Reaction to the latest Fed minutes has given the equity market wings this morning. Click here to find out what The Trader Nicole Elliott thinks.
IC TIP UPDATES:
Royal Dutch Shell (RDSB) cleared a major hurdle to its proposed $70 billion takeover of BG Group (BG.) as it has received the green light from Australia's competition regulator. The Australian Competition and Consumer Commission has granted unconditional approval for the bid which will align the oil giant's undeveloped gas in Queensland – held in the Arrow venture with PetroChina – with BG's $28 billion LNG export project in Gladstone. Buy.
Inland Homes (INL) has sold the major part of its site at the former RAF Stanbridge site for £14m, while group subsidiary Inland Homes Development has secured a £20m revolving credit facility with Barclays. At the same time, the group has taken a 25 per cent stake in Troy Homes for £1m. Buy.
Helical Bar (HLCL) has purchased two properties in London’s Old Street for £248m.The acquisition will be funded through existing cash resources of £18m and a new debt facility of £200m, of which £146m will be drawn down to complete the purchase. Buy.
Shares in Meggitt (MGGT) crept up 1 per cent in early morning trading after the aerospace and defence components company secured a contract from Boeing to provide its777X aircraft with advanced smoke detection devices and controller systems. Buy.
As expected, trading at Senior (SNR) was weak in the four months since 1 July as North American heavy truck production slowed and aerospace margins were impacted by additional costs. But the acquisition of Steico, a West coast US aerospace ducting components business for £60m, saw shares climb 4 per cent. Buy.
Meanwhile, engineering and environmental consultancy firm Ricardo (RCDO) reported that order intake increased by £43m in the past four months after it won a rail project in Asia and passenger car orders in the US and Europe. Buy.
Lender Close Brothers (CBG) continues to demonstrate steady growth, while facing the same challengers. In its third quarter loans grew by 3 per cent, with some expected margin pressure. Its securities business continues to suffer in volatile markets, and it saw further asset management inflows. We keep our buy rating.
Healthcare and industrial software group Servelec (SERV) inked a contract with Dŵr Cymru Welsh Water (DCWW) for more than 250 of its remote telemetry units (RTUs). These devices will be used to monitor the utility group’s existing pump stations; the deal could be the first of several as AMP5, the UK water investment programme, gains momentum. Buy.
It is a good morning for financial services group Investec (INVP). Its shares were up 4 per cent in early trading after reporting operating profit up 16 per cent in the six months to the end of September. The specialist banking division powered the progress, with good growth in the South African loan book. Buy.
Choppy markets boded ill for closed life insurance consolidator Chesnara (CSN). Embedded value dropped by £22m in the third quarter as guarantees became more costly relative to asset prices. Cash generation remains in line, with £6.6m raised in the period. Buy.
KEY STORIES:
Full year expectations have been reiterated by Domino’s Pizza (DOM) after its chief financial officer Paul Doughty announced his resignation from the group. The company said it had started the process of recruiting his replacement and would update the market when appropriate. Chief executive David Wild will assume responsibility for the group’s finance activities.
A trading update from high street fashion chain Ted Baker (TED) has revealed a 20.5 per cent increase in group revenues across the 13 weeks ended 14 November. Retail sales rose 18.1 per cent, online sales by more than 74 per cent and wholesale revenues by 27 per cent. However, bosses reminded investors that full-year numbers would still be reliant on Christmas trading.
Animal genetics specialist Genus (GNS) said adjusted pre-tax profits are running ahead of last year on a constant currency basis, despite pressure on group sales from lower porcine genetic nucleus revenues. Market conditions for the group’s customers remain “mixed” as falling dairy and pig prices take their toll. Encouragingly, there have been signs of recovery in the Chinese pig market.
Bovis Homes (BVS) pushed its private sales rate ahead by 20 per cent so far this year, while average sales prices has moved up 7 per cent. However, rising build costs are expected to leave operating margins only slightly ahead of the 17 per cent recorded in the previous year. Around 25 consented site were added to the land bank of around 4,000 plots, giving an expected return on equity of about 28 per cent.
Euromoney Institutional Investor (ERM) posted a 13 per cent decline in adjusted operating profits in the year to 30 September. That reflected a marginal dip in the publisher’s revenues, higher property and investment expenses, the costs of acquiring a 16 per cent stake in Dealogic, and lower delegate and advertising revenues.
