Markets
Europe
The FTSE-100 finished yesterday's session 1.04% higher at 7,460.65, whilst the FTSE AIM All-Share index was up 0.10% at 1,030.27. In continental Europe, the CAC-40 finished 0.57% higher at 5,390.48 whilst the DAX was up 0.46% at 13,059.53.
Wall Street
Last night in New York, the Dow Jones closed 1.09% higher at 23,836.71, the S&P-500 added 0.98% to end at 2,627.04 and the Nasdaq finished 0.49% higher at 6,912.36.
Asia
In Asian markets this morning, the Nikkei 225 was up 0.37% at 22,569.03, while the Hang Seng was 0.16% lower at 29,632.64.
Oil
In early trade today, WTI crude was 0.5% lower at $57.7 per barrel and Brent was down 0.66% at $63.19.
Headlines
Some lost rail routes may be 'restored'
Railway lines closed in the 1960s could be reopened if they boost the economy, the government has said. Some 4,000 miles of rail routes were closed and became known as the Beeching cuts - after Dr Richard Beeching who was then chairman of British Rail. It is part of the Transport Secretary Chris Grayling's rail strategy which will be unveiled on Wednesday. Labour, which wants to renationalise the railways, said the ideas were "flimsy re-announcements". Mr Grayling said new rail lines could unlock jobs, encourage house building and ease overcrowding. "These could include rail services lost under the Beeching and British Rail cuts of the 1960s and 1970s where - if restored - these could kick-start crucial housing developments or help create new economic opportunities," the Department for Transport said in a statement. "We're already accelerating plans to reopen the railway line from Oxford to Cambridge. Now I want to see how we can expand other parts of the network to help make Britain fit for the future," Mr Grayling added.
Source: BBC News
Company news
Tertiary Minerals (LON:TYM, 0.55p) – Speculative Buy
Tertiary has signed an MOU with Possehl Erzkontor GmbH & Co, a global commodity trading group which amongst other things specialises in fluorspar. The MOU includes the intention for Possehl and Tertiary to enter an offtake agreement. Possehl would provide funding in return for offtake over 70% of output from anyone of Tertiary's three mine projects. The MOU also envisages Possehl providing funding for "any of the near-term revenue generating fluorspar acquisition targets where Tertiary is currently carrying out evaluation, due diligence and discussions".
Our view: This looks like an important relationship for Tertiary, and one which could enable Tertiary to complete a near term acquisition. If the acquisition is good enough quality, we'd expect Possehl to provide the funding, technical and marketing support. That would lead to a transformation for Tertiary. We maintain a Speculative Buy recommendation.
Beaufort Securities acts as a corporate broker to Tertiary Minerals plc
Pets at Home (LON:PETS, 160.60p) – Buy
The UK's leading specialist pet omnichannel retailer and services provider yesterday released interim results for the 28-weeks to 12th October 2017. Highlights included continued positive momentum in Merchandise trading with H1 showing +3.1% like-for-like growth (Q1: 1.5%, Q2 5.1%) as a result of its omnichannel initiatives, accessories range innovations and pricing changes, which reported revenue up 81% to £24m, driven by Order In-Store and Subscription plans. This was accompanied by another positive half year from the Services division, with LFLs +9.5%, benefitting in particularly from the Group's Veterinary business which also powered ahead with total income from Joint Venture vet practices up 16.1% to £28.0m and specialist referral centres growing revenues at double digit rates. The Board declared an interim dividend of 2.5 pence per share, unchanged at the prior year level. Ian Kellett, Group Chief Executive Officer, commented: "We are confident we are taking the right actions to reposition our Merchandise business and having seen the results from our initial investments, we are accelerating our plans. There remains much to do and we will continue to evolve our strategy and adapt to customers' needs in what remains a competitive market place."
Our view: The surprise resignation of CEO Ian Kellett rather shocked investors yesterday. Despite confirmation that Peter Pritchard, currently CEO of Retail, will succeed Ian as Group CEO on 31st May 2018 following a smooth transition, the shares dived 9% on the news. Notwithstanding this, the Group has confirmed its profit outlook for the full year 2018 remains in line with market expectations. It is now seeing the benefit of pricing actions, while accelerating investment plans in anticipation of Group gross margin dilution of between 200 and 250 bp. The sost of delivering a fast growing omnichannel business is reflected in operating cost growth anticipated in the range of 6-6.5%, while management anticipates higher overall sales growth. Clearly Pets is feeling the pain of being only partway through the first year of its three-year transition to lay foundations for sustainable profit growth. The maturity benefits the Services/Veterinary business will bring to the Group, however, will start to become evident in the year to March 2019 when significant growth can be expected alongside continuing investment in selected Merchandise areas. The following year, should lead to market share gains which, alongside divisional maturation elsewhere in the Group, should underpin profit growth at high single digit levels. Based on forward P/E multiples of 12.1x and 11.3x, together with yields of 4.8% and 5.1%, the shares now look oversold. Beaufort recommends taking advantage of yesterday's sell-off to build a position.