Ali’s six new babas
Macro & Overnight
Oil prices have risen strongly. Brent crude is up over 10% in the last ten days but still at the bottom end of last year’s trading range.
Alibaba shares rallied strongly on news that it will break into six “baby babas.” This is an interesting case study of what US regulators might have in mind for their tech giants. What price an independent AWS, YouTube or Instagram?
The former UBS CEO, who steered UBS out of the GFC, returns to take charge of the enlarged group.
UK Company News
Retail bellwether, Next said that the year ahead would be challenging. “The combination of inflation in our cost base and top-line sales likely to edge backwards is uncomfortable. But the Company is well prepared. If we achieve our guidance, a moderate sales decline will result in a pre-tax profit of £795m, strong cash flow and underlying net margins of around 15%”. As ever, Simon Wolfson writes a highly informative and detailed update.
Artisanal Spirits, the owner of The Scotch Malt Whisky Society, had FY results showing revenue increased by 19%. It made £5.5 million of further investment in both cask spirit and wood (c£3m), taking the total number of casks to 16,500 Stock-in-cask, increasing its notional retail sales value by 15% to approximately £493 million. Gross margins of 63.6% were up 2.1ppt. Membership growth increased by 12% despite a Covid-impacted performance in China. UK venues had a record December.
Chapel Down, the largest UK winemaker, reported that current trading aligns with management expectations, and its outlook for 2023 remains positive.
Both these quality UK drinks brands offer long-term asset value growth but limited near-term profit prospects.
Ecora, the mining royalties company, had robust results with an upbeat assessment of the outlook for its main producing assets.
NB Prices are as at the previous day’s close.
This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations. Opinions contained in this communication represent those of the research department of PERL at the time of publication. PERL does not undertake to provide updates to any opinions or views expressed in this document. PERL does not hold any positions in the securities mentioned in this email. However, PERL’s directors, officers, employees and contractors may have a position in, and PERL or its affiliates may perform services or solicit business from, any of the companies or related securities mentioned in this document.