FTSE 250 movers: Ascential ascends, Wetherspoon goes flat
By Frank Prenesti
Date: Wednesday 25 Jan 2023
(Sharecast News) - FTSE 250: 19,774.10, -0.41% at 1455 GMT.
Ascential said on Wednesday that full-year revenues and adjusted EBITDA were set to be ahead of market expectations, as it announced the separation of its digital assets.
The group, which specialises in information, analytics and e-commerce optimisation, said 2022 saw double-digit revenue growth across all four segments.
Total revenue for the year ended 31 December 2022 is expected to be at least £520m, up from £349m a year earlier and ahead of consensus expectations of between £479m and £516m.
Meanwhile, adjusted EBITDA is expected to be at least £118m, versus £89m in 2021 and ahead of the consensus range of £91m to £115m.
Ascential also announced that following a review of its strategic objectives, it has decided to separate its worldwide digital commerce assets into an independent, publicly-traded company listed in the US. It also plans to put WGSN up for sale, while its events businesses will continue with a UK listing as Ascential.
Scott Forbes, currently chair of Ascential and Duncan Painter, currently chief executive, will serve as chair and CEO, respectively, of the listed digital commerce business.
Painter said: "Ascential has had an excellent end to the year, with each of our segments delivering double-digit revenue growth over 2022. Digital Commerce's performance in particular, given the challenging backdrop, illustrates the clear competitive advantage we provide to brands trading on the marketplaces, where there remains a rare and significant growth opportunity.
"Product Design delivered another strong performance where its record rate of customer retention is testament to the value it delivers to its customers. While the economic outlook for 2023 remains unclear, our events businesses have demonstrated extremely high levels of customer engagement in 2022, reinforcing their industry leadership and which has translated into strong levels of rebooking for 2023."
Budget airline easyJet said it expected to beat full-year profit expectations as it narrowed losses in the first quarter and forward bookings into the summer surged.
The carrier on Wednesday said pre-tax losses for the three months to December 31 came in at £133m against a loss of £213m when Covid travel restrictions were in force.
"Whilst we remain mindful of the uncertain macroeconomic outlook across the globe, based on current high levels of demand and strong bookings, easyJet anticipates beating the current market profit expectations for 2023," the company said in a trading statement.
EasyJet has forecast an annual profit of £126m. The company hailed a return of the traditional January booking boom as it hitting record numbers on several days, with customers booking flights and package holidays into 2023.
The carrier said it continued to see strong demand for travel in the UK, while its easyJet holidays were already 60% sold for this summer, adding that easyJet holidays remained the fastest-growing major holiday company in the UK, with a 161% year-on-year increase in customer numbers.
"This strong booking performance, aided by the airline's step changed revenue capability, has driven an £80m year on year boost in the first quarter with continued momentum as customers prioritise spending on holidays for the year ahead," said chief executive Johan Lundgren.
He added that the company's holiday division was upgrading growth plans for the year given the strong demand.
"In summary, we expect to see our winter loss reduce significantly over the first half compared to last year. This will set us firmly on the path to delivering a full year profit, where we anticipate beating the current market expectation enabling us to create value for customers, investors and the economies we serve."
AJ Bell investment director Russ Mould said if Lundgren's profit forecast proved accurate, easyJet will be in the black on an annual basis for the first time since the financial year that ended in September 2019, "although from an investor's perspective, there is still a lot of work to be done as the shares (and annual profits) actually peaked way back in 2015".
"The pandemic presented easyJet with a terrible challenge and the firm has done well to come out of the viral outbreak and lockdowns in the condition it is in, especially after three years of trading losses. But the share price had been losing altitude for some time before then and it peaked in 2015 (when profits did the same, perhaps not coincidentally).
"Over the past decade, easyJet's shares have lost more than a third of their value, while the S&P Global 1200 Airlines index has advanced by 80%."
Customised electronics designer and manufacturer discoverIE said on Wednesday that full-year underlying earnings were set to be ahead of the board's expectations as it reported a jump in third-quarter sales and a strong order book.
In an update for the three months to the end of December, the company said positive trading momentum continued, with the strong order book providing good visibility of demand.
Group sales rose 11% on the previous year, of which 5% was organic, 3% from acquisitions and 3% from foreign exchange. This represents a new record high for the firm.
For the nine months to the end of December, meanwhile, group sales were 21% higher than the previous year, of which 11% was organic, 7% from acquisitions and 3% from foreign exchange, with 11% organic growth in both divisions.
"The order book remains at a high level and ahead of last year," DiscoverIE said. "As previously guided, it has begun to normalise from the record level reported at 30 September 2022 as it converts into sales and we expect this to continue through the final quarter of the year."
It said gross margins remained robust and the semiconductor sourcing issues flagged last year, which affected two of its 21 businesses, are continuing to improve.
"Accordingly, the group is on track to deliver full year underlying earnings ahead of the board's expectations.
"With a clear strategy focused on long-term, high quality, structural and sustainability-aligned growth markets across Europe, North America and Asia, a diversified customer base, a strong order book and pipeline of acquisition opportunities, the group is well positioned to make further progress."
The company also said on Wednesday that its acquisition of Magnasphere, announced last month, has now completed. Magnasphere designs and manufactures high performance magnetic sensors and switches for industrial electronic markets including access control, data centres and specialist vehicles.
