The Times - UK (2022-02-16)

42 2GM Wednesday February 16 2022 | the times

BusinessMarkets

news in brief

Xpress Money unravels

FRP Advisory has been

appointed special administrator

of Xpress Money Services, a

subsidiary of Finablr, by the High

Court in the latest unravelling of

the former FTSE 250 foreign

exchange group. In a statement,

Finablr did not explain the

reason for the appointment.

Finablr was a financial services

holding company built by

Bavaguthu Raghuram Shetty, an

Indian-born tycoon and former

owner of Travelex, which was

embroiled in alleged fraud after it

uncovered about $1 billion of

undisclosed debt in 2020.

Broadband tariffs plea

Ofcom has called on telecoms

companies to promote special

discounted broadband packages

more widely after it found that

millions of families who are

under financial pressure could

save £144 on their annual bills.

The packages, known as “social

tariffs”, are available to an

estimated 4.2 million households

in receipt of universal credit.

However, only 55,000 homes

have taken advantage of these

discounted rates so far, 1.2 per

cent of those eligible.

Altria antitrust ruling

A judge dismissed a complaint

filed by the US Federal Trade

Commission requiring Altria

Group, the maker of Marlboro

cigarettes, to sell a minority

investment in Juul, the e-

cigarette start-up, Altria said. The

FTC filed a lawsuit in April 2020,

saying Altria’s decision to buy a

35 per cent stake in Juul was bad

for competition. The FTC said

the companies were competitors

but that Altria opted to exit and

invest in Juul. The ruling may be

reviewed by the FTC.

Binance in spotlight

The US Securities and Exchange

Commission is examining the

relationship between the

American division of Binance, the

cryptocurrency exchange, and

two trading firms with ties to

Changpeng Zhao, Binance’s

founder and chief executive,

according to The Wall Street

Journal. A Binance spokesman

said that as a private company it

did not need to disclose details of

its investor or corporate structure,

but that information was shared

with regulators when requested.

Commodities

ICIS pricing (London 7.30pm)

Crude Oils ($/barrel FOB)

Brent Physical -5.17

BFOE(APR) -3.20

BFOE(MAY) 91.23

WTI(APR) 90.21 -3.29

WTI(MAY) 88.29 -3.23

Products ($/MT)

Spot CIF NW Europe (prompt delivery)

Premium Unld 880.00 881.00 -18.00

Gasoil EEC 809.25 811.25 -8.500

3.5 Fuel Oil 496.00 497.00 -17.75

Naphtha 830.00 832.00 -19.00

ICE Futures

Gas Oil

Mar 824.00-823.75 Jun 767.00-766.50

Apr 801.00-800.75 Jul 766.00-744.00

May 782.00-781.75 Volume: 695495

Brent (9.00pm)

Apr 93.28-93.26 July 87.89-87.10

May 91.08-91.06 Aug 87.72-86.12

Jun 89.29-89.25 Volume: 2112658

LIFFE

Cocoa

Mar 1758-1757 May 1796-1785

May 1810-1809 Jul 1781-1753

Jul 1845-1825 Sep 1832-1782

Sep 1832-1782

Dec 1830-1802

Mar 1813-1801 Volume: 63611

RobustaCoffee

May 2269-2266 Jan 2234-2095

Jul 2240-2236 Mar 2180-2141

Sep 2239-2153

Nov 2250-2152 Volume: 12360

White Sugar (FOB)

Reuters Dec 485.00-472.00

Mar 485.80-475.90

May 481.20-480.90 May 475.50-471.40

Aug 480.70-474.00 Aug 468.20-465.40

Oct 472.00-468.00 Volume: 54899

PRICES

Major indices

New York
Dow Jones 34988.84 (+422.67)
Nasdaq Composite 14139.76 (+348.84)
S&P 500 4471.07 (+69.40)

Tokyo
Nikkei 225 26865.19 (-214.40)

Hong Kong
Hang Seng 24355.71 (-200.86)

