Bookie William Hill plc (LON:WMH) was slow out of the traps this morning after its trading update and a revival down the back-straight has since faded.
The shares were off 5.6% at 201.7p despite the company announcing at its capital markets day its intention to double profits by 2023.
“This is to be achieved through a 10% CAGR [compounded annual growth rate] in profits from Online, partly achieved through geographic diversification of revenue. More dramatically the target for the US business is [to] take EBITDA [underlying earnings] from US$50mln to US$300mln through William Hill fulfilling its goal of being ‘market leader’,” said broker, Peel Hunt.
“We expect this bold statement of intent for the next five years, while needing a very considerable pinch of salt, will offset the confirmation that the group has put itself in a position where it can no longer sustain the dividend,” the broker said, as it reiterated its “add” recommendation and 250p target price.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, put the dilemma slightly differently.
“For investors, William Hill is a trade-off between almost certain pain in the short term, and possible opportunity in the long run,” he declared.
“The group’s large betting shop estate means it’s going to be hit hard by changes to rules around betting machines, and declining footfall on the high street isn’t doing it any favours either. Regulation requiring increased due diligence on online customers and higher rates of tax mean profits from the online business are set to head backwards this year and next as well.
“There’s a pot of gold at the end of the rainbow though, and that’s the US$5bn-US$19bn US sports betting market. William’s Hill’s been fast out the stalls, an advantage of already being an established player in Nevada, and has started racking up the bets. Early gross win margins in those states suggest the market could be very lucrative in the long run. It’s not going to be a walkover though, European bookies are jetting around the US agreeing tie-ups left right and centre, and William Hill will soon be up against some stiff competition,” Hyett predicted.
Interesting slide from the William Hill capital markets presentation. They've not got to this bit yet so have no other colour on this at the moment. pic.twitter.com/lgQb6Xsik4
— Alun (@gamblinglamb) November 6, 2018
1.30pm: Pebble Beach holes out with two contract wins
For some of us, Pebble Beach is a golf course but it is also a software company and today it is featuring high on the leader-board.
Shares in Pebble Beach Systems Group PLC (LON:PEB) shot up 18% to 4.9p after the company announced two significant new orders.
Pebble Beach Systems #PEB
Share Price 4.9p (+18%)
Bid/Offer 4.6p/5.2p
Don't needlessly rush in!
£5.2 mkt cap but with £15.7 enterprise value =£10m+ debt.
Contracts won, but still as yet only marginally profitable.
Hit pause button, review and wait for debt to be reduced. pic.twitter.com/8r9Kh2JWqF
— Dearg Doom (@MyDeargDoom) November 6, 2018
The first order, worth roughly £1mln, was from a large European commercial broadcaster while the second, also worth around a million quid, is for a European broadcast service provider that is building a new facility in Zurich.
The company said it remains on track to deliver improved profitability as a direct result of the restructure undertaken throughout 2017 and the first half of this year.
And just in case you had clicked on this story expecting to see a golf story, here is a Tweet featuring the Pebble Beach golf course.
The Lodge at Pebble Beach- Pebble, Spanish Bay, Spy Glass- 2 nights 2 Rounds Stay and Play - - - pic.twitter.com/BvKkqUHtFm
— Myrtle Beach Trips (@Myrtlebeachtrip) November 6, 2018
Noon: Recruiters Nakama and Hydrogen are just the job
Nakama Group PLC (LON:NAK), the AIM-quoted recruitment consultancy, shot up after it revealed First Point Group has a 24.2% stake in the company.
First Point is now beneficially interested in 28,480,240 ordinary shares in Nakama.
Shares in Nakama soared 38.6% to 1.52p, taking the market capitalisation up to the princely sum of £1.3mln.
Sector peer Hydrogen Group PLC (LON:HYDG) was also wanted after it raised full-year profit expectations.
The global specialist recruitment group said it was outperforming fiscal 2017 in all regions. Furthermore, the group's balance sheet has continued to strengthen as profit has been converted to net cash.
Hydrogen shares rose 18% to 58.5p.
The ‘Will It Make the Boat Go Faster?’ approach helps companies get back to defining what’s important, what their real purpose is and what difference they want to make. - https://t.co/JRyDMYLqhx
— Hydrogen Group (@HydrogenGroup) November 6, 2018
10.30am: Morrisons' slowing sales growth sends shares sliding; Connect Group dives after binning final divi
Supermarket group Morrison (Wm) Supermarkets PLC (LON:MRW) was the worst performing blue-chip after a third-quarter trading statement.
The shares were down 5.5% at 240.5p and independent retail analyst, Nick Bubb, gives a hint why the market may have been underwhelmed.
“CEO Dave Potts trumpets about the business, but there is no comment in the statement on margins or profits. every impression of being prepared to give Morrisons an even break,” Bubb said.
“Today’s Q3 update from Morrisons covers the 13 weeks to Nov 4th, so it includes most of the recently quieter period of trading for the supermarket industry, after the summer bonanza, but the underlying Retail income of +1.3% LFL [like-for-like] is only “slightly” down on the +2.5% achieved in Q2 and strong Wholesale growth has pushed total LFL sales growth up to 5.6%,” Bubb commented.
Graham Spooner, an investment research analyst at share-dealing service, the Share Centre, said the market appears to be focussing on a slight slowing of sales from the previous quarter at the core supermarket business.
