the strongest rates since the summer of 2007, mostly reflecting robust demand for residential projects and a boost to commercial work from the reopening UK economy,” said Moore.

“Supply chains once again struggled to keep up with demand for construction products and materials, with lead times lengthening to the greatest extent since the survey began in April 1997. Survey respondents widely reported delays due to low stocks of building materials, shortages of transport capacity and long wait times for items sourced from abroad.”

“Purchasing prices and sub-contractor charges both increased at a survey-record pace in June, fuelled by supply shortages across the construction sector. Escalating cost pressures and concerns about labour availability appear to have constrained business optimism at some building firms. The degree of positive sentiment towards the year- ahead growth outlook remained high, but eased to its lowest since the start of 2021.”

UK house prices drop for the first time since January

Liam Roche
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0
UK house prices drop for the first time since January

The average price of a home is now £260,358

House prices in the UK fell by 0.5% in June compared to the month before, according to Halifax, the mortgage lender.

It is the first time since January that house prices dropped.

The yearly rate of growth is down to 8.8% from 9.6% in May, which was a 14-year high. This comes stamp duty will gradually be phased out until September.

The average price of a home is now £260,358, down by £1,284 from the month before.

Russell Galley, managing director at Halifax, commented on the phasing out off the stamp duty holiday:

“With the stamp duty holiday now being phased out, it’s was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.”

“That said, with the tapered approach, those purchasing at the current average price of £260,358 would still only pay about £500 in stamp duty at today’s rates, increasing to around £3,000 when things return to normal from the start of October.”

Chris Hutchinson, CFO & Co-Founder of Canopy, says the stamp duty holiday was never going to be a permanent solution:

“House prices couldn’t keep on rising forever, and it seems that some of the heat is finally coming out of the market as the stamp duty holiday comes to an end. But while the temporary tax freeze got some buyers on the front-foot, it was never a long-term solution and barriers to homeownership remain. What’s more, we’re now at a point where the disparity between average salary and average asking price has led Generation Rent down an incredibly difficult path to future homeownership.”

“Nobody should feel that they are compelled to face a lifetime of renting. But with renters plugging thousands into the rental system each year, this money can feel like a waste. We should be making rent payments count towards people’s credit rating, to make it easier and quicker to secure an affordable mortgage when the time comes to buy. Instead of propping up first-time buyers with temporary support measures, it could make far more difference if we get Generation Rent equipped to buy from the very beginning of their rental journey.”

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