Equities have started the day in positive fashion amid a flood of results, click here for The Trader Nicole Elliott’s latest views on the markets.
IC TIP UPDATES:
Sell recommendation Carpetright (CPR) has managed to return to growth in its UK business, posting like for like sales growth of 6.1 per cent for the 13 weeks to 26 July, although it came at the cost to profit margins, which dipped by 2.6 per cent. Meanwhile, European markets are not faring as well with like for like sales in Netherlands, Belgium and Ireland down by 3.6 per cent.
PZ Cussons (PZC) has posted a 7 per cent improvement in pre-tax profits to £115m despite a 2.5 per cent reversal in revenues due primarily to currency movements, without which profits would have been 18 per cent higher. We maintain our buy rating.
Engineer GKN (GKN) has enjoyed strong performance in its Driveline business, which posted an 11 per cent uplift in organic sales during the six months to June. Overall sales dipped by 1 per cent after a £247m currency hit. Overall group profit before tax was 6 per cent higher at £296m. Buy.
Sell recommendation Domino’s Pizza (DOM) has posted another set of results characterised by continued strong progress in the UK and Ireland and a struggle to gain traction in its smaller German and Swiss businesses. Overall system sales for the first half rose by 14.9 per cent to £375m and group profits were up by 10.1 per cent to £24.5m. Like for like sales in the UK rose by 11.3 per cent, in Ireland by 3.2 per cent, in Switzerland by 2.9 per cent with German sales declining by 1.7 per cent.
Building products business Tyman (TYMN) enjoyed a good first half in its UK and US markets with a more mixed performance in Europe where economic recovery is less entrenched. Overall sales rose by 8.2 per cent to £167m with underlying operating profits up 79.3 per cent at £19.4m or 21 per cent on a constant currency, like for like basis. We maintain our buy recommendation.
Electronic invoicing specialist Tungsten (TUNG) has announced an extended and widened contract with BT Group to provide all its electronic invoicing, purchase order and invoice status services worldwide. Buy.
Simon Thompson recommendation Treatt (TET), a flavourings and ingredients specialist, has enjoyed a solid third quarter performance which compares well with what was a very strong period last year. The full year performance is on track although management has warned investors of price rises creeping in to raw materials costs which could dampen full year returns, as could exchange rate movements.
Another Simon Thompson recommendation, Chinese children’s clothing specialist Camkids (CAMK) has reported that trading is in line with expectations. The company has added 51 stores in the first half of this year, taking its total to 1,336 retail stores.
St James Place (STJ) continues to enjoy buoyant trading with total single investments up by 21 per cent or £3.92bn and net inflows of funds under management of £2.4bn in the first half. Total funds under management now stand at £47.6bn, up seven per cent since the turn of the year. Management confidence is reflected in a 40 per cent dividend hike to 8.93p. we keep our buy rating.
Property company Segro (SGRO) has acquired four UK logistics properties from Harbert European Real Estate fund for £49.5m, on a net initial yield of 6.3 per cent. We maintain our buy recommendation.
Sell recommendation Drax (DRX) has posted statutory losses of £11m for the first half, down from a profit of £206m last year, underlying earnings dipped from £70m to £38m. Management put the sharp reduction in financial performance down to higher UK carbon taxes and also hailed a strong operational performance which has seen biomass fired production reach 20 per cent of the total.
KEY STORIES:
Retailer Next (NXT) has enjoyed strong trading in the first half of the year with Next brand sales up by 10.7 per cent in total with Next retail sales 7.5 per cent higher and Directory sales up 16.2 per cent. This has prompted management to upgrade its forecasts for full year sales guidance from 5.5 per cent to 9.5 per cent to 7 – 10 per cent.
Oil giant BP (BP.) posted a 34 per cent rise in underlying replacement cost profit to $3.6bn for the second quarter. The company has now agreed divestments worth $3.4bn towards its $10bn target.
Supermarket Morrison (MRW) has announced the appointment of former Tesco executive director and current Poundland chairman Andy Higginson as its new chairman.
Half year results from interdealer broker Tullett Prebon (TLPR) reflect tougher markets with revenues down from £439.8m to £360.3m and profits down from £62.8m to £43.2m.
Distribution specialist Brammer (BRAM) grew revenues by 10.9 per cent in the first half with underlying pre-tax profits up by 15.1 per cent to £17.5m.
Exhibitions and publishing specialist Informa (INF) has posted 1.9 per cent organic growth and adjusted operating profit growth of 4.5 per cent to £166.7m.
