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News & Tips: CRH, Playtech, Gulf Keystone, Bwin & more

Equities have bounced hard
August 27, 2015

Amidst absolute flurry of company results today, the sense that the Fed in the US is rapidly backing away from a September interest rate rise has fired the London market up this morning. Click here to find out what the Trader Nicole Elliott thinks.

IC TIP UPDATES:

Irish building products specialist CRH (CRH) has accompanied its solid interim results, sales up 13 per cent to €9.4bn, with an eye-catching acquisition announcement. It is expanding its presence in the US in a big way with the purchase of LA-based glazing products business C.R. Laurence Co for $1.3bn. The business is forecast to see sales of $570m and cash earnings of $115m this year. We maintain our buy recommendation.

Gaming and financial trading software specialist Playtech (PTEC) has enjoyed another buoyant six months trading with revenues growing by a third to €286m and adjusted net profits up 19 per cent to €115m. The company’s gaming division continues to grow well and its more recently established financials business will be boosted by the forthcoming completion of its acquisition of Plus500 and Ava Trade. Plus500 (PLUS) also published results today which suggest it is recovering from its regulatory hiccup earlier this year. It posted 20 per cent revenue growth but profits dipped due to extra costs. Nonetheless it now expects to outperform market expectations for the full year. We keep our buy on Playtech.

Recruiter Hays (HAS) posted a 17 per cent rise in headline profits despite foreign exchange headwinds as it continued to grow its business across all regions. Buy.

Energy and oil and gas services business Amec Foster Wheeler (AMFW) reported first half figures which reflected the downturn in its core markets. Margins and revenues are down but management has made progress in taking costs out of the business in a bid to ride out the downturn. The dividend is maintained at 14.8p and the company has an order book worth £6.6bn. We reiterate our buy rating.

IC Tip of the Year Fyffes (FFY) says trading has continued its positive momentum during the first half of 2015 with adjusted earnings per share rising by 12 per cent and the company on course to meet management expectations of full year adjusted cash profits of €55m-€61m. Buy.

Engineering and environmental consultancy WYG (WYG) has responded to a recent strategic review with a boardroom shakeup which will see chief operating officer Graham Olver step down from the board with immediate effect, with the role not being replaced. Management has also agreed to amend its share incentive arrangements after consultation with shareholders. Our recommendation is under review.

Irish ferries business Irish Continental Group (ICGC), which the IC tipped recently, has produced a strong set of half year figures, bolstered by the recovering economies either side of the Irish sea. Volumes of cars, passengers and roll on, roll off freight all grew while container freight was flat. Revenues rose 9.5 per cent while cash earnings leapt 82 per cent to €25.5m. Buy.

Specialist debt portfolio manager Arrow Global (ARW) enjoyed a 48.6 per cent uplift in revenues while profits rose by 21 per cent to £16.4m. Buy.

Software specialist Servelec (SERV) posted a 20 per cent rise in half year revenues which led to a 25 per cent uplift in underlying operating profits at £4.9m. Buy.

KEY STORIES:

The downturn in the oil and gas sector was reflected in half year results from services business Hunting (HTG) where revenues dipped by almost one third and cash earnings fell by more than half to $44.1m. The company has stripped more than $40m of annualised costs out of its businesses with around a quarter of the workforce leaving in recent months.

Gaming business Bwin.Party (BPTY) says it has received clarification on some elements of a proposed offer from potential bidder GVC (GVC) and is awaiting further details on the best terms it is prepared to offer before it decides whether to recommend it ahead of the offer already on the table from 888 Holdings (888).

Kurdish oil producer Gulf Keystone (GKP) produced 4.7m barrels of oil in the opening half of this year with production peaking at 45,000 barrels of oil per day in recent weeks. The company made revenues of $30.1m and losses of $77.7m in the first half after well documented issues in receiving payments for its output, although this appears to be on track to being resolved. At 30 June, total arrears due to Gulf Keystone stood at $283m.

Car auctions and webuyanycar.com website owner BCA Marketplace (BCA) continues to enjoy the buoyant conditions in the UK car market. In the period from April to June it saw auction volumes rise by 7.7 per cent while revenues were 17.8 per cent higher than last year at £243.4m, producing adjusted cash earnings of £23m.

Fit out specialist ISG (ISG) has won a £59m contract to refurbish offices at Old Bailey in London for Blackstone.

Industrial property specialist Hansteen (HSTN) accompanied results with news of a £40m fundraising which will support the acquisition of further units in the Ashtenne Industrial fund, taking its holding to 76.5 per cent of the fund, plus a £27m deal to buy a portfolio of more than 2,300 units across 237 UK industrial estates. Meanwhile, Hansteen’s half year results showed a 55.5 per cent uplift in profits.

Lamprell (LAM), which provides engineering services to the oil and gas sector, posted downbeat interim results, affected by the timing of projects as well as weak market conditions. Revenues slumped from $632.5m to $351.4m while profits from continuing operations more than halved to $20.3m.

Challenger bank Aldermore (ALD) more than doubled profits in the first half of its financial year to £44m after a 14 per cent rise in origination to £1.2bn.