“In a very competitive market place, investors in the group will be hoping that it can entice some new shoppers through its doors in the run up to Christmas. Morrison’s is trying to be different and the launch of its ‘naturally wonky’ fruit and veg range, alongside cost cutting in an attempt to gain market share demonstrates it is making steps,” Spooner said.
Chris Beauchamp, the chief market analyst at spread betting group IG, reckons a 5% fall “seems a little overdone”.
“Still, with the UK’s exit from the EU looking to be a messy one, firms dependent on UK consumers are not exactly the place to be. Despite hopes that Christmas will be an encouraging season for the sector, it looks like investors expect more weakness in the near term,” he suggested.
Full-year results from Connect Group PLC (LON:CNCT), the supply chain specialist, failed to deliver on expectations.
The shares tumbled 3p to 34.35p as the company binned its final dividend after reporting a loss before tax of £35.5mln, compared to a profit the year before of £34.2mln.
"A year of significant challenge exposed weaknesses in our strategy and its execution, with a consequent impact on results,” said chairman Gary Kennedy.
“While it is disappointing not to succeed, we have taken decisive action to address underperformance and respond to the lessons learned.”
Tony Grace, who was appointed as chief financial officer on an interim basis in June, is clearly a man who is up for a challenge, as he has dropped the “interim” part of his job title and joined the board of Connect.
9.15am: Renewable energy the flavour of the morning
There was more than a flavour of renewable energy – if that has a flavour – about the early morning top performers.
ITM Power PLC (LON:ITM), up 7.3%, is a power-to-gas technology firm while SIMEC Atlantis Energy Limited (LON:SAE), up 4.8%, is working on converting a coal-fired power station to use energy pellets made from non-recyclable waste – in other words, a waste-to-energy company.
ITM’s share price surge was prompted by a green light being given to the HyDeploy pilot project, which will blend up to 20% hydrogen into an existing natural gas network.
HyDeploy: Hydrogen in the UK Gas Grid: https://t.co/PZzDrPiebm #hydrogen #gas #fuel #energy #heating #homes #heat pic.twitter.com/eDMmQpUkrV
— ITMPowerPlc (@ITMPowerPlc) November 6, 2018
ITM Power is supplying the electrolyser system at the heart of the 12-month study, which begins next year.
Hydrogen will be pumped into the Keele University gas system serving 17 faculty buildings and 100 domestic properties.
"The significance of this announcement, allowing up to 20% green hydrogen to be injected into a UK gas network, is hard to overstate,” said ITM’s chief executive Graham Cooley.
As for SIMEC Atlantis, which is perhaps better known for its tidal power prowess, it issued its second announcement of the week relating to the Uskmouth coal-fired power plant in Wales.
Yesterday, it detailed the progress it has made on the planned conversion of the plant to use energy pellets; today, it revealed it has awarded the front-end engineering and design (FEED) contract for the project to WSP UK, part of the Canadian engineering group, WSP Global Inc, and RJM, which has been working on the Uskmouth conversion project since July 2015.
Proactive news headlines:
A ground-breaking green energy pilot involving ITM Power PLC (LON:ITM) has been given the green light. The HyDeploy project will blend up to 20% hydrogen into an existing natural gas network.
SIMEC Atlantis Energy Limited (LON:SAE) has awarded the front-end engineering and design (FEED) contract for its Uskmouth power plant conversion project to a consortium consisting of WSP UK and RJM.
TLOU Energy Ltd (LON:TLOU) updated investors on its field operations in Botswana where it is advancing the Lesedi coalbed methane project. It told investors that the vertical Lesedi-3P well had now been drilled down to its total depth of 575 metres.
KRM22 PLC (LON:KRM) has inked a partnership deal with Vector Risk, a market and credit risk solution provider, to provide software for its Global Risk Platform (GRP).
Cabot Energy PLC (LON:CAB) has revealed a 26% increase in proved and probable reserves as it reported its annual inventory report. It comes as a result of revised studies and documentation of the subsurface and surface facilities.
Curzon Energy PLC (LON:CZN) has unveiled a number of management changes, with the most significant being the promotion of non-executive director Scott Kaintz to the position of chief executive.
Pan African Resources PLC (LON:PAF) produced 37,729 ounces of gold during the first quarter of the 2019 financial year. And chief executive Cobus Loots struck an optimistic tone when commenting on the likely performance for the rest of 2019.
Caledonia Mining Corporation PLC (LON:CMCL) is to move ahead with the acquisition of a further 15% of the Blanket gold mine in Zimbabwe from local investment group Femiro. Separately, Caledonia has moved to reassure investors that the ongoing shortage of foreign exchange in Zimbabwe has not impacted operations at Blanket. The company said it is in touch with the highest levels of government in Zimbabwe, and that the matter is receiving urgent attention.
AfriTin Mining Limited (LON:ATM) has started drilling at the Uis in Namibia to firm up the resource ahead of the planned re-opening of the tin mine. Anthony Viljoen, chief executive, said the historical database originally created for Uis is extensive with a high level of detail and will be used to speed up the validation drilling and exploration programme.
Kazera Global PLC (LON:KZG) has now drilled and assayed 360 cores with further cores and channel sampling sent for assay at the Namibia Tantalite mine in Namibia.