Spread betting firms love market volatility so IG Group Holdings PLC (LON:IGC) will just have to grin and bear today’s 10.4% fall.
The tumble came after a first half trading update that revealed full-year revenue is expected to be down 6% year-on-year.
“The final month of Q1 was under the new ESMA [European Securities and Markets Authority] rules (notably the materially lower leverage caps) and IG reported that, as expected, this had resulted in ‘significantly’ lower trading volumes from UK/EU retail clients compared to the previous month; however, the performance in August did not, at that point, change the company’s previously stated view that the ESMA measures would reduce group revenue by 10% on an annualised like-for-like basis,” noted IG’s house broker, Shore Capital, which went into bet … er … bat for its client.
“Today’s statement notes that in the four months since the regulations changed (IG use 1st August as the reference date because that was when all measures were applied) group revenue was down 10%. This figure is very close to IG’s guidance of a pro-forma annualised 10% fall, the only slight caveat being that within this 10% fall the group appears to have benefited from a degree of mitigation from c1200 clients previously contracting with the UK entity, now trading with one of IG’s non-EU entities. This is presumably because they were unable to pass the test to elect for professional status. The original -10% guidance assumed no mitigation,” Shore Capital continued.
Long story short: Shore Capital thinks the recent share price fall has been overdone. It has a target price of 608.5p and has just upgraded its recommendation to ‘buy’ from ‘hold’.
Based on Shore’s forecasts for the year to the end of May, the stock trades on an earnings multiple of 11 and offers a forecast dividend yield of 7.9%.
1.15pm: Another company joins the list complaining about delayed contracts
The theme of the day – certainly among the stocks knocked for six – has been delays, and here’s another candidate: Surface Transforms PLC (LON:SCE).
The carbon-ceramic materials specialist saw its share price slump to 13p from 14.75p overnight as the directors admitted to being “increasingly concerned of a possible, but not yet certain, three to six months delay” to the start of production of a contract with a British original equipment manufacturer (OEM) for a limited edition track car.
The start of production had been forecast for the final quarter of the company’s fiscal year, which runs to the end of May, so there is still time for things to take a turn for the better but if they do not, the firm reckons the financial impact will be a reduction in expected sales of around £500,000.
The company said that, as a precaution, it has modelled the working capital impact of this as well as a "stress test" of a situation where fiscal 2019’s sales are on a par with the year before. In both instances the company has adequate cash headroom, it assured shareholders.
11.30am: Consort Medical warns on profits as it waits for FDA to approve Mylan's Wixela programme
Consort Medical PLC’s (LON:CSRT) solid interims were overshadowed by a warning on full-year profits.
The drug delivery specialist said delays in the expected approval date of US drugs giant Mylan’s Wixela will hit full-year profits.
Mylan had been building inventory ahead of the potential launch and the US firm’s demand for Consort’s devices is now anticipated to reduce in the near-term due to the delay in the programme.
The net result is that the board of Consort expects profit before tax for the current financial year to be affected by roughly £3mln.
Consort Medical plc (CSRT) examined in new market research report: The company provides inhaler and auto-injector technologies and manufacturing services to pharmaceutical manufacturers; and active pharmaceutical ingredients (API), and finished dose… https://t.co/fFDVpNmYBS pic.twitter.com/3VQcPj0egR
— XmarketReports (@XmarketReports) December 4, 2018
Broker RBC Capital Markets responded by cutting its price target to 1,320p from 1,430p, although it stuck with its ‘outperform’ rating. Shares in Consort currently trade at 765p, down 216p on the day.
“Whilst the delay in approval of this programme and near-term anticipated negative impact on our business is disappointing, our view of the peak sales opportunity for the product remains unchanged,” said Jonathan Glenn, the chief executive officer of Consort Medical.
At the risk of sounding like the reporter who asked Mrs Abraham Lincoln what the play was like, half-year results from Consort were respectable, with reported profit before tax rising 28% to £9.6mln from £7.5mln the year before on flat revenues.
Net debt of £95.3mln, versus £95.3mln a year earlier, was in line with expectations and roughly 1.6 times annual underlying earnings (EBITDA).
Literally all I do is see what company has blown up. Then search to see if the IC have tipped it. Consort Medical #CRST tipped most recently by IC at Sept 12 2018 at 1,190p. Today less than 800p after a 20% slide. Off a third in total in about three months. pic.twitter.com/xuYhCd0DkX
— ChronicInvestor (@ChronicInvest) December 4, 2018
10.15am: Tekmar sunk by timing delays
The first set of results for Tekmar Group PLC (LON:TGP) since it floated in June proved a bit of a disappointment.
The provider of protection systems for sub-sea cable, umbilical and flexible pipes floated at 130p but they’ve long since stopped floating and have been sinking in the last couple of months, falling another 30p to 97.5p today.
Today’s fall followed the revelation in the half-year results of a short-term delay in the award of preferred bidder contracts and a shift in revenue recognition from the first half of the current fiscal year to the second due to delays in customer procurement decisions.
The company said that the delay plus a change in product mix means that full-year profits – or losses if you prefer – will now likely be closer to those achieved in fiscal 2018, although the company expects to return to profitability in fiscal 2020.
"Contracting activity has increased during the period and the group has a record order book of £12.9mln,” noted Alastair MacDonald, the non-executive chairman of Tekmar.