Amsterdam
AEX Index 755.22 (+7.33)

Sydney
AO 7490.30 (-44.80)

Frankfurt
DAX 15412.71 (+298.74)

Singapore
Straits 3421.38 (+0.18)

Brussels
BEL20 4067.53 (+62.64)

Paris
CAC-40 6979.97 (+127.77)

Zurich

SMI Index 12181.86 (+155.49)

DJ Euro Stoxx 50 4143.71 (+79.26)

London

FTSE 100 7608.92 (+77.33)

FTSE 250 21852.51 (+234.62)

FTSE 350 4283.36 (+43.93)

FTSE Eurotop 100 3504.76 (+47.29)

FTSE All-Shares 4254.78 (+43.04)

FTSE Non Financials 5120.23 (+53.68)

techMARK 100 6307.70 (+32.81)

Bargains n/a

US$ 1.3537 (+0.0007)

Euro 1.1913 (-0.0055)

£:SDR 0.98 (+0.00)

Exchange Index 82.80 (-0.12)

Bank of England official close (4pm)

CPI 115.05 Dec (2015 = 100)

RPI 317.70 Dec (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 Mar 22 119.66 119.86 119.39 119.60 249328 824468

Jun 22 121.13 121.38 121.13 121.25 3587 4924

3-Mth Sterling Mar 22 99.320 99.320 99.285 99.301 3457 269264

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

3-Mth Euribor Mar 22 100.50 100.50 100.49 100.50 37978 340627

Jun 22 100.36 100.38 100.36 100.37 68037 509931

Sep 22 100.13 100.16 100.13 100.14 74265 514247

Dec 22 99.875 99.890 99.855 99.875 76496 535672

Mar 23 99.530 99.575 99.515 99.550 81561 416419

3-Mth Euroswiss Mar 22 100.73 100.73 100.73 100.73 677 31949

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

FTSE100 Mar 22 7468.0 7554.5 7435.0 7531.5 101430 592556

Jun 22 7492.0 7492.0 7492.0 7475.5 3 3086

FTSEurofirst 80 Mar 22 5734.5

Jun 22 5717.5

© 2022 Tradeweb Markets LLC. All rights reserved.

The Tradeweb FTSE Gilt Closing Prices information contained

herein is proprietary to Tradeweb; may not be copied or

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from the use of this information.

it acquires. The decline in selling and

marketing expenses was not as great

in magnitude as the 18 per cent fall

in trading income, which amplified

the decline in profitability. Avenues

of spending included product

development, online marketing and

trading platforms. Plus500 needs to

keep the customers coming because

while the churn rate was down on

the 2019 level, it remained

characteristically high at just over

51 per cent.

There should be some reassurance

for shareholders from generous cash

returns, which totalled just over

$1.19 a share in dividends and

$80.2 million in share buybacks for

last year, in line with a strategy to

was lower as average revenue per

customer declined marginally on the

pre-pandemic level.

The shares, which ended the day

down 4.1 per cent, have gone

sideways this year as investors have

braced for a decline in trading from

the exceptional levels of 2020. But

an enterprise value of just over five

times forecast earnings before

interest, taxes and other charges

does not leave the shares looking

exactly cheap, either. That multiple

is above the group’s own five-year

average multiple and is broadly in

line with IG Group, a rival that

might not gain new customers at the

same whizzy rate but does have a

better record of hanging on to those

I

nvestors in Plus500 will take

nothing less than exceptional

growth, so even though a

comedown was inevitable as stock

market volatility eased last year, they

reacted with disdain to annual

results published yesterday.

The listed spread-betting

specialist reported a decline in new

customer numbers of around a third

— and though it might point to

active client numbers that, at just

over 407,000, were more than

double the 2019 level, the payback

Emma Powell Tempus

Buy, sell or hold: today’s best share tips

There’s more in rich seam for investors

R

apid rebounds in demand

and commodities prices

have provided a fair wind

over the past 18 months

for Glencore, which has

unveiled a sharp rebound in pre-tax

income to $7.4 billion and funds from

operations that were more than

double the previous year.

