MARKET REPORT: Anglo’s coal spin-off Thungela lights up the Footsie

After a dire first day of trading, Anglo American spin-off Thungela made a stonking recovery that took the City very much by surprise.

Thungela was Anglo’s South African coal business but has been separated at a time when the mining giants are under pressure to clean up their acts and decarbonise. 

Thungela’s stock market debut on Monday was always going to be a tricky test of investor appetite.

Recovery: Thungela was Anglo’s South African coal business – but has been separated at a time when the world’s mining giants are under pressure to clean up their acts and decarbonise

But it was dealt a hammer blow by Boatman Capital Research, the mysterious short-selling outfit that previously targeted Babcock International (down 2.3 per cent, or 7.2p to 301p), which published a report branding the group worthless.

It also claimed Anglo had ‘massively underestimated’ the amount required for the clean-up costs of Thungela’s seven mines.

Anglo had put aside £340million, though Boatman said the bill could be as high as £960million.

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Deep fat fryer cleaning specialist Filta said that its franchisees raked in record revenue of £3.3million in April as Covid restrictions unwound in many of its markets.

This has been driven by the United States, where Filta has lots of big clients such as sports stadiums and universities, and where hospitality businesses have opened sooner than planned.

Trading is picking up in the UK too, though it has been sluggish in Europe because of the slower pace of the coronavirus vaccine rollout.

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Shares in the AIM-listed group rose 5.5 per cent, or 8.5p, to 163p by the close. 

Under the terms of the demerger, Anglo shareholders received one share in Thungela for every 10 they hold in the former parent company. 

After a day of dumping from many of these default shareholders, bargain hunters swooped, sending Thungela rocketing almost 30 per cent, or 33p, to 144.04p.

Anglo, which took over Yorkshire potash miner Sirius Minerals last year, rose 1 per cent, or 30p, to 3183p.

Danni Hewson, analyst at AJ Bell, said: ‘While short-term investors unhappy with the thermal coal operation clearly ditched their shares after the demerger from Anglo American, there’s obviously been no shortage in interest from others. It highlights the fact that not every investor is focused on clean and green.’

Thungela’s rise helped keep the FTSE 100 in the black, as it rose 0.3 per cent, or 17.87 points, to 7095.09 by the close. Intermediate Capital Group was another big climber.

The alternative asset manager, which invests in debt, finished the session 5.9 per cent higher, up 127p, to 2283p after its full-year results topped expectations. 

Profit before tax rocketed to £508million in the year to March, up from £111million the year before, which meant it could pump up its dividend to 56p per share, up from 50.8p in 2020.

The FTSE 250 spent the day treading water before falling 0.1 per cent, or 12.56 points, to 22,895.5, despite some hefty risers.

Watches of Switzerland rose after it set a date for its full-year results and told investors it would simultaneously publish an update that will lay out its ‘long-term strategic direction and priorities’.

That sent shares 4.5 per cent higher, up 36p, to 844p.

Lender Paragon Bank was the biggest mid-cap gainer after it unveiled a £40million share buyback programme, and rose 11.2 per cent, or 57.5p, to 569.5p. A boom in mortgage lending sent half-year profits soaring. 

New mortgage loans jumped 45 per cent in the six months to March to £1.1billion, compared with the same period last year, and house prices are at record levels – standing at £261,743 on average.

The effect of the rampaging housing market could also be seen in figures put out by online property group On The Market, which posted its first profit. 

It made £1.1million in the year to January, compared with a loss of £11.7million the year before. 

Visits to its website earlier this year were 13 per cent higher than in January 2020.

A 22 per cent rise in turnover to £23million helped the company, which is 60 per cent-owned by agents, offset £2.6million of discounts given to agents during the first lockdown. It rose 4.8 per cent, or 5p, to 110p.

And, in another sign that the economy is in recovery, Nightcap toasted better-than-expected sales since its bars reopened from May 17. 

The London Cocktail Club-owner, co-founded by former Dragons’ Den investor Sarah Willingham, said revenues were up 92 per cent during the last three weeks compared to 2019. 

Shares rose 6.5 per cent, or 1.5p, to 24.5p.