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FTSE 250 movers: AA hits skids ahead of likely index reshuffle
London's mid cap index crept higher on Monday, with Ascential leading the risers on the back of its bumper dividend and the AA hit by the news that its shares are skidded out of the FTSE 250 index in the next reshuffle.
Events organiser and business information provider Ascential hiked its dividend 19% to 5.6p and announced a strategic review of its exhibitions business.
After acquisitions of MediaLink and One Click Retail and the sale of its final publishing brands, chief executive Duncan Painter said the focus had been increased on its primary brands, "enabling us to accelerate product innovation, grow our market leadership positions and further diversify our revenue internationally".
He said the strategic review of the £78m-revenue-a-year exhibitions business was one such exercise, looking at Spring Fair, Autumn Fair, Bett, CWIEME, Pure, Glee and BVE. Giving a clue at to his intentions, Painter said to maximise shareholders returns, the company's focus as a business was best targeted at "brands that support customer success in the digital economy".
Wizz Air continued to fly higher after falling to around three-month lows last week. After airlines were hit by worries over the imminent launch of a direct Eurostar service between London and Amsterdam in April, analysts at UBS said there is likely to be some aviation market share loss on this route, "but in the context of total network the impact will be immaterial".
Also broker Numis last Wednesday noted that Wizz had underperformed its peers by 20-25% so far in 2018 despite plans to double its fleet by 2026. Analysts said this gave them "confidence that the group continues to see a significant long-term structural growth opportunity in CEE. Therefore, we believe that the recent underperformance is unwarranted and serves as an attractive entry point for investors".
Miners were on the up amid higher steel and copper prices, and with the decline in the dollar helping drive a rise across precious metals in particular. Vedanta Resources, Kaz Minerals and Ferrexpo were the leading lights on the FTSE 250.
Vedanta was boosted by an 'overweight' rating from JPMorgan noting positive potential from India's new policy to offer bauxite at market prices via auctions from state owned Odisha Mining.
Genus was up ahead of interim results due on Wednesday. Analysts at house broker Liberum said they could see scope to add circa £40m to the company's current £60m EBIT in five years via the Genus Sexed Semen launch and share expansion in Chinese and EU pig markets, while gene editing gives scope for "another wave of growth" from next decade. Liberum did flag headwinds of FX and rising R&D costs that are "likely to cause near-term EPS downgrades" and high valuation metrics.
Veterinary products manufacturer Dechra Pharmaceuticals rallied as first-half revenues cantered in ahead of expectations. Analysts at RBC Capital said results were 8% ahead of its EBIT forecast due to operational leverage and 14% at the EPS level due to a tax benefit.
Engineer Senior rallied as its full-year profit came in ahead of expectations and sales exceeded £1bn for the first time.
The AA was down at it is likely to be relegated from the FTSE 250 after the next index reshuffle, which will be decided based on market closing prices on Tuesday.
The quarterly reshuffle is also predicted to see Royal Mail promoted from the 250 and rejoin the blue chip index, with property company Hammerson replacing it in the mid-cap list.
Inhaler maker Vectura Group, retailer N Brown, outsourcer Mitie, property developer Hansteen and funeral provider Dignity are also slated to drop out of the 250, with Games Workshop among those which could potentially be promoted in their place, as well as Pantheon International, Charter Court Financial Services and online travel agent On The Beach.
"Sometimes the FTSE reshuffle provides an insight beyond financial markets and into the real world inhabited by human beings, who it seems are increasingly seeking refuge in the fantasy world of Warhammer," said analyst Laith Khalaf at Hargreaves Lansdown. "As a result, Games Workshop has enjoyed some spell-binding performance with its share price more than doubling over the last year, propelling the company into a FTSE 250 promotion spot."
Sub-prime lender Provident Financial was also under the cosh ahead of its preliminary full-year results on Tuesday and after reports in the Sunday newspapers that it has been sounding out investors about a "bumper cash call". The shares were coming off their lows later in the morning amid some bullish broker comment from Numis.
Non-life insurer Hiscox tumbled heavily early doors as investors did not like the sight of a 91% drop in full-year pre-tax profit but most of the shares' losses were erased over the session as investors came round. "In a brutal year for insured catastrophe losses across the globe, Hiscox has delivered a fine underlying result," said broker Shore Capital.
Outsourcer Serco was down amid worries about the sector that were reignited by news reports about peer Interserve. A report in the Sunday Telegraph revealed Interserve was struggling to put together a debt refinancing deal after the collapse of Carillion spooked its lenders.
Market Movers
FTSE 100 (UKX) 7,287.44 0.59%
FTSE 250 (MCX) 19,823.57 0.11%
FTSE 250 - Risers
Ascential (ASCL) 399.60p 5.66%
Wizz Air Holdings (WIZZ) 3,563.00p 4.21%
Vedanta Resources (VED) 772.20p 3.96%
Sirius Minerals (SXX) 26.54p 3.67%
Kaz Minerals (KAZ) 861.80p 3.21%
Metro Bank (MTRO) 3,788.00p 2.99%
Ferrexpo (FXPO) 314.10p 2.95%
Genus (GNS) 2,300.00p 2.86%
Vectura Group (VEC) 74.23p 2.73%
Big Yellow Group (BYG) 850.50p 2.66%
FTSE 250 - Fallers
AA (AA.) 77.70p -9.69%
Provident Financial (PFG) 614.94p -6.34%
Serco Group (SRP) 89.60p -4.93%
Phoenix Group Holdings (DI) (PHNX) 790.50p -3.01%
Go-Ahead Group (GOG) 1,516.00p -2.82%
Royal Mail (RMG) 554.20p -2.77%
Cobham (COB) 117.60p -2.77%
Mitie Group (MTO) 157.20p -2.60%
Capita (CPI) 177.05p -2.56%
Daejan Holdings (DJAN) 5,700.00p -2.23%