Today's edition features:
• Premier African Minerals (LON:PREM)
• Merlin Entertainments (LON:MERL)
Markets
Europe
The FTSE-100 finished Friday's session 0.49% higher at 7,511.71 whilst the FTSE AIM All-Share index was up 0.60% at 993.65. In continental Europe, the CAC-40 finished 1.42% higher at 5,203.44 whilst the DAX finished down 1.18% at 12,297.72.
Wall Street
In New York on Friday, the Dow Jones closed 0.3% higher at 22,092.81, the S&P-500 ended 0.19% firmer at 2,476.83 and the Nasdaq Composite was up by 0.18% at 6,351.56.
Asia
In Asian markets this morning, the Nikkei 225 was 0.57% higher at 20,065.8 and the Hang Seng was up by 0.38% at 27,666.15.
Oil
In early trade today, WTI crude was down 0.34% at $49.41 per barrel and Brent was 0.36% lower at $52.23 per barrel.
Headlines
Google employee anti-diversity memo causes row
A Google employee's opinion criticising the firm's diversity initiatives is causing a furore at the firm. In an internal memo, a male software engineer argued the lack of women in top tech jobs was due to biological differences between men and women. "We need to stop assuming that gender gaps imply sexism," he wrote in the piece which was widely criticised. But the author said he had received "many personal messages from fellow Googlers expressing their gratitude". Posted on an internal discussion board, the article was published in full by tech website Gizmodo. It argues that "the abilities of men and women differ in part due to biological causes and that these differences may explain why we don't see equal representation of women in tech and leadership". The unnamed author says women generally "prefer jobs in social or artistic areas" while "more men may like coding".
Source: BBC News
Company news
Premier African Minerals (LON:PREM, 0.42p) – Speculative Buy
Premier African Minerals, the South and Western Africa focused mineral explorer and developer, announced today an update on its Zulu lithium project in Zimbabwe. The Company has completed 14 drill holes (diamond core) totalling 2,037m with significant visible lithium mineralisation zones intersected in all holes. Premier has a current resource estimate of 20.1Mt grading 1.06% Li2O including 7Mt grading 1.5% Li2O and an exploration target of 60-80Mt. The purpose of the current drill programme is to expand on resources from Main Zone to include the newly discovered South-East Zone. Drill holes ZDD-37, ZDD-38 and ZDD-39 contain multiple intersections of visible lithium mineralisation from the South-East Zone.
Our View: Whilst the assay results are pending from the drill programme we are encouraged with the multiple intersections of visible lithium mineralisation from the newly discovered South-East Zone. We look forward to the assay results in the coming weeks which could expand the current resource estimate from the Main Zone. In the meantime, we maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as corporate broker to Premier African Minerals plc
Merlin Entertainments (LON:MERL, 489.40p) – Buy
Merlin Entertainments ('Merlin'), the European entertainments company operating the world's second-largest visitor attractions, on Friday announced its interim results for the 6 months ended 1 July 2017 ('H1 FY2017'). During the period, on a reported basis, Group's revenue advanced +19.4% to £685m, EBITDA rose +114.6% to £144m, operating profit grew +5.1% to £73m, pre-tax profit increased +0.7% to £50m, leading earnings per share improved by +0.6% to 3.7p, against the comparative period (H1 FY2016). At a constant currency basis, revenue increased by +9.6% and EBITDA rose +2.4%, but operating profit dropped -8.3%, primarily due to Midway Attraction delivered lower EBITDA and an increase in depreciation, reflecting expected seasonality of H1 weighted growth in depreciation. Margin declined by -0.9% to 21.1% due to number of timing effects. Like-for-like ('LFL') revenue growth was up +3.7%, comprised of; +6.2% growth in Resort Theme Parks division, +8.0% jump in LEGOLAND Parks division, but -0.4% decline in Midway Attractions division. On the operational front, the Group opened 5 new Midway Attractions, 381 new accommodation rooms across four theme parks, and LEGOLAND Japan opened on 1 April 2017. Total visitors during the period was 29.7 million, up +6.2%. Merlin Entertainments' CEO, Nick Varney commented "We continue to be excited by the long term underlying growth prospects in our market and have the strategy in place to exploit these. We remain on track to meet our 2020 milestone targets, supported not only by the attractions and accommodation opened to date, but also by the progress we have made on the pipeline, in particular the ongoing development of new brands which will underpin the longer term roll out". The Group declared an interim dividend of 2.4p per share, up +9.1%, to be paid on 25 September 2017 (ex-Dividend: 17 August 2017). The Group is scheduled to provide a trading update on its peak Summer season on 5 October 2017.
Our View: Merlin delivered strong results for the H1 FY2017. Group's revenue jumped by +9.6% at a constant currency basis, helped by +6.2% growth in visitor numbers, which together with good LFL revenue growth of +3.7% during the period, demonstrates continuing appeal of both its existing and new attractions. The results were boosted further by Sterling weakness, given that the Group generates over 70% of its profits outside of the UK. The fact that it reported a flat year-on-year pre-tax profit of £50m for the period, was due primarily to a number of specific timing effects, which will instead bolster H2 results. Such timing effects arose from opening of LEGOLAND Japan, which made significant revenue but limited EBITDA, the phasing of the Midway roll out, and softer Midway trading performance. LEGOLAND Parks showed strong LFL revenue growth of +8% which benefitted from phasing of 2016's 53rd week, while opening of LEGOLAND Japan (ahead of schedule and on budget) was well received, leading to constant currency revenue growth of +20.8%. Resort Theme Parks delivered strong LFL revenue growth of +6.2%, benefitting also from this same phasing effect and weaker comparative period, despite caution arising from the UK terror attacks. By contract, Midway Attractions saw LFL decline of -0.4% due to fewer peak days trading at the beginning of 2017. Such effects are expected to normalise in the H2. Its performance was also impacted by softer trading in the North America, as well as due to smaller £2m sales tax rebate recognised in H1 FY2017, against £5m last year. Looking ahead, despite the Group repeating its cautious outlook for its UK attractions, it maintained its full year guidance unchanged. We also tend to believe weaker Sterling will continue to attract additional foreign visitors to the UK as the Group approaches its peak Summer season, whilst at the same time, persuading more income squeezed British residents towards 'staycations'. Beaufort believes Merlin is well-position to leverage its strong brand recognition, portfolio diversity and on-going global expansion strategy. Although external factors such as disease, terrorism and natural disasters can create short-term impacts on performance and sentiment, Merlin's well-diversified global portfolio enables it to mitigate such effects. The shares are valued at FY2017E and FY2018E P/E multiple of 22.6x and 19.4x along with dividend yield of 1.6% and 1.8%, respectively. Beaufort retains its Buy rating on the shares. Merlin Entertainment remains one of Beaufort's Tips for 2017.