Equities are up marginally in early trading as traders prepare for the European Central Bank’s quantitative easing announcement later on today. Click here for the Trader Nicole Elliott’s latest take on the markets.
IC TIP UPDATES:
Sell recommendation Royal Mail Group (RMG) handled 120,000 parcels in December, a 4 per cent rise on last year but letter volumes were down 3 per cent in the first nine months of its financial year. Overall group revenues improved by 1 per cent with UK parcel and letter revenues flat.
Builders merchant Wolseley (WOS) has decided to explore exit options for its French building materials business which turned over £577m and made profits of £7m last year. We retain our buy recommendation.
Buy to let mortgage specialist Paragon Group (PAG) enjoyed a good performance in the final three months of the year when operating profits rose by 14.9 per cent to £30.9m. Buy to let completions rose by 58 per cent to £222.1m with the recently formed Paragon Bank contributing 13 per cent of the total. Activity levels remain strong. We keep our buy rating.
Wealth manager St James Place (STJ) saw an 18 per cent rise in new single investments to £7.8bn in the year to December with net inflows of funds under management up 20 per cent and total funds under management at the year end of £52bn, up from £44.3bn a year earlier. Buy.
Property company CLS Holdings (CLI) says that a significant increase in the value of its London property portfolio means that full year results will be ‘materially ahead’ of expectations. We maintain our buy recommendation.
Simon Thompson recommendation KBC Advanced Technologies (KBC) has enjoyed a strong second half with technology revenues at record levels. Despite the upheaval in the oil and gas industry the company serves, its order book is said to be ‘significantly stronger’ than this time last year.
Mobile payments specialist Monitise (MONI) has launched a strategic review which effectively places the company up for sale. Meanwhile revenues for its first half year were £42.4m with transaction revenues up 8 per cent but licence revenue down 47 per cent on the previous half year as management transition the business to a product-based recurring revenue model. Our recommendation is under review.
Henry Boot (BHY) reports that good trading conditions in its construction and house building operations mean that full year results will be comfortably ahead of expectations. Buy.
Restore (RST) reports that its document storage business has performed steadily and its relocations operations are showing year on year growth. We keep our buy rating.
Simon Thompson recommendation 32Red (TTR) boasted record annual net gaming revenues of £32.1m for 2014, up 26 per cent and a fifth consecutive year of double digit growth. Early trading in January has seen revenues for the first 20 days rise 31 per cent on last year. The company says it is too early to quantify the effect of the government’s Point of Consumption tax but there are fewer rivals legally accessing the UK market.
KEY STORIES:
Balfour Beatty (BBY) has released summary details of KPMG’s review of its UK construction business which has concluded that a further £70m hit to profits is expected due to differences between reported contract positions and forecasts of contract performance and a deterioration in project performance. Further details are expected at the results in March.
Industrial hire company HSS has announced details of its impending initial public offering which will be priced at 210p-262p a share, valuing the company at £365m at the middle of that range.
Oxford Instruments (OXIG) has been hit by sanctions on dealing with businesses in Russia and is now assuming it will do no business with Russia in the remainder of this financial year and the whole of 2015. A lack of recovery in the Japanese market has also hit orders and this means adjusted profit for the current year will now be in the region of £35m.
Gaming software specialist Playtech (PTEC) says it has traded in line with expectations and should produce double digit growth in both revenues and cash earnings for the year to December.
Action to refocus the business of Chemring (CHG) is reflected in full year revenues falling from £624.9m to £474.9m over 2014. Stripping out discontinued operations meant revenues dipped from £472.3m to £403.1m with margins only down marginally at 11.6 per cent and underlying profits coming in at £46.7m, down from £56.3m.
OTHER COMPANY NEWS:
Workspace Group (WKP) posted 3.1 per cent growth in total rent roll to £64.4m in the final quarter of 2014 with nine month growth of 10.5 per cent. The company has completed three acquisitions for a total of £61m since it raised £96.5m from investors in November.
Card Factory (CARD) grew revenues by 8.1 per cent in the 11 months to December, driven by 1.8 per cent like for like growth and the opening of 51 new stores, giving it 764 stores at the end of December.
Online flash sale retailer MySale (MYSL) saw revenues accelerate in December which means half year revenues are expected to come in 8 per cent ahead of last year. But investment in marketing means a loss will be recorded for the six months but margins should improve over the second half as such marketing spend will not be repeated. Meanwhile, the company is closing its US website to concentrate on its Asian, Australasian and UK operations.
