The FTSE-100 finished yesterday's session 0.61% lower at 7,484.10, whilst the FTSE AIM All-Share index was down 0.38% at 1,036.85. In continental Europe, the CAC-40 finished 1.16% lower at 5,407.75, whilst the DAX was down 1.49% at 13,182.56.
In New York on last night, the Dow closed 0.43% lower at 23,461.94, the S&P 500 slipped 0.38% to 2,584.62 and the Nasdaq finished 0.58% weaker at 6,750.05.
In Asian markets this morning, the Nikkei 225 was down 0.82% at 22,680.84 but the Hang Seng was 0.24% higher at 29,205.32.
In early trade today, WTI crude was 0.09% lower at $57.12 per barrel and Brent was 0.14% weaker at $63.84 per barrel.
Christmas ad spend to hit record high
Advertising agencies are expected to rake in a record £6bn over the Christmas period, according to an industry body forecast. The Advertising Association says it is being driven by intense competition, especially within the retail sector, and the rise of big-budget campaigns. It believes spending on ads has jumped nearly 40% in just seven years. The figures come as campaigns by major retailers such as John Lewis, M&S and Asda get under way. "There have been so many blockbuster campaigns over the last 10 years," says Karen Fraser, director of Credos, a think tank which compiled the forecast with the Advertising Association. John Lewis' Christmas ads have become particularly anticipated by the public and advertisers in recent years. A recurring theme in John Lewis adverts has been to take out branding and centre on stories to grab people's attention. Their latest campaign - launched this week - focuses on the tale of a little boy and his friendship with an imaginary monster living under his bed. Rival Marks and Spencer has launched an advert featuring Paddington Bear stumbling across a burglar he mistakes for Father Christmas.
Source: BBC News
Jubilee Platinum (LON:JLP, 4.22p) – Speculative Buy
Jubilee has published FY17 results to June. These reflect a full year's contribution from Dilokong but only a small one from Hernic which was under construction for most of the period. Key numbers include revenues of £9.8m and a loss of £2.1m before impairments, versus a loss of £3.4m last year. In terms of cash, operating cashflow was a small positive, investing cashflow was approx. £7.8m and after £5.2 of equity financing, cash was £4.6m at the end of June. In FY18 these numbers should improve very significantly due to a full year contribution from Hernic and a new JV agreement at Dilokong which gives Jubilee 50% of all earnings. Dilokong's output should also increase as it can now process 3rd party ore (as opposed to only historical surface dumps). Other key value drivers were the Tjate mining license award and the PlatCro acquisition. Post period, Bushveld signed an agreement over zinc lead dumps in Zambia and secured a $50m financing package (as yet unused).
Our view: These results reflect Jubilee's first steps towards becoming a multi project platinum, chrome, zinc-lead and potentially other metals processing company. Hernic and Dilokong are both fully financed, operating and generating cash. While PlatCro and Zambia (ZnPb) are next on the list for development. In terms of cash generation going forward, the new 50:50 agreement at Dilokong and the fact Hernic is making a full contribution, are very significant positive changes. We maintain a Speculative Buy recommendation.
Beaufort Securities acts as a corporate broker to Jubilee Platinum PLC
Burberry Group (LON:BRBY, 1,787.00p) – Buy
Burberry yesterday announced its interim results for the 6 months ended 30 September 2017 ('H1 FY18'). During the period, retail revenue advanced by +4% (underlying) and +9% (reported) to £1,263m, while like-for-like ('LFL') sales grew by +4%, against the comparative period (H1 FY17). On an adjusted basis, operating profit rose +28% to £185m, supported by +2.1% improvement in margin (driven by reduced marketing spend for Beauty) to 14.6%, leading to diluted EPS of 32.3p, up +32%. Net cash at period end amounted to £654m (end-FY17: £809m). On the operational front, the Group completed the transition of its Beauty operations to strategic partnership with Coty on 2 October 2017. To date, Burberry returned £191m through share buyback, while it declared an interim dividend of 11p, up +5%, to be paid on 2 February 2018. Looking ahead, the Group upgraded its full year cumulative cost saving guidance to £60m (from £50m) and increased share buyback to £350m (from £300m). Adverse FX impact is now £20m (previously £25m). One-off restructuring costs is now expected to be £75m (from £40m). Altogether, management marginally upgrade their adjusted operating profit (at constant currencies) expectations for FY18.
Our view: Burberry's H1 results were strong and the management marginally upgrade their adjusted operating profit expectations for the FY18. So why the share price sank -10% yesterday? It is probably due partially to profit taking (shares up +37% YTD surpassing Beaufort's target price of 1,920p), but more down to Burberry's strategy update for the next two years. The Group now expect during this 'transitional period' in order to move the Burberry brand more towards luxury and fashion (as oppose to heritage), revenue and margin will be broadly flat. Beaufort, however, is encouraged that despite an ambitious strategy to adjust the brand in line with current consumer trend, the CEO is confident to deliver this in just two years time, where revenue, operating margin and EPS are expected to grow further thereafter. During next two years, we believe the Group is capable to derive profitability through cost savings (cumulative savings of £120m by FY20) and reduced tax rate (reduction of 2%-3% by FY20), while shareholders are continued to receive return through continued progressive dividend and share buybacks. The shares are valued at FY18E and FY19E P/E multiple of 22.5x and 22.4x with dividend yield of 2.3% and 2.5%, respectively, which is not demanding comparing to its peers. Beaufort reiterate its Buy rating on the shares and upgraded its target price to 1,980p (from 1,920p).