Ocado recoups some losses over Takeoff, Kroger worries
Ocado PLC (LON:OCDO) was a big riser on Wednesday, up 5% to 1,133p as it recouped some of its sizeable losses in recent days on the back of worrying reports for the company that its relationship is “cooling” with US grocery partner Kroger.
Shares in the online grocery specialist had fallen around 20% over the week to Tuesday on concerns that rival tech firms are catching up, which is perhaps resulting in cold feet for Kroger, for which the UK company is helping build 20 high-tech warehouses around the USA to fulfil grocery delivery orders.
Analysts at Jefferies put out a bearish note to clients about Ocados Kroger deal, noting the smaller and more efficient automated warehouses being rolled out by rival online grocery start-up called Takeoff Technologies, based in Massachusetts.
It has been suggested by analysts that Takeoffs smaller warehouses might be better suited for the US market than Ocado's as they might be better at fulfilling same-day delivery orders.
In a new note, Bernstein analysts said that the sell-off was undeserved, arguing that Takeoff's systems are not as sophisticated as Ocado's and that the FTSE 100 group's relationship with Kroger remains strong.
“At current share price, we are very close to the point where nothing of the future is priced in,” they said.
Another company recouping some share price losses is Royal Mail Group PLC (LON:RMG) as it won a High Court injunction to block a potential strikes by postal workers.
Last Friday the letters and parcels group applied for the legal blocking manoeuvre to prevent members of the Communication Workers Union going on strike, saying it believed the ballot was “unlawful” and that the process could “damage” the company.
After the ruling on Wednesday afternoon the CWU said: "The High Court has ruled against us. Genuinely this is an utter outrage. 110,000 workers vs the establishment."
The postal group was not please with all the days developments, however, as it was slapped with a £50mln fine for breaking competition rules after losing an appeal against regulator Ofcom in the Competition Appeal Tribunal.
RMG shares were up 1.5% at 231.05p.
Geophysical survey data at the Stonepark project, in which Ankle holds a 23.44% stake, had refined a key exploration concept at the site as well as a cross fault in another area.
"Our partners continue to build evidence supporting new and exciting exploration targets to the south of the project along the 'Pallas Green Corridor”, said Arkle chief executive Patrick Cullen.
1.30pm: Tullow Oil investors pinch noses over sulphurous whiff from Guyana
In among the habitually volatile small-cap movers on Wednesday was Tullow Oil plc (LON:TLW) as its shares crashed 28% to 148.6p by early afternoon after cutting its oil production target and revealing disappointment about recent discovery drilling.
The Africa-focused producer said it anticipated average daily production for 2019 will be around 87,000 barrels of oil, down from the previous guidance of 89,000–93,000, which in combination with a dip in oil prices has also hit free cash flow generation and therefore putting pressure on the dividend.
Tullow also said its recent discoveries in Guyana with Eco Atlantic contain low quality, heavy, sulphurous oil, which analysts said would offer significantly lower commercial value.
“Given the group has recently started paying a dividend, but still has some work to do on debt reduction, thats far from ideal,” said analyst Nicholas Hyett at Hargreaves Lansdown.
In what was the first trading update since the completion of the merger with Charter Court in early October, the challenger bank said that despite the macroeconomic uncertainty, both franchises were “performing very well, with strong levels of applications at attractive margins … building a robust pipeline for Q1 2020”.
Broker Shore Capital said the performance appeared to be in line with previous guidance in respect of loan book growth and net interest margin.
The central and eastern Europe focused airline now expects full-year profit to be between €335mln and €350mln, after revenue increased 21.7%, mostly thanks to a 39% boost in ancillary services.
Wizz shares hit an all-time high earlier this month, so the shares seemed victims of some profit taking or over-optimism from some investors.
“A more challenging economic backdrop impacted on revenue and order intake in the first half of the year,” said chief executive Robert Purcell, adding that work had been done to sustain profits and improve margins.
But finance director Ian Scapens has given notice of his resignation, while non-executive director Ian Griffiths is retiring.
9.15am: Inspirit warms up after "long journey" with boiler
Inspirit Energy Holdings Plcs (LON: INSP) seemingly frozen shares warmed up a little as the company said it was in discussions about a number of potential application of its technology into sectors such as solar, renewable and refrigeration.
Inspirit, which as KleenAir Systems acquired a business developing a micro combined-heat-and-power domestic boiler in 2013 using the Stirling engine technology first developed by Scottish clergyman Robert Stirling in 1816, said it had been invited to demonstrate its Stirling technology to a “large scale Swedish marine engine manufacturer” with a view to designing and developing a potential application for the marine and shipping industry.
Shares in the company, which said it was “at a pivotal point” after a “long journey…that has not been as straight forward as we would have liked”, were up 46% to 0.051p on Wednesday morning.
Meanwhile, investors are not the only people queuing up to buy Accesso Technology Group PLC (LON:ASCO) as the e-ticketing specialist continues talks to sell itself.
The company said it has received “refreshed indications of interest over the last several months” and these suitors were still engaged in financial and operational due diligence.
Accesso shares jumped 13% to 585p by late morning.
