44 Friday April 8 2022 | the times
BusinessMarkets
news in brief
ECB takes hawkish turn
Eurozone government bond
yields rose yesterday as the
minutes of the European Central
Bank’s meeting on March 10
made for more hawkish reading
than expected. Policymakers
appeared to have been keen to
roll back stimulus and argued
that conditions for lifting rates
had been met or were about to be
met. While they agreed to end
bond-buying some time in the
third quarter without making a
further commitment to
unwinding stimulus, a group
wanted to go further and set a
firm end-date.Rising costs passed on
One in four small businesses
have already increased prices as
they look to manage rising costs,
according to a survey. A total of
26 per cent of small business
owners survey by Iwoca, the
financial technology group, said
that they had put up prices this
year. Nearly half of business
owners, 46 per cent, said that the
increased cost of running their
firms was their biggest worry
over the coming year. Iwoca and
Panelbase surveyed 500 small
business owners for the report.Questions over QE
Quantitative easing may be the
wrong tool to tackle future bond
market turmoil, especially given
how high inflation is, the Bank of
England’s chief economist said.
Opening a Bank conference, Huw
Pill said that it might not want to
repeat the bond purchases
announced at the start of the
pandemic. “Some of the papers to
be presented here... give reason
to question whether monetary
policy is the appropriate tool to
address these sovereign market
functioning concerns.”Qatar row grows
Qatar Airways has accused
Airbus of moving the goalposts in
a safety and contract dispute by
raising the allowable limit for
flaws on the aircraft maker’s
A350 jetliner. The two have been
in dispute over damage to anti-
lightning mesh within the painted
skin of the A350 that Qatar says
forced it to ground 23 jets. It says
it will not take further deliveries
until the cause is formally
explained and it is suing Airbus
for steadily rising compensation
that exceeds $1 billion.Commodities
ICIS pricing (London 7.30pm)Crude Oils ($/barrel FOB)
Brent Physical 99.79 -1.18
BFOE(Apr) 100.75 -0.49
BFOE(May) 100.22 -0.20
WTI(Apr) 95.51 +0.10
WTI(May) 94.81 +0.18Products ($/MT)Spot CIF NW Europe (prompt delivery)
Premium Unld 971.00 972.00 -34.00
Gasoil EEC 971.25 973.25 -71.75
3.5 Fuel Oil 544.00 546.00 -36.00
Naphtha 857.00 859.00 -40.00ICE Futures
Gas Oil
Apr 984.50-982.50 Jul 899.75-896.75
May 953.50-953.00 Aug 885.75-880.00
Jun 920.75-920.25 Volume: 607518Brent (9.00pm)
Jun 99.09-99.06 Sep 97.43-97.05
July 98.59-98.55 Oct 96.47-95.86
Aug 97.94-97.78 Volume: 1742961LIFFE
Cocoa
May 1769-1765 Jul 1793-1773
Jul 1788-1786 Sep 1812-1705
Sep 1802-1792 Dec 1768-1750
Dec 1804-1801
Mar 1801-1800
May 1829-1750 Volume: 70433RobustaCoffee
May 2074-2071 Jan 2280-2040
Jul 2075-2071 Mar 2091-1995
Sep 2080-2061
Nov 2111-2051 Volume: 26027White Sugar (FOB)
Reuters Dec 530.00-522.00
Mar 525.60-513.20
May 550.30-549.00 May 515.80-514.70
Aug 540.50-540.10 Aug 505.70-502.50
Oct 534.00-531.70 Volume: 65314PRICES
Major indices
New York
Dow Jones 34583.57 (+87.06)
Nasdaq Composite 13897.30 (+8.48)
S&P 500 4500.21 (+19.06)
Tokyo
Nikkei 225 26888.57 (-461.73)
Hong Kong
Hang Seng 21808.98 (-271.54)
Amsterdam
AEX Index 716.53 (-3.14)
Sydney
AO 7734.80 (-53.50)
Frankfurt
DAX 14078.15 (-73.54)
Singapore
Straits 3404.23 (-18.72)
Brussels
BEL20 4163.15 (+2.01)
