August, Azerbaijan, Barratt Developments, Business, Eastern Europe, Fresh Easy, Ithaca Energy, June, Revenue, Ron Burkle, Ronald Burkle, Sport Direct, Tesco, Thorntons, Trader Dominic Picarda, United States, Yucaipa, Yucaipa California
Today’s market overview
Equities have started the day flat, but The Trader Dominic Picarda views the price moves of the past couple of sessions as confirmation that the bulls are back in charge.
IC TIP UPDATES:
Ithaca Energy (IAE) has issued a positive flow test result from the first Stella field development well which flowed 10,835 barrels of oil per day and was only limited by the capacity of the equipment available. Undersea infrastructure work is also progressing well and the drilling equipment will now move to the second development well. We maintain our buy recommendation.
Sell recommendation. Kingfisher (KGF) continues to struggle in tough end markets for the DIY retailer. The 26 weeks to 3 August saw total sales edge ahead by 1.5 per cent in constant currency terms but like for like sales dipped by 0.8 per cent. Adjusted pre-tax profits dipped by 1.6 per cent but reported profits were up by 10.2 per cent. During the period the company has acquired 15 stores in Romania and opened a net 29 new stores across the UK, France, Poland, Spain and Turkey.
Simon Thompson recommendation. Thorntons (THT) has posted pre-exceptional profits of £5.6m, up from £900,000 last year, from just a 1.8 per cent uplift in revenues as management continues its turnaround plan. Management has closed 35 stores and will close more this year as the refocus on the fast moving consumer goods segment continues.
Location intelligence technology specialist Ubisense (UBI) grew revenues by 3.6 per cent to £12.4m in the six months to June with recurring revenues up to 26.8 per cent of the total. The company’s order book is up 38 per cent to £14.1m with a further order announced today to deploy its Smart Factory system with an existing European automotive manufacturer for a factory in Eastern Europe. We maintain our buy rating.
Alkane Energy (ALK) more than doubled revenues in the six months to June as it increased its coal bed methane output capacity and its standby power offering to an installed capacity of 81MW by the period end. Cash profits rose by 54 per cent to £3.3m. We keep our buy recommendation.
Tesco (TSCO) has finally announced its exit from the US grocery market after sealing a deal which will see the retail giant pay a loan of £80m to the buyer, Yucaipa Group of Companies, as well as incur further costs for the closure of non-core stores. Yucaipa, owned by US billionaire Ron Burkle, will take on the Fresh & Easy business as a stand alone chain. Tesco will receive warrants which, dependent on success of the business, could see it end up with a 32.5 per cent share of the business.
The continued acceleration of the housing market is reflected in full year results from Barratt Developments (BDEV) which showed revenues up 12.2 per cent in the year to June and pre-tax profits before exceptionals up 73.7 per cent to £192.3m. Since the period end this performance has accelerated with a 29.4 per cent rise in net reservations per week and a 44.4 per cent increase in forward sales to £880.4m.
Fellow housebuilder Redrow (RDW) has announced a new, increased four year banking facility worth £250m as it looks to increase its output.
Retailer Sports Direct (SPD) continues its dominant performance of the sporting sector on the high street posting an 18.2 per cent rise in group sales for the 13 weeks to 28 July and a 23.2 per cent uplift in gross profit.
African Barrick Gold (ABG) has announced the abrupt departure of its chief operating officer Marco Zolezzi.
OTHER COMPANY NEWS:
Advanced Medical Solutions (AMS) grew revenues by 11 per cent to £27.4m and profits by 33 per cent to £6m in the six months to June.
Anglo Asian Mining (AAZ) enjoyed its best month of gold production at the Gedabek mine in Azerbaijan on record in August after the recently completed Agitation Leaching Plant helped push production to 7,600 ounces. An updated resource estimate for Gedabek is expected before the end of this month. Meanwhile, progress is being made at Gosha, 50km away from Gedabek, where the first trial batch of ore has been mined.
- Ithaca Energy Inc – Norvarg Appraisal Well Results (sys-con.com)
- Tesco to Sell Fresh & Easy to Burkle’s Yucaipa in US Exit – Bloomberg (bloomberg.com)
- Tesco pays out to rid itself of US chain Fresh & Easy (theguardian.com)
- Tesco will sell bulk of US operations (bigpondnews.com)
- Tesco agrees to sell bulk of US unit Fresh & Easy (valuewalk.com)
- Fresh & Easy supermarket chain sold to U.S. investment group (rawstory.com)
- Tesco sells US chain Fresh & Easy (bbc.co.uk)
- How Tesco came to dominate (bbc.co.uk)
- Private investment firm to buy Fresh & Easy (kget.com)
- Tesco offloads loss making Fresh & Easy chain (arunbabyveranakunnel.wordpress.com)