Shares in London raced out of the blocks this morning despite ongoing geopolitical tensions. Click here to find out what The Trader Nicole Elliott thinks of the markets.
IC TIP UPDATES:
There’s no other way to say it. Thomas Cook (TCG) shares have taken off. The stock is up more than 8 per cent this morning thanks to a return to profit for the first time in five years. Continental Europe might not be performing as desired but the UK business stood out with increased underlying operating profits up by 42 per cent to £119m. Its ‘cost out and profit improvement’ programme also yielded further results with another £110m of savings on top of the £400m from the previous three years. Buy.
Trading at crop enhancement group Plant Impact (PIM) has started well this year, with revenue in the three months to October up 95 per cent to £3.7m. Sales of the company’s soybean product, Veritas, accounted for the bulk of sales, though the company soon expects to begin shipment of cocoa product Banzai. Buy.
BG Group (BG.) today announced that commercial operations began from the second train at its Queensland Curtis LNG (QCLNG) plant. BG Group now has full control of both LNG trains and associated facilities at QCLNG. Under offer.
Japan Residential (JRIC) has received a second approach to buy the Japan-focused residential property operator. The new approach values JRIC shares at 73.5p, which tops the 72p a share agreed offer from real estate investor Blackstone Funds. Discussions over the new approach are at an early stage and may not develop into a formal bid.
Revenue at Hogg Robinson (HRG) fell 4 per cent to £156m during the first half of this year due to the continued switch to online booking and strong competition. However, pre-tax profit rose by a quarter, due to cost-saving initiatives in North America as well as a strong performance from its Fraedom business. We place our recommendation under review.
Research tool provider Horizon Discovery (HZD) has signed new development contracts with three “major” developers of diagnostic tests. No word on exactly who that might involve, but the cumulative value of those deals comes to £2.2m. Horizon will supply reference standards so those developers can test the accuracy and efficacy of their tests. The bulk of the new revenue will be recognised in FY15. We remain buyers.
Revenue at water group United Utilities (UU.) was broadly flat during the first-half despite a lower allowed regulatory returns, as last year was impacted by customer discounts applied to bills. Buy.
Shares in tool rental group Vp (VP.) rose 3 per cent after the group revealed pre-tax profit grew 5 per cent to £16.3m, due to a strong performance from the housebuilding sector. We maintain our buy rating.
Plastic packaging firm RPC (RPC) hiked its interim dividend by 18 per cent, following a rise in pre-tax profit that was driven by much higher revenue derived from organic growth and acquisitions in the six months to September. Shares climbed 4 per cent off the news. Buy.
KEY STORIES:
The results for bookie Betfair (BET) will not only please investors but also the company’s likely acquirer Paddy Power (PAP). Revenues rose 15 per cent in spite of a tough comparative period which contained the World Cup. This was driven by a 93 per cent rise in volumes on its sportsbook and no doubt helped by a 31 per cent rise in active customers in what it calls sustainable markets. Await documents.
A rise in pre-tax profits has been ground out at drinks maker Britvic (BVIC) and chief executive Simon Litherland expects to increase profitability again in 2016 in spite of what he called a “slow start to the year”. The group saw volumes fall in its UK stills division but carbonates rose marginally. Warm weather in France boosted volumes and hence revenues there while distribution alterations knocked the international division’s numbers. The company also announced the acquisition of Ebba, which it said gives it access to world's second largest liquid dilutes market - Brazil.
Tethys Petroleum (TPL) has confirmed that it intends to repay monies owed to both AGR Energy and Nostrum Oil & Gas as soon as it receives a draw-down of a new financing facility from Olisol Investments. Tethys has received an accelerated repayment notice from AGR, demanding repayment of a $7.5m debenture and accrued interest. Hold.
Shares in HSS Hire (HSS) dropped 2 per cent despite management announcing revenue for the first nine months of the year was up 10.7 per cent. However, group adjusted cash profits were down marginally on last year to £51.2m, due to investment in its branch roll out programme, less favourable revenue mix and listing costs.
Investors sent shares down 7 per cent in Daily Mail and General Trust (DMGT) after the media giant posted a 4 per cent decline in underlying operating profits in the year to 30 September. The group weathered tepid trading in the UK print advertising market, while weakness in the investment banking and commodities markets weighed on its Euromoney subsidiary.
UK Mail’s (UKM) shares have come under further pressure after the struggling postal group revealed that chief executive Guy Buswell has stepped down with immediate effect. The group is currently searching for his replacement.
Shares in Chemring (CHG) soared 4 per cent in early morning trading after the defence contractor revealed that full-year results will meet the guidance it provided in October’s profit warning. Fortunately, the delayed approvals for the 40mm Middle Eastern export contract have now been received. Separately, Chemring confirmed that it has agreed to buy certain assets of UK-based Wallop Defence Systems’ from Esterline for about £2.5m.
OTHER COMPANY NEWS:
Acquisitions certainly added some underlay to carpet and flooring manufacturer Victoria (VCP) with revenues up a staggering 164 per cent to £105.6m. This meant pre-tax profits more than doubled to nearly £5.9m. The group acquired Quest in Australia last year as well as its largest acquisition to date of underlay manufacturer Interfloor. The latter was funded by a mixture of debt and equity.
Generics business Hikma Pharmaceuticals (HIK) has agreed to sell some of the US-based manufacturing facilities it acquired as part of a 2014 deal to Danish group Xellia Pharmaceuticals. The financial details of the transaction have not been disclosed, and Hikma will retain a quality and development centre on the site which is equipped with full research and development (R&D) facilities.