Paris
CAC-40 6461.68 (-37.15)
Zurich
SMI Index 12372.46 (+52.36)
DJ Euro Stoxx 50 3802.01 (-22.68)
London
FTSE 100 7551.81 (-35.89)
FTSE 250 21037.80 (-62.93)
FTSE 350 4230.52 (-18.93)
FTSE Eurotop 100 3437.93 (-7.36)
FTSE All-Shares 4199.46 (-18.66)
FTSE Non Financials 5123.63 (-17.02)
techMARK 100 6078.61 (+18.25)
Bargains n/a
US$ 1.3072 (+0.0005)
Euro 1.2009 (+0.0018)
£:SDR 0.98 (+0.00)
Exchange Index 81.69 (0.04)
Bank of England official close (4pm)
CPI 115.83 Feb (2015 = 100)
RPI 320.20 Feb (Jan 1987 = 100)
RPIX 290.10 Jun (Jan 1987 = 100)
Morningstar Long Commodity 677.16 (+5.72)
Morningstar Long/Short Commod4703.45 (+27.75)London Financial Futures
Period Open High Low Sett Vol Open Int
Long Gilt Jun 22 120.59 120.91 119.83 120.17 231304 683524
Sep 22 124.10 124.10 124.10 119.35 2 2
3-Mth Sterling Jun 22 99.025 99.045 99.015 99.026 10377 232459
Sep 22 98.885 98.890 98.860 98.866 3885 301735
Dec 22 98.820 98.825 98.790 98.806 7310 347378
Mar 23 98.785 98.795 98.755 98.771 8310 229855
Jun 23
3-Mth Euribor Jun 22 100.35 100.36 100.33 100.33 78074 482197
Sep 22 100.08 100.09 100.04 100.05 90810 470604
Dec 22 99.690 99.725 99.635 99.655 108477 502527
Mar 23 99.230 99.295 99.160 99.190 95712 458738
Jun 23 98.840 98.915 98.755 98.795 105341 393323
3-Mth Euroswiss Jun 22 100.71 100.72 100.70 100.71 925 29152
Sep 22 100.68 100.68 100.67 100.68 710 31355
Dec 22 100.61 100.62 100.59 100.62 488 22748
Mar 23
FTSE100 Jun 22 7537.0 7568.5 7497.5 7506.0 78361 582949
Sep 22 7511.5 7511.5 7511.5 7486.5 2 565
FTSEurofirst 80 Jun 22 5252.5
Sep 22 5241.0© 2021 Tradeweb Markets LLC. All rights reserved.
The Tradeweb FTSE Gilt Closing Prices information contained
herein is proprietary to Tradeweb; may not be copied or
re-distributed; is not warranted to be accurate, complete or timely; and does not constitute
investment advice. Tradeweb is not responsible for any loss or damage that might result
from the use of this information.year, from $6.03 the year before.
There is a virtuous circle between
4imprint’s place as the largest
distributor of branded promotional
merchandise in America and its
desire to take a greater share of what
is a highly fragmented market, in the
geographical span of its reach and
the breadth of product range.
Orders were above the 2019 level
during the second half of last year,
which gives confidence that, on an
annual basis, revenue could fully
recover to the pre-pandemic level
this year.
When rising rates mean that
highly rated technology stocks are
falling out of favour, smaller
companies, which by virtue of theircontinue in 2022 — although
inflation and its impact on smaller
and medium-sized businesses in the
United States, where 4imprint makes
the bulk of its revenue, could stymie
that.
The more immediate impact on
the group’s cost base has been
mitigated in part by price increases,
but that needs to be finely balanced
against remaining competitive when
taking market share is the main
growth avenue.
There are other levers to pull on
the cost side. The greater use of
online marketing versus direct mail,
along with a recovery in underlying
demand, meant that revenue per
marketing dollar rose to $6.17 lastT
hink of ways to play the
economic revival and banks
and recruitment firms are the
most obvious candidates. A more left-
field nominee might be 4imprint.
The company makes promotional
pens and mugs and other branded
merchandise for corporate clients.
