Langton Capital – 2015-08-17 – Daily Wrap: Sugar, smoking bans, evolution, mad chefs & other:
Leisure Wrap & Other:So the trading day is grinding to a close. We’re another day older but are we any wiser? After a day of intensive head-scratching, pen flipping and gossip, we have been considering the following. As always, contact us if you’d like further details: Is sugar the new tobacco? • There’s competition for the ‘accolade’ from alcohol, salt & fats. • But sugar may be a killer, some talk of a smoking gun. • Mr Oliver still has the bit between his teeth, calling for 7p per can tax on fizzy drinks. Tax in Mexico seems to be working, say some. Others insist it’s a matter for education. • Meanwhile fizzy drink makers perhaps racing against time, pushing their zero-sugar lines as the real thing. Beer gardens, safe for the moment: • Royal Society for Public Health has called for the ban to be extended. • UKIP has said the ‘proposed beer garden smoking ban is the work of “crackpot killjoys”’ • The PMA reports the Department of Health as saying it has ‘no plan’ to extend the public smoking ban to pub gardens. • At this stage, there will not even be a consultation on the proposals set out by the Royal Society of Public Health. • One battle doesn’t win a war and this is likely to remain more of a fighting retreat than it is to represent a line in the sand Evolution ongoing, change is the only constant etc. • Warming to a theme, Deltic suggests dancing will never go out of fashion. May be true but the number of people boogying & the frequency with which they do so could go down rather than up. We don’t want young people ending up like the consumers on Wall-E – here – but the trend to (and beyond) Facebook is well-established. Gen Y drinking less, going out less often. • Sugar free soft drinks – see above. • Morrison’s may be exiting C-stores altogether, not just trimming its estate. Some evolutionary trends may be dead-ends – or other operators could have filled the niche already. • Amazon Fresh may or may not be a major competitor in the food-delivery market. Ocado’s shares fell Friday, now down 20% in a month. • Ryanair wants to take on the online vendors, says it will offer concert tickets, hotel bookings and the rest. Random information, hopefully not all of it useless (re most leisure operators etc.): • Consumer spending power: Diesel price at >5yr lows, milk ditto, commodities down after attempted rally = consumer better off. • Commodity prices are all sliding, metals & food. Many blipped up then fell again. Orange juice the exception, go figure. • Miners down Friday led to FTSE100 down and FTSE250 up. Former is heavily oil/miners influenced, latter more domestic. • Business confidence up post ‘decisive’ election result says Institute of Chartered Accountants in England & Wales. That’s good as it tends to be a lead indicator. Confidence leads to capex and capex means jobs. • Interest rates will go up at some point. MPC member Kristin Forbes may have twisted her analogies (she wrote ‘linger too long in the sun and your skin may take on a slightly pink glow. Enjoy the sunshine and low inflation this holiday season. But remember that neither are likely to persist. Stay vigilant against sunburn’) but she is right. Interest rates will go up (perhaps 10-15x) over the next few years. • Chef vacancy numbers rising; this is becoming a big deal. We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance): 1. M+C reports Strada is looking for new sites, quotes Hugh Osmond as saying it will have ‘trial of the new concept open shortly.’ 2. Jamie Oliver calls in Sunday Times for tax of 7p per can on fizzy drinks. Says he has lost two stones himself 3. Daily Telegraph quotes Peter Marks of Deltic (was Luminar) as saying dancing will never go out of fashion 4. Average price of diesel now at lowest level since Jan 2010, helps put a little more money in consumers’ pockets 5. Telegraph reports Morrison’s is in ‘advanced talks’ to to sell its convenience stores to Greybull Capital. 6. The Department of Health has clarified that there is ‘no plan’ to extend the public smoking ban to pub gardens 7. Sportech reports Friday that it has received proposal from Contagious Gaming of Canada re a bid for the company. 8. The International Monetary Fund has renewed its call on Eurozone ministers to offer Greek debt relief. a. Angela Merkel has called upon the IMF to take part in the most recent bailout for Greece 9. World markets: UK mixed Friday, Europe lower, US up and Far East down in Monday trading 10. Oil price more firmly below $50, trading off half a buck or so at around $48.50 per barrel 11. Grant Thornton/ICAEW business confidence survey suggests that the ‘decisive general election result provided businesses with certainty’ 12. Japan’s economy shrank in Q2 by 0.4% against Q1. Sluggish exports + lower consumer spending were to blame 13. MPC member Kristin Forbes has warned that waiting ‘too long’ to raise interest rates could undermine UK economic recovery Langton Food Retail Index – The Grocer’s DozenThe Food Retail Index contained a few heavy fallers in what proved to be another turbulent period on the markets last week. Tesco, by some way the index’s largest constituent, recorded the second-largest fall of 6.09%. Grocers As mentioned above Tesco dragged the grocers down, its 6.09% decline to 202.65p beaten only by Ocado’s 6.1% fall. The online retailer has lost over a quarter of its value over the past month and now trades at 361.9p per share, highlighting its inherent volatility and blue sky valuation despite continued operational progress. Ocado’s latest fall coincides with Amazon’s Fresh food launch. Tesco’s underperformance can be partly attributed to slowing industry sales and fears over the sale of its valuable Dunhumby business and the complicated contractual wrangles over who retains ownership of the tech business’ data. Specialty/Wholesale With ten of the active shares in the index having posted falls for the week, it was a case of ‘you can’t keep a good stock down’ with Booker Group reporting a small 0.11% gain to near 52-week highs of 178p. Booker has been a strong performer over the past three months, rising nearly 19% as it continues to benefit from recent acquisitions and a solid trading performance. Discounters Poundland bucked the trend for the discounters with a 2.63% rise to 363.3p after a collection of institutional investors raised their stakes in the company ahead of its AGM. McColls, by contrast, has fallen by 8% in recent weeks to near 52-week lows of 148p a share, giving it a forecast dividend yield of 6.8% covered 1.6 times. Jack Brumby – jack.brumby@langtoncapital.co.uk Leisure – Licensed Retail Index – Major MoversThe LRI outperformed the FTSE All-Share, rising 0.19% against a 2.05% drop as China drove the miners and the wider market down last week. Cineworld was the biggest mover, rising 12.48% following the group’s interim numbers last Thursday. The group saw strong pro-forma revenue growth of 11.3% and announced an interim dividend of 5p. Three films this year broke box office records, and the film schedule for the rest of the year continues to look good for cinemas. The pub companies had a generally good week, with Greene King up 2.49%, Marston’s up 1.28% and JD Wetherspoon up 0.89%. Mitchell’s & Butler, however, was down 0.80% this week. Mid-cap restaurant chains also had a strong week with The Restaurant Group up 2.99%, Domino’s Pizza UK up 3.32% and Patisserie Valerie up 4.75%. Merlin was down another 0.75% last week as the group struggles to rid itself of its recent bad press. The group may have been affected somewhat by a slight worsening in geopolitical sentiment given the renminbi devaluation and Greek debt problem, which likely also caused SSP Group to dip 0.33%. Will Brumby – will.brumby@langtoncapital.co.uk |
|