That, in turn, boiled down to a

sugar hit for investors in the form of

another boost to the dividend. The

base dividend was raised to 26 cents

a share, more than double the figure

the year before, when the Anglo-

Swiss mining and commodities group

sank to a $2.6 billion loss.

At about $6 billion, net debt is

below the range targeted by

management, which means that a

$550 million share buyback is on the

cards before the release of interim

results in August, to return debt to

the company’s $10 billion optimal

cap, equating to four cents a share.

More importantly, commodities

prices are expected to remain

elevated this year, which should

provide a fillip for free cashflow and

more special returns. Analysts at

Jefferies have forecast a base return

of 28 cents a share in respect of this

year.

Yet while the shares have risen by

more than 50 per cent over the past

12 months to an almost ten-year

high, an enterprise value of around

4.8 times forecast ebitda (earnings

before interest, tax, depreciation and

amortisation) is towards the bottom

of the range recorded over the past

decade and is barely above the

trough recorded in March 2020. So

why is the market so pessimistic?

Glencore’s decision to hang on to

its thermal coal operations, which it

plans to run down over the next 30

years, is one culprit, proving

problematic for institutional

investors increasingly conscious of

environmental, social and

governance considerations within

their mandates. Glencore wants the

best of both worlds. It has trumpeted

its role in producing metals vital for

the decarbonisation push, including

the copper used in renewable energy

generation and cobalt and nickel

necessary for the manufacture of

electric cars. That positions it better

for the shift towards greener trends

than its leading iron ore mining

peers on the London stock market,

according to RBC Capital.

But then again, coalmining has

provided a huge boost to the bottom

Resourceful

Share price

Source: Refinitiv

Earnings and dividends

Dividend per share

Earnings per share

250

300

350

400

450p

Apr 2021 Jul Oct Jan 2022

2019

2020

2021

2022e

-3c−

20c

-14c

12c

38c

26c

84c

41c

line as funding for new mines is less

forthcoming and with the

Indonesian ban on coal exports

remaining in place, which has

constrained supply while Chinese

demand shows no signs of slowing.

Ebitda from coalmining rose more

than threefold last year to

$5.2 billion, or just under a quarter of

the group total, as the average price

of Newcastle thermal coal more than

doubled. Thermal coal prices are set

to rise even higher this year,

according to Glencore’s projections.

A sale or spinning off of its coal

business, or Viterra, its agricultural

business, are potential avenues for

unlocking value, Jefferies reckons.

The value of the latter business has

not been reflected adequately in the

share price, Gary Nagle, Glencore’s

chief executive, believes, although he

has refused to be drawn on whether

the business was included in the 13

assets that are under internal review.

The spectre of regulatory

investigations isn’t removed, either.

Provisions taken this year do not

include outstanding Swiss and Dutch

inquiries and there’s always the

chance that the $1.5 billion set aside

for American, Brazilian and British

investigations is insufficient. In

addition, some heat is forecast to

come out of prices after this year,

RBC forecasts, as supply improves.

Cash returns will remain liberal in

the short term, but exposure to coal

means that Glencore could face

more battles to gain a more generous

valuation from investors in the

medium term.

ADVICE Hold

WHY The shares offer a

generous dividend and there

is a good chance of more

share buybacks

return at least 50 per cent of net

profits to shareholders.

Next year’s dividend is forecast to

decline to 94 cents a share, which

equates to a potential yield of

roughly 4.9 per cent, versus a

potential yield of 6.5 per cent for

IG’s shares, based upon dividend

forecasts for the next financial year.

The latter might not account for

potential share buybacks, but it does

seem more reliable.

ADVICE Avoid

WHY Not attractively priced as

trading returns to normal

glencore

Market cap

£55.81bn Funds

from operations

$17.1bn

plus500

Dividend yield

5.4%

Full-year

revenue $719m