Proactive Investors -
- FTSE 100 up 57 points to 8,202
- Pound set to continue losing streak
- Hargreaves Lansdown (LON:HRGV) accepts bid
Revolution Bars survives after rescue plan approved
Zooming in even further into the world of small-caps, it's a night-out favourite which is drawing some attention.
Revolution Bars, the hospitality group, saw its shares surge more than 16% after it said its “long-term future” is secure after a survival plan was approved by London’s High Court.
This will see the bar operator’s Revolution brand amend secured lending facilities, ditch some loss-making sites and implement rent reductions at certain others.
According to the Peach Group, Revolution Bars and De Cuba-owner, the restructuring will boost pre-tax earnings by £3.8 million annually, after it has struggled in the wake of the pandemic.
Revolution will now benefit from amended obligations on £30 million of debt with lender NatWest (LON:NWG), including seeing £4 million written off, alongside having longer to pay taxes.
Bellway surges in strong start for FTSE 250
In the world of mid-caps, the FTSE 250 is enjoying a strong start to the day, with the index up close to 0.9%, helped by gains from AO World, Wizz Air (LON:WIZZ) and Aston Martin.
One company also on the rise is Bellway, the housebuilder, after its shares jumped more than 2.5% on the back of its financial results.
Bellway (LON:BWY) slightly exceeded its housebuilding targets in its 2024 financial year, completing 7,654 homes against a previously set target of 7,500.
The average house sold for £308,000 in the year, which was also slightly above guidance, leading to total group revenues of £2.35 billion.
Bellway noted sequential improvements over the year as mortgage rates began to moderate and the prospect of central bank interest rate cuts began to emerge.
Honeyman said “we are encouraged” by Labour’s plans and planning reforms, which are intended to deliver 1.5 million new homes within five years.
Bellway did not make mention of its proposed merger with Crest Nicholson (LON:CRST) in today’s full-year trading update, having extended the deadline for negotiations on Thursday.
Chinese inflation rate more than doubles
Chinese markets came under pressure last night after it was revealed that the inflation rate in the country had more than doubled in July, bringing it to a five-month high.
Fresh data put to rest fears of deflation in the world's second-largest economy after the consumer price index increased by 0.5% year-on-year in the last month, rising against June's 0.2%.
July's rise marks six consecutive months of lifts for the inflation rate, the National Bureau of Statistics revealed.
"China is sticking to mere targeted support for domestic demand, prioritising revamping the growth model to rely on high-tech manufacturing, rather than the property sector," said Duncan Wrigley at Pantheon Macroeconomics.
"The five-year urbanisation action plan has the potential to boost domestic demand - partly filling in the gap from the plunge in property sales - but the impact will be gradual and depends on proper implementation and funding.
"The beefed up auto subsidies are enjoying a better take-up since late July; however, the vicious auto price war is still continuing amid fierce competition, and automakers’ pricing power is likely to remain weak."
Fears of economic slowdown have been at the forefront of many Chinese economists' minds over the last few years, with the country having suffered a period of deflation between October and January.
Despite being weighed by a debt-laden real estate industry and high unemployment amongst the youth, China is hopfeul it can increase its economic growth rate to 5% for 2024 - a target considered ambitious by many.
Deliveroo continues to soar
Deliveroo (LON:ROO) has kicked more than 5.5% higher this morning, continuing on from its strong performance yesterday after its shares lifted by close to 11%.
Driving the share gains was Deliveroo's first-ever profits, with the delivery firm announcing earnings of £1.3 million in the six months to June, improving against a loss of £82.9 million in 2023.
A £150 million share buyback was also announced, with chief executive Will Shu noting the return to profit and positive cash flow marked “two major financial milestones,” coming in part on a “stabilising” consumer environment.
Also keeping the stock in flight was a bullish broker note from analysts at Deustche Bank, who upgraded the group's price target from 180p to 187p after reitertaing its 'buy' rating.
"Deliveroo reported solid results that we think keep the group on track to deliver midterm growth acceleration to low double digits and 4% adjusted EBITDA margin in 2026E," said Silvia Cuneo at the German bank.
"We raise our adjusted EBITDA forecasts in 2024E and outer years, albeit with slightly more conservative growth assumptions since macro contribution remains uncertain."
Cuneo also added that the new buybacks were "an extra plus".
Shares in Deliveroo are trading at close to 150p today, representing a close to 25% discount compared to DB's target price.
Pound on track for worst losing streak in a year
The British pound must strengthen today to avoid suffering its worst run in over a year, as it heads for another week-on-week loss.
Sterling has dropped in value for the last three consecutive weeks, and is a session away from its fourth, putting it on pace for its worst performance since September 2023.
Compared to the USD, the pound has dropped 0.12% since the start of the week, driven by the volatile global market and investors seeking calmer assets.
Nevertheless, the currency has made a strong start to today, lifting 0.2% to US$1.276, meaning continued upward momentum on Friday could pull it from a month of weekly losses.
Despite the downturn, the pound still remains 0.3% up year-on-year.
A similar experience for the pound has occurred when compared to the Euro, having dropped for the last four, is now on track to fall another 0.3%.
Much of the decline in the pound was driven by the Bank of England's decision to cut interest rates last week while leaving the door open for two additional reductions later this year.
FSTE 100 opens higher
The FTSE 100 has lifted close to 30 points to bring it near the 8,175 mark and put it in a good position for the final day of the week.
Shares in British Airways (LON:ICAG) IAG lifted by around 0.5% after it said the UK airline will stop operating flights between London and Beijing later this year.
The airline had dubbed the route as one of its “most important” last year when restarting flights after the pandemic.
However, a Russian ban on western airlines entering its airspace since the start of the Ukraine war in 2022 has forced operators to fly longer and more costly routes.
British Airways is set to axe the Beijing route from October to November next year, alongside one of two daily flights to Hong Kong.
Hargreaves Lansdown accepts takeover bid
Wealth-management platform Hargreaves Lansdown PLC has formally agreed to be taken over by a consortium of private equity firms for 1,140p per share.
The offer tabled by CVC, Nordic Capital and Platinum Ivy values Hargreaves at a 54% premium to Hargreaves’ share price on 11 April, when the consortium first approached the investment platform’s board.
It values Hargeaves at £5.4 billion.
Certain shareholders have bristled at what they see as a “two-tiered” offer for unfairly favouring the firm’s co-founders and largest shareholders.