Join our community of smart investors

News & Tips: Telford Homes, French Connection, Thomas Cook & more

Equities are on the up again
November 26, 2014

Equities have begun the day with a small upwards move on the back of mixed data from the US, which the Trader Nicole Elliott assesses here.

IC TIP UPDATES:

London-focused property developer Telford Homes (TEF) continues to blossom on the back of strong demand for properties in the price bracket and areas of London in which it operates. A new development at Stratford has already sold 270 out of 307 apartments within two months of marketing commencing. Half year results showed the company has sold more than 600 homes since April and profits rose from £7.7m to £9.4m. With forward sales of £550m in the bag and a development pipeline worth north of £1bn, management is confident of meeting 2015 forecasts. Buy.

Kier Group (KIE) has completed a £120m fundraising through a private placing of debt in the US. We keep our buy.

French Connection (FCCN) is another high street retailer to have suffered from the unseasonably warm weather in the past two months. Up against tough comparatives from last year, sales in the 17 weeks to 22 November dipped by 5.7 per cent on a like for like basis. More full price sales helped margins improve and wholesale revenues rose 9 per cent during the period. Our recommendation is under review.

A trio of Simon Thompson recommendations have updates today. Firstly engineering specialist 600 Group (SIXH) announced ‘satisfactory’ results for the six months to September during which revenues edged up to £21.05m and profits rose from £940,000 to £3.2m, although this was boosted by a £2.19m uplift from a pension credit.

First Property (FPO), recommended originally in Simon’s 2011 Bargain Shares portfolio, enjoyed a 184 per cent uplift in profit in the six months to September at £5.4m with a strong contribution from its property fund management business and property deals.

Finally another Simon property tip, Daejan Holdings (DJAN), announced pre-tax profits of £134.5m for the six months to September, almost double last year’s level after a net valuation gain on properties of £107.9m. Performance was boosted in the period by the settlement of a rent review at the Strand Palace Hotel and the signing of a new tenant for the refurbished Africa House in London.

KEY STORIES:

Shareholders in Thomas Cook (TCG) were surprised by this morning’s news of chief executive Harriet Green’s departure after two years leading the group’s turnaround with shares slumping 19 per cent on the news. She is to be replaced by chief operating officer Peter Frankhauser. Full year results for the period to September showed a dip in revenues to £8.6bn as continued poor sentiment towards Egypt and the shift in currencies hit takings. There was an improvement in underlying earnings to £323m with profitability improving across the company’s operations.

Builders merchant Wolseley (WOS) has seen a 6.6 per cent improvement in revenues from ongoing businesses in the three months to 31 October with trading profits 13.5 per cent higher.

Caterer and support services specialist Compass Group (CPG) posted 4.1 per cent growth in year on year revenues for the 12 months to September with pre-tax profits rising 5.4 per cent to £1.16bn. The full year dividend is increased by 10.5 per cent and a £500m share buy back is ongoing.

United Utilities’ (UU.) half year results showed relatively flat revenues of £859.4m and operating profit of £340.5m, up from £339.8m last year.

The year to 28 September brought revenue growth of 2.4 per cent at drinks maker Britvic (BVIC) after volume growth of 1.5 per cent, earnings rose by 17.6 per cent at constant exchange rates to £158.1m.

Retirement products specialist Partnership Assurance (PA.) says sales of annuities continue to track at less than half the levels they enjoyed before the Budget earlier this year ruled that retirees no longer need to buy them with sales likely to weaken further as the deadline for the changes approaches in April.

OTHER COMPANY NEWS:

Patisserie Valerie (CAKE), the cafes group which floated earlier this year has posted full year results showing 27.5 per cent revenue growth and a 37 per cent uplift in adjusted profits to £11.3m. It opened 19 new stores during the year and acquired 23 more with the Philpotts acquisition, giving it 148 stores at year end with a further 20 targeted for this year.

LondonMetric’s (LMP) half year results saw profits rise from £44.1m to £69.7m after a 4 per cent uplift in the value of its portfolio. Meanwhile it has sold a retail park in Milton Keynes for £21.8m and acquired a site in Bedford with the intention of developing it as a distribution facility.

Finsbury Food (FIF) says organic sales have risen by 3.9 per cent in the opening four months of the year with 5 per cent growth in the UK bakery division but a 3.1 per cent dip in sales at its jointly-owned export business.