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Beaufort Securities Breakfast Alert - Global growth back at pre-crisis levels, says World Bank

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Markets

Europe
The FTSE-100 finished yesterday's session 0.45% higher at 7,731.02, whilst the FTSE AIM All-Share index was up 0.33% at 1,067.94. In continental Europe, the CAC-40 finished 0.67% higher at 5,523.94 whilst the DAX was up 0.13% at 13,385.59.

Wall Street
Last night in New York, the Dow Jones gained 102.80 points (0.41%) to close at 25,385.80. The S&P-500 added 3.58 points (0.13%) to end at 2,751.29 and the Nasdaq gained 6.19 points (0.09%) to 7,163.58.

Asia
In Asian markets this morning, the Nikkei 225 was down 61.79 points at 23,788.20, the Hang Seng was 92.24 points (0.30%) higher at 31,103.65 and the Shanghai Composite fell 3.38 points (0.10%) at 3,410.52.

 

Oil
In early trade today, WTI  was up 0.78% at $63.45 per barrel and Brent was 0.51% higher at $69.17 per barrel.

 

 Headlines

Global growth back at pre-crisis levels, says World Bank
The World Bank says global economic growth is likely to speed up this year, after a stronger than expected 2017. The bank's new forecast is that the world economy will expand by 3.1% this year before slowing slightly. It will be the first time since the financial crisis that growth is operating at its full potential. However, the report warns the upswing will be short term, with gains in improving living standards and reducing poverty levels at risk long term. For the immediate future, the bank sees a reasonably upbeat prospect. The bank's president Jim Yong Kim said: "The broad-based recovery in global growth is encouraging". The forecast is better than what the bank was expecting in its previous assessment last June. Among the large economies, the up-rating is especially marked for the eurozone, though the bank still thinks it will slow somewhat this year, but by less than its previous forecast.

Source: BBC News

Company news

 

Jubilee Metals Group (LON:JLP) 3.55p – Speculative Buy
Jubilee has announced that it has secured investment from two financial institutions: Miton Group and International Wealth Group comprising £4.5m (before expenses) through the issuance of 125M new ordinary shares at a price of 3.6p per share. The funds will be used to support the expansion drive of Jubilee’s global metals strategy. The above investment recognises Jubilee’s success and expertise in the recovery of metals from surface materials and tailings.

Our view: The above institutional investment confirms that Jubilee’s strategy of securing low-risk and low-capital intensity material across a range of commodities is working. Having successfully implemented the Hernic and DCM projects Jubilee is now focused on diversification into base metals through the earn-in agreement with BMR and the development of the Kabwe project in Zambia. We look forward to the completion of Phase 1 and the decision to proceed with the Kabwe earn-in agreement by 28 February. In the meantime, we maintain our Speculative Buy recommendation.

Beaufort Securities acts as corporate broker to Jubilee Metals Group plc

 

Joules Group (LON:JOU) 309.00p – Buy
Joules yesterday provided its trading update for the 7 weeks to 7 January 2018. During the period, retail sales (c.71% of revenue) advanced by +19.2% against last year, led by continued growth in both the stores and e-commerce channels. No update was provided on its Wholesale division (c.29% of revenue). Joules is scheduled to release its Interim results on 31 January 2018.

Our view: Joules’ Christmas trading update demonstrated continued strong momentum for the brand. The sales figure also takes into account of the returns received or anticipated. At its pre-close H1 trading update announced on 12 December, the company noted that it has surpassed 1 million active customers mark for its Retail division and added net 10 new stores. For Wholesale division, the CEO said Spring/Summer 18 order book saw a “good growth”. We believe Joules’ strong brand footprint and expanding loyal and highly engaged active customer base will continue to drive its momentum forward. The shares are currently valued at FY18E and FY19E P/E multiple of 27.1x and 22.7x, along with dividend yield of 0.7% and 1.0%, respectively. In view of positive trading along with a confident outlook, we reiterate our Buy rating on the shares and set a target price of 340p.

 

Morrison (WM) Supermarkets (LON:MRW) 232.30p – Buy
Morrison yesterday provided its trading statement for the 10 weeks to 7 January 2018. During the period, total sales advanced by +2.6% (+2.8% including fuel), while like-for-like (‘LFL’) sales grew by +2.8% (+3.0% including fuel), comprised of +2.1% growth in Retail and +0.7% rise in Wholesale, against last year. KPIs showed LFL number of transactions during the period rose +2.3% while items per basket fell by -4.4%, implying continuing customer trend of ‘top-up’ rather than ‘main weekly’ shopping. On the operational front, the group said its online sales (Morrison.com in partnership with Ocado) grew by +10% and commenced trials for Wholesale supply to McColl’s earlier than initially planned. Phased rolling programme to supply McColl's will commence this month.

Our view: Morrison reported strong Christmas trading. LFL sales of +2.6% came despite tough comparable of +3.3% growth same time last year. Altogether, given encouraging Halloween and Christmas sales, Q4 performance is now highly promising. On the other hand, as the group continue to invest in prices, the full year (to end-January) expectations remain unchanged. The management also said at the analyst conference that run rate inflation has ticked down “a touch”. Consensus is currently forecasting full year revenue of £17,049m (+4.4%), PBT of £374m (+11.0%) and EPS of 12.1p (+11.0%) with net debt reduced to £948m (FY17: £1,224m). It is currently valued at FY18 and FY19 P/E multiple of 19.2x and 17.6x, along with dividend yield of 2.6% and 2.8%, respectively. In light of strong performance and growing Wholesale channel (partnership with Amazon, Ocado and McColl’s), we maintain our Buy rating on the shares with a target price to 250p.

 

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