There are some thin news days...and there are some busy ones. Yesterday was one of the latter...so let us dive in… The press had been banging on about a potential Marks & Spencer (MKS) / Ocado (OCDO) hook up for a few days, so no great surprise to see the announcement of M&S acquiring a 50% stake in Ocado's UK retail business for up to £750 million, with M&S having a £600 million rights issue to fund it. Clearly this is a good deal for Ocado even if it rips up its relationship with Waitrose. Unsurprisingly in its presentation document on the deal, Ocado notes that M&S has a higher 'best' quality food ranking. I could not possibly comment on that...but your new girlfriend is always better than your old one etc. I talked back in November about how M&S is a 'bottom drawer' longer-term play and this move deepens its online scope and skills which can only be a good thing. Yes, the £600 million money-raising is an overhang but I like where the story is going here. I note that numbers were reiterated by M&S too.
Good news too for one of my tips of the year GVC (GVC) which has signed a deal with Playtech (PTEC), which will ensure 'many of GVC's brands will have access to Playtech's proven suite of content and products'. That can only be a good thing. I am still loving up GVC for 2019 and the shares are mildly positive on the news. The M&S link above also made reference to ITV (ITV), which so far has not really worked out as a tip and the full year 2018 numbers showed the company was still working hard to stay still as despite total external revenue rising 3%, this was all in businesses such as Studios and the core Broadcast & Online division saw adjusted ebita fall 7%, helping to pull down group ebita by 3%. Of course the tough advertising environment is noted too with 'total advertising forecast to be down 3-4% for the first four months' hurt by tough comparisons across the first half (no football World Cup) and, of course, structural changes in how people are advertising. None of this - of course - is particularly new or unexpected and the big seminars of recent months have noted the changes the group is going through in the realm of Studios and digital. All good stuff re content...but the key is not to leave the historic core business too far behind. Personally I still think it is cheap (single digit EV/ebita and a 6% yield) but you have to believe...and possibly have a propensity for Love Island and the like.
Where do we start with Taylor Wimpey (TW.)? I've recently discussed Persimmon (PSN) and it will not surprise you to learn that basically my cautious views on this stock is replicated for Taylor Wimpey. For the latter, full year 2018 showed revenues up 3% and profit up 5%. It said it made a 'positive start to 2019' but expect flat volumes and cost increases of 3-4%. Hello lower margins... Don't chase / stay exited on the housebuilders.
And finally...an update from my old pal Metro Bank (MTRO), whose shares have had a mega dump following a late doors announcement of a money raising. Or as it put it: 'Metro Bank today announces that it has entered into a standby underwrite agreement with RBC Capital Markets, Jefferies and KBW for a c.£350m equity raise'. Enjoy doing that boys: the market has pushed the shares to little more than 10 quid as lack of clarity over the company's balance sheet strength level continues. This will help shore it up...but then the next debate will be all about the quality of the loan book which has been aggressively expanded recently. As I noted HERE, it is easier just not to bother with this one until more information is available. Who ever said short selling was dead?!
Filed under: RNS potpourri, Centamin, Neil Woodford, Thin Film, Idex, Proactis, Conroy Gold, Merlin Entertainment
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