Edison Investment Research

Guaranteed security? Investment implications of US foreign policy

North Korea summit opens the way to an easing of sanctions and international recognition – while G7 allies are left reeling

North Korea has recently made enormous progress towards re-integration with the world economy on its own terms, and in particular security guarantees for its incumbent administration. Development of nuclear missile capability in 2017, followed by the willingness to discuss the destruction of this same capability only a year later does indeed highlight that Kim Jong-un may be, in Trump’s words, a very worthy and smart negotiator. Potentially, the prize is as large as a return to the world community of nations. The contrast with the disarray at the meeting of the traditional G7 allies days earlier was striking - and these trade disagreements are the greater risk for markets in our view.

Ted Baker’s trading statement shows a strong wholesale operation and constant currency revenue

Drilling dow performance was rescued by the wholesale operation with constant currency sales growth of 18.9%. Within retail itself, constant currency revenue only grew by 3.6%, which was less than the 5.7% increase in average square footage.  And the wholesale figure also contains a significant timing benefit from earlier deliveries – management expects the total for the year to be in high single digits rather than high teens.

Fidelity China Special Situations (FCSS); final results: NAV total return of 22.2%

Stock flat at 263.5p at 8:14

For the year ended 31 March 2018, FCSS’ NAV total return of 22.2% underperformed the MSCI China Index return of 23.8%. Dividend per share increased 40% to 3.5p.

Keywords Studios (KWS); issued 513,189 new ordinary shares to vendors of Mindwalk

Stock down 0.11% to 1,846.0p at 8:01

KWS issued 513,189 new ordinary shares as part of non-contingent deferred share consideration to vendors of Mindwalk that was due on second anniversary of its acquisition. Further payment of $0.5m is deferred until third anniversary post acquisition which falls due on 31 May 2019.

Park Group (PKG); FY preliminary; billings grow 2%, operating profit rises 6.5%

PKG’s annual billings (Mar-18) grew 2% y/y to £413m, while revenue declined 4.7% to £296m. Operating profit and net income grew 6.5% and 5.2% to £11.6m and £10.4m, respectively. Full year dividend per share was at 3.05p (2017 – 2.90p).

Trifast (TRI); preliminary results: revenue up 6% at AER; dividend of 3.85p per share

Stock down 2.33% to 265.66p at 8:10

TRI has reported its preliminary results for the year ending 31 March 2018. Total revenue grew 6% at actual exchange rate (AER) to £197.6m (FY17: £186.5m). The final dividend per share for the year rose 10% to 3.85p (FY17: 3.50p) and diluted earnings per share grew 17.3% at AER to 12.20p (FY17: 10.40p).

Nanoco Group (NANO); Keith Wiggins intends to step down as COO and from the Board

Stock flat at 42.5p at 8:05

Keith Wiggins intends to step down as Chief Operating Officer and from the Board to pursue other business interests. He will leave the Board with immediate effect but will stay with the business for an orderly handover.

KEFI Minerals (KEFI); $30m project investment for TKGM

Stock up 45.71% to 04.08p at 8:29

KEFI has reported it has entered a $30m proposed acquisition agreement with an Ethiopian investment syndicate for 30% of ownership interest in wholly owned subsidiary KEFI Minerals Ethiopia (KME) that holds the company’s interest in Tulu Kapi Gold Mines Shares Company (TKGM).

Keywords Studios (KWS); acquires Hollywood-based production services company for $10m

Stock up 1.22% to 1,830.0p at 8:01

KWS acquired Hollywood-based production services company Blindlight for a total consideration of up to $10m. KWS will pay the initial consideration of $3.64m in cash. It will then issue 64,521 new ordinary shares to the seller on the first anniversary of the acquisition.

Palace Capital (PCA); final results; acquisitions for £88m; largest equity raise of £70m

Stock up 2.23% to 366p at 8:01

PCA has reported results for year ended 31 March 2018. Adjusted profit before tax (PBT) grew 27% to £8.5m (31 March 2017: £6.7m) and net rental income rose 22% to £14.9m (31 March 2017: £12.2m). Total dividend increased 3% to 19.0p (31 March 2017: 18.5p).