Cold Snap Forces UK to Resort to Backup Coal -2-

1015 GMT - Restaurant Group posted a sticky set of 2022 results and as such recent activist pressure may well be dialed up, AJ Bell says. The restaurant-and-pub chain has suffered from rising costs across the board, and while it isn't alone and is still generating sales growth, it is unlikely to be enough for some of its detractors, AJ Bell investment director Russ Mould says in a market comment. The owner of Wagamama and Frankie & Benny's, among other brands, has several institutions pushing for changes--including, reportedly, selling off its pub and travel-concessions arms, the brokerage says. "Rename the business as Wagamama, clear out the rest, and you would have a streamlined and focused operation, which might have more appeal to investors," Mould says. Shares are down 13% at 39.4 pence. ([e-mail])

Hotel Chocolat Margin Targets Look Tangible

1001 GMT - Hotel Chocolat has outlined considerable earnings targets for the next few years, but these should be achievable, analysts at Liberum say in a note. The U.K. chocolate manufacturer's aim for 20% Ebitda margins by fiscal 2025 suggests a significant rise in profit in fiscal 2024, which should be manageable driven by improved gross margins, they say. Profit should also receive a boost from a planned GBP7 million in cost savings, aided in part by the recent launch of the company's Smart Design program, the analysts say. Store openings provide another bright spot for the future, with management expressing confidence for a further 50 Hotel Chocolat stores over the next three to five years, they say. Liberum has a buy rating on the stock. ([e-mail])

Relatively Small Supply of UK's 2061 Gilt at Auction Should Lift Demand

0957 GMT - The relatively small supply at Wednesday's auction of GBP2 billion in the U.K. October 2061 gilt is likely to support demand, say RBC Capital Markets analysts in a note. The auction is likely to be the last supply event of the U.K. October 2061 gilt. "Wednesday's supply event realistically presents itself as the last opportunity for investors to get their hands on the U.K. 0.5% October 2061 gilt and with the very small nature of the supply event, it should be supportive," the analysts say, adding: "We think the auction itself will go fine." ([e-mail])

Sterling May Fall Vs Euro on Risk Aversion, Euro's Better Fundamentals

0953 GMT - Sterling could extend its recent fall against the euro following a deterioration in sentiment after Federal Reserve Chair Jerome Powell warned of higher interest rates Tuesday and due to the euro's better fundamentals, ING says. EUR/GBP faces "upside risks" every time the Fed signals higher rates because sterling is more sensitive to risk sentiment, ING analyst Francesco Pesole says in a note. Incidentally, the euro looks more attractive than sterling due to rising European Central Bank rate expectations and a more encouraging domestic outlook, he says. EUR/GBP falls 0.1% to 0.8911 after hitting a two-and-a-half-week high of 0.8927 on Tuesday, according to FactSet. ([e-mail])

L&G Would Have Posted 2022 Profit Miss Barring 2H One-Offs, UBS Says

0951 GMT - Legal & General's operating profit beat was driven by second-half one-offs, but otherwise would have been a miss, UBS says in a note after the car insurer posted 2022 results. Operating profit in 2H was driven by its retail segment where there were more than GBP160 million of net assumption changes and experience variances from routine longevity assumption changes in retirement during 2022, with the largest movement coming from an update to the base mortality assumption, the Swiss bank says. "We expect a negative reaction given the low quality beat on earnings, however, solvency remains strong," UBS analysts, who rate the stock neutral, say. Shares shed 2.1% at 260.3 pence. ([e-mail])

CLS Holdings Shares Look Attractive Given Track Record

0942 GMT - CLS Holdings' 2022 results show valuations slipped but the company's overall performance exceeded expectations, Liberum says. The commercial-property investor looks well-placed to benefit from the trend toward high quality office spaces post-pandemic, and its share price looks attractive given the discount to net development value and its track record of value creation, Liberum analysts Chris Spearing and John Mozley say in a research note. "Whilst CLS' results are ahead of our expectations, reflecting the resilience of the business model, we keep forecasts unchanged as we expect further near-term pressure on values from higher rates," the brokerage says. Liberum retains its buy rating and 180 pence price target on the stock. Shares are down 0.7% at 142.0 pence. ([e-mail])

CLS Holdings Delivers Resilient 2022 Despite Uncertainty

0930 GMT - CLS Holdings' 2022 results highlight the resilience and quality of its portfolio, achieved despite wider market uncertainty, Berenberg says. The commercial-property investor's valuation was better than expected, and while debt costs are likely to remain a headwind, the company should benefit from existing hedging agreements and for any increased finance costs to be offset by top-line growth, Berenberg analyst Kieran Lee says in a research note. "With European markets--54% of CLS's portfolio--likely to remain more resilient than the U.K. and CLS offering total returns 20% higher than U.K. office peers, while trading at a 33% valuation discount, CLS remains our top pick in the office subsector," the German brokerage says. Berenberg retains its buy rating and 205 pence price target on the stock. Shares are down 0.7% at 142.0 pence. ([e-mail])

IP Group Presents Attractive 2023 Risk/Reward Profile

0919 GMT - IP Group's 2022 results were solid, with a resilient portfolio performance excluding Oxford Nanopore, Berenberg says. The intellectual property commercialization company posted a GBP309.1 million fair value loss--largely driven by falls in Oxford's share price following competing product launches and broader public-market weakness--somewhat offset by a decent private group holdings performance, Berenberg analysts say in a note. "With several catalysts ahead for key holdings and a 52% discount to net asset value, which has the group trading 3% lower than its net cash, quoted and recently funded holdings, we think the shares offer an attractive risk/reward profile, particularly given the group's much lower exposure to public holdings," the German brokerage says. Berenberg retains its buy rating and 147 pence price target on the stock. ([e-mail])

Contact: London NewsPlus; [e-mail]

(END) Dow Jones Newswires

03-08-23 0539ET