the times | Wednesday December 22 2021 2GM 49
MarketsBusiness
The usual prices service will resume in the new yearnews in brief
Lithium deal for Rio
Rio Tinto is to buy a lithium
project in Argentina for
$825 million as the miner builds
its battery materials business. The
purchase comes at a time when
lithium is in strong demand as a
vital ingredient in batteries for
electric cars, while another
expected mining product, borate,
is used in solar panels and wind
turbines. In July Rio committed
$2.4 billion to a lithium project in
Serbia, which is attracting
protests by environmentalists
saying it will pollute land and
water. Rio’s London-listed shares
rose 143½p, 3 per cent, to £49.03.Go-Ahead vote rebellion
Adrian Ewer, senior independent
director at Go-Ahead and
chairman of its audit committee,
has become the target for
shareholder anger over the
group’s problems at Southeastern
rail, which will lead to its shares
being suspended and is expected
to lead to government fines.
Forty-six per cent of the shares
voted at the company’s annual
meeting were cast against Ewer’s
reappointment as a director. Go-
Ahead has already said that he is
to be replaced as senior director.Mail offer unconditional
The owner of the Daily Mail is set
to have its stock delisted from the
London Stock Exchange in the
new year. Lord Rothermere, the
biggest shareholder, made a
“final” offer to investors in Daily
Mail & General Trust this month
of 270p a share, or £871 million,
and last night the company said
the offer was now unconditional
and it was making applications to
the Financial Conduct Authority
to cancel the listing and stop
trading in all DMGT shares on
what is expected to be January 10.Spotlight on binmen
The Competition and Markets
Authority is to launch a full
investigation into Britain’s waste
bin clearance sector amid fears of
a French takeover. The European
Commission has waved through a
€13 billion merger between Veolia
and Suez, France’s largest
environmental services
companies and the biggest refuse
collectors operating in Britain.
Post-merger, they would have
UK revenue of £2.5 billion, easily
twice as much as Biffa, the next
player in the market.total returns target of 10 per cent, so
how to stop higher acquisition costs
eroding returns? Part of the strategy
has been to shift the focus towards
purchasing land next to existing sites
and developing new warehouses.
However, the group is balancing the
amount of capital it commits to
development activity with investors’
desire for cash returns, so there is a
cap of 15 per cent on the level of
gross assets to be deployed in
building new sites.
The Reit’s managers have pledged
an annual dividend of at least 6.2p
this financial year, which Peel Hunt,
the house broker, has forecast will
rise to 6.4p next year. At the present
share price, the latter would equatedwarfed by the premiums of 24 per
cent and 40 per cent attached to its
larger rivals LondonMetric and
Segro, respectively.
New lettings were agreed 6 per
cent ahead of estimated rental values
and renewals were signed 12 per cent
above previous passing rents. That
rental growth is expected to continue
— the value of the portfolio rose by
9.4 per cent over the six months to
the end of September compared with
the same period last year. That’s just
as well, because the cost of acquiring
new warehouses is increasing, too,
amid rising ecommerce and logistics
demand and a tight supply of land on
which to build sites.
Warehouse Reit has an annualT
he biggest conundrum for
investors worrying whether
they have missed the boat
when it comes to the fast-growth
industrial and logistics property
sector are the considerable
premiums baked into the market
valuations of publicly listed operators.
Warehouse Reit, a commercial
landlord that owns more than 100
sites, presents less of a headache. Yes,
the shares are priced at a 6 per cent
premium to forecast net asset value
at the end of March, but that’sEmma Powell Tempus
Buy, sell or hold: today’s best share tipsRaise a glass to life after lockdowns
Y
ou don’t have to shut pubs
to punch a hole in their
takings — as dire pre-
Christmas trading figures
from UK Hospitality, the
industry body, indicate — but some
operators are likely to feel the pain
more than others. Fuller, Smith &
Turner faces a bigger threat than
most from any return to tighter
restrictions.
A greater exposure to urban
London means that Fuller’s sales
have been slower to recover than
rivals such as Marston’s and
Mitchells & Butlers. Like-for-like
sales over the seven weeks to mid-
November were still 10 per cent
lower than 2019 levels for its
managed pubs. Guidance to work
from home and rising infections look
set to widen that gap further this
month and in January.
