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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January 16, 2024

Gamma delivers the cash, DP Poland delivers pizza & DP Eurasia agrees to a bid

Macro & Overnight

Overnight, the dollar strengthened, but oil prices remained largely unchanged amid growing tensions in the Red Sea.

UK wage growth moderated in the three months to November. The unemployment rate was unchanged at 4.2%.

UK Company News

In the UK today, we have had several updates from FX and payment providers:

The cross-border payments specialist CAB Payments made a short statement that its income will be approximately 25% above the prior year of £109.4 million.

SME provider Equals Group updated that its FY-23 results would align with market expectations.

The retail FX provider Wise, formerly Transferwise, upgraded income guidance to c.42-44% from 33-38%. 

Card Factory updated that its LFL revenue grew +8.2% in the seven months to December, with its Christmas trading performance +7.8% in November and December. It expects to deliver full-year profit at the top of market expectations. 

DP Poland, the Dominos franchise owner for Poland and Croatia, updated that its Q4 ’23 was the strongest quarter in the Company’s history. It states that its staff have embraced the High Volume Mentality and transformed Poland into one of the fastest-growing Domino’s markets globally. It grew by 27% in the final three months of 2023, with strong growth in order count and reduced delivery times. It said that food and labour costs were in line with expectations. Inflation in Poland has abated since April 2023, following 17 months of double-digit inflation to reach 6.1% YoY at the end of December 2023. This trend should continue in 2024. DPP sees volume-led growth continuing, supported by easing inflationary pressures and a new pro-European parliament following the recent Polish election. It will begin the transition of the Company towards a more widespread sub-franchised business model in the coming year.

The London-listed Domino’s franchise holder in Turkey, DP Eurasia, agreed an increased and final offer of 110p per share. This is the third offer that Jubilant Foods has made and values the company at £161m. The offer is 29% up from the first offer made in November last year.

Gamma Communications anticipates reporting a group financial performance in line with the market consensus, which was increased with the September H1 results. It continues to produce a strong cash conversion from EBITDA. Note link here

Johnson Service Group stated that it had proactively managed its cost base against increasing labour costs and would report FY profit in line with current market expectations. 

Ocado Retail, the grocery delivery business jointly owned by Ocado and M7S, reported Q4 Retail revenue of £609.4m, which grew 10.9% compared to last year. FY Retail revenue was £2,357.5m, and it enjoyed a record Christmas with its highest-ever level of sales. However, revenue growth is likely as food price inflation continues to subside. It still sees a journey towards high mid-single digit EBITDA margins in the mid-term.

QinetiQ, on track to deliver its financial expectations, launched a £100m share buyback programme.  

A PE investor has sold 5m shares, 1.23% of Trustpilot at 157p, exiting its holding after the shares have enjoyed a strong run. 

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