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News & Tips: Persimmon, Bovis Homes, Domino's Pizza, Afferro Mining, Associated British Foods, Leyshon Resources, Trap Oil, HiWave Technologies & more

Today's market overview

Equities have begun the week on the front foot after a choppy week last week, and The Trader Dominic Picarda is sticking with his upbeat assessment of the outlook.

IC TIP UPDATES:

Housebuilders Persimmon (PSN) and Bovis Homes (BVS) have both issued strong results today, highlighting the fact that conditions in their industry remain positive. Most housebuilders are enjoying slow but steady sales growth, rising selling prices and, crucially, are now building on plots bought at knockdown prices during the financial crisis so margins are improving. Persimmon grew underlying profits by 52 per cent on a 12 per cent improvement in sales, and Bovis saw pre-tax profits rise by 69 per cent. We continue to rate both Persimmon and Bovis as buys.

Sell recommendation Domino’s Pizza (DOM) has reported like for like sales growth of 5 per cent across its mature UK stores and overall profits of £46.7m, up 10.8 per cent. Online sales now account for more than 55 per cent of total sales in the UK and almost one fifth of all online sales are now made via mobile phones.

Afferro Mining (AFF) has signed a memorandum of understanding with South Korean steel giant POSCO with a view to progressing to a full project funding deal for Afferro’s iron ore interests in Cameroon. We keep our buy.

Final results from Bunzl (BNZL) showed a 5 per cent rise in turnover and a 6 per cent improvement in profits. The distribution specialist has also spent £272m on acquisitions recently, expanding its presence in South America and bringing in £500m in annualised revenues. Our recommendation is under review.

Engineering specialist Senior (SNR) has posted record results for the year to December with 14 per cent revenue growth at £729.8m producing a 19 per cent hike in profits to £86.7m. We keep our buy.

Intu Properties (CSCG), formerly known as Capital Shopping Centres Group, has announced that it is in talks regarding the acquisition of the Midsummer Shopping Centre in Milton Keynes. We keep our sell recommendation.

KEY STORIES:

Associated British Foods (ABF) has been boosted by continued strong showing from its Primark clothing retail business, which means interim results will beat expectations.

Investors Chronicle owner Pearson (PSON) has issued flat results with sales up by 5 per cent but adjusted profits just 1 per cent better.

Thorntons’ (THT) revenues have risen by 2.9 per cent in the first half of the year, with profits leaping by 49 per cent.

Half year results from Petra Diamonds (PDL) showed an improvement in production of 31 per cent to almost 1.25m carats. The company also reports that the diamond market remains solid and, with more tenders expected in the second half, revenues should improve from the first half effort of $151.7m.

Sirius Minerals (SXX) has announced the appointment of Gordon Cowe as development director.

Leyshon Resources (LRL) has announced that it is spending $20m on an accelerated exploration and development plan for the highly prospective Zijinshan gas prospect in China.

OTHER COMPANY NEWS:

Great Eastern Energy (GEEC) wants to launch an Initial Public Offering in India to raise funds for its development.

North Sea explorer Trap Oil (TRAP) has confirmed that drilling has begun on its Magnolia licence.

Nostra Terra Oil & Gas (NTOG) confirms it has now reached break even on a monthly basis from its Chislholm Trail prospect.

HiWave Technologies (HIW), formerly known as NXT, has finally thrown in the towel and admitted that it is preparing to call in administrators after failing to attract sufficient offers for the business.

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By Graeme Davies,
25 February 2013

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