the times | Tuesday December 21 2021 V2 45
MarketsBusiness
news in brief
Cloud move at Sage
Sage Group has agreed to buy the
remaining 83 per cent stake in
Brightpearl, a cloud-based
provider, that the Tyneside-based
FTSE 100 software group does
not already own for about
$299 million. The deal for
Brightpearl, which provides
operating systems to retailers and
wholesalers, will be funded using
existing cash and liquidity. The
acquisition is expected to be
completed next month. Sage’s
shares, which have risen by more
than 40 per cent this year, closed
up 9¾p, or 1.2 per cent, at 823¼p
last night.Chairman for Rio Tinto
Rio Tinto, the iron ore mining
colossus that makes much of its
money supplying China’s steel
industry, has appointed Canada’s
departing ambassador to Beijing
as its next chairman. Dominic
Barton, 59, who led McKinsey,
the management consultancy, for
nine years until 2018, will join in
April and in May will succeed
Simon Thompson, 62, who has
been hit by the fallout from the
company’s destruction of a sacred
Aboriginal site at Juukan Gorge
in Western Australia.Davos off until summer
The Omicron outbreak has
forced the postponement of the
annual gathering of business and
political leaders at the World
Economic Forum in Davos. The
meeting was due to take place in
Switzerland between January 17
and January 21, but the WEF said
that it was now planned for early
summer. “The transmissibility of
Omicron and its impact on travel
and mobility have made deferral
necessary,” it said. Would-be
attendees can join online sessions
called State of the World.Health data deal
A giant American software group
has agreed to buy Cerner, an
electronic medical records
company, for $28.3 billion in an
attempt to bolster its business
in the healthcare industry. The
all-cash deal for $95 per share —
Oracle’s largest ever takeover
— is expected to be completed
next year, subject to regulatory
approval. Shares in Oracle
dropped by 3.1 per cent, or $2.99,
to $93.64 in New York, while
Cerner rose by 1 per cent,
or 89 cents, to $90.66.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 0.1791 0.1838 0.2218 0.3944 0.7323
Eurodollar Deps 0.04-0.24 0.05-0.25 0.24-0.39 0.17-0.37 0.39-0.59Mkt Rates for Range Close 1 month 3 month
Copenhagen 8.6952-8.7522 8.7050-8.7100 47ds 186ds
Euro 1.1772-1.1697 1.1711-1.1709 8pr 21pr
Montreal 1.7028-1.7141 1.7096-1.7098 2ds 4ds
New York 1.3174-1.3242 1.3210-1.3211 1pr 3ds
Oslo 11.936-12.044 11.979-11.983 69pr 141pr
Stockholm 12.011-12.110 12.091-12.101 70ds 169ds
Tokyo 149.54-150.40 150.00-150.01 7ds 19ds
Zurich 1.2153-1.2225 1.2167-1.2173 13ds 37ds
Premium = pr Discount = dsSterling spot and forward rates
Exchange rates
Bid Change
Australia $ 1.860 +0.01
Canada $ 1.713 +0.01
Denmark Kr 8.708 -0.04
Euro ¤ 1.171 -0.01
Hong Kong $ 10.317 -0.03
Hungary 431.033 -0.65
Indonesia 19007.800 -49.26
Israel Shk 4.190 +0.04
Japan Yen 149.914 -0.81
New Zealand $ 1.970 +0.01
Norway Kr 11.985 +0.04
Poland 5.422 -0.03
Russia 98.182 -0.14
S Africa Rd 20.837 -0.19
Sweden Kr 12.095 +0.03
Switzerland Fr 1.218 -0.01
Turkey Lira 23.863 +2.11
USA $ 1.322
Rates supplied by MorningstarCommodities
ICIS pricing (London 7.30pm)
Crude Oils ($/barrel FOB)
Brent Physical 70.67 -2.01
BFOE(Feb) 71.60 -2.00
BFOE(Mar) 71.69 -1.95
