UK car sales see first drop for six years

FTSE-100
FTSE-100 Chart (1 Year)

FTSE-100 1 Year Chart

Today’s edition features:

  • Kibo Mining (KIBO.L)
  • Obtala (OBT.L)
  • Premier African Minerals (PREM.L)
  • easyJet (EZJ.L)

Visit Company News »

 


Markets

Europe
The FTSE-100 finished yesterday’s session 0.32% higher at 7,695.88, whilst the FTSE AIM All-Share index was up 0.26% at 1,066.20. In continental Europe, the CAC-40 finished 1.55% higher at 5,413.69 whilst the DAX was up 1.46% at 13,167.89.

Wall Street
Last night in New York, the Dow Jones added 152.45 points (0.61%) to break through the psychological 25,000 barrier for the first time, reaching 25,075.13 at the close.
This latest surge was largely due to strong employment data in the US.
The S&P-500 added 10.93 points (0.40%) to end at 2,723.99 and the NASDAQ gained 12.38 points (0.18%) to 7,077.91.

Asia
In Asian markets this morning, the Hang Seng was 5.35 points (0.02%) higher at 30,741.83 and the Nikkei 225 advanced 201.41 points (0.86%) to 23,707.74.

Oil
In early trade today, WTI  was trading at $61.96 per barrel and Brent at $68.03 per barrel.


Headlines

UK car sales see first drop for six years
New car sales fell for the first time in six years last year with demand for diesel cars plunging by almost a fifth. In total, there were around 2.5 million cars registered, according to industry body the Society of Motor Manufacturers and Traders (SMMT). The figure was down 5.6% from 2016, while diesel sales fell 17% as higher taxes and pollution fears hit demand. SMMT chief executive Mike Hawes said he expected car sales to continue to drop this year, predicting a 5 to 7% fall. The figures are preliminary, with final numbers for the year due to be published later.

Source: BBC News


Company news

Kibo Mining (KIBO.L, 5.75p) – Speculative Buy
Kibo Mining announced that it plans to meet with the Tanzania Ministry of Energy and TANESCO on Monday 8 January to finalise the MoU for fast tracking the Mbeya Coal to Power Project (MCPP). The MCPP is viewed as the most advanced Independent Power Producer (IPP) project in the Tanzania energy strategy pipeline and is expected to make a significant contribution towards achieving the government’s energy targets. The MoU will provide a framework within which the fundamental commercial and technical components of the PPA (Power Purchase Agreement) will be established, which is crucial for the development of the project.

Our view: It’s good to see the urgency of all stake holders involved with the goal to fast-track the MCPP towards finalisation of the all-important PPA. We are encouraged with the commitment by the Ministry of Energy to finalise the MoU followed by the all-important PPA in Q1 2018. As such, we look forward to the details of the agreement which will be the precursor to the crucial PPA. In the meantime, we maintain a Speculative Buy on the stock.

Beaufort Securities acts as corporate broker to Kibo Mining plc

REQUEST A CALL FROM A BROKER REGARDING THIS RECOMMENDATION

Obtala (OBT.L, 12.62p) – Speculative Buy
Obtala announced yesterday (and on 2 January 2017) that its discussions with external trade finance providers have “moved forward” and is now pending completion of due diligence and finalisation. Once the legal documentation is completed, the size and terms of trade finance will be announced. The group noted that structured commodity trade finance is typically priced at 12-18%, with equipment finance over 20% with less than 1 year duration. To complement the proposed external facility and fulfill the required funding gap, the Board said it decided to raise a “separate or internal pool” of loan capital. As a first step, on 2 January 2018, the group announced it had secured an initial US$1m in the form of a 10-year loan bearing interest at 11.5% per annum payable annually in arrears from 5 of the group Directors, including CEO and Deputy Chairman. Proceeds will be used to finance timber trading activities for its recently acquired WoodBois International ApS.

Our view: The management’s participation demonstrates their commitment to the group. The group acquired WoodBois in June 2017 as the group saw an opportunity to grow its trading revenues and market share by injecting capital. Without such funding, WoodBois had been constrained from operational expansion, generating flat revenues in the US$15-19m range, which is less than 0.5% of the management’s estimated market size for African timber exports. We look forward to the further progress on securing external trade finance. We retain our Speculative Buy rating on Obtala with a target price of 37.50p.

Beaufort Securities acts as a corporate broker to Obtala Limited

REQUEST A CALL FROM A BROKER REGARDING THIS RECOMMENDATION

Premier African Minerals (PREM.L, 0.26p) – Speculative Buy
Premier has updated the market on two of its five Zimbabwe projects – RHA Tungsten (49%)and Zulu Lithium. In summary RHA requires more capital to achieve profitable production which Premier is now seeking from its 51% partner the National Indigenisation and Economic Development Fund (NIEEF). Management believe RHA’s resource grade is high enough for a profitable operation but is a unwilling to continue to be the sole funder. The mine needs capital for proper reserve development. It will send one last shipment this month and suspend operations until a finance solution is found with NIEEF.

Regarding Zulu Lithium, as announced on Tuesday, Premier plans to spin the project out into a new vehicle and distribute a “substantial proportion of Premier’s retained interest in Zulu Newco” to Premier shareholders. Timing of this transaction is “as soon as possible”.

