5 FTSE shares in news - Cineworld, Rolls Royce, Avast, IAG and Scottish Mortgage

Summary

• UK’s economy is expected to grow in the near term due to the complete lifting of COVID-19 related restrictions and rising vaccination rates.
• All eyes are now on the last quarter of the year as government plans to end support initiatives such as wage subsidies and financial support for the self-employed

UK’s economy is poised for recovery with regard to the easing of lockdown rules and restrictions. However, only time will show the impact rapidly rising infections caused due to the new variant and the impact of ending the furlough scheme on consumer behaviour.

Here we will take a look at 5 FTSE listed companies and how they have been performing in the stock market: 

Cineworld Group Plc 

FTSE 250 listed Cineworld Group plc (LON: CINE) is one of the largest cinema chains in Europe. The cinema chain’s acquisition of Regal Entertainment Group resulted in the creation of one of the leading global cinema businesses operating across the UK and the US, Poland, Ireland, Slovakia, the Czech Republic, Hungary, Romania, Bulgaria and Israel.

Cineworld was hit by the COVID-19 pandemic, as many recreation and leisure entities struggled to remain afloat amidst the restrictions. With rather short and intermittent business months throughout the year, Cineworld paid staff with over three years-service 40% of their pay, leading to a considerable cashflow drain and in turn adding to Cineworld’s net debt - currently at £4.5 billion. In March 2021, the company declared its annual results for the year ending 31 December 2021, reporting revenues of $852 million and a loss of $2.65 billion, as the cinema halls continued remain closed due to the COVID-19 lockdown.

As COVID-19 restrictions started easing across the globe, over the past weekend, Cineworld registered $80 million domestic theatrical box office opening for Disney/Marvel’s Black Widow. Mooky Greidinger, CEO of Cineworld, has reportedly said that an exclusive theatrical window could have fetched the company a $110 million opening at the box office in the US. The film was released day-and-date on the Disney+ Premier Access for a $30 surcharge for subscribers.

The company’s stock hovers around GBX 63.28, up by 10.40 per cent, at 13:39 PM on 16 July 2021. In the last one year, the stock has given a return of 10.36 per cent.

Rolls-Royce Holdings Plc

Rolls-Royce Holdings (LON: RR.) is an engineering company with expertise in civil aerospace, power systems, defence and aero-engine sub-system design. It is a global leading aircraft engine manufacturer. Yesterday, Rolls-Royce reported that production could be affected due to a large number of staff being notified to quarantine as per the NHS Test and Trace app. Thus, the company announced that it might have to cut down production by 50% at its Goodwood facility, West Sussex. The company also voiced concerns that if the notifications continued to rise, it would also have to reduce the number of shifts at its production facility.

The company’s reported revenues £11.76 billion for the year ended 31 December 2021 were down from the previous year figures of £15.45 billion. While the net loss for the year stood at £3.95 billion a sharp increase from the previous year’s £583 million. Further, a major source of revenue for Rolls-Royce is through long-term service contracts with airlines. New developments on COVID-19 and travel restrictions across different countries have made the company’s share movement extremely volatile.

The company’s stock was trading at GBX 93.39, up by 2.45 per cent, at 13:41 PM on 16 July 2021. 

Avast Plc

FTSE 100 listed Avast plc (LON: AVST), a Czech Republic-based and LSE listed antivirus and cybersecurity company, is currently in the advanced stages of discussion for its acquisition by the US-based NortonLifeLock Inc., for a whopping $8 billion (£5.77 billion). The deal is slated for completion by the end of this month. The merger will provide long-term shareholder value and innovative products for customers.

Avast is a pioneer of "freemium" software where users can download basic applications for free, and subscribers are required to pay for premium features. The company’s Avast and AVG branded desktop and mobile software registered over 435 million active users at the end of 2020, which includes 16.5 paid million users. The shift to remote working during COVID-19 pandemic spurred demand for Avast’s desktop products such as antivirus software, and it recorded annual revenues of $892.9 million in 2020.

The company’s stock was trading at GBX 599.80, up by 0.71 per cent, at 13:40 PM on 16 July 2021. In the last one year, the stock has given a return of 5.92 per cent.

International Consolidated Airlines Group SA 

With a huge cloud of uncertainty hovering over domestic and international travel in the backdrop of rapidly spreading new COVID-19 variant, the market performance of International Consolidated Airlines Group SA (LON: IAG), the parent entity of British Airways, has been adversely affected. It is suspected the company’s performance will continue to underperform as the fear of the spread of the Delta variant continues. Demand may recuperate when the vaccination rates improve, and people will venture out for revenge-travel.

In May 2021, IAG alerted the European Commission (EC) about its plans to take over airline Air Europa. Post a preliminary examination. The EC opened an in-depth investigation on 29 June 2021 due to uncertainties around the compatibility of the merger with the internal market conditions and its ability to lower competition in the passenger air transport market in Spain.

Air Europa and IAG feature among the top three providers of scheduled domestic and international passenger air transport and cargo services in Spain. Initial investigation revealed the airlines compete on various of direct routes, which could be significantly lowered across 70 origin and destination city sets, both to/from and within Spain.

The EC also highlighted difficulties of assessing the impact of the pandemic on the competitive environment in relation to Air Europa's activities as well as IAG and their competitors. The EC has thus not proposed any commitments during the preliminary investigation. It has until 5 November 2021 to carry out an exhaustive examination of the impact of the proposed transaction.

The company’s stock trades at GBX 169.16, up by 2.30 per cent, at 13:43 PM on 16 July 2021. In the last one year, the stock has given a return of 7.85 per cent.

Scottish Mortgage Investment Trust plc

Managed by Baillie Gifford & Co Limited, Scottish Mortgage Investment Trust plc (LON: SMT) is a publicly traded investment trust engaged in investing globally in businesses with above-average returns. It boasts of the reputation of one of the most searched trusts, according to the Association of Investment Companies.

Scottish Mortgage doubled its money within a year after one of its holding companies - Wise (WISE), an international payments and money transfer firm, was listed for a record £8bn. This provided a boost to Scottish Mortgage Investment Trust, which held a 0.9% share in the total assets as of 31 May 2021.

Scottish Mortgage has been supportive of Wise’s decision to choose a dual share class structure that enables the founders and early investors to have more control in its opening years as a public company and believes that it can offer protection from short-term investor interests.  

The company’s stock trades at GBX 1,314.50, up by 1.12 per cent, at 13.44 PM on 16 July 2021. In the last one year, the stock has given a return of 44.63 per cent.