Edison Investment Research

ConvaTec Group (CTEC); posts another profit warning

Organic revenue growth expected at 0-1%, down from 2.5-3%

Medical equipment maker ConvaTec, which first warned on profits last October, released another profit warning today. It says its revised guidance is due mainly to changes in inventory policy by the biggest customer in its infusion devices franchise.

Target Healthcare REIT (THRL); operational portfolio grew 1.1% like-for-like

Stock up 0.37% to 112.92p at 8:01

Target announced that, as of 30 September, its EPRA NAV/share rose 1.9% to 106.1p from 105.7p on 30 June, while the operational portfolio grew 1.1% like-for-like to £403.7m. The company completed 12 rent reviews at an average uplift of 3.1%.

Shoe Zone (SHOE); beats market expectations in pre-close update

Revenues grow 1.8% to £161m

Shoe Zone has demonstrated that a closely managed and soundly positioned terrestrially based retail operation can still deliver excellent results. Pre-tax profit for the year to September is flagged as in excess of £11.0m, growth of 16%, and beating market expectations of £10.1m. 

Ebiquity (EBQ); issues 240,000 ordinary shares at 25p each

Stock flat at 69.50p at 08:06

Ebiquity announced the issue of 240,000 ordinary shares at 25p each in the capital of the company, following the exercising of options under share option schemes.

Man Group (EMG); reports strong first quarter

Man announces its selling its 18.5% stake in Nephila Holdings

Hedge fund manager Man Group reported $114.1bn of funds under management in the first quarter, boosted by $400m of net inflows and a $900m boost from investment performance. That’s up from $113.7bn in June.

Carclo (CAR); trading update: expectations for full year remain unchanged

Stock flat at 86p at 08:11

The company announced its trading update for the first half of the year ending 31 March 2019. Trading was below the board’s expectations owing to underperformance at Technical Plastics.

Primary Health Properties (PHP); Exchange price update of 4.25% Guaranteed Convertible Bonds 2019

Stock up 0.36% to 110.60p at 8:22

PHP has changed the exchange price of new ordinary shares of 12.5p each, to be issued in exchange for the preference shares in its wholly owned subsidiary PHP Jersey, from 97.5p to 96.16p.

GAME Digital (GMD); Ray Kavanagh appointed CFO with effect from 11 October 2018

Stock up 0.88% to 28.65p at 8:06

GAME announced that Ray Kavanagh, who was the Interim CFO since June 2018, has been appointed as its CFO with effect from 11 October 2018. Ray has worked as the Interim Director of Corporate Finance since January 2018 until the appointment.

Rising US bond yields spark volatility breakout

Synchronised declines in global equity markets may help stockpickers

October’s sharp declines in equity markets are being attributed to rising US bond yields. However, the surge in volatility is similar to that seen in January and raises questions about an underlying weakness in equity market depth rather than any radical change in fundamentals. It was hardly a secret that bond yields were likely to rise further over time given the strength of the US economy. Furthermore, a quarter-point increase in US 10y rates to 3.25% is not an especially large move. Recent increases in the US 2y rate perhaps went against the grain of Powell’s August comments but again were not especially noteworthy. We believe investors should first ensure that portfolios are appropriately positioned from a risk perspective, given the likelihood of a higher volatility trading environment.  Second, investors should be actively looking for securities which have been unfairly discounted in what has been an indiscriminate sell-off. However, we do not feel it is time to change our cautious stance on developed equity markets in general.

Diversified Gas & Oil acquisition of Core Appalachia Holding Co

Diversified Gas and Oil has announced the acquisition of Core Appalachia Holding Co (Core) for a consideration of $183m comprised of $130m in cash (funded through the assumption of $93m of Core debt and $40m DGO debt drawdown) and 35m new shares issued at £1.15. The deal is expected to be immediately accretive to cash flow and earnings with synergies with DGOs existing Appalachian asset base. Net working interest production is expected to increase 19% to 71,000boed and 1P reserves +25% to 493mmboe. DGO expects immediate to near term synergies of $5-10m pa. The deal is priced at 72% of management estimated PV10 of $255m and is in line with the EQT acquisition on this metric. Assuming we were to include the Core assets at PV10, post equity dilution, the deal would add c.8.4p/share to our last published valuation of 138.1p/share excluding synergies. We note that DGOs share price has disconnected from recent spot price strength in Henry Hub in recent weeks and on our last published forecasts the stock yields c 7.4%.