FTSE 250 movers: ITV in focus, ASOS out of fashion

(Sharecast News) - The FTSE 250 was up 2.72% to 17,495.78 at 1530 BST. Television company ITV was said to be reviewing its ITV Studio production arm, including whether or not to sell the unit as part of an effort to bolster the broadcaster's share price.

According to the Financial Times, ITV has fielded expressions of interest in ITV Studios after chief executive Carolyn McCall was said to have been weighing options for the group's Studios wing, which has been estimated to potentially be worth more than its parent company's £2.5bn market capitalisation.

While an unnamed ITV insider told the FT that a sale was still unlikely due to longstanding resistance of breaking up the group's integrated broadcaster-producer model, they also noted that the gap in valuations made the option "impossible to ignore".

Potential buyers were said to include private equity groups and other large independent producers - such as Freemantle or FL Entertainment.

AJ Bell's Russ Mould said: "Enormously frustrated with its stock market valuation, ITV appears to be looking for ways to put a spotlight on what it perceives as the company's true worth.

"It may also be in management's minds that thanks to weak sterling and a depressed valuation it is at risk of being bought up wholesale on the cheap. Virgin Media owner Liberty Global has long held a strategic stake in the free-to-air broadcaster so that is a name to watch."

Mould also noted that ITV faces short-term problems associated with its exposure to advertising, which he said was "likely to suffer" in any slowdown, and longer-term concerns over a structural shift away from analogue television.

"The market reaction to its ITVX digital platform plans were pretty savage, with significant concern over the costs involved. The expansion of the production division, which has been underpinned by acquisitions made by ITV itself, is all part of an attempt to make the business less reliant on volatile advertising revenue."

House builders Crest Nicholson and Vistry both gained when the government confirmed that cuts in stamp duty introduced in the controversial mini-budget three weeks ago would be retained.

On the downside, ASOS shares slumped on Monday as the online retailer confirmed it was in the final stages of agreeing an amendment to its revolving credit facility after reports that after a leading credit insurer cut cover for its suppliers.

Allianz Trade reduced its insurance cover for ASOS suppliers by more than half, media reported over the weekend, which could force Asos to pay for products up-front, tightening the squeeze on the company's cashflow.

Shares in the company took a hit, and were further battered by a 'sell' recommendation from Canaccord Genuity as part of its initiation of coverage of the e-commerce sector.

"This action will give ASOS significantly increased financial flexibility, against the uncertain economic backdrop. ASOS retains a strong liquidity position and this is a prudent step in the current environment," the company said.

Reports said the company, scheduled to report full-year results on Wednesday, recently approached the banks behind its £350m revolving credit facility to seek an amendment to its borrowing agreements.

Lenders including Barclays, HSBC and Lloyds Banking Group were lining up AlixPartners and law firm Clifford Chance to advise them on the unfolding situation.

Last month, it said annual profits for the year to August 31 would be "around the bottom end" of a previously indicated £20m-£60m range.

"The fact ASOS is talking to its lenders about more flexible borrowing facilities just goes to show how conditions are very challenging for retailers," said AJ Bell investment director Russ Mould.

"Suppliers take out insurance cover as protection between taking an order and being paid for it. When cover is unavailable, suppliers seek upfront payment from customers, which can put pressure on the latter's finances as they need to hand over cash before being paid by their own customers."

"Retailers have been struggling with the cost-of-living crisis where consumers are watching every penny, while at the same time they have had to stomach higher costs. Many shopkeepers, virtual or physical, have seen a rise in inventories as demand has weakened. This clogs up valuable storage space and raises the risk they'll have to slash prices just to shift the stock, thereby depressing profit margins."

"The news is yet another reason for investors to stay negative on ASOS shares, which are now down 78% year-to-date and are trading at a 12-year low."

FTSE 250 - Risers

Darktrace (DARK) 343.80p 13.32% ITV (ITV) 67.12p 8.78% Urban Logistics Reit (SHED) 131.50p 6.91% Vistry Group (VTY) 566.50p 6.79% Liontrust Asset Management (LIO) 814.00p 6.54% Morgan Advanced Materials (MGAM) 256.00p 6.44% UK Commercial Property Reit Limited (UKCM) 58.50p 5.79% Future (FUTR) 1,292.00p 5.73% RIT Capital Partners (RCP) 2,140.00p 5.68% Crest Nicholson Holdings (CRST) 196.50p 5.65%

FTSE 250 - Fallers

ASOS (ASC) 496.60p -6.57% Hikma Pharmaceuticals (HIK) 1,251.50p -0.87% JPMorgan Japanese Inv Trust (JFJ) 420.50p -0.71% AVI Global Trust (AGT) 175.20p -0.68% Tullow Oil (TLW) 37.74p -0.63% QinetiQ Group (QQ.) 342.20p -0.29% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 449.00p -0.22% Carnival (CCL) 556.80p -0.22% Baillie Gifford Japan Trust (BGFD) 711.00p -0.14% Micro Focus International (MCRO) 517.80p -0.04%