UK WINNERS & LOSERS SUMMARY: HSBC Falls After Quarterly Profit Drops

Mon, 28th Oct 2019 10:26

(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Monday.

----------

FTSE 100 - WINNERS

----------

Flutter Entertainment, up 1.1%. RBC Capital started coverage on the company formerly known as Paddy Power Betfair with an Outperform rating.

----------

FTSE 100 - LOSERS

----------

HSBC Holdings, down 4.5%. The global lender reported a sharp drop in third-quarter earnings amid "challenging" conditions, in particular within its European and US businesses. For the three months ended September, pretax profit narrowed 18% to USD4.84 billion from USD5.92 billion the year prior. Company-compiled analyst consensus expected the figure to come in at USD5.3 billion. Third quarter operating income fell 3.2% to USD13.36 billion from USD13.80 billion the year before. Looking ahead, HSBC now no longer expects return on equity of at least 11% to be achieved in 2020. The bank will, therefore, focus on rebalancing its capital away from low-return businesses as well as adjust its cost base. These changes could result in "significant" charges in the fourth quarter of 2019. Such costs would be related to goodwill impairments and additional restructuring charges. "This is hardly an auspicious start for Noel Quinn, who as acting chief executive officer is auditioning for the role on a permanent basis," commented AJ Bell's Russ Mould.

----------

Informa, down 2.5%. Goldman Sachs downgraded the events and publishing company to Sell from Neutral.

----------

FTSE 250 - WINNERS

----------

Drax Group, up 3.6%. HSBC raised the biomass and coal-fired power station operator to Buy from Hold.

----------

FTSE 250 - LOSERS

----------

Cairn Energy, down 17%. The oil explorer said a decision over its long-running tax claim against the Indian government is now unlikely to be made until next summer. Cairn said Arbitral Tribunal expects to announce, in the summer of 2020, the outcome related to Cairn's proceedings against India under the UK-India Bilateral Investment Treaty. The dispute between Cairn Energy and the Indian government stretches back to early 2014, when the Indian government froze Cairn Energy's 10% stake in Cairn India following the introduction of a retrospective tax legislation. To date, the Indian Income Tax Department seized dividends due to Cairn from its shareholding in Vedanta of around USD155 million, the company said. Separately, Cairn said it completed the first well in its Mexican offshore drilling programme, known as Alom-1 in Block-9, which had the objective of proving hydrocarbons in stacked Pleistocene targets. The well was drilled to a vertical depth of 2.06 kilometres below the sea surface. However the objectives were discovered to be dry. As a result, the well is to be plugged and abandoned.

----------

Aston Martin Lagonda Holdings, down 7.6%. Bank of America downgraded the luxury carmaker to Underperform from Neutral.

----------

Ferrexpo, down 2.5%. The iron pellet producer said Chief Executive Officer Kostyantin Zhevago will step down temporarily to focus on resolving matters in Ukraine relating to one of the businesses he owned until 2015. Zhevago, who according to Morningstar holds a 50% stake on Ferrexpo, will remain on the board as a non-independent, non-executive director, the company added. Ferrexpo said Chief Financial Officer Chris Mawe has been appointed as acting chief executive. Mawe has "deep knowledge" of the company's operations acquired during his 11 year stint, it added. The changes will take place with immediate effect.

----------

OTHER MAIN MARKET AND AIM - WINNERS

----------

Sosandar, up 23%. The online womenswear retailer predicted strong first half revenue growth on the back of a solid rise in order numbers. For the six months to the end of September, Sosandar expects revenue to be GBP2.8 million, up 53% from GBP1.8 million the same period the year before. Operationally, the number of orders rose by 47% year-on-year to 64,709 from 43,979, while Sosandar's customer database grew by 76% to 148,884 from 84,500 the prior year. The company said its growth was fostered by its placing in July which raised GBP7 million, the proceeds of which went towards strengthening its design capability, enlarge its product range and start on additional marketing channels. Looking ahead, Sosandar said it expects to continue with its full price sales performance in the third quarter of its financial 2020, and expects the average order value to increase on expectations of the cold weather to raise the sales of higher price points items such as outwear.

----------

OTHER MAIN MARKET AND AIM - LOSERS

----------

Safestay, down 6.5%. The hostel operator said it will to acquire the prime boutique hostel AthenStyle in Athens, Greece for EUR1.5 million. The company said it expects to complete the acquisition by January 15, 2020 with an 18-year lease. Safestay said EUR1.5 million payment will be satisfied from its existing cash resources. The 150-bed AthenStyle hostel, generated sales of EUR700,000 and earnings before interest, taxes, depreciation and amortization of EUR200,000 for 2018. Following the acquisition, Safestay's portfolio consists of five sites in the UK and 12 in Europe, including cities such as London, Paris, Venice and Barcelona.

----------

By Arvind Bhunjun; arvindbhunjun@alliancenews.com