Equities are off again in early trading as geopolitical concerns remain to the fore. Click here for The Trader Nicole Elliott’s take on the markets.
IC TIP UPDATES:
A trading update from Thomas Cook (TCG) indicates that the turnaround at the holidays business continues apace. Full year operational performance is expected to show a ‘material’ improvement on last year even though there has been some weakness recently in Germany. Underlying earnings are expected to come in between £315m and £335m, signalling growth of 39-48 pr cent. Bookings for winter, especially from the UK, have been strong. We keep our buy rating.
N Brown (BWNG) has announced a marginal dip of 0.5 per cent in like for like sales for the first half after management reduced its home and electricals ranges and cut marketing spend on catalogues by 24 per cent, which led to a 3.2 per cent sales fall in the second quarter. Management intends pushing on over the second half with its business transformation plans. Buy.
The chief executive of Galliford Try (GFRD), Greg Fitzgerald, has announced his intention to stand down by the end of next year after 33 years with the business. This came alongside strong full year results which showed a 21 per cent hike in revenues, profits up 28 per cent and the dividend payout rise by 43 per cent. This record performance is backed up by strong order books in both its housing and construction operations. Buy.
Ophir Energy (OPHR) has announced a successful gas discovery at the Silenus-1 well offshore Equatorial Guinea. The well could contain 405 billion cubic feet, taking the wider Silenus area to 1.2 trillion cubic feet. We keep our buy rating.
Simon Thompson recommendation IQE (IQE) has announced half year results showing earnings up 11 per cent and adjusted profits up by the same margin to £5.6m despite revenues falling by 17 per cent on industry de-stocking and sterling strength. Headline losses were £3.2m after £7.9m of exceptional and restructuring costs.
Ithaca Energy (IAE) has announced another good well test result on its Greater Stella Area North Sea oil project. The fourth such development well flowed 12,005 barrels of oil per day. Buy.
Another Simon Thompson recommendation, Thalassa (THAL) saw group revenues dip from $11.6m to $9.3m in the opening six months of the year but strip out a one-off manufacturing contract from last year worth $4.5m and the seismic monitoring business performed well, growing revenues from $7.1m to $9.3m. The company’s pipeline of orders has risen by 23 per cent to $175m since the end of 2013 and it also ended the year with a healthy cash balance of $21m.
Simon Thompson recommendation Global Energy Development (GED) saw turnover fall from $19.7m to $14.9m in the opening six months of the year due to a decline in volumes and oil prices although the cost of sales also decreased by 22 per cent which meant net profits were the same as last year at $1.2m.
KEY STORIES:
Shares in house builder Crest Nicholson (CRST) have dipped by almost five per cent after the company admitted that slower than expected sales in recent weeks mean open market reservations since 1 May are down 8 per cent on the same period last year. Otherwise, forward sales are up 11 per cent on last year but forward sales for future years are lower, reflecting the strategy of releasing product for sale later than previously.
Online retailer Asos (ASC) has confirmed that it lost sales to the value of £25m-£30m from the fire at its Barnsley distribution centre and saw a gross margin hit of 2 per cent. Overall retail sales for the year to 31 August rose by 27 per cent with UK sales up 35 per cent and international sales up 22 per cent. But recent weeks have seen tougher trading with the final quarter seeing UK sales up 33 per cent, US sales flat, EU sales up 21 per cent and rest of the world sales down by 5 per cent although these were affected by currency movements. Management has signalled its intention to invest further in its international businesses, which will hold back profits.
Petra Diamonds (PDL) has sold the 122.5 carat diamond discovered earlier this year at its Cullinan mine for a value of $27.6m, of this Petra receives $23.5m but retains a 15 per cent interest in the final sales value of the diamond after it has been polished and cut.
Russian gold miner Petropavlovsk (POG) is in discussions with its banks over refinancing debts, something which has become more difficult since sanctions were ramped up against Russian companies. Its banks are offering to waive covenant restrictions while talks are ongoing and the company is considering a rights issue.
Asset location technology specialist Ubisense (UBI) posted a 40 per cent uplift in revenues for the six months to June, allowing it to record a small cash earnings position of £200,000. We keep our buy rating.
