Today’s edition features:
- Bezant Resources (BZT.L)
- Next (NXT.L)
- Ryanair Holdings (RYA.L)
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The FTSE-100 finished yesterday’s session 0.52% lower at 7,648.10, whilst the FTSE AIM All-Share index was up 0.09% at 1,050.54. In continental Europe, the CAC-40 finished 0.45% lower at 5,288.60 whilst the DAX was down 0.36% at 12,871.39.
Last night in New York, the Dow Jones closed 104.79 points (0.42%) higher at 24,824.01. The broader-based S&P 500 added 22.20 points (0.83%) to end at 2,695.81 and the tech-focussed Nasdaq jumped 103.51 points (1.5%) to 7,006.90.
In Asian markets this morning, the Hang Seng gave up earlier gains and was 9.88 points lower at 30,505.43, while the Nikkei 225 remains closed until Thursday and stands at 22,764.94.
In early trade today, WTI crude recently up 0.02% at $60.38 per barrel and Brent was flat at $66.57 per barrel.
US blocks sale of Moneygram to China’s Ant Financial
The US has blocked the $1.2bn (£880m) sale of money transfer firm Moneygram to China’s Ant Financial, the digital payments arm of Alibaba. It is the highest profile Chinese deal to be rejected by Washington since Donald Trump came to power. Regulators overseeing foreign investments in the US had refused to support the takeover, the firms said. The geopolitical environment had “changed considerably” since the merger was announced last year, they added. The collapse is a blow to the ambitions of Alibaba’s billionaire executive chairman Jack Ma, who had promised President Trump that he would create a million US jobs. Alibaba, which owns Ant Financial together with Alibaba executives, saw the US market as a way to expand overseas in the face of fierce domestic competition form the likes of Tencent’s WeChat. But in a joint statement on Tuesday, Ant Financial and Moneygram said they had abandoned the deal “following the inability of the companies to obtain the required approval for the transaction from the Committee on Foreign Investment in the United States, despite extensive efforts to address the Committee’s concerns.” Reports suggest the committee had cited security concerns over the takeover. Moneygram chief executive Alex Holmes said he was “disappointed” by the outcome and noted the “geopolitical environment has changed considerably” in the year since the deal was announced.
Source: BBC News
Bezant Resources (BZT.L, 0.38p) – Update
Bezant Resources announced that it has made the final payment due with respect to its exercise of the option over two alluvial platinum and gold licences in the Choco region of western Columbia. The final option payment of US$200,000 has been made, thereby securing Bezant’s 100% interest on the FKJ-083 and HCA-082 licences covering c. 2,659ha. Management can now focus on pursuing project level funding options to continue development of the FKJ-083 licence.
Our view: The above announcement should help with management’s strategy of obtaining project level financing to achieve full-scale production on the FKJ-083 licence. We look forward to further announcements regarding potential funding options. In the meantime, our recommendation remains under review.
Beaufort Securities acts as corporate broker to Bezant Resources plc
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Next (NXT.L, 4,500.00p) – Sell
Next has published its annual Christmas trading update, a general read across for the health of the UK high street retailer. In its last update (November) the board said “We believe the most reliable guide to sales for the balance of the year are the full price sales for the year to date, which are down -0.3%”. Today’s news was sales up 1.5%, so significantly above guidance and results in a small increase to FY18 (to January) profit guidance from £717m to £725m. Note the shares trade ex-div of a 45p dividend tomorrow.
Our view: Next is an interesting beast, very cash generative, decent balance sheet (net debt of circa £950m), growing on line sales but declining sales in its shops. This morning’s sales news is positive although nothing like a reversal of Next’s long term high street decline. And the outlook statement is less positive, with FY19 profit guidance of £705m (down 3% on FY18 to Jan) and free cash (for divis and share buybacks) of £525m versus a market cap of £6.57bn. Due to the negative outlook, we expect the shares to underperform and change our recommendation to SELL.
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Ryanair Holdings (RYA.L, EUR15.00) – Buy
Ryanair this morning provided its traffic update for December 2017. During the month, passenger traffic increased by +3% y-o-y to 9.3 million customers, while the load factor grew +1% y-o-y to 95%. The rolling annual traffic to December rose +10% to 129 million customers. Passenger traffic represents the number of earned seats flown, while load factor represents the number of passengers as a proportion of the number of seats available for passengers.
Our view: December passenger statistics were weaker than expected. Slower rate of growth was due to flights cancellations announced previously plus adverse weather conditions, while load factor remained strong. The recent sharp fall in share price was due to Ryanair agreeing to formally recognise pilots’ unions to avoid strikes during Christmas period. Such move is likely to push up the long-term cost base through improved pay and working conditions. We anticipate European airline market to continue consolidate with Ryanair one of the leading player. And despite rising cost pressure, Ryanair’s lower passenger costs should maintain its competitive advantages. Ryanair publishes Q3 results on 5 February 2018. We maintain our Buy rating on the shares with a target price of €19.00.
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Charles Long, Ben Maitland, Sheldon Modeland & Kazunaga Senga
(t) +44 (0) 207 382 8384
On Monday, 18th December 2017 Dr Dan Gooding, CEO of Nuformix answered questions posed by private investors at the Beaufort offices. Click here to see the interview.
Beaufort Securities acts as corporate broker to Nuformix plc
Click here to see all next week’s planned corporate and economic announcements.
During the three months to end-December 2017, the number of stocks on which Beaufort Securities published recommendations was 193, and the recommendations were as follows: Buy – 22; Speculative Buy – 163; Hold – 6; Sell – 2.
Full definitions of the recommendations used by Beaufort Securities in its publications and their respective meanings can be found on our website here.
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