After a decent rebound in equities, there is a little bit of profit taking in play today as traders begin to prepare themselves for the start of September, a month which is traditionally tough for equities. Click here for The Trader Nicole Elliott’s latest take on the state of play in the global markets.
IC TIP UPDATES:
Recruiter Hays (HAS) has posted strong full year results considering currency headwinds and continued tough trading in its Australian business. Like for like net fees rose by 5 per cent and pre-tax profits by 12 per cent to £132.3m. We maintain our buy rating.
Oil company Soco International (SIA) has announced a 22p a share return of cash to shareholders alongside its interim results. Production during the first half averaged 13,960 barrels of oil per day with full year guidance at 14-15,000. Buy.
Ophir Energy (OPHR) has announced a plan to slim down its board composition to two executives and five non-executives. Former Chevron executive Bill Higgs is joining as chief operating officer next month, reporting to chief executive Nick Cooper while Lisa Mitchell and Dennis McShane will step down from their chief financial officer and director of strategy roles in due course. Non-executive Lynn Powell will not stand for re-election. We maintain our buy recommendation.
Gaming technology company Playtech (PTEC) enjoyed a strong opening six months to the year with revenues up by 21 per cent and adjusted profits 45 per cent higher at $96.8m. During the period the company has completed the migration of Ladbrokes’ online business to Playtech’s product suite and signed a white label agreement with Trinity Mirror amongst others. We keep our buy rating.
Simon Thompson recommendation Molins (MLIN) has seen weak market conditions in the Middle East and eastern Europe affect its tobacco machinery business in the first six months of 2014 with group sales dipping from £47.8m to £40m. The smaller scientific services and packaging machinery divisions reported positive sales growth.
Oil services business Hunting (HTG) saw performance bounce back in the second quarter after a slow start to the year which meant half year revenues came in 4.8 per cent up on last year and reported profits rose by more than 15 per cent. Our recommendation is under review.
Printing technology specialist Xaar (XAR) has seen its shares slump by around a fifth in early trading after the company warned that weakening market conditions are likely to hit second half revenues, leaving full year revenues in the £115m-£125m range, which would be well down on the £134.1m reported for 2013. The company has seen growing competition in its core digital printing for ceramic tiles, which has reduced prices, and latterly seen a slowdown in the Chinese housing market hit demand. Our recommendation is under review.
Debt management specialist Arrow Global (ARW) has posted a 10.6 per cent uplift in adjusted first half profits to £48m. During the period the company purchase loans with a face value of £1.05bn for £99.3m. Buy.
Hotels group PPHE (PPH) enjoyed positive trading during the first six months of 2014 with total revenues up by 12.3 per cent and like for like revenues 10.8 per cent higher at €120.4m. Like for like cash earnings rose by 9.7 per cent to €39.1m and the interim dividend has been hiked by 50 per cent to 9p a share. We keep our buy rating.
KEY STORIES:
Recently floated motor services business AA (AA.) has announced the departure of chief executive Chris Jansen and chief finance officer Andy Boland with executive chairman Bob Mackenzie stepping in to the top role on an interim basis. Both Mr Jansen and Mr Boland were already with the company when a buy-in team led by Mr Mackenzie took over the business and floated it earlier this year.
Tullow Oil (TLW) has announced a series of positive appraisal wells from a number of its discoveries in Kenya which suggest that the South Lokichar basin could be a significant producing asset.
Half year results from Melrose Industries (MRO) showed a 10 per cent rise in headline profits and a 9 per cent rise in profits to £69.6m at actual currencies. The Elster acquisition has proved to be successful with the business now having increased profitability by 50 per cent since August 2012.
Bookmaker Paddy Power (PAP) has had a particularly positive opening half to the year in terms of customer acquisition with sportsbook stakes up by 17 per cent and online active customers up by 25 per cent, leading management to predict ‘mid-teen’ percentage growth in full year earnings per share. But first half profits were hit by a combination of adverse sporting results and exchange rate movements which left pre-tax profits 13 per cent lower at €61.6m.
Russian gold producer Petropavlovsk (POG) achieved record gold production in the first half of 306,400 ounces. Combined with improved selling prices and reduced costs this led to half year earnings rising by 41 per cent to $139.2m. The company remains on course for full year production of 625,000 ounces.
Half year production at Salamander Energy (SMDR) averaged 11,800 barrels of oil per day, which was well down on last year’s 14,900 bopd and reflected production downtime during the period. This also fed into reduced revenues of $177.8m. Production in the second half to date has averaged 15,300 bopd, leading management to restate their target of 13-15,000 bopd for the full year. Salamander is expecting a cash injection before year from the sale of a chunk of its interest in the Bualuang field.
Specialist healthcare business BTG (BTG) says that its Chinese partner SciClone has won approval from the China Food and Drug Administration for the registration of BTG’s DC Bead liver cancer treatment and plans for commercialisation are underway.
OTHER COMPANY NEWS:
Student accommodation specialist Unite Group (UTG) enjoyed a 34 per cent uplift in earnings to £20.4m in the first half and says it is on track to achieve 3 per cent like for like rental growth in the full year. Its secured development pipeline is expected to add 32p to net asset value per share and 12p per share to earnings by 2017.
Engineering and oil services specialist Lamprell (LAM) appears to be back on track after posting a strong rebound in performance in the first half of 2014. Revenues rose from $506.6m to $632.3m and pre-tax profits from continuing operations quadrupled from $11.8m to $46.1m.
Recently floated private hospitals group Spire Healthcare (SPI) grew revenues by 10.5 per cent in the first half with adjusted earnings up 9.3 per cent to £79.9m.
Out of town logistics property investor Tritax Big Box Reit (BBOX) has published first half results which reflect a period of busy activity during which it has fully invested the £200m raised at float late last year plus an additional £20m raised in June and a further £46.4m out of the £150m raised in July. The portfolio, which is fully occupied, has been revalued at £360.7m.
