Maitland/AMO Morning Monitor – Thursday 10 October 2019

10th October 2019

Market Information

The FTSE is expected to open flat this morning while the CAC and DAX are set to open up.

Major Asian stock markets recovered from earlier lows to trade higher Thursday afternoon as investors watched for developments on the U.S.-China trade front ahead of high-level negotiations. The Shanghai composite is up 0.19% and the Shenzhen component gaining 0.45%. The Shenzhen composite also advanced 0.507%.


In the news

  • Turkey launches offensive in northern Syria; US did not give green light, says Pompeo
  • EU leaders issue ultimatum to Johnson on Brexit plan ahead of Ireland talks
  • Fed drops toughening liquidity rules on foreign banks

The political day

  • Chancellor Sajid Javid will represent the UK at an informal ECOFIN in Luxembourg.
  • Brexit Secretary Steve Barclay is expected to meet with European Commission Chief Negotiator for Brexit, Michel Barnier in Brussels.
  • The Institute for Government hosts an event with candidates to be the next Commons Speaker, including Henry Bellingham, Chris Bryant, Harriet Harman, Meg Hillier, Eleanor Laing and Shailesh Vara.

Top Financial Announcements

* Maitland Client

Hargreaves Lansdown PLC Trading Statement
  • Net revenue increased 6% to £128.1m (2018: £120.8m).
  • Net new business increased to £1.7bn (2018: £1.3bn).
  • Assets under administration increased 3% to £101.8bn (2018: £94.1bn).
  • Chris Hill, CEO, said: “I’m pleased to report a solid start to our financial year for client, net new business and revenue growth. We continue to focus on our strategy of delivering excellent service, information and value during these continued uncertain times for our clients.”
Mondi PLC Trading Update
  • LFL sales volumes were, on average, marginally lower than the comparable prior year period (Q3 2018) as a result of lower industrial bags and uncoated fine paper volumes; this was partly offset by growth in corrugated packaging.
  • The Group continue to make good progress on its previously announced major capital investment projects at its high-quality, cost-advantaged operations in central Europe.
  • Underlying EBITDA decreased 18% to €383m (Q3 2018: €466m).
Dunelm Group PLC First Quarter Trading Update
  • Total LFL sales increased 6.4% to £255.6m.
  • Total Dunelm sales increased 7.5% to £262.6m.
  • Total Group sales increased 5.8% to £262.2m.
  • Nick Wilkinson, CEO, said: “The launch of our new digital platform will be an important milestone in this phase of Dunelm’s development.  Once fully live, we can really begin to enhance and extend our offering and customer experience. Despite the recent softness in the homewares market and the increased political uncertainty, we are confident we can continue to win market share and our expectations for the full year remain unchanged.”
Inchcape PLC Sale of UK Inchcape Fleet Solutions for £100m
  • The Group has agreed to sell its Inchcape Fleet Solutions business to Toyota Fleet Mobility GmbH for total cash consideration of £100m.
  • The transaction is expected to complete in Q4 2019 and as such the impact on Inchcape’s 2019 trading profit will be minimal.
  • The use of the proceeds will be consistent with Inchcape’s existing capital allocation policies, focusing on growing both organically and inorganically, with any surplus cash returned to shareholders.
  • Stefan Bomhard, CEO, said: “This transaction is a further demonstration of strategic progress and focus on our core Distribution activities which generate 90% of Group trading profit. We are pleased to have been able to further streamline our UK Retail market activities by selling IFS at a good valuation. We remain focused on our Ignite strategy which frames our operational excellence initiatives, has driven 10 Distribution deals since 2016, and sets the foundations for capabilities that will enable us to position Inchcape well for the future. I would like to thank our IFS team for all their hard work and dedication and wish them success under Toyota, Inchcape’s oldest OEM partner.”
Sabre Insurance Group PLC Trading Update
  • The Group continues to execute its strategy of focusing on underwriting profitability over premium growth in order to maximise profitability over the long term.
  • The Group anticipates delivering a FY2019 combined ratio slightly better than its mid 70%’s target (FY2018: 70.6%).
  • The Group expects full year Gross Written Premiums to be approximately 7% lower than 2018 (FY2018: £210.0m), in line with previous guidance.
  • Geoff Carter, CEO, said: “We continue to observe high levels of industry-wide claims inflation, and are additionally focused on other emerging cost pressures. These include increases in the MIB and FSCS levies, potential reinsurance price rises following the Ogden rate decision and possible changes in claims management company behaviour following the implementation of the forthcoming personal injury legal reforms. Our performance so far in this financial year has been in line with our expectations and we remain confident that we will deliver a combined ratio slightly below our long-term target and an attractive dividend for the full year, supported by our current solvency ratio of 198%, which is well above our target 140% to 160% range.”