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Beaufort Securities Breakfast Alert: Bushveld Minerals and JD Wetherspoon

Beaufort Securities Breakfast Alert: Bushveld Minerals and JD Wetherspoon

Markets
Europe
The FTSE-100 finished yesterday's session 0.65% higher at 7,529.72, whilst the FTSE AIM All-Share index was down 0.49% at 1,040.84. In continental Europe, the CAC-40 finished 0.17% lower at 5,471.43, whilst the DAX was up 0.02% at 13,382.42.
Wall Street
In New York last night, the Dow closed 0.03% higher at 23,563.36, the S&P added 0.14% to reach 2,594.38 and the Nasdaq finished 0.32% stronger at 6,789.12, as president Donald Trump continued with his travels around Asia.
Asia
In Asian markets this morning, the Nikkei 225 was down 1.06% at 22,671 but the Hang Seng was 0.45% higher at 29,036.28.
Oil
In early trade today, WTI crude was 0.04% lower at $56.79 per barrel and Brent was also weaker at $63.45 per barrel.

Headlines
Sainsbury's profits fall 9% but sales rise
The supermarket giant said profits came in at £251m in the 28 weeks to the 23 September, while like-for-like sales excluding fuel went up by 1.6%. It said the fall in profits was due to price cutting, wage cost inflation and the consolidation of Argos. Chief executive Mike Coupe said he was "very pleased with progress" at the company. The supermarket chain took over catalogue retailer Argos and Habitat last year in a £1.4bn deal. Mr Coupe said: "We have delivered a good performance across the group in the last six months, with more customers choosing to shop at Sainsbury's in the first half than ever before. We are now three years into delivering our differentiated strategy and are seeing clear results." Sainsbury's is looking to make cost savings amid fierce competition from discounters and rising food costs.
Source: BBC News

Company news
Bushveld Minerals (LON:BMN, 9.62p) – Update
Bushveld Minerals, the diversified mineral development company with a portfolio of vanadium, titanium, iron ore, tin and coal in southern Africa, announced today the admission of AfriTin Mining (ATM.L) ordinary shares to trading on the AIM market. Upon admission, Bushveld will own a total of 52M ordinary shares of AMT, valued at £2m based on the issue price of 3.9p. A further 24.39% (72.6M shares) of the issued share capital of ATM will be distributed to Bushveld shareholders on record as of close of business on 8 November 2017.

Beaufort Securities acts as a corporate broker to Bushveld Minerals plc

JD Wetherspoon (LON:JDW, 1,247.00p) – Sell
JD Wetherspoon yesterday provided its trading update for the 13 weeks ended 29 October 2017 ('Q1 FY2018'). During the period, total sales advanced by +4.3%, while like-for-like ('LFL') sales increased by +6.1%, against the comparative period (Q1 FY2017). Operating margin remained flat year-on-year at 8.6%. On the operational front, the Group opened 2 new pubs and closed 6 pubs during the period.

Our view: Q1 LFL sales growth of +6.1% was reasonably impressive and the management retained its full year expectations for operating margins and trading outcome. What has not changed, however, is the fact that the industry continues to face significant cost pressures. Wetherspoon anticipates total additional costs of some £20m this year coming from business rates, electricity taxes, excise duty and Apprenticeship Levy. The proposed sugar tax (which some expects to be included in Philip Hammond's budget on 22 November 2017) will also impact the Group from April 2018 at a cost of some £4m. Such headwinds will require Wetherspoon to achieve LFL sales of c.3% to 4% in order to maintain flat profits against last year (FY2017: £102.8m). Consensus currently forecasting LFL of +3.9% but profits before tax of £98.2m (-3% EPS decline year-on-year). The shares deserve some premium to its peers but trading at FY2018E P/E of 18.6x with dividend yield of only around 1%, it now reflects just about all anticipated opportunities, while remaining vulnerable to any downside shocks. Beaufort downgrade the shares to Sell (from Hold) and set a price target of 1,142p.



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