Not surprisingly, the recovery in
Fuller’s shares since the first
lockdown has been far more muted
than its listed peers, with the stock
generating a total return of 8 per
cent since March last year, compared
with more than 90 per cent for
Mitchells & Butlers and City Pub
Group and 169 per cent for
Marston’s. Yet that also means that
some of the froth has been taken out
of Fuller’s premium valuation when
set against those of other pubs
groups. An enterprise value of 7.5times forecast earnings before tax
and other charges next year looks
good.
One-off grants of £6,000 per
premises offer some cushion against
the festive reduction in visitor
numbers and, even setting aside
government support, the group’s
ability to withstand interruptedtrading seems secure. It has
£87.2 million of available cash and
unused debt facilities, which looks
plenty. During the depths of last
year’s lockdown, when all its 400
pubs were shut, the rate of cash burn
was £4 million to £5 million a month.
A £52 million fundraising this year
and a return to profitable trading
during the summer helped to cut net
debt by almost 40 per cent to
£132 million at the end of September.
The reinstatement of the dividend at
the half-year was further cause for
confidence. That payment is forecast
by analysts to be 7.41p this year,
rising to 16.25p for the next financial
year.
Banking £164 million from theTough measures
Source: RefinitivFirst-half sales as % of 20192022 and 2023 estimatesShare priceJan2021Apr Jul Oct6007008009001,000p Outside M25Rural 109Suburban^93Urban^88Total^90Inside M25Suburban 82Urban 58Total 692019 sale of its beer business to
Asahi, of Japan, had put the balance
sheet in a strong position ahead of
pub closures and trading restrictions,
with part of the proceeds reducing
debt to a multiple of only 1.7 times
earnings before tax, interest and
other writedowns. Rising
competition from craft beer and
more cumbersome costs meant that
the brewing business had become a
drag on profitability, so there is the
potential for earnings growth to
improve once pubs have a decent run
at trading normally.
The estate is 91 per cent freehold
by value, so the rent bill is less of a
concern, though other expenses
could be problematic. Operating
costs are growing, mainly because of
a rising wage bill, but, with Fuller’s
pubs and hotels sited in more
affluent areas, customers are less
price-sensitive, so increasing prices is
an option.
Analysts expect adjusted pre-tax
profit of £11.5 million this year, after a
loss of £48.7 million last year, but
profits aren’t expected to recover to
pre-pandemic levels until the year
that ends in March 2024. Achieving
that will depend on the severity of
any further trading restrictions.
Nevertheless, there is a sturdy
enough financial base not only to
endure those pressures but also to
take advantage of any acquisition
opportunities that come along. With
the shares still almost 30 per cent
below last year’s pre-crash level,
there is enough substance to drive a
re-rating.ADVICE Buy
WHY Shares’ undemanding
valuation leaves room for
longer-term recovery if sales
return to pre-pandemic levelsto a dividend yield of 3.8 per cent.
There are plans to move the Reit’s
listing from Aim to the main market,
which for practical reasons is likely
to take place after the next financial
year’s end in March. That could lift
the shares higher by bringing the
landlord to greater attention and
within the scope of some institutional