WTI(Feb) 68.61 -2.11
WTI(Mar) 68.36 -1.99
Products ($/MT)
Spot CIF NW Europe (prompt delivery)
Premium Unld 634.00 635.00 -32.00
Gasoil EEC 601.75 603.75 -35.25
3.5 Fuel Oil 371.00 371.75 -20.50
Naphtha 637.00 639.00 -34.00
ICE Futures
Gas Oil
Jan 624.00-623.75 Apr 617.75-617.00
Feb 623.75-623.25 May 615.75-613.00
Mar 621.00-620.75 Volume: 692675
Brent (9.00pm)
Feb 71.85-71.84 May 71.51-71.30
Mar 71.93-71.91 Jun 70.97-70.94
Apr 71.64-71.62 Volume: 2072982LIFFECocoa
Mar 1673-1672 May 1744-1706
May 1717-1682 Jul 1740-1708
Jul 1711-1702 Sep 1711-1684
Sep 1711-1684
Dec 1716-1700
Mar 1750-1705 Volume: 67806RobustaCoffee
Jan 2432-2414 Nov 2290-2169
May 2268-2252 Jan 2270-2169
Jul 2267-2175
Sep 2270-2258 Volume: 10896White Sugar (FOB)
Reuters Oct 477.30-474.60
Dec 476.90-473.70
Mar 488.20-488.00 Mar 475.60-470.00
May 485.60-485.50 May 466.40-462.10
Aug 481.70-481.30 Volume: 53368London Grain Futures
LIFFE Wheat (close £/t)
Jan 206.00 Mar 225.00 May 224.00
Jul unq Nov 197.50 Volume: 710
London Metal Exchange
(Official)
Cash 3mth Dec 22
Copper Gde A ($/tonne)
9404.0-9406.0 9388.0-9390.0 9250.0-9260.0
Lead ($/tonne)
2330.0-2332.0 2305.0-2307.0 2252.0-2257.0
Zinc Spec Hi Gde ($/tonne)
3400.0-3400.5 3355.0-3356.0 3158.0-3163.0
Alum Hi Gde ($/tonne)
2645.0-2645.5 2674.0-2675.0 2655.0-2660.0
Nickel ($/tonne)
19360.0-19370.0 19235.0-19245.0 18850.0-18900.0
Tin ($/tonne) 15mth
38650.0-38750.0 38150.0-38200.0 36870.0-36920.0Data as shown is
for information
purposes only. No offer is made by
Morningstar or this publicationThe usual prices service will resume in the new yearbenchmark Dow Jones World
Technology Index. However, that has
presented another problem. Spicy
valuations for some stocks leaves
little room for error, which has
resulted in the trust now holding a
relatively high 4.6 per cent of assets
in cash. That dragged on performance
over the six months to October and
contributed towards the trust
underperforming the benchmark.
That cash represents “firepower”,
according to the trust’s manager,
which can be deployed during a
market setback. A more hawkish
stance from the US Federal Reserve
and the emergence of the Omicron
variant prompted the trust last week
to begin topping up some of itsand large operators, with companies
with a market cap of $10 billion or
more accounting for just over 92 per
cent of assets. The top three largest
holdings are Microsoft, Apple and
Alphabet, the parent company of
Google, which account for 28.1 per
cent of net assets in aggregate.
In the 12 months to November last
year, when the efficacy of Covid-19
vaccines was announced, the trust’s
net asset value rose by just over half
and the share price climbed almost
43 per cent higher, while the
FTSE 250 fell by 7 per cent during
the same period. The trust’s track
record stretches further back: over
the past decade its NAV has risen
more than sevenfold, beating theT
he shift towards cheaply valued
stocks tied into the economic
recovery looks less assured than
it has done since the start of this year.
Are we about to see a resurgence in
so-called lockdown winners? If so,
Polar Capital Technology Trust
would play well with investors.
The investment trust takes stakes
in technology companies that are
listed on global stock exchanges.
