Maitland/AMO Morning Monitor – Thursday 26 September 2019

26th September 2019

What really matters... COVID-19

The FTSE, CAC and DAX are expected to open higher in Thursday morning trade.

In Asia, Mainland Chinese shares were lower by the afternoon, with the Shanghai composite slipping 0.73% while the Shenzhen component shed 1.97%. The Shenzhen composite also declined 2.311%. Hong Kong’s Hang Seng index rose 0.16% as shares of Chinese tech behemoth Tencent added 0.67%.


Stock market moves


In other news

  • Boris Johnson lays ground for acrimonious ‘people vs parliament’ election
  • KPMG switches 820 UK staff from advisory to audit
  • ECB’s German board member quits over loosening policy

Politics today

  • MPs will vote on whether to approve a short recess for the Conservative conference next week, followed by a debate on ‘the principles of democracy and the rights of the electorate’

Corporate announcements

* Maitland Client

Pearson PLC Nine Month Trading Update
  • The Group expects to deliver adjusted operating profit in 2019 at the bottom of the guidance range of £590m to £640m.
  • The Group expects to deliver adjusted EPS at the bottom of the guidance range of 57.5p to 63.0p.
  • The Group expects underlying revenue to be broadly flat with Core markets up 5%, Growth up 3% and North America down 3%.
  • The Group remains on track to deliver in excess of £330m of annualised cost savings, with the full benefits accruing from the end of 2019 onwards.
  • John Fallon, CEO, said: “The third quarter has been significantly weaker than we expected in US Higher Education Courseware. Whilst difficult in the short term this places more importance on our work to remake this part of Pearson and we are exploring new ways of deploying our new technology platform so that we can offer students highly affordable, convenient, adaptive, digital courseware. We still expect revenue across Pearson as a whole to stabilise this year, with encouraging growth in many parts of the company.”
International Airlines Group (IAG) IAG Full Year 2019 guidance update
  • The Group has updated its full year 2019 guidance based on recent events, expecting  operating profit before exceptional items to be €215m lower than 2018 pro forma (€3,485m).
  • The events in questions are BALPA’s industrial action (c. €137m adverse financial impact), threatened strikes by Heathrow Airport employees (c. €33m adverse financial impact) and weak booking trends in its low cost segments (c. €45 adverse financial impact).
  • Passenger unit revenue is expected to be slightly down at constant currency, compared to flat guidance previously.
  • Non-fuel unit costs are expected to improve at constant currency, unchanged from previous guidance.
  • Capacity growth, measured in ASKs, for the fourth quarter is now expected to be about 2%, which is 1.2 points below previous guidance.
  • Full year capacity growth is expected to be about 4%, compared to 5% previously.
Imperial Brands PLC Pre-Close Trading update
  • In light of a challenging NGP market in the USA and changes to our results expectations in the Africa, Asia and Australasia (AAA) division, Group net revenue for the year to 30 September 2019 is now expected to grow at around 2%, with EPS expected to be broadly flat at constant currencies.
  • The Group expects overall NGP business to grow net revenue by around 50% this year, which is below expectations. 
  • The divestment of the Group’s premium cigar business has generated strong interest from a number of potential buyers. The Group remains on track to realise proceeds of up to £2 billion from its disposal programme before May 2020.
Mitchells & Butlers PLC Pre-Close Trading Update
  • Despite cost headwinds the Group expects the full year operating profit margin to be at a similar level to last year.
  • Total sales have increased by 4.0% in the year-to-date.
  • In the 8 weeks to 21 September 2019, food sales have increased by 2.1% and drink sales have increased by 4.0%.
  • The Group has opened 7 new sites and completed 239 conversions and remodels in the financial year to date.
  • Phil Urban, CEO, said: “Sales growth has remained consistently ahead of the market and we carry this momentum forward into the new financial year.  We remain confident of the impact of our Ignite initiatives which will be continually reviewed and refreshed as the business moves forward.”
SSP Group PLC Pre-Close Trading Update
  • Despite many external challenges, SSP has performed well and guidance for FY19 remains unchanged.
  • Total Group revenue is expected to increase by approximately 7.8% on a constant currency basis.
  • At actual exchange rates, total Group revenues for the period are expected to increase by approximately 10% year-on-year.
  • Net contract gains for the full year are expected to be just above our previous expectations, at around 5.5%.
3i Infrastructure PLC Completion of the acquisition of Ionisos
  • The Group yesterday completed the acquisition of Ionisos.
  • Thr Group invested c.€210m to acquire c.95% of Ionisos, alongside management.
  • Ionisos is a leading owner and operator of cold sterilisation facilities servicing the medical, pharmaceutical and cosmetics industries.
  • The transaction was first announced on 26 July 2019.
Rothesay Life PLC Pension scheme buy-out
  • The Group and the Trustee of the GEC 1972 Plan (“the Scheme”) today announce an agreement for a bulk annuity insurance buy-out of the Scheme by Rothesay Life, a specialist insurer of defined benefit pension schemes.
  • The Scheme has assets and liabilities of approximately £4.7bn.
  • The Scheme contains approximately 39,000 members made up of c.28,000 pensioners and c.11,000 deferred pensioners.
  • The buy-out is expected to be completed before the end of 2022 and will be the largest full scheme buy-out ever undertaken in the UK.