Markets brush off rate rise

Macro & Overnight

Markets brushed off the rise in Fed policy guidance to 5.25% yesterday, considering the hiking cycle to be near its peak. Treasury yields did not flinch, and stocks rose. There is a growing implicit belief in the central banks’ immaculate disinflation. Let’s see.

UK Company News

Bango updated with solid revenue growth from the significant acquisition activity, albeit it was loss-making in the period. It said it would benefit from synergy actions, and the typical second-half revenue weighting underpins management’s confidence in delivering EBITDA in line with market expectations for the year.

CMC Markets said that quiet market conditions in the first quarter have resulted in a decline in client trading and investing activity of 15-20% year on year.  These conditions have continued into Q2. However, stronger interest income has offset weaker client activity, resulting in overall net operating income tracking at a similar run rate to last year. It will launch cash equities for institutional clients, OTC options, and listed futures, giving clients better opportunities to trade and hedge existing portfolio positions. Invest UK will launch SIPPs and mutual funds, while Invest Singapore will offer equities and ETFs initially.

CVS announced its entry into the Australian veterinary services market with the initial acquisition of four independent small animal first-opinion veterinary practices in Australia. It expects the FY outcome to June to be comfortably in line with market expectations. It also announced the acquisition of a further three UK veterinary practices. 

In its H1 results, Drax said that its Drax Power Station remained the UK’s largest renewable energy provider by output. It confirmed that its UK BECCS investment is paused, subject to further clarity on support for BECCS at Drax Power Station, while it has moved its main BECCS activities to the US. 

Eleco, the software provider for the built environment, updated that its ARR increased 18% to circa £19.7m, while its total revenue will be circa £13.5m (H1 2022: £13.4m).  Revenues in the first half of 2023 reflect the SaaS transition and also the impact of the end-of-life of the Group’s Memmo and Sitecon products, the end-of-life of a third-party resold product in Sweden, and the absence of the revenue contribution from the German ARCON business disposed of in February. Its outlook remains in line with market expectations for the financial year. 

Elementis reported H1 Revenue down 6% with operating profit of $53m, 7% on an underlying basis. Strong Personal Care and materially improved Talc performance offset by weaker Coatings volumes.  Net debt of $255m was down from $367m at the end of 2022, driven by the successful disposal of Chromium. It is well-positioned to deliver against full-year expectations. 

Forterra reported revenues for the period of £183.2m, a decrease of 17.8%, as guided. It sees progressive signs of market improvement in May and June. Recent guidance of a full year 2023 EBITDA with a more balanced H1/H2 split remains unchanged. Note here. 

Frasers FY results showed a revenue increase of 15.8%, and a profit increase of 96.9%, driven by the continuing success of the elevation strategy and property gains. It expects further strong profit progress during FY24 as FY23 momentum continues but anticipates significantly lower levels of property profit. Based on these factors, it expects FY24 PBT to be in the range of £500m-£550m, representing strong underlying trading profit progression.

Indivior  H1 2023 total net revenue increased 24% and operating profit by 1%. Cash and investments totalled $782m at the end of H1 2023 (including $26m restricted for self-insurance), primarily reflecting the net cash outflow of $124m for the Opiant acquisition and litigation settlement payments of $177m. It is updating its FY 2023 guidance to reflect increased expectations for SUBLOCADE based on the strong H1 2023 performance and expectations for the remainder of the year and expectations for SUBOXONE due to the anticipated delayed timing of an approved fourth generic buprenorphine/naloxone sublingual film entrant to the US market. Guidance continues to assume 1) commercial launch of OPVEE in the fourth quarter and 2) no material change in exchange rates for critical currencies compared with FY 2022 average rates. 

RBG said its Legal Services, which trades under two brands – Rosenblatt and Memery Crystal – has performed broadly in line with the Board’s expectations. However, M&A advisory transactions take longer due to the economic environment, and several pipeline deals will be completed in the second half. In addition, over the past six years, RBGLS invested in 13 cases with a total cash investment of £17.4m. The current carrying value of the remaining cases is £13.3m. The Board has decided to further write down the value of all remaining cases to zero, including the four remaining fully funded retained LionFish investments. The total non-cash write-off will be £13.3m. Any successful outcomes of the cases will be returned to the Group as revenue in line with RBGLS’ percentage stake in the claims.

Safestyle expects to report H1 revenue of £74.0m, a decline of 5.4% on H1 2022, which is in line with our forecasts. The challenging market conditions have worsened over the last five weeks into July and have adversely impacted order intake volumes which the Board forecasts will be an ongoing trend to the extent that the Group’s full-year performance will be materially below current market expectations. The Board forecasts an underlying profit before taxation for H2, now expected to be c.£0.5m.  This performance level represents the ongoing delivery of monthly profitability established at the end of H1 into H2.  The Board also remains confident that the Group will continue to deliver market share growth for the remainder of the year.

Prognosticator