Equities raced out of the blocks in London this morning. Click here to find out what The Trader Nicole Elliott thinks of the markets.
IC TIP UPDATES:
It might have seen pre-tax profits rise 18 per cent to £686m but hitting the mid-point of earlier guidance means easyJet’s (EZJ) shares are down nearly 2.5 per cent in early trading. The budget airline saw its annual load factor – a measure of how full its planes are – rise 0.9 percentage points to 91.5 per cent while the low fuel price helped costs per seat fall 3.4 per cent. Elsewhere, the dividend is up a fifth to 55.2p but the move to increase capacity by 36 aircraft will be scrutinised. Buy.
Shares in Entertainment One (ETO) rose 3 per cent after the FTSE 250-listed film distributor posted a 43 per cent rise in underlying cash profits to £52m in the six months to 30 September. That was driven by strong growth in the TV business, which offset losses in the film division due to fewer theatrical releases. Buy.
Shares in tool hire company Lavendon (LVD) rose 6 per cent after it revealed group rental revenue for the first nine months of the year grew 2 per cent on a constant currency basis and excluding ex-fleet sales. The Middle East was the top performing region for the group, growing 7 per cent, but there was still weakness in the UK. We place our recommendation under review.
Crest Nicholson (CRST) pushed housing completions ahead by 8 per cent in the year to October, with average selling prices up 10 per cent at £309,000. Sales outlets rose by 5 per cent, while the gross development value of its short-term and strategic land bank rose 12 per cent to £10.47bn. Strong trading is expected to continue into the new financial year, with forward sales up by a third at £329m. Buy.
Investors sent shares in Independent News & Media (INM) up 5 per cent after the Irish Independent publisher returned to top-line growth for the first time in eight years in the 10 months to 30 October. Circulation revenues dipped, but digital ad sales leapt 44 per cent, fuelling total ad revenue growth of 4 per cent. Buy.
Engineering group WS Atkins (ATK) has acquired the nuclear services segment of Energy Solutions for £209m, adding to its existing nuclear support services operations. The group expects the purchase to be double-digit earnings enhancing in the first full-year post completion of the deal. Buy.
Carclo’s (CAR) investments to capitalise on robust demand for high-tech plastic and lighting solutions yielded 82 per cent underlying operating profit growth in the six months to 30 September. Buy.
Shares in Renold (RNO) bounced 4 per cent higher in early morning trading after the industrial chain supplier agreed to buy a German rival for £4.5m. That news made up for a difficult period of trading in the six months to 30 September. Buy.
Engineering conglomerate Smiths Group (SMIN) has agreed a deal to reduce the amount of cash it has to pay into its pension scheme as it announced a more resilient first quarter performance. While the John Crane energy services business continued to struggle, the group’s other operations helped compensate. Our sell advice is under review.
All it took for Macfarlane Group (MACF) shares to rocket 11 per cent in early trading was a sign that momentum shown in the first half of this year would continue. Management expects this, reports the integration of acquisition One Packaging is performing to plan, and expects operating profit from the packaging distribution division to be “well above” the level achieved in 2014. We stay buyers.
KEY STORIES:
Investors sent shares in Blinkx (BLNX) down 3 per cent after the video advertising specialist swung from an adjusted cash profit of $1m to a $6.8m decline in the six months to 30 September. However, mobile, video and programmatic revenues leapt 37 per cent to make up 69 per cent of group revenues, up from 43 per cent.
The plan to tackle the impending beer-tie cut at Enterprise Inns (ETI) appears to be well established now and the 5 per cent rise in shares this morning means investors are cheering it on too. The pub managed an incremental 2 per cent rise in operating profits to £279m. The revaluation of its estate fell 2.7 per cent meaning it reported a pre-tax loss but a rise in like-for-like net income growth of 0.8 per cent against a tough comparator which featured the World Cup, is a positive sign. Hold.
Sports results might not have been going its way but Irish bookmaker Paddy Power (PAP) is still pleasing the punters. Sports betting stakes rose 23 per cent and total net revenue was up 7 per cent in its online business while the increases were 12 per cent and 7 per cent respectively in its retail business, including new shops. The group said it expected to publish shareholder documents in the coming weeks with regards to its proposed merger with Betfair. Hold.
Intermediate Capital Group (ICP) is making good progress in its transition from investing its own balance sheet to becoming a focused asset manager. Demand from institutional investors for private debt delivered net inflows of €3.2bn in the first half, to add to the €6bn delivered last year, against an annual target of €4bn. Higher fund management profit was tempered by reduced profit from its in-house investments, leaving group pre-tax profits 2 per cent lower at £94m.
Safety, health and environmental technology group Halma (HLMA) continued to enhance its reputation for consistency after posting sales growth across all its sectors. Shares rose 6 per cent.
Engineered electronics manufacturer TT Electronics (TTG) reported declining sales in the first ten months of 2015 as it got hit by weak industrial markets. But management claimed the group’s operational improvement plan has helped to offset these troubles.
Bodycote (BOY) also reported challenging markets in the four months to October, but maintained its full year profit guidance as its restructuring programme gains traction. Investors clearly expected worse, as shares leapt 11 per cent in early morning trading.
The same scenario applied to Spirax-Sarco (SPX). Management at the pump maker confirmed that weak industrial production growth had weighed on sales, before adding that cost-cutting and efficiency-boosting measures kept profit in line.
Homeserve (HSV) grew its pre-tax profit by 8 per cent on a constant currency basis to £28m during the first six months of the year. This was driven by strong growth in the group’s US division, which grew customer numbers by a quarter.
OTHER COMPANY NEWS:
There’s an Aim newcomer this morning in the shape of Finnish biotech company Faron Pharmaceuticals. The group has raised £10m from placing close to 4m new shares, and will use the proceeds to fund a third phase clinical trial for its new acute respiratory distress syndrome drug and early development of a cancer treatment.
Shares in Aim-listed Allergy Therapeutics (AGY) fell nearly 7 per cent in early trading after the group announced a £12m placing. Bosses there said proceeds would go towards new product development, as well as improving the health of the balance sheet. In a separate trading update, the group revealed like-for-like sales rose 12 per cent at constant currency in the first four months of the financial year.
Shares in Aquatic Foods Group (AFG) leapt 11 per cent after the seafood processor said revenue for the 9 months to September was up a fifth. Such is the negative sentiment towards Aim-listed Chinese companies however, that the stock remains at half its February listing price, and is at a tiny premium to a reported cash balance of RMB 329.5m (£34m).
Vitec (VTC), a provider of products and services for the broadcast and photographic markets, downgraded its forecasts for the full-year after reporting that challenging trading conditions had hindered signs of recovery.