“There has, however, been a delay in the award of higher margin TekLink offshore wind contracts, on which we have preferred bidder status. Our customers have changed lead times from order placement to delivery by up to six months, deferring the signing of contracts by a similar period,” he explained.
“It is important to note that this impact on FY19 profit is purely a timing issue, which will be partially mitigated by profits generated by newly acquired Subsea Innovation,” MacDonald added.
READ Tekmar Group goes back to roots with Subsea acquisition
9.15am: Argo Blockchain bounces back
Argo Blockchain PLC (LON:ARB), the crypto mining services provider, was one of the top risers early doors after an upbeat trading statement.
The company said sales of its crypto mining subscription packages beat its targets by “a significant margin ahead of schedule” as growth continued to exceed supply and its own expectations.
The annualised revenue run-rate now expected to be US$6.2mln (£4.8mln), up from US$0.26mln when it listed on the London main market in August.
Argo added that its net cash balance amounted to around £15mln as of 30 November.
The Bitcoin bubble may have burst this year but in an echo of the Californian gold rush, where anecdotal evidence has it that the surest way to make money was to sell mining equipment to the prospectors, there is clearly still money to be made in the crypto-currency world.
Argo shares were up 18.4% at 5.625p.
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— Argo (@ArgoMining) December 3, 2018
IXICO PLC (LON:IXI) made two announcements this morning and while the full-year results were decent for an early-stage company, it is fair to say that it was probably the news about a contract modification that sent the shares 12.8% higher to 26.5p.
The data analytics company, which delivers insights in neuroscience, said the scope of a current contract with a top 10 biopharmaceutical company has been expanded, increasing the value of the contract by US$2.4mln over the remaining six-year term of the agreement to US$5.1mln.
Other Proactive news headlines:
BigDish Plc (LON: DISH), the company which operates a yield management platform for restaurants, has announced the appointment of SVS Securities as its joint broker with immediate effect.
discoverIE Group PLC (LON:DSCV) has hiked its interim dividend after reporting a rise in profits of almost 25% for the first half.
Demand for Collagen Solutions PLC’s (LON:COS) regenerative medicines and biomaterials surged in the first half of its current financial year.
Chinese engines giant Weichai Power has confirmed it will take a further 10% stake in Ceres Power Holdings PLC (LON:CWR) as part of a strategic collaboration agreed in May. The two have also agreed to create fuel cell manufacturing joint venture in China, a licence agreement to transfer key technology to the venture and a new £9mln joint development agreement.
Digital marketing and advertising firm Taptica (LON:TAP) was reeling after chief executive Hagai Tal offered to resign last night. Tal was found liable yesterday for certain statements made in relation to the sale of Plimus in 2011, where he was chief executive and a shareholder.
Project management and consultancy group WYG PLC (LON:WYG) has repeated its full-year guidance after coming through a “tough” first half relatively unscathed.
Life sciences business OptiBiotix Health plc (LON:OPTI) has secured a distributor in Greece and Cyprus for its SlimBiome Medical weight loss device. The AIM-listed company said its partner has an established distribution network in Cyprus, Greece and the Middle East and a track record in taking new products to market direct to pharmacies. The unnamed distribution company is associated with a number of private clinics providing therapies to individuals across the world.
Every hole in the latest drill campaign at Greatland Gold PLC’s (LON:GGP) Havieron licence in Western Australia has yielded “significant visible mineralisation”.
Custodian REIT PLC (LON:CREI) has purchased Jubilee Close, a 44,844 square foot retail Park in Weymouth.
ECR Minerals PLC said it has submitted four new licence applications to augment its existing gold exploration interests in the Victoria region of Australia and is undertaking further work to identify other strategic exploration opportunities. It said three of the applications have been submitted in the Bailieston/Moormbool gold project area to augment existing licences.
The latest well update from Tlou Energy Ltd (LON:TLOU) has told investors that ‘top hole’ drilling operations are complete for the Lesedi-3, Lesedi-4 and the ‘optional’ Lesedi- 5 wells. It added that the coal bed methane project is on time and in line with budget.
Diversified Gas & Oil PLC (LON:DGOC) told investors it has reached an agreement with the West Virginia Department of Environmental Protection regarding the company’s well decommissioning obligations.
Strategic Minerals Plc (LON:SML) has started a EM survey to search for nickel targets to drill at its Hanns Camp project at Laverton, Western Australia. The ground-based survey follows air core drilling earlier in 2018, which confirmed three valid target areas, Hanns Camp South, Royal North and Royal Central.
Europa Oil & Gas Holdings PLC (LON:EOG) chairman Simon Oddie has told investors that the company is pursuing a new venture opportunity in Morocco, to add to the high-potential exploration offshore Ireland and its bogged down English projects.
Solo Oil (LON:SOLO), the natural resources investment company focused on acquiring and developing a diverse global non-operated portfolio of strategic oil and gas assets, has announced the appointment of Tom Reynolds as an independent non-executive director. Reynolds is a Chartered Engineer with over 25 years' experience in the energy sector, including a range of technical and commercial roles with BP, Total and British Nuclear Fuels.
Union Jack Oil PLC (LON:UJO), the UK focused onshore hydrocarbon production, development and exploration company has announced the appointment of Frazer Lang as a non-executive director with immediate effect. The group said Frazer is also an executive director of Union Jack's commercial partner, Humber Oil & Gas Limited, with whom Union Jack established a relationship in March 2018, whereby both parties seek to co-invest in UK onshore hydrocarbon opportunities.