Fewer trade events and training days
mean fewer orders, so the pandemic
was bad news for business, but
recovery from the worst days of
Covid-19 was a natural catalyst for
the shares last year and that couldEmma Powell Tempus
Buy, sell or hold: today’s best share tipsWealth of opportunity if bid emerges
I
nvestors in Rathbones must be
rubbing their hands with glee at
the takeout multiple secured by
Brewin Dolphin, its rival wealth
management group. Royal Bank
of Canada’s £1.6 billion offer last week
represented a 62 per cent premium
to the undisturbed share price, or
roughly 23 times earnings forecast by
analysts for next year, head and
shoulders above an average multiple
of 14 over the past decade.
For Rathbones, that meant an
immediate 12 per cent rise in the
FTSE 250 constituent’s share price
and a steady re-rating ever since. But
while the Brewin bid might have
increased the likelihood of an offer
emerging, that doesn’t mean it will
be as generous.
Rathbones has been a long-time
laggard of both Brewin and Brooks
Macdonald, the smaller discretionary
management specialist. Takeover
offer aside, Rathbones’ shares have
generated a decent enough total
return of 50 per cent since the first
lockdown took effect in March 2020,
but that’s almost half that delivered
by Brewin and less than the 85 per
cent generated by Brooks. Stretch
that comparison back to the Brexit
referendum and that gap widens.
Rathbones has a return of 4.8 per
cent, versus 61 per cent delivered by
Brewin and 78 per cent by Brooks.
Even after gaining heat over thepast week, the group is still valued at
just under 13 times forward earnings,
cheaper than Brewin than even prior
to the RBC approach emerging. But
there are good reasons for that. The
core investment management
business has been growing at a
slower organic rate, recording net
inflows of £800 million last year afterexcluding its acquisition of
Saunderson House. That equates to
net annual growth of 1.8 per cent,
versus the 4.4 per cent recorded by
Brewin Dolphin over its last financial
year. The same dynamic was present
in 2020.
Margins over the next two years
are expected to decline from the
27.7 per cent recorded last year to
somewhere around the mid-20s as
Rathbones steps up investment in
technology upgrades, primarily
across client-facing platforms, and
takes the impact of wage inflation.
Ploughing £40 million into
technology over this year and next
means that Shore Capital expects flat
earnings per share until 2024. TheWaiting for its shot
share priceSource: Refinitiv^2021
Q3 Q4 Q12022
Q215161718192021£22Organic growth in funds under
management2016
4.5%
2017
3%2018
3.4%
2019
0.6%
2020
3.6%2021
4.9%risk? That the timeframe or budget
for those projects slips, even if
Rathbones isn’t undertaking a more
burdensome overhaul of its custody
and settlement systems, which has
caused wealth managers to slip up in
the past.
Yet Rathbones still has a “a rarity
value”, reckons Shore. Indeed, with
Brewin taken out, its scale, legacy
and the strength of the brand within
the wealth management sector make
it a prime target for a larger rival or
bank seeking to move into a
structurally growing industry.
Shore puts a fair value of £25 on
Rathbones’ stock, applying a 10 per
cent discount to the group for its
slower organic growth and unit
trusts business, which accounted for
almost a fifth of funds under
management at the end of last year.
That price might be 17 per cent
higher than the present share price,
but it still equates to only 17 times
the earnings forecast by analysts
next year, below the Brewin takeout
multiple.
The burden on household budgets
from increased costs might result in
more spending and less saving, but
savers that have enough to stump up
for the services of a discretionary
wealth manager such as Rathbones,
where investors hand over the day-
to-day running of their portfolio,
should be more insulated against the
pinch of inflation. The volatility
affecting markets adds another
opportunity for would-be bidders. It
seems a matter of when, not if,
someone takes a shot at Rathbones.ADVICE Hold
WHY Likelihood of a bid
emerging has increased given
the lack of larger-scale wealth
managers in the UK marketsize can have greater growth
potential, could be a good
alternative. Peel Hunt, the house
broker, reckons that earnings will
grow at a compound annual rate of
33 per cent out to 2024. Shares in
4imprint might have risen by almost
half over the past two years, but a
price/earnings growth ratio of 0.9
indicates that its earnings recovery
potential has been underappreciated
by the market.ADVICE Buy
WHY Recovery potential has
not been built into share pricerathbones
Market cap
£1.32bnDividend yield
3.8%4imprint
Market cap
£793mRevenue
£787m