Our view: RHA’s suspension is clearly disappointing but we hope management is successful in its negotiations with NIEEF. Political changes in Zimbabwe are still fluid but most observers believe the legal and fiscal framework will improve e.g. government is now discussing potential 100% foreign ownership of mines. This would increase the value of all Premier’s Zimbabwe projects including Zulu, a potentially very large lithium deposit with an exploration target of 60-80mt. We have a Speculative Buy recommendation.

Beaufort Securities acts as a corporate broker to Premier African Minerals Limited

REQUEST A CALL FROM A BROKER REGARDING THIS RECOMMENDATION

easyJet (EZJ.L, 1,510.00p) – Hold
easyJet this morning provided its traffic update for December 2017. During the month, passenger traffic increased +5.5% y-o-y to 5.88 million customers, while the load factor improved +1.5% y-o-y to 91.4%. Year to date traffic to December grew +9.6% to 81.63 million customers with load factor up +1.6% to 93.0%. Load factor represents the number of passengers as a proportion of the number of seats available for passengers.

Our view: As was the case for Ryanair, easyJet’s December passenger statistic growth was slower, impacted by adverse weather conditions. It has caused c.400 cancellations in the month with a further cancellation of c.180 due to runway closures and strikes. Load factor, on the other hand, remained strong. Given the share surpassed our target price of 1,460p which was based on FY18E P/E multiple of 15x we consider the shares are now fairly priced. We downgrade our recommendation to Hold.

REQUEST A CALL FROM A BROKER REGARDING THIS RECOMMENDATION

To read Beaufort’s full research archive click here

Compiled by:
Charles Long, Ben Maitland, Sheldon Modeland & Kazunaga Senga
(t) +44 (0) 207 382 8384
(e) info@beaufortsecurities.com


Weekly diary


Click here to see all next week’s planned corporate and economic announcements.


Recommendations
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.

Important Risk Warnings and Disclaimers
This report is published by Beaufort Securities Ltd (“Beaufort Securities”). Beaufort Securities Ltd is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange.

RELIANCE ON THIS NOTE FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE YOU TO A SIGNIFICANT RISK OF LOSING ALL OF THE FUNDS, PROPERTY OR OTHER ASSETS INVESTED OR OF INCURRING ADDITIONAL LIABILITY.

This document is not an offer to buy or sell any security or currency. This document does not provide you with individually tailored investment advice. It has been prepared without regard to the your financial circumstances and objectives The appropriateness of a particular investment or currency will depend on your individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for you.

This research is non-independent and is classified as a Marketing Communication under FCA rules. As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition on dealing ahead of the dissemination of investment research in COBS 12.2.5. However Beaufort Securities has adopted internal procedures which prohibit analysts from dealing ahead of non-independent research, except for legitimate market making and fulfilling clients’ unsolicited orders.

By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of Beaufort Securities. When distributing this document, Beaufort Securities is not acting for you and will not be responsible for providing advice to you in relation to this document. Accordingly, Beaufort Securities will not be responsible to you for providing the protections afforded to its clients.

Beaufort Securities may effect transactions in shares mentioned herein and may take proprietary trading positions in those shares, and may receive remuneration for the publication of its research and for other services. Beaufort Securities may be a shareholder in any of the companies mentioned in this report. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to Beaufort Securities or the Group, which is not reflected in this material. The remuneration of the author of this report is not tied to the recommendations on any shares mentioned nor to the any transactions undertaken by Beaufort Securities or any affiliate company. Further information on Beaufort Securities’ policy regarding potential conflicts of interest in the context of investment research and Beaufort Securities’ policy on disclosure and conflicts in general are available on request. Please refer to http://www.beaufortsecurities.com/important-info.

Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. The listing requirements for securities listed on AIM or NEX are less demanding and trading in them may be less liquid than main markets. This may make it more difficult to buy and sell these securities.

This document includes certain statements, estimates, and projections with respect to the anticipated future performance of securities listed on stock exchanges and as to the market for these shares. Such statements, estimates, and projections are based on information that we consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates, and projections or as to its fitness for the purpose intended and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them. This report has not been disclosed to any of the companies mentioned herein prior to its publication.

This document is based on information Beaufort Securities has received from publicly available reports and industry sources. Beaufort Securities may not have verified all of this information with third parties. Neither Beaufort Securities nor its advisors, directors or employees can guarantee the accuracy, reasonableness or completeness of the information received from any sources consulted for this publication, and neither Beaufort Securities nor its advisors, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document (except in respect of wilful default and to the extent that any such liability cannot be excluded by the applicable law). You should not rely on this document and should not use it substitution for the exercise of the independent judgment of yourself or your adviser.

The information contained in this document is confidential and is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. Other persons who receive this document should not rely on it. Beaufort Securities, its directors, officers and employees may have positions in the securities mentioned herein.


Beaufort Securities Limited, 63 St Mary Axe, London, EC3A 8AA.
Authorised and regulated by the Financial Conduct Authority (Register No. 155104).
Members of the London Stock Exchange, NEX and QCA.

Comments are closed.