My corporate RNS wooden spoon award goes to challenger bank Metro Bank (MTRO), whose shares are currently down over 25% which - at face value - does appear a tad surprising given the full year update shows loans up 48% year-on-year and underlying profit before tax to be up 138%. However...this latter statistic was below hopes and was impacted by a 'softening' in the last quarter due to high levels of mortgage market competition. Well oops...but down 25% oops?
Well anyone looking at this company is very fearful about anything even slightly dodgy around the balance sheet after last summer's surprise money raising - which was to improve the balance sheet and fund growth 'natch. The assertion - on the conference call and not really included in the regulatory news statement - that there was a mistake in the way the company had previously accounted for some of its loans has worsened the company's asset and liquidity ratios. It is the smell of a need for another money raising that has hurt this one. I told you back in October HERE that 'I would still not touch it' and this advice remains a mere 10 quid a share lower than even in October.
Meanwhile it was November last year when I last wrote about Burberry (BRBY), observing that: 'I still really like that 17 odd quid bad day support level to buy/add at but all I know is - with a fair wind from a global trade and macro perspective - this one is going back to 20 quid plus'. After a third quarter update I have not changed this view. The shares - down slightly as I write - are only a few per cent above the 17 quid level currently but I liked the sound of the update. We all know that the luxury space runs to its own rules - and that the typical generation X investment analyst and writer is not going to be its core customer - but the company appears to me to be transitioning well to its next growth period. Sales were up only 1% year-on-year but that matched expectations and the cost saving and margin maintenance metrics have been maintained too. More importantly, the Chinese market remained strong and - at around a third of group sales - is super critical for the group's future.
It has seen a very modest slowdown in recent weeks reflecting tough comps more than anything else and look forward both to the Chinese New Year period and the opportunity to sell its new collections. The latter is super-critical as newish designer Riccardo progressively rolls out his new ranges over the next year or so. Feedback so far is good and despite some press talking about its 'creepy' Chinese media campaign (check it out online!) the company's social media exposure continues to build, especially on the China-focused WeChat as well as on instagram. The key fear here is global trade angst ('cost of tens of millions' of a shift to WTO levels of tariffs), which is no surprise. Assuming the US and China among other trading nations see sense and kick the can down the road (at least) given no one is a winner from a trade war, Burberry shareholders should all hail the rise and rise of the Chinese chav happy to wear wall-to-wall Burberry as some kind of attempt to look cool, trendy and/or superior, to supplement the top 10% of shoppers here and in the US who seemingly do not care little for the travails of the mainstream retail stream (at least whilst asset and property prices that maintain their wealth and shopping budgets hold up - if they crumble, then all bets are off!).
Filed under: Metro Bank, Burberry, Adam Reynolds, Arden, Bluejay, Gama Aviation, Restaurant Group, St James's Pla
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