Maitland/AMO Morning Monitor – Monday 18 May 2020

18th May 2020

In the news

  • Shops, restaurants and hair salons reopen in Italy today as the government eases its strict coronavirus lockdown, saying it is taking a “calculated risk” to put the country back on its feet after two months of hibernation.
  • The Sunday Times Rich List has revealed the coronavirus pandemic wiped £54bn from the wealth of Britain’s super-rich in the past two months. Over half of the country’s billionaires have lost money and the combined wealth of the top 1,000 has dropped for the first time since 2009. At least 63 Rich Listers — including 20 billionaires — have furloughed some staff under the taxpayer-backed scheme.
  • Saudi Arabia’s sovereign wealth fund snapped up stakes worth at least $7.7bn in US and European blue-chip companies between January and March 2020 as it hunts assets at knockdown prices during the coronavirus pandemic. The largest investments by the Public Investment Fund, which is chaired by Crown Prince Mohammed bin Salman include a holding in UK energy major BP worth $827.8m, and a stake in Boeing, valued at $713.6m at the end of March.
  • More than half of the UK public would welcome a windfall tax on companies such as food retailers that have thrived during the coronavirus crisis, according to a YouGov opinion poll. The survey also found that 61 per cent would approve of a wealth tax for those with assets of over £750,000. The poll comes as the Treasury considers ways to deal with a deficit that is expected to soar to more than £300bn in the current financial year.
  • JCPenney became the fourth household-name retailer to file for bankruptcy in the US in a fortnight after the coronavirus shutdown proved too much and the department store group buckled under its heavy debt load. The mass-market chain, which has more than 800 stores and employs around 90,000 people, on Friday joined Neiman Marcus, J Crew and Aldo in seeking court protection from creditors.
  • The capital’s congestion charge will be reimposed from today. Transport for London is raising the charge by 30% to secure a £1.6bn government bailout after it took a 90% hit to its revenue due to the pandemic. Free travel for under-18s will also be temporarily suspended and for people over 60 during peak hours.
  • Mayor Sadiq Khan has announced that large areas of central London will be made car free. Roads between London Bridge and Shoreditch, Euston and Waterloo, and Old Street and Holborn will be limited to buses, pedestrians and cyclists. Cars and lorries will also be banned from crossing London and Waterloo Bridge. British Cycling says up to 14 million UK adults are ready to get on their bikes and spark a transport revolution.
  • The New York Stock Exchange is planning to reopen its trading floor on 26 May. Brokers will be expected to wear masks and avoid any unnecessary contact with each other.

Politics today

  • Civil servants who had been moved to deal with the coronavirus crisis have been sent back to work full-time on no-deal Brexit preparations. Senior government figures said the UK was preparing to “walk away” from trade talks with Brussels in the next month unless the EU gives ground
  • Labour’s Ed Miliband has called for the creation of a ‘zero-carbon army’ for eco-friendly industries, as part of Labour’s proposals to rescue the post-coronavirus economy with a radical green recovery plan, focused on helping young people who lose their jobs by retraining them in green industries
  • The UK government says it has recruited 17,000 people to form England’s army of contact-tracers seeking to contain the spread of coronavirus as lockdown restrictions are eased. Michael Gove, told Sky News on Sunday that the programme was on course to reach its target of enlisting 18,000, with the first tracers due to start work today
  • In yesterday’s Mail on Sunday, Boris Johnson conceded that people will feel frustrated with some of the new rules and he trusts in their good sense. “I want to thank you personally for sticking with us and — most of all — for being so patient”
  • Commons: starting with Treasury questions, followed by transport questions (2.30pm)
  • Statement from Health and Social Care Secretary Matt Hancock on the government’s coronavirus response (3.30pm)
  • Legislation: The immigration bill’s second reading in the House of Commons
  • House of Commons education committee on COVID-19 impact on universities (9am)

Stock market moves

  • Investor sentiment was tempered by comments from Federal Reserve chairman Jay Powell on Sunday that it could take until 2021 for the US economy to make a full recovery and a rebound may be dependent on the development of a vaccine. Gold prices gained ground in the wake of the warning and continued tensions between Washington and Beijing, with the spot price climbing 1.1 per cent to a new seven-and-a-half year high. S&P 500 futures pointed to a 0.7 per cent gain when US stocks begin trading on Monday.
  • Stock markets in Asia-Pacific started mixed on Monday following poor economic data, while gold prices rose to a seven-year high amid rising US-China tensions.
  • Oil prices hit a five-week peak as coronavirus lockdowns ease and consumption creeps up just as production plummets. West Texas Intermediate, the US crude benchmark, rose 4.4 per cent to $30.72 a barrel on Monday morning in Asia, climbing above $30 for the first time in two months. Brent crude, the international benchmark, rose 3.6 per cent to $33.67 a barrel amid signs that demand was recovering as major economies begin to ease lockdowns imposed to counter the pandemic.
  • In Europe, the Eurostoxx 600 and FTSE 100 are up in early trading.