investors’ mandates. It’s worth retail
investors buying before then.ADVICE Buy
WHY Reasonably priced way
to gain exposure to fast-
growth industrial propertyfuller, smith & turner
Half-year
revenue £116mHalf-year pre-tax
profit £10.6mwarehouse reit
Market cap
£720mDividend yield
3.7%Money rates %
Base Rates Clearing Banks 0.25 ECB Refi -0.50 US Fed Fd 0.00-0.25
Halifax Mortgage Rate 3.74Treasury Bills (Dis) Buy: 1 mth -1.500; 3 mth -0.200. Sell: 1 mth -0.610; 3 mth -0.0 651 mth 2 mth 3 mth 6 mth 12 mth
Interbank Rates 0.1748 0.2008 0.2356 0.4170 0.7591
Eurodollar Deps 0.04-0.24 0.05-0.25 0.07.027 0.17-0.37 0.40-0.60Mkt Rates for Range Close 1 month 3 month
Copenhagen 8.6967-8.7464 8.7393-8.7443 48ds 189ds
Euro 1.1764-1.1698 1.1757-1.1755 7pr 21pr
Montreal 1.7059-1.7151 1.7134-1.7137 1ds 5ds
New York 1.3197-1.3260 1.3245-1.3245 1pr 3ds
Oslo 11.845-11.963 11.857-11.861 76pr 161pr
Stockholm 12.063-12.134 12.111-12.115 76ds 177ds
Tokyo 149.91-151.29 151.24-151.27 7ds 20ds
Zurich 1.2162-1.2258 1.2256-1.2258 12ds 36ds
Premium = pr Discount = dsSterling spot and forward rates
Commodities
ICIS pricing (London 7.30pm)
Crude Oils ($/barrel FOB)
Brent Physical 73.23 +2.56
BFOE(Feb) 74.03 +2.43
BFOE(Mar) 74.08 +2.39
WTI(Feb) 71.12 +2.51
WTI(Mar) 70.82 +2.46
Products ($/MT)
Spot CIF NW Europe (prompt delivery)
Premium Unld 664.00 665.00 +30.00
Gasoil EEC 633.75 635.75 +32.00
3.5 Fuel Oil 394.00 394.50 +23.00
Naphtha 669.00 670.00 +32.00
ICE Futures
Gas Oil
Jan 645.00-644.75 Apr 638.25-637.25
Feb 644.50-644.25 May 635.00-630.00
Mar 641.75-641.25 Volume: 613563
Brent (9.00pm)
Feb 74.24-74.22 May 73.60-73.51
Mar 74.21-74.20 Jun 73.14-73.12
Apr 73.90-73.85 Volume: 1830090
LIFFE
Cocoa
Mar 1690-1689 May 1744-1706
May 1717-1714 Jul 1740-1708
Jul 1724-1705 Sep 1718-1708
Sep 1718-1708
Dec 1721-1700
Mar 1707-1706 Volume: 62967
RobustaCoffee
Jan 2440-2417 Nov 2290-2240
May 2282-2272 Jan 2271-2169
Jul 2275-2250
Sep 2274-2210 Volume: 8760
White Sugar (FOB)
Reuters Oct 483.20-477.60
Dec 484.80-476.70
Mar 492.20-491.80 Mar 479.30-470.00
May 488.60-487.50 May 468.10-464.50
Aug 484.60-483.30 Volume: 50942
London Grain Futures
LIFFE Wheat (close £/t)
Jan 206.00 Mar 225.00 May 228.00
Jul unq Nov 201.00 Volume: 695Exchange rates
Bid Change
Australia $ 1.855
Canada $ 1.711
Denmark Kr 8.737 +0.03
Euro ¤ 1.175
Hong Kong $ 10.323 +0.01
Hungary 431.873 +0.84
Indonesia 18940.878 -66.92
Israel Shk 4.188
Japan Yen 150.962 +1.05
New Zealand $ 1.961 -0.01
Norway Kr 11.872 -0.11
Poland 5.431 +0.01
Russia 97.864 -0.32
S Africa Rd 20.992 +0.15
Sweden Kr 12.124 +0.03
Switzerland Fr 1.224 +0.01
Turkey Lira 16.977 -6.89
USA $ 1.323
Rates supplied by MorningstarData as shown is
for information
purposes only. No offer is made by
Morningstar or this publicationGold/Precious
metals (US dollars per ounce)
Bullion: Open $1791.48
Close $1786.31-1786.85 High $1799.98
Low $1785.01
AM $1797.40 PM $1796.30
Krugerrand $1768.00-2863.00 (£1334.80-2161.51)
Platinum $934.00 (£705.15)
Silver $22.49 (£16.98)
Palladium $1808.00 (£1365.00)London Metal Exchange (Official)
Cash 3mth Dec 22
Copper Gde A ($/tonne)
9520.5-9521.0 9510.5-9511.0 9365.0-9375.0
Lead ($/tonne)
2321.5-2322.0 2294.0-2296.0 2247.0-2252.0
Zinc Spec Hi Gde ($/tonne)
3444.5-3445.0 3419.0-3421.0 3250.0-3255.0
Alum Hi Gde ($/tonne)
2695.0-2696.0 2714.0-2716.0 2698.0-2703.0
Nickel ($/tonne)
19745.0-19750.0 19560.0-19565.0 19180.0-19230.0
Tin ($/tonne) 15mth
39000.0-39100.0 38450.0-38500.0 37410.0-37460.0