Equities have bounced back in early trading as geopolitical concerns have faded a little but the Trader Nicole Elliott reckons we are stuck in something of a holding pattern.
IC TIP UPDATES:
Royal Mail (RMG) says it has delivered growth in the ‘low single digits’ in the past three months although the mix was slightly unexpected with a better than expected performance in letters but weaker parcels growth due to tougher competition. Stronger sterling and a more competitive export market have not helped either. We maintain our sell recommendation.
Simon Thompson recommendation IQE (IQE) grew first half earnings by 5 per cent to £11m despite a 17 per cent slide in revenues as destocking at major customers hit demand and currency movements also had an effect. Management expects to move to production of solar wafers during the second half and is sticking with overall full year forecasts.
Songbird Estates (SBD), the owner of vast swathes of Canary Wharf, has received planning permission for a 4.9m square foot mixed use development at Wood Wharf. This extends Canary Wharf to the east and will add a primary school, 3,100 homes, 1.9 square metres of offices, a high street, hotel and medical centre. We keep our buy recommendation.
Qinetiq (QQ.) reports that its Europe, Middle East and Africa services business continues to perform well but the Global Products business is being impacted by the drawdown of US forces overseas and this business is being refocused on new areas of business although the effect will probably not be felt until later this year. Buy.
Arbuthnot Banking Group (ARBB) has enjoyed a 368 per cent surge in profits from £2m to £9.5m for the six months to June with both customer loans and deposits rising strongly, with the latter topping £1bn for the first time. The company also recently placed £75m worth of shares in Secure Trust Bank (STB), reducing its stake to 53.3 per cent. We retain our buy rating.
Chains and transmission engineering specialist Renold (RNO) says it is making progress with the closure of its Bredbury plant, with annualised savings of £3.2m already being realised. Meanwhile, underlying first half growth of 0.8 per cent has prompted management to increase its expectations beyond the current upper end of forecasts despite currency headwinds. Buy.
Simon Thompson recommendation KBC Advanced Technologies (KBC) is to buy FEESA, a supplier of software and services to the upstream oil and gas industry, for £11.2m in cash and shares.
KEY STORIES:
Chip making giant ARM Holdings (ARM) has posted a 16 per cent uplift in first half revenues in dollar terms, or 9 per cent in sterling, with profits also up by 9 per cent in sterling to £191.3m. A total of 2.7 billion Arm-based chips were shipped in the first half, up 11 per cent year on year with a decent backlog suggesting second half performance will meet expectations.
IG Group (IGG) has reported another record year of performance despite ending the 12 months with a subdued period of trading. Net trading revenues rose by 2.4 per cent to £370.4m with profits up 1.3 per cent to £194.7m.
Private equity group Blackstone has agreed to buy the property business of Max Property (MAX) for £414.2m in cash. Following the deal, the company will return a total of £447.7m, reflecting the cash plus a previously announced £33m dividend, to investors and wind the holding company up.
Premier Foods (PFD) has posted a 2.1 per cent improvement in trading profits despite a 6.1 per cent slide in revenues during the first half due to ‘challenging market conditions’.
Chemicals business Croda (CRDA) has been hit hard by currency movements on top of tougher trading. This was reflected in half year figures which showed a 4.5 per cent dip in sales and a 6 per cent reversal in profits at £125.1m although currency movements did mask more positive sales trends in the underlying businesses.
Protein research tools specialist Abcam (ABC) has announced a trading update detailing solid organic growth and group growth at actual exchange rates of 4.7 per cent. Adjusted profits are expected to come in ahead of expectations.
OTHER COMPANY NEWS:
Convenience store operator McColl’s (MCLS) posted 3.6 per cent growth in sales in the first half to 26 May with operating profits up by 14.6 per cent to £10m. Continued conversion and renewal of its estate meant the group ended the period with 747 convenience stores and 544 newsagents. Meanwhile the group has announced a raft of board changes with James Lancaster relinquishing his dual role to concentrate on chief executive duties, John Coleman taking on the chairman’s role and chief operating officer Martyn Aguss resigning, to be replaced by operations director Dave Thomas.
Russian gold producer Petropavlovsk (POG) increased its total gold production by 4 per cent in the first half and its gold sales by 5 per cent.
