Rose conjures Ocado growth
SUPER smooth Sir Stuart Rose is not everyone’s cup of tea but everything he touches in retail does tend to come up smelling of roses.
The multi-millionaire splashed out £9,000plus on 452,284 shares in Ocado at 2p a pop when he became chairman in May and yesterday his investment was worth £2.1m after the online grocer jumped 21.8p further to a record 450.5p on a Goldman Sachs recommendation and target price of 545p.
Founded in 2000 by three Goldman Sachs bankers, the group was floated at 2010 at 180p but soon traded well below that price. It touched a low of 58.5p in November 2012 as sceptical analysts queried its prospects and said it would be years before it would make a profit.
The worm turned for Ocado in July when it confirmed a 25-year licensing agreement with Wm Morrison, 2.5p cheaper at 274.1p. Ocado agreed to the picking, packing and delivering of Morrison’s online operation in return for a £170m upfront payment and an ongoing series of fees and charges. The deal is worth at least £300m to Ocado which is now uniquely positioned to benefit from the inexorable shift of grocery shopping online.
Research group IGD forecast that the online food and grocery market will be worth £11.1bn by 2017.
With that in mind, and continuing vague speculation that one day Wm Morrison will swallow Ocado lock, stock and barrel, it has helped its share price soar 59pc since August, much to Rose’s delight.
Founder Jason Gissing cashed in £3.3m worth of stock in August at 310.6p a share but still sits on a 2.9pc stake.
The Footsie fell 71.45 points more to 6365.83 and Wall Street traded another 86.81 points lower at 14,849.43 in the early stages as the world awaited a resolution to the US govern- ment shutdown and debt ceiling crisis ahead of the deadline on October 17.
Housebuilder Persimmon advanced 10p to 1077p as the Government launched its £12bn Help to Buy mortgage guarantee scheme, under which the government would pick up the bill for 15pc of the purchase price of a home in the event of a default.
Reckitt Benckiser slumped 101p to 4269p on a Liberum Capital sell recommendation. The broker slashed its target price to £35 from £37.
Engineering and project management consultancy group WS Atkins put on 4p to 1114p after it won a £75m contract as the lead designer for three of the six lines being built as part of the Riyadh Metro project in Saudi Arabia. Fund manager Ashmore added 1.2p at 387.4p ahead of tomorrow’s first-quarter trading statement.
Former dotcom darling BATM Advanced Communications improved 0.88p to 16.5p after the provider of real time technologies for the telecoms and medical equipment markets announced it will join three Tel Aviv Stock Exchange indices on October 20.
Acquisition news lifted Trakm8 Holdings 9p or nearly 43pc to 30p. The developer of vehicle tracking systems has bought fleet management systems provider BOX Telematics for £3.5m cash. Small buying lifted Aeorema Communica
tions 11p or 32pc to 44.75p following news that the communications and event specialist company returned to a full-year profit last year and proposed a maiden dividend payment.
Grafenia, the former Printing.com, shed 3.7pc to 19.5p after warning that results for the year will be below market expectations, citing disappointing sales from its July AGM to the end of August.
After reporting super high-grade results for its Sao Chico gold project in Brazil, Serabi
Gold rose 14pc to 6.12p. An upbeat third- quarter trading statement helped Blur Group firm 2.5p to 461.5p.
Buyers nibbled away at Kentz Corporation, 7.3p better at 480.3p, on hearing it has won a Manpower Services contract for the Qatargas Laffan Refinery Phase 2 project in Qatar.
Profit-taking dragged Victrex 15p lower to 1549p. Shares of the manufacturer of high performance polymers had initially risen after the board said that full year sales volume was slightly ahead of last year at 2,920 tons, compared with 2,904 tons a year earlier.
Bango, the mobile web payments company, rose 4.5p to 138p after announcing a partnership with MMIT in Africa to launch M-Iflo, a billing mechanism and verification portal for digital wallets, designed to fit the cash-exchange culture of Africa.
Fixed line telecoms group Daisy buzzed 8p higher to 147p following an in-line trading update. Liberum Capital is a fan and says the company is an increasingly attractive takeover target.