Equities have taken an overdue tumble in early trading in the wake of comments from the Federal Reserve overnight in the US. Click here for The Trader Nicole Elliott’s latest take on the markets.
IC TIP UPDATES:
Royal Dutch Shell (RDSB) shares have suffered after the company announced worse than expected fourth quarter figures with profits excluding exceptionals of $3.26bn, down from $5.85bn in the third quarter as the sliding oil price began to hurt. Management is ramping up its quest for efficiencies and also slashing $15bn of capital spending plans over the next three years to adjust to the new oil price reality. Our recommendation is under review.
Great Portland Estates (GPOR) says its portfolio rose in value by 5.2 per cent in the three months to December and is up by 19.9 per cent over 12 months, boosted particularly by growing value in its development properties, up 36 per cent over 12 months, as well as decent rental value growth of 11 per cent. The company still has a significant development pipeline covering half of its existing portfolio. Buy.
3i Group (III) received realisation proceeds of £245m in the three months to December, taking the total for the first nine months of its year to £569m. It also invested £275m in new private equity investments during the last three months and enjoyed earnings growth of 15 per cent in the private equity portfolio and a £39m uplift from the rise in 3i Infrastructure’s share price. We keep our buy rating.
South African platinum giant Lonmin (LMI) has increased production across all of its operations in the first quarter of its financial year, although the same period last year was blighted by industrial action. Overall sales of platinum rose by 9 per cent with total tonnes mined up by 7.2 per cent but refined platinum production fell almost 29 per cent due to the shutdown of a furnace. Our recommendation is under review.
Galliford Try (GFRD) has won four contracts in the extracare and affordable homes sector worth an aggregate £72m. We maintain our buy rating.
Avon Rubber (AVON) reports that trading in both its protection and defence and dairy businesses has continued to be positive. Buy.
Development Securities (DSC) has acquired the Killingworth Centre, a shopping centre on the outskirts of Newcastle, for £19.2m which represents a 8.27 per cent yield. We keep our buy.
Soco International (SIA) enjoyed a strong year in 2014 with production averaging 13,600 barrels of oil per day but is scaling back its drilling programme for 2015 which should result in reduced production of 10,500-12,000 barrels of oil per day. But the company says its average cost of production is in the low $20’s. Our recommendation is under review.
KEY STORIES:
Beverages giant Diageo (DGE) posted a 0.1 per cent dip in organic net sales for the six months to December with volumes down 1.9 per cent, although the second quarter showed an improvement over the first. Core reserve brands saw sales growth of 10 per cent and restructuring and efficiency initiatives meant organic operating profit rose by 0.7 per cent and free cash flow was £699m. The interim dividend is increased by 9 per cent to 21.5p a share.
Infrastructure specialist John Laing has announced that its forthcoming initial public offering will be priced at 195p-245p, valuing the business at £715.5m-£865.5m.
Ocado (OCDO) has signed a deal for a new warehouse inside the M25 at Erith, South London, which will be built by Bericote Properties and funded by Tritax Big Box Reit (BBOX). The facility is expected to be ready for fit out next year and operational in 2017.
Pubs group Mitchells & Butlers (MAB) posted like for like sales growth of 1.7 per cent for the 17 weeks to 24 January with total growth of 9.1 per cent, boosted by food volumes although margins are weaker due to the integration of the Orchid acquisition and the wider consumer pricing environment.
Specialist engineer Renishaw (RSW) continues to trade strongly with the first half showing record revenue of £223.8m, up 36 per cent, and pre-tax profits more than doubling to £56.6m. The trend is expected to continue into the second half with full year revenues forecast to be in the range of £480m-£510m, giving profits of £130m-£150m.
OTHER COMPANY NEWS:
Paypoint (PAY) grew transaction numbers by 5 per cent to 216.9m in the three months to December with revenues rising 2 per cent to £58m. The company’s Collect+ parcels service is growing rapidly, increasing volumes by 37 per cent in the period. The coming year is likely to see an impact of £1m-£2m from changes to long standing VAT rules.
Banknote printer De La Rue (DLAR) says recent trading has been in line with reduced expectations and operating profit for 2014-15 should be around £20m lower than the previous year’s underlying profit.
Rank Group’s (RNK) performance has improved markedly with first half operating profits rising 25 per cent after growth in all its business segments, boosted by reductions in bingo duty and growing online operations.
Pork products business Cranswick (CWK) enjoyed strong Christmas trading with total sales ‘well ahead’ of last year.
Market Tech Holdings (MKT), which owns vast swathes of Camden Market in London, has announced commencement of the redevelopment of the Hawley Wharf site, where plans include a nursery, infant and junior schools, 170 homes and new market facilities.
