Lively DCC aims for Footsie leap
FANCY that. A Dublin-based company which in 2000 was involved in one of the biggest ever Irish business scandals is now champing at the bit to join the Footsie.
Shares of the international support services group DCC, which is on the reserve list of the elite index, jumped 26p to 5015p taking its valuation up to £4.5bn following a positive first-half pre-close trading update.
It showed the group has delivered strong profit growth in energy, healthcare and environmental, which helped partially offset technology softness in UK tablet and mobile phone sales.
The board said it remains on track for significant full-year 2016 profit growth.
It is many years since DCC’s founder and executive chairman Jim Flavin was forced to resign following what was deemed to be an illegal insider trading transaction in February 2000, which netted a profit of €80m from the sale of shares in banana group Fyffes.
Flavin, as director of Fyffes (as well as chief executive of DCC), was aware of inside, secret information concerning Fyffes that was to cause a fall in the value of the shares, once the information became known.
DCC has since gone from strength to strength via a stream of acquisitions.
In May, its largest acquisition yet saw it buy Butagaz, a leading LPG business in France, from Shell, for £338m. Investors who subscribed for stock at £47 a pop to help finance the deal are now sitting pretty and will be in an even happier mood if DCC gets promoted to the Footsie in December. Hungry tracker funds would then have to get involved. Broker Jefferies target price is £59.
Blue-chips got the fourth quarter off to a quietly firm start with the Footsie closing 10.86 points better at 6072.47. The FTSE 250 was 80.63 points up at 16763.65.
Led by a sharp early fall in techno giant Apple, Wall Street traded 109 points lower in the early stages. With Fed boss Janet Yellen failing overnight to provide any relevant comments about US interest rates in her speech in St Louis, traders in New York took profits.
A firmer Brent crude price lifted oil stocks, as did news that Tullow, 16.3p higher at 185.4p, has been told by its banks they would be keeping credit lines unchanged at £2.4bn. Tullow also revealed it has all the funds it requires, including for the developing an oilfield off Ghana. BP gushed 8.25p to 342.25p and Royal Dutch Shell 38p to 1601p.
However, broker Investec was not getting carried away with developments at Tullow. Analyst Brian Gallagher advises clients to sell. Be careful what you wish for, he says, access to debt may seem like a good thing in the near term, but he urged caution.
Loss-making Big data group WANdisco lost 5p more to a year’s low of 122.5p on increasing fears that a fundraising could be just around the corner.
Intelligent Energy put on 6.75p to 107p after announcing the biggest ever deal for a fuel cell company, worth £1.2bn in revenues over a ten-year period.
IE has effectively acquired GTL’s energy management business for £85m, of which £25m will be funded out of its cash resources and £60m will be debt financed by the Indian banking markets at a rate of 12pc.
Stockbroker Numis Corporation advanced 7.75p to 242.75p after announcing full-year revenue from core activities rose 5pc yearon-year due to a better second half. Client activity was strong in the second half of the year, enabling it to complete a further 15 equity raises, including five IPOs.
Celebrating Rob Rennie’s appointment as chief executive, Avon Rubber bounced 15p higher to 929p. Broker Edison Investment Research said: ‘The capture of someone who has significant commercial and international experience shows how far the group has come over the past seven years. Having held several senior roles in Invensys, latterly as president of energy controls, Rob was a member of the executive committee which sold Invensys to Schneider Electric in 2014.’
As the market awaits it to wrap up the Local World deal, Trinity Mirror eased 2p to 148.5p despite a Peel Hunt buy recommendation. Analyst Alex DeGroote says Trinity is still good value even though print circulation revenue forecasts across the sector could be hit by a decision by Express Newspapers to slash cover prices. According to industry reports, Express is to slash the cover price on its Star titles from Monday. The Daily Star is currently priced at 40p, but could be 20p from next week.
Highly speculative Ortac Resources rose 44pc to 0.06p. The company holds a 20pc interest in Zamsort, a copper miner with significant exploration licences in Zambia.
Zamsort has raised more than £1m from Kopara Investments to help expand and transform its copper production in Zambia. The deal gives Kopara a 20pc stake in Zamsort, equal to Ortac’s interest.