Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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March 29, 2023

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. 


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