Shares in London have staged a recovery following yesterday’s sharp sell off as macro economic data remains mixed. Click here to find out what The Trader Nicole Elliott makes of the latest market moves.
IC TIP UPDATES:
Construction business Galliford Try (GFRD) says that its three businesses, Linden Homes, Partnerships and Construction, have all continued to perform well with good demand growth and despite ‘challenges on the labour supply side’. In housebuilding, Galliford has £982m of sales reserved, contracted or completed, with £778m for the current year. Both these figures are down slightly on last year. The construction order book rose marginally to £3.3bn with 83 per cent of revenues for next year already secured. We keep our buy rating.
Insurance specialist Novae (NVA) enjoyed buoyant growth in gross written premiums in the period to March with the value up from £195.1m last year to £257.6m, boosted by 7 per cent like for like growth and good performance from new underwriting teams. This has offset a dip of 2.8 per cent in average premium rates. Buy.
Tritax BigBox Reit (BBOX) has pre-let and forward funded a new development in Wigan which will be taken on a 25 year lease by Nice-Pak International. It has also announced debt financing for B&Q’s regional distribution warehouse at Worksop. We maintain our buy recommendation.
KEY STORIES:
House builder Barratt Developments (BDEV) says trading conditions have remained strong since the turn of the year with demand for new build housing holding up well. Net private reservations per week have risen to 289, or 0.74 per site and completions for 2015 are now expected to exceed previous guidance at 16,100, up from 14,838 in 2014. Forward sales at 10 May totalled £2.59bn, up 17.9 per cent.
Brewer SABMiller (SAB) posted flat sales growth at actual exchange rates for the year to March but tighter control of costs saw free cash flow rise by 26 per cent, allowing management to increase the full year dividend by 8 per cent.
Support services specialist Compass Group (CPG) grew organic revenues by 5.7 per cent in the six month to March, reporting underlying revenues of £9.1bn while pre-tax profits rose by 4.9 per cent to £637m. North America and emerging markets were the standout performers but Japan and Europe also saw a resumption of growth. Management reported an ‘encouraging’ pipeline of contracts but did warn on rising uncertainty in emerging market economies and weakness in its Offshore and Remote business due to commodity price weakness.
Engineer Renishaw’s (RSW) strong trading recovery continues apace. Third quarter revenues totalled £145.9m, up from £85.4m last year and cumulative nine month revenues of £369.7m are up 49 per cent on the same period last year. The Far East has been a strong source of growth with revenues more than doubling while the UK, Americas and Europe all showed positive momentum. Profits for the first nine months of the year are up 174 per cent at £109.8m.
Oil services giant Wood Group (WG.) has won a £250m contract to provide BP with services to its operations in Trinidad and Tobago through its Wood Massey joint venture. An AGM statement confirmed that overall performance is down year to date, but in line with expectations, reflecting the resilience of the business.
Packaging specialist Mondi (MNDI) saw its first quarter profits rise by 29 per cent, boosted by volume growth, lower input costs, contributions from acquisitions and higher selling prices in some regions.
The chief executive of insurance group Admiral (ADM), Henry Engelhardt, has announced his intention to step down from his role in a year, to be replaced by current chief operating officer David Stevens.
Premier Oil’s (PMO) production averaged 60,200 barrels of oil per day in the period from January to the end of April although full year guidance is maintained at 55,000 barrels.
Severn Trent (SVT) has agreed to sell its water purification business to joint venture Industrie De Nora in a deal worth $99m although Severn will receive $20.1m in cash with the balance being accounted for by the settlement of intercompany debt.
Newly merged travel business Tui (TUI) has posted a 14 per cent improvement in operating cash earnings for the first half of its financial year and says it is pleased with the level of Summer 2015 trading.
OTHER COMPANY NEWS:
Property company Hansteen (HSTN) has sold off the Hansteen UK Industrial Property investment company to Brockton Capital and Dunedin Property for £192.1m. The fund was launched in May 2013 with £107m of equity.
The buoyant motor trade is reflected in trading at Vertu Motors (VTU) where revenues for the year to February rose by 23 per cent to just north of £2bn and pre-tax profits rose by 32.9 per cent to £21m. The dividend is increased by almost one third to 1.05p.
Changes to the pensions and retirement industry brought about by last year’s budget hampered full year performance at retirement finance specialist Partnership Assurance (PA.) First quarter sales totalled £99m, down from £254m last March with individual annuity sales accounting for £54m, only around a quarter of last year’s level. Management report a pick up in advisor activity in recent weeks but expect the second quarter performance to remain subdued as it will reflect low first quarter quote levels.