Corporate announcements

* Maitland Client

Ryanair Holdings PLC Final Results
  • Ryanair Holdings reports a full year profit of €1,002m (excl. hedge ineffectiveness), compared to €885m last year.
  • Traffic grew 4% to 149m guests.
  • Revenue per guest rose 6% to €57 (2% higher fares & ancillary rev. up 16%).
  • Outlook: Given the uncertainty over the impact and duration of the Covid-19 pandemic, coupled with no visibility on what customer behaviour and demand will be following a return to service, Ryanair cannot provide FY21 PAT guidance at this time. The Group expects to record a loss of over €200m in Q1, with a smaller loss expected in Q2 (peak summer) due to a substantial decline in traffic and pricing from Covid-19 groundings.
LXi REIT PLC* Dividend Declaration & Forward Dividend Guidance
  • As announced on 6 April 2020, the Board is pleased to declare an interim quarterly dividend in respect of the quarter ended 31 March 2020 of 1.4375 pence per ordinary share, payable on 17 July 2020 to shareholders on the register at 26 June 2020. The ex-dividend date will be 25 June 2020.
  • Following the payment of this dividend, the Company will have paid, in aggregate, 5.75 pence per ordinary share in dividends in respect of the year ended 31 March 2020, in line with its target for the year.
  • The Board confirms that it expects to approve the payment of the Company’s first quarterly dividend for the financial year ending 31 March 2021 at the rate of 1.30 pence per share*. This dividend is in respect of the quarter ending 30 June 2020 and is scheduled to be declared and paid in September 2020.
LXI REIT PLC* Annual Results
  • Total net asset value return for the year was 13.4% (31 March 2019: 12.1%), significantly ahead of our medium term annual target of at least 8%.
  • Operating profit of £78.4m (31 March 2019: £37.3m) comprising income from the Group’s property portfolio and changes in fair value of investment property net of administrative and other expenses.
  •  The Board confirms that it expects to approve the payment of the Company’s first quarterly dividend for the financial year ending 31 March 2021 at the rate of 1.30 pence per share. This dividend is in respect of the quarter ending 30 June 2020 and is scheduled to be declared and paid in September 2020.
  • Stephen Hubbard, Chairman, said: “We announce our annual results this year at a time of unprecedented upheaval as the economic and social impact of Covid-19 continues to unfold in the UK and around the world. The results for the year ended 31 March 2020 were largely unaffected by the crisis and the Group continued to perform well during the year. The Investment Advisor’s sourcing of suitable assets has allowed the Group to continue to deliver good returns to shareholders. Whilst clearly we are in uncertain times, I take comfort in the key defensive attributes of an index-linked portfolio, fully let on long leases to institutional-quality tenants, with largely fixed or collared rent reviews.”
Centamin PLC Annual Results for the year ended 31 December 2019
  • Gross revenues of $658.1m for the twelve months ending 31 December 2019, up 7% compared to the prior year.
  • EBITDA improved 10% to $284.0m, at a 43% EBITDA margin.
  • To give shareholders greater certainty and expedite the dividend timetable, the previously proposed 2019 final dividend of 6 US cents per share was replaced with a 2020 first interim dividend of 6 US cents per share, equating to c.$69.4m, and paid on 15 May 2020.
  • Ross Jerrard, CFO, said: “We have made a good start to 2020 with production and costs on track. The global uncertainty around the impact of the COVID-19 pandemic has created significant volatility in the global investment markets, resulting in increased safe-haven investing. Our clean balance sheet, with no debt nor hedging, offers pure exposure to the gold price and our long cash position of c.US$379 million underpins the financial strength of the business and self-funds current growth investment.”
Schroder AsiaPacific Fund PLC Half-year Report
  • During the six month period ended 31 March 2020, the Company’s net asset value  and share price produced total returns of -10.8% and -9.4%, respectively, compared to a total return of -9.3% for the Benchmark.
  • After the period end, on 21 April 2020, the Company extended its revolving credit facility for a further two months. The board intends to renew it for a year in June. The committed amount is £100 million. The Company also has access to a £30 million overdraft with HSBC Bank.
  • Nicholas Smith, Chairman, said: “Your Company has faced a number of different challenges over its life, and COVID-19 is the biggest. In recent months, most of the portfolio holdings have faced severe dislocation in both their operations and demand for their products, and few have much visibility on when they will return to normal.”