Given its sector-bias, the FTSE 250
constituent naturally has a high
weighting towards North AmericaEmma Powell Tempus
Buy, sell or hold: today’s best share tipsBuilding confidence in partnership
T
he decision was,
presumably, music to the
ears of the activist investors
that had been demanding
changes at Countryside
Properties — that the company
plans to sell its private housebuilding
business to focus on mixed-tenure
developments, those that include
affordable homes, properties for
institutional private rental and
homes for private sale. It was already
heavily tilted towards partnership
work anyway, but not enough in the
view of Browning West, a Los
Angeles-based hedge fund, and
David Capital, a Chicago-based
investment manager.
Targeting the underserved
affordable housing market has its
merits. The chief benefit is that
housing associations and private
rental operators stump up more of
the capital to fund the development,
which means housebuilders have the
opportunity to make higher returns
on capital, even if lower operating
margins are the trade-off.
And investors have been willing to
pay a premium for greater exposure
to higher-returning partnership
work. Countryside’s shares trade at
14 times forecast earnings, against a
multiple of 12 for Berkeley Group,
the next-most-expensive peer, and 11
for Persimmon, the largest
housebuilder listed in London. For itspart, Countryside is targeting a
return on capital employed of at
least 40 per cent, which would place
it above its UK-listed rivals, and to
increase the operating margin to
13 per cent or more. From there, it’s
shooting for annual profit growth of
between 10 per cent and 15 per cent.
Plans to return £450 million in
proceeds from the sale through ashare buyback programme over the
next two years will placate those
American shareholders, which
typically have a preference for
buybacks over special dividends, and
may fortify defences against any
further activist attacks.
But if you thought going all-in on
supposedly “capital-lite” partnerships
work would leave more cash for
shareholder dividends, you’d be
disappointed. The housebuilder
hasn’t declared a dividend since 2019
and analysts don’t expect one any
time soon. Peel Hunt, the broker,
reckons investors might question this
“slightly contradictory” capital
allocation policy and it’s got a point.
In a sector that has been favoured byRoom for improvement
Share priceSource: RefinitivPre-tax profits (£ million)2019 2042018 1812017 1422020 -1.92021 85.42022* 2102023* 271Jan Apr Jul Oct Dec 2022 and 2023 estimates400450500550600pinvestors for its generous dividends,
that could be a turn-off.
Instead, the company, which is set
to change its name to Countryside
Partnerships, plans to plough more
cash into hitting that double-digit
organic growth target. There’s the
cost of setting up a new partnerships
division in the home counties and
the expense of buying more land and
completing developments.
Confidence in its ability to deliver
might be dented by past mis-steps.
Six sites are classed as
underperforming and these
contributed just under half the level
of operating profit that Countryside’s
seven established sites produced last
year, despite having roughly the
same level of capital employed in
them at the end of September. It
could get out of one large site if it
doesn’t start coming up to scratch,
which would result in a £20 million
write-off in inventory.
In boom times private-focused
housebuilders such as Persimmon
and Barratt Developments benefit
from rising demand and house price
inflation. Maybe that’s why
Countryside’s shares have lagged the
rest of the sector since the start of
this year (although the opposite is
also true when the housing market
eases or even begins to slide). Shares
in housebuilders more broadly have
weakened as the stamp duty break
that turbo-charged demand has
come to an end. Completing mixed-
tenure developments is a lengthy
process. Investing in Countryside will
require similar endurance.ADVICE Hold
WHY Shares look fairly priced
given the jury is still out on
whether it will achieve its
targets on returns and marginholdings in software stocks that had
eased from their peak valuations.
Rising interest rates remain a
threat to high-priced tech stocks and
the trust itself, but that is reflected in
the shares’ 5 per cent discount
against the trust’s NAV, which should
prevent investors from balking at it.
For those willing to back tech giants,
the trust offers a more diversified bet.ADVICE Buy
WHY The trust offers a more
diversified way to invest in
technology giantscountryside properties
Return on capital
employed 18.6%Adj operating
margin 11%polar capital tech trust
Market cap
£3.56 billionDiscount/NAV
5%