PRESS TIPS:
Tempus in The Times says that the launch last month of Aveva Group's Everything3D product is its most significant since the first computer-aided design software was unveiled in 1973, six years after the company was spun out of Cambridge University.
Aveva is one of those British-based global leaders that most people will not have heard of, with a market capitalisation of approaching £1.4bn.
Halfway figures to the end of September show growth across all three regions, with Asia Pacific the standout at 21 per cent. It has been expanding in India, with a new office in Mumbai. The halfway dividend is raised by 13 per cent to 4.5p.
Aveva continues to carry large amounts of cash on its books, £166m at the half-year end. Mr Longdon insists that this could be needed for acquisitions, though no deal of any size has been completed since 2004.
It is not a bad place to be, having surplus cash in these markets. The shares, up 14p to £20.15, sell on about 20 times' this year's earnings, if you strip out that cash. High, but worth it for the long term (Last IC rating: Hold, 12 Nov).
Tempus writes that some analysts were worrying about the decision by Jon Kempster to quit Wincanton no later than the end of January for an unspecified new role elsewhere. But the logistics group is a very different animal to the one he joined in July two years ago. This year it sold the European operation. The banking facilities have also been renegotiated.
The halfway figures were a little better than the market had been expecting. Underlying profits before tax were up from £14.2m to £17.1m in the six months to the end of September, disregarding a raft of one-off items that pushed Wincanton into a loss last time. Revenues were down by almost 12 per cent to £551.2m, but this reflects the loss of more than £100m of business from three retailers.
Focus DIY went into administration, the Co-op chose to bring its warehouse distribution in-house and Wincanton walked away from Comet rather than accept less attractive terms from its new private equity owners.
Debt remains uncomfortably high, averaging £201m over the first half, and the company is not yet generating cash to repay this, though it will turn cash-positive in the next financial year. There is no prospect of a resumption of dividend payments, which were suspended two years ago.
The shares have more than doubled since they bottomed out at 31p in July and, at 76.5p, sell on a lowly four times' this year's earnings. But, given the state of the high street, immediate outperformance looks unlikely. A mere hold, then (Last IC rating: Hold, 12 Nov).
Questor in The Telegraph writes that Bovis Homes, in line with the rest of the house building sector, continues to perform well, as it benefits from cheap land bought following the credit crunch.
Good land purchases and the robustness of house prices in certain parts of the country mean that margins are continuing to expand. The gross margin is expected to be 22 per cent this year - or 13 per cent at the operating level compared with 10 per cent last year. This is at the upper end of the guidance issued when the company last updated the market in August.
The average sale price in the year to date is above £190,000, some £10,000 higher than last year, as the group continued to focus on higher-margin family homes rather than flats.
The group has a strong balance sheet - it is expected to be in a net cash position by the end of the year - so it can continue to snap up plots of land. Net debt currently stands at £65m.
The current year's earnings multiple is 18.1, falling to 13.3 next year and the prospective yield is 1.7 per cent rising to 2.3 per cent. Questor last recommended a purchase on August 21 when the shares were at 491.6p. Questor keeps a buy recommendation (Last IC rating: Buy, 20 Aug).
Business press headlines:
The US Congress should agree to higher taxes on the wealthy to avoid the fiscal cliff, a top Republican economist has said in a sign of the rapidly shifting political climate in Washington before negotiations to avert the looming budget crisis. Writing for the Financial Times, Glenn Hubbard, who advised Barack Obama's rival Mitt Romney on his losing presidential bid, is the latest prominent conservative to suggest Republicans should change tack and accept the president's structure for impending budget talks. "The first step is to raise average (not marginal) tax rates on upper-income taxpayers," he wrote. "Revenues should come first from these individuals." Mr Hubbard said that could be achieved by eliminating tax loopholes and capping popular deductions - such as those for mortgage interest, charitable giving and employer-provided health plans - rather than allowing Bush-era tax rates for the rich to expire this year, as Democrats are demanding, the Financial Times.
At least ten senior traders at Royal Bank of Scotland have been approached by authorities in the United States in connection with a criminal investigation into alleged manipulation of Libor interest rates by banks, The Times understands. The US Department of Justice has made initial approaches to the traders in the bank’s markets division in recent weeks as a first step to seeking formal interviews, sources said. It is the clearest sign yet that prosecutors are stepping up inquiries into whether employees of British banks broke criminal laws by allegedly conspiring to rig the benchmark interest rates used by banks to lend to one another. The move will stoke fears on City trading desks of a much wider investigation, involving other banks, that ultimately could lead to British traders being extradited to the US.
Traders expect China's powerful State Reserves Bureau to resume purchases of base metals this week, three years after the end of a buying programme that helped prop up prices during the financial crisis of 2008-2009. The SRB, which reports to the National Development and Reform Commission, could offer to buy as much as 400,000 tonnes of aluminium and 150,000 tonnes of zinc from smelters, according to physical traders with knowledge of the plans. The purchases might start as early as Wednesday, they said, although it remained unclear exactly how the buying programme would be structured and how much metal the SRB would ultimately acquire. News of the planned purchases, which were first reported by Reuters, triggered a sharp rally in aluminium prices, according to the Financial Times.
Angry oil traders branded chronic output disruption at Britain's biggest oilfield, Buzzard, as "worse than Nigeria" yesterday after production problems flared up again. Buzzard is the biggest of the North Sea fields that contribute to the Forties crude blend, which underpins the key Brent benchmark price. The latest production glitch at the field, owned by Canadian oil giant Nexen, struck on Sunday. That came only days after the flow of crude had restarted on 3 November, following an earlier extended, two-month shutdown. One trade source said yesterday: "It was back up to full output but [then] tripped… on Sunday, and production is still shut down." One frustrated trader commented: "It is literally unbelievable. It is easy to say from the sidelines, but still, this is worse than Nigeria," The Scotsman writes.
The City watchdog, the Financial Services Authority, is investigating claims by a whistleblower that Britain's £300bn wholesale gas market has been "regularly" manipulated by some of the big power companies, exploiting weaknesses that echo the recent Libor scandal. Separately, the energy regulator Ofgem has been warned by a company responsible for setting so-called benchmark prices, ICIS Heren, that it had seen evidence of suspect trading on 28 September, a key date as it marks the end of the gas financial year and can have an important influence on future prices. The whistleblower, who worked for ICIS Heren, raised the alarm after identifying what he believed to be attempts to distort the prices reported by the company. These benchmark prices are critically important because many wholesale gas contracts are based on them and small changes in the price can cost or save companies millions, The Guardian says.
