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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October 12, 2023

Restaurant Group recommended offer

Macro & Overnight

Bond yields continued to ease, and oil prices declined further as fears of a widening Middle East conflict reduced.

FOMC minutes were broadly dovish in tone. The Fed is committed to higher for longer but is proceeding cautiously.

US PPI trends reported yesterday suggest that inflationary pressures increased in September, reflecting higher energy costs.

Attention now focuses on the CPI figures later today, with consensus expecting a month-on-month reduction from 3.7% to 3.6%.

UK Company News

Marks Electrical, the next day white-goods supplier, updated H1 revenue growth of 24.8% to £53.9m. it reports continued market share gains, making over 7,000 installations. It has seen some margin strain as it invested in its installation team and continued to experience distribution cost inflation. It maintained its coveted Trustpilot score of 4.8, reaching over 55,000 reviews, with 95% being 4 and 5 stars. It has a net cash position of £10.9m (HY23 £7.7m) and exited September with order growth of over 20% and making a solid start to October. 

Marks Electrical is carving out a solid niche in the delivery of large household appliances as Currys and John Lewis struggle to keep up with specialist operators such as AO World. It is a tough gig to offer next-day delivery with installation and make a decent margin. Hear more about how Marks does this on this podcast episode with CEO Mark Smithson.

Restaurant Group recommended an offer from Apollo at 65p per share, a c 35% premium valued at over £500m. 

The bid for Restaurant Group has been a long time in the making. Now Apollo has broken cover, it would not be a surprise to see other bidders emerge. A timely DYOR blog post from yesterday explains the issues at Restaurant Group over the last few years.  

Warnings today have been released by building materials distributor, SIG and electronics supplier Oxford Instruments

Prognosticator 

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