Analysts at Morgan Stanley upgraded their recommendation for shares of Darktrace from 'equalweight' to 'overweight', arguing that the "broader growth story remained intact".
In their opinion, the slowdown seen in constant currency annual recurring revenues over recent quarters - which they had anticipated - was mostly the result of tougher comparables and macro factors.
"Macro weakness bites: In our initiation last September, we flagged that - while we were confident in Darktrace's product and market positioning - there were several factors that kept us Equal-weight.
"One of these was the potential for purchases of Darktrace's relatively greenfield platform to be more discretionary in a tougher macro environment,and that this could lead to deferral of purchase decisions. We see evidence of this playing out [... ]," the analysts said in a research note sent to clients.
"Combined with the most recent company guidance being "sufficiently cautious" and with the shares changing hands on approximately 2.1 times their estimate for its 2024 enterprise value-to-sales, the valuation was "sufficiently cheap".
Morgan Stanley did however trim its target price for the shares from 425.0p to 410.0p.
Tullow Oil said it expected to report better-than-expected free cash flow of $267m, up from $245m a year earlier and said it was facing a large tax bill on its assets in Ghana as tax incentives wind down.
Revenue was expected to come in at $1.7bn, including hedge costs of $313m at an average realised oil price of $87 a barrel.
Tullow Oil faces a large $300m tax bill in Ghana and has challenged efforts from the government there to pay more tax on historical trading. The company says the assessments are "without merit" and is holding talks with officials in an attempt to resolve the dispute on a "mutually acceptable basis".
The Africa-focused miner said it would invest $400m this year, mainly on fields in Ghana, and forecast 2023 free cash flow to come in at $200m at oil price of $100 a barrel or half that figure at $80.
Tullow guided for $700-$800 million in free cash flow for the 2024-2025 at an assumed oil price of $80 a barrel. It expects to produce between 58,000 and 64,000 barrels per day this year, broadly in line with 2022.
CMC Markets shares fell, despite reporting that net operating income was tracking in line with market expectations for the year ending 31 March 2023 and that it remains on course to deliver its strategic growth objectives.
In an update for the period from 1 October 2022 to 23 January 2023, the company said that while net operating income was weaker towards the end of the calendar year, it has recovered strongly in January.
Monthly active clients, client money and assets under administration in the investing and trading businesses remain stable versus the first half, it said.
The company said CMC UK Invest continues to expand its offering with the recent addition of ETFs, ISAs as well as responsible ESG screening functions. Further upgrades remain on track in the coming months, it added.
It also announced a regulatory grant in-principle for the launch of CMC Singapore Invest.
The group said management expectations for FY23 operating expenditure remain unchanged.
JD Wetherspoon shares were lower as first-half sales jumped although they remain below pre-pandemic levels and the group had about 40 pubs up for sale.
The FTSE 250 pubs group said like-for-like sales in the 25 weeks to 22 January 2023 were 13.1% higher than the same period a year ago, but down 0.7% on the six months to 26 January 2020.
Over the key festive season, sales were ahead 17.8% in the 12 weeks to 22 January 2023. A number of pandemic restrictions remained in place in December 2021.
Compared to the 12 weeks to 26 January 2020, like-for-like sales fell 2.0%.
Wetherspoon, which said it had outperformed the wider market during December, noted that labour, food, energy and maintenance costs in the hospitability sector were "far higher" than the pre-pandemic period.
Looking to the second half, founder and chair Tim Martin said: "We are cautiously optimistic about the company's prospects for the financial year."
He added that the "biggest threat" to the hospitality sector were supermarkets, because grocers are taxed differently to pubs and restaurants. "Unless the industry campaigns strongly for equality, it will inevitably shrink relative to supermarkets."
Wetherspoons has an 844-strong estate, after it opened two pubs and sold ten during the first half. A total of 35 remain on the market.
FTSE 250 - Risers
Ascential (ASCL) 258.20p 24.13%
easyJet (EZJ) 519.20p 10.94%
Baltic Classifieds Group (BCG) 158.00p 4.64%
Wizz Air Holdings (WIZZ) 3,020.00p 4.50%
Discoverie Group (DSCV) 821.00p 3.66%
Tullow Oil (TLW) 37.44p 2.97%
Darktrace (DARK) 255.90p 2.94%
Octopus Renewables Infrastructure Trust (ORIT) 97.40p 2.31%
Big Yellow Group (BYG) 1,197.00p 2.22%
Pennon Group (PNN) 938.00p 2.07%
FTSE 250 - Fallers
Wetherspoon (J.D.) (JDW) 452.00p -5.64%
Molten Ventures (GROW) 367.40p -5.26%
Mitchells & Butlers (MAB) 163.90p -4.15%
National Express Group (NEX) 132.50p -3.99%
Bridgepoint Group (Reg S) (BPT) 236.00p -3.67%
CMC Markets (CMCX) 235.00p -3.49%
FDM Group (Holdings) (FDM) 771.00p -3.26%
Tate & Lyle (TATE) 721.20p -3.22%
Ashmore Group (ASHM) 262.80p -3.17%
Dr. Martens (DOCS) 134.70p -3.09%
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