In what is its first deal in the country, the company will provide the technology, equipment and services required to construct the plant.
Final documentation for the agreement is now being processed, while Eqtec has also reached out to third parties regarding funding for the project.
9.45am: Bonhill running down that hill
Shares in Bonhill Group plc (LON:BONH) were tumbling down a 31% incline to 37.13p in early morning trading after its big acquisition from earlier in the year was hit by tougher trading in Hong Kong and the UK.
The publisher of What Investment and Growth Company Investor said the civil unrest in Hong Kong and weaker flows in the UK fund management industry were weighing on Last Word Media, the business information, data and live events business it acquired for £7.8mln in April.
Bonhill said that while it had fired three executives and been reassured by “more normalised trading pattens” for its US business in the second half, the group was likely to fall short of full-year targets.
House broker Shore Capital noted that underlying profits (EBITDA) for the year are now expected to come in roughly at £2.5m, well below previous guidance of circa £4.0mln.
Over in the more glamorous circles of luxury group Mulberry Group PLC (LON:MUL) some investors were clutching their handbags to their chest with disappointment after the leather goods makers interim results.
Revenue was up less than 1% to £68.9mln as good overseas growth was offset by a 4% decline from the UK, with loss before tax growing to £9.9mln from £8.2mln last time due to further investment and the effect of a “challenging UK market”.
The board said the UK has been impacted by “an increasingly promotion led environment and lower traffic to stores” but was able to say it “expects the group to trade profitably and to generate cash during the second half of the financial year”.
Mulberry shares were down 7% to 261.65p.
Proactive news headlines:
Integumen PLC (LON:SKIN) provided 2020 revenue guidance of £4mln as it unveiled a deal to deliver artificial intelligence software to clients of Parity Group, the data and people specialist. The Drive4Growth partnership will provide Integumen access to Parity's National Health Service, central government and private institutional client base, the company said. And it creates the opportunity to cross-sell its intelligent data management services driven by its Rinodrive technology, it added.
Avacta Group PLC (LON:AVCT) has taken an “important step” towards further “substantial” milestone payments from the drug development arm of the Korean giant LG by expanding its partnership. The latest update reveals that LG Chem has now nominated two further prospective treatments that will use the UK groups technology. Avacta chief executive Alastair Smith said the first LG drug programme had made “excellent progress”, and was upbeat on the expanded collaboration.
Xpediator PLC (LON:XPD) has appointed a new chief financial officer, Robert Ross, who will take up his post on 1 January. In a statement, the AIM-listed provider of freight management services said Ross is replacing Richard Myson, who has been at the company for 15 years and will become the group's chief commercial officer. Ross is currently finance director of Europa Worldwide Group, a transport and logistics company with £175mln annual revenues, and previously held several management roles at Big Four auditor PwC.
Arc Minerals PLC (LON:ARCM) has unveiled plans to sell its entire 99.43% interest in Casa Mining Limited to Canadian private equity group, Century Capital Management Ltd for a total consideration of up to US$9.8mln. In a statement, the company said the initial consideration will comprise a cash consideration of US$1.8mln and will have a significant positive impact on Arc's cash and balance sheet position.
EQTEC PLC (LON:EQT) has inked an agreement to develop a 1.18 megawatt (MW) biogas power plant in the commune of Gratens in France. Under the €5.5mln (£4.7mln) commercial agreement with French group Biomasse 31, EQTECs first in the country, it will provide the technology, equipment and services required to construct the plant.
Accesso Technology Group PLC (LON:ASCO) is continuing discussions with several parties over a potential sale of the business. In a brief update on Tuesday, the electronic queuing and e-ticketing specialist said it has received “refreshed indications of interest over the last several months” and the interested parties were still engaged in financial and operational due diligence.
Caledonia Mining PLC (LON:CMCL) has shrugged off power outages in Zimbabwe to lift production at the Blanket mine by 7% in its latest quarter. Production in the three months to September was 13,646 ounces of gold as output rose in the second six weeks as Caledonia used generators it has installed at the gold mine to keep operations running.
Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) chief executive Gil Holzman said the explorer is “very confident of the potential” of its Guyana joint venture as it updated investors on the latest findings of analysis from its two new offshore discoveries. The Jethro-1 and the Joe-1 wells, drilled in August and September, continue to be analysed and fluid samples are presently in the lab. Initial results, meanwhile, indicate that both discoveries comprise mobile heavy crudes which are said to be “not dissimilar” to the commercial heavy crudes in the North Sea, Gulf of Mexico, Brazil, Venezuela and Angola.
Horizonte Minerals PLC (LON:HZM) (TSX:HZM) has highlighted another quarter of good progress at its projects in Brazil. At its flagship Araguaia project, mine financier Orion is to provide US$25mln for a 2.25% royalty on the first 426,429 tonnes of contained nickel within the final product (ferronickel) produced and sold. Horizonte also published a first resource for the Serra do Tapa nickel deposit that sits 90km to the north-west of Araguaia. In the Measured and Indicated category, Serra do Tapa contains 70.3mln tonnes grading 1.22% nickel, which has boosted Horizontes total tonnage by 30%.