- Bitcoin leaps, for no good reason
- Oil price steadies
- Bunzl cools off after the pandemic
- ScS Group agrees 280p takeover deal
- Hermes International – luxury winner
Steve Clayton, head of equity funds, Hargreaves Lansdown:
“Bitcoin, the cryptocurrency that, like other cryptocurrencies, has no purpose or fundamental value whatsoever, saw a double-digit price jump in trading overnight, hitting $35,000 at one point as investors warmed to the potential for the launch of Bitcoin ETFs in coming weeks. In other words, people have piled in, in the expectation that many others will pile in afterwards, squeezing the price higher. It’s tulip fever all over again.
Energy markets are looking steady this morning, with crude oil futures pricing in gains of around US 30c per barrel after easing back yesterday. In the short term, the conflict in the Middle East is raising tensions in the oil trading markets. In the background, however, is the looming European winter, where gas supplies will be tested once more by Russia’s withdrawal of supplies following its invasion of Ukraine in 2022. Gas storage capacity is largely full as winter approaches. Encouragingly, UK Gas futures for December delivery are still less than half the level at which they were trading this time last year, although they have risen in recent weeks.
Bunzl was a business that benefited from the pandemic because it supplies sanitation products to industrial and commercial premises as part of its international specialised distribution activities. With the pandemic now in the rear-view mirror, Bunzl is seeing lower volumes of pandemic-related hygiene products. That, coupled with adverse currency swings, is pushing revenues lower, and today the company reported that sales in its third quarter were 8.8% down on last year. Strip out the pandemic and currency impacts though, and revenues were 29% ahead of the pre-pandemic level, and earned at substantially higher margins. CEO Frank van Zanten says he sees exciting medium-term opportunities for the group.
ScS Group, purveyor of sofas, has agreed to sell itself to Poltronesofa S.p.A. a leading Italian rival. The offer is pitched at 280p per share, (including a 10p dividend to be paid by ScS) which represents the all-time high for the group. That’s quite an achievement in such challenging a consumer market as UK furniture retail. By contrast, market leader DFS Furniture’s stock is languishing around its all-time low. The offer represents a premium of 66% to yesterday’s closing price.
Recently, trading news from the luxury goods sector has been a little downbeat, with LVMH shares falling quite sharply on their results release last week. Today however, Hermes International have reported consensus-beating sales growth of 15.6% for their third quarter. It all shows the value of brands positioned at the very top end of their segments. Buyers who want a Birkin handbag have to join waiting lists, making Hermes’ revenues highly predictable. It helps too that Hermes has been less reliant on Asian and Chinese demand. Their growth this quarter has come from customers in the US and Europe, suggesting that right now, at least, old money is more dependable than new. Hermes International shares were up 3% in early trading in Paris”.
