Equities are selling off in early trading after the US markets drew back in late trading overnight after earlier setting all-time highs.
IC TIP UPDATES:
Shares in Simon Thompson recommendation Heritage Oil (HOIL) are up in early trading after the company reported a sharp increase in production and revenues in the third quarter as Nigerian oil began to flow in earnest. Third quarter revenues were $49.1m, up from $2.1m last year and the momentum has continued into the current period with October revenues rising to $71.8m. Average production for the quarter was 11,649 barrels of oil per day but during September this number rose to 46,000.
Broadcaster ITV (ITV) continues to perform well with total external revenues up by 6 per cent to £1.66bn in the nine months to September. The company is also on track to deliver its planned £25m of cost savings. We keep our buy rating.
Oil explorer Afren (AFR) has announced a significant uplift to potential recoverable reserves at the Ogo prospect offshore Nigeria, which it owns along with Lekoil (LEK) among others. Pre-drill estimates of 202 million barrels of oil equivalent have been substantially upgraded to 774m barrels of oil equivalent after exploratory drilling. Buy.
Travel operators Thomas Cook (TCG) and Tui Travel (TT.) have both sold their interests in NATS, the UK air traffic control operator, to Universities Superannuation Scheme banking £38m each. Tui has also announced an order for another two Boeing 787 Dreamliners. We retain our buy recommendation on both Thomas Cook and Tui.
Simon Thompson recommendation PV Crystalox Solar (PVCS) says that demand for solar panels in the global market remains strong, with installations expected to rise by 20 per cent to 35GW next year. But pricing remains subdued due to overcapacity. PVCS is maintaining low levels of production and focusing on costs but now expects full year output to be at the top end of expectations of 160MW-180MW. The company is planning a 7.25p a share cash return to shareholders.
Fellow Simon Thompson recommendation Entertainment One (ETO) has posted strong half year results, boosted by the acquisition of Alliance Films. Overall reported revenues rose by 65 per cent to £364.5m and underlying cash earnings more than doubled to £28.4m. The group’s library of film and television content has been revalued at $650m, up 70 per cent.
Sell recommendation Paddy Power (PAP) has continued to be dogged by unfavourable sporting results which have resulted in a €10 reduction in expected gross win since July. This has partially offset improved performance from the online and Australian parts of the business. We keep our sell rating.
Oil and gas well head technology specialist Plexus Holdings (POS) has extended a contract with Centrica in the North Sea, adding £850,000 of revenues in 2014. Buy.
Smiths Group (SMIN) reports overall trading in the past three months is in line with expectations as the Detection, John Crane and Flex-Tek businesses have compensated for continued weakness in the Medical and Interconnect divisions. One note of caution came from the Detection business where the order book remains slightly behind this stage last year. Buy.
Housebuilder and construction specialist MJ Gleeson (GLE) expects its first half 2014 results to show a ‘strong increase’ over 2013 and with completions for the full year expected to come in 25 per cent ahead management says the year to June 2014 will beat current market expectations. We maintain our buy recommendation.
Oil services specialist Amec (AMEC) says it remains on track to meet expectations for the full year and that its order book has edged up to £4bn, from £3.9bn in June. Buy.
Construction group Keller (KLR) says trading has continued to improve in the four months since June and improving margins mean that results will now be at the top end of expectations. We keep our buy rating.
IG Group (IGG) revenues have been slightly ahead of last year over the first two months of the current quarter despite market conditions being more subdued than they were in the first quarter of its financial year. Buy.
KEY STORIES:
Easyjet (EZJ) grew revenues by 10.5 per cent to £4.3bn in the year to September and boosted profits by 51 per cent to £478m after a sharp uplift in margins to 11 per cent. This has prompted management to propose a special dividend of 44.1p a share on top of the 33.5p a share final dividend.
The chief executive of Enterprise Inns (ETI), Ted Tuppen, has chosen the occasion of his company’s final results to announce his retirement from the business he founded in 1991. Results showed a continued turnaround in like for like performance with the final quarter of the year registering positive like for like net income growth of 0.6 per cent although the full year still showed a 2.6 per cent reversal in like for like net income.
Testing specialist Intertek (ITRK) has announced the proposed acquisition of building products testing specialist Architectural Testing Inc for $95m. A trading update also detailed revenue growth of 7.6 per cent since July although industry-wide headwinds continue in some sectors.
Engineer Renold (RNO) is seeing the effects of its attempts to ‘re-engineer’ its business with profits in the six months to September more than doubling to £1.1m despite a decline in revenues.
Melrose Industries (MRO) says trading is in line with expectations and the Elster business, which will constitute two thirds of revenues once the sales of the Crosby and Acco businesses are completed, is performing well. Overall trading is line with expectations but currency movements will cause a 2 per cent headwind for profits next year.
OTHER COMPANY NEWS:
Aureus Mining (AUE) has been granted four new gold mining licences in Liberia adjacent to its existing New Liberty mine.
Sierra Rutile (SRX) confirms that it is in talks which could lead to a potential offer for the company.