Leisure travel and logistics company Dart Group (DTG) is jumping on the buoyant outlook bandwagon after announcing the purchase of 27 planes between September 2016 and April 2018. It is clearly expecting the 22 per cent increase in its Jet2holidays customer numbers to be repeated, which will need to happen given it had 2.65m flight-only customers compared to 3.07m in the same period in 2014. Elsewhere, while logistics revenues were down 7 per cent to £72.3m but operating profit increased by £1.9m to £3.5m as operating margins improved 2.8 percentage points to 4.8 per cent.
Bowleven (BLVN) is set to acquire stakes in two Tanzania gas projects for up to $28m (£18m). Edinburgh-based oil and gas explorer has signed a conditional agreement with Aminex to buy a 25 per cent interest in the Kiliwani North Development Licence, which is soon to begin production, along with a 50 per cent stake in the Ruvuma petroleum sharing agreement. Hold.
Energy Secretary Amber Rudd outlined a number of proposals aimed at halving the UK’s carbon emissions by 2027 from 1990 levels. Shares in Drax (DRX) fell sharply after Ms Rudd proposed closing all UK coal plants by 2025, in favour of a greater shift towards gas generation. National Grid (NG) also suffered a drop in share price - which has since recovered - after Ms Rudd said she would consult on whether to break up the group, since the structure creates a conflict of interests. For example, it runs the capacity auctions for energy funding, but also stands to gain subsidies for its interconnectors.
Shares in Berendsen (BRSN) rose 2 per cent after management announced higher underlying revenue and operating profit in the third quarter were up on the second half of the year. The group’s German workwear business grew particularly strongly and the group also announced some small bolt-on acquisitions during the period.
Shares in Johnson Matthey (JMAT) climbed 7 per cent in early morning trading as a bumper special dividend took the heat off tepid trading.
The deterioration of global steel and foundry markets prompted management at Vesuvius (VSVS) to warn that the molton metal flow engineer’s full-year performance will be at the lower end of expectations. Self-help is expected to ease the blow.
There’s been no more said regarding the tussle for UAE-based hospital operator Al Noor Hospitals (ANH) between South African group Mediclinic and fellow Middle East operator NMC Health (NMC). NMC Health released a “strategy update” today detailing the group’s ambitions, including “partnership” and “consolidation” opportunities to grow its market presence. It doesn’t mention Al Noor by name.
OTHER COMPANY NEWS:
Investors sent shares in Blur (BLUR) up 4 per cent when the markets opened, after the business services platform provider revealed growing volumes of projects were pitched, commissioned and completed in the third quarter to 30 September. That partly reflected management’s focus on typically more loyal, mature and reliable enterprise projects.
Investors sent shares in Johnston Press (JPR) down another 5 per cent in early trading, after they fell 14 per cent on Wednesday. The regional publisher told investors that it expected underlying profit and net debt to be in line with full-year expectations. The regional publisher posted an 8 per cent rise in digital revenues in the 17 weeks to end-October, but that couldn’t offset a 15 per cent decline in print advertising revenues.
Canada’s Lucara Diamond Corp (0QUI) announced that it has uncovered two exceptional white stones through the XRT diamond recovery units. The news was incredible in itself, but the discovery of the two white diamonds, an 813 carat stone and a 374 carat stone, came shortly after an announcement that Lucara had unearthed a gigantic 1,111-carat, gem-quality diamond (the second largest ever found) from its Karowe mine in Botswana. Unsurprisingly, William Lamb, President and CEO, commented, "I am truly at a loss for words”.
Polo Resources (POL) announced an increase in its direct interest in Blackham Resources Limited, an Australian gold exploration company listed on the Australian Stock Exchange. Polo has agreed to acquire 10m ordinary shares of Blackham for A$2.1m (£0.98m) in aggregate.
Falkland Islands Holdings (FIH) announced half-year revenues of £17.7m, slightly down on last year, with pre-tax profits up 17 per cent to £1.4m. Edmund Rowland, Chairman of FIH, said: "This has been a satisfactory period of trading for the Group, with a good trading performance in the Falklands, coupled with increased profitability from the Portsmouth Harbour Ferry Company and further strengthening at Momart”.
