Equities began the day with a dip as the rout in commodities continues to drag equity markets south with it but have since picked up some positive vibes from somewhere and currently trade marginally ahead of their open. Click here to read The Trader Nicole Elliott’s latest thoughts on the markets.
IC TIP UPDATES:
The government has finally begun the process of offloading its stake in RBS (RBS) by shifting 5 per cent of the company to institutions in an accelerated bookbuild process which priced the shares at 330p, raising £2bn or so in the process. The sale price is well below the 502p level RBS traded at when it was bailed out. We maintain our buy recommendation.
Changes to the pensions landscape have affected Standard Life’s (SL.) various business arms in different ways. Annuity sales have been hit, they slumped by two thirds in the first half of the year, but other parts of the business have benefited from an uptick in enquiries from retirees with strong demand for asset management products, while its workplace pension schemes benefited from auto-enrolment rules coming into force. Overall assets under management rose from £296.6m at the end of 2014 to £302.1m at the half year stage and operating profits rose 6 per cent to £290m. We keep our buy rating.
After the attention on Rolls Royce (RR.) yesterday following news that US activist investor ValueAct has taken a stake, it has now emerged that the same investor has also bought into IC sell recommendation Smiths Group (SMIN), where corporate activity has been expected for several years, sending its shares up 6 per cent. Our recommendation is under review.
Travis Perkins (TPK) continues to benefit from its exposure to the UK’s recovering economy. Its half year results showed revenue growth of 7.8 per cent to £2.9bn with operating profits up 6 per cent to £176m. We maintain our buy rating.
Wincanton (WIN) has won a contract with B&Q which will see take on the management of B&Q’s national distribution network including all six of its distribution centres, having until now run one of the centres. Buy.
Galliford Try (GFRD) has been appointed by developer ACDL to deliver the first phase of the Arena Central Scheme in Birmingham in a deal worth £66m. We keep our buy rating.
Silver and gold miner Fresnillo (FRES) grew silver production by 10 per cent and gold by 37 per cent during the opening half of its financial year but ‘significantly lower’ realised commodity prices resulted in a 44 per cent slide in profits to $76.4m. We maintain our long term buy rating.
Lower commodity prices also affected the fuels trading business of NWF (NWF), resulting in a dip in revenues of 8.4 per cent to £492.3m. But a decent recovery in trading in agricultural feeds and a decent showing by the food distribution business meant that management was able to eke out a 5.2 per cent improvement in headline profits to £8.1m. Buy.
KEY STORIES:
Direct Line Insurance (DLG) edged premiums written in the first half up by 0.4 per cent to £1.55bn in a rather flat premium environment. Profitability was aided by a lack of major claims events during the period which means operating profit from ongoing operations surged from £235.7m to £335.8m.
Online takeaway operator Just Eat (JE.) saw orders through its systems surged by 52 per cent in the first half of 2015, resulting in a revenue uplift of 54 per cent to £107.8m and underlying earnings rising 62 per cent to £25.8m. The company grew the number of active users by 59 per cent to 11 million.
Car retailer Pendragon (PDG) has ridden the wave of the UK’s booming car sales market in the first half of 2015. It grew profits by almost 23 per cent to £40.3m and now expects the full year performance to ‘comfortably’ outpace expectations.
Specialist engineer Meggitt (MGGT) has celebrated its interim results with news of contract wins with the UK Ministry of Defence and US company Lockheed Martin. This emphasised the trends seen in the first half when a good showing from the aerospace and defence business managed to offset weakness in energy markets. Organic revenues rose by 3 per cent and underlying profits by 6 per cent to £152m.
Morgan Sindall (MGNS) continues to be hampered by legacy issues in two troublesome construction contracts which prompted a further exceptional cost of £39.4m in the half year to June. Revenues were 15 per cent higher but adjusted profits dipped by 6 per cent to £13.3m. .
Engineer Rotork (ROR) posted a lacklustre set of results as expected as it suffered from weakness in oil and gas markets. Order intake was down 9.5 per cent, revenues dipped by 1.6 per cent and profits fell 8.4 per cent. Meanwhile, the company has announced the acquisition of M&M International from Spirax Sarco (SPX) for €9.7m.
The language services division of SDL (SDL) outstripped expectations in the first half of the year but the technology division saw bookings fall by 6 per cent. Overall the company posted 4 per cent growth in group revenues and a 39 per cent jump in profits to £9.3m.
OTHER COMPANY NEWS:
Luxury wall coverings and furnishings business Walker Greenbank (WGB) continues to thrive, reporting 8.4 per cent growth in total brand sales in the six months to 31 July with UK sales up 6.8 per cent and US sales surging 29.7 per cent in reportable currency.
Building services specialist T.Clarke (CTO) has seen its order book grow 16 per cent to £320m over last year. Meanwhile, in the half year to June, revenues grew to £112m and profits edged up from £1.1m to £1.4m.
