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News & Tips: Marston's, Barclays, Telford Homes & more

Equities are up a little
November 26, 2015

London equities rose a little in quiet trading as the US markets are closed for Thanksgiving. Click here to see what The Trader Nicole Elliott makes of the markets.

IC TIP UPDATES:

There’s no blaming the weather by pub chain Marston’s (MARS) this morning after the group reported a 10 per cent rise in underlying pre-tax profits to £91.5m. Management said the transformation of its estate was largely complete, partly thanks to the fact another 25 new pub restaurants were completed this year. This and other measures have helped the average profit per pub rise 15 per cent in 2015 - up roughly 40 per cent since 2012. We keep our buy rating.

Though it is unlikely to trouble the shares, Barclays (BARC) has been fined £72m for failing to act to minimise the risk of financial crime when making a £1.9bn transaction on behalf of some ultra-high-net-worth clients. “Barclays did not follow its standard procedures, preferring instead to take on the clients as quickly as possible and thereby generated £52.3 million in revenue,” said the Financial Conduct Authority. This does not affect our buy stance.

The bow is pointed a little higher today for our buy tip Arrow Global (ARW) after the debt management specialist reported £120m of turnover for the nine months to September, compared to £79m in the past comparable. This was driven by a 42 per cent increase in collections. It also expects a further £2m of synergies as its acquisition of credit specialist Capquest beds in. We keep our buy recommendation.

Telford Homes (TEF), the London focused residential property developer, has conditionally exchanged contracts for the purchase of a development site Carmen Street, Poplar, E14, for in excess of £20 million. The site has full detailed planning consent for a 22 storey development, consisting of 206 new homes and a nursery. Buy.

Tip of the year Hill & Smith (HILS) has acquired Premier Galvanizing for £15.5m. Premier owns two galvanising plants near Hull and Corby, which are areas not covered by the infrastructure companies network. Buy.

Nighthawk Energy (HAWK) has plugged and abandoned its Northstar 1-14 well after it revealed no viable oil. The Northstar 1-14 well was spudded midway through the month and was drilled to a total depth of 8,900 feet within the Monarch Joint Development Area. Under review.

KEY STORIES:

The Financial Conduct Authority has released its consultation on a two-year deadline on claims for missold payment protection insurance that have so bedevilled Lloyds (LLOY) and other banks that earned commission on these products. “The proposed deadline and consumer communications campaign would help bring finality and certainty in a way that advances our operational objectives of securing an appropriate degree of protection for consumers and of protecting and enhancing the integrity of the UK financial system,” the FCA said. But there is plenty of small print to work through yet.

Travel hub retailer SSP Group (SSPG) shares have had a volatile past half-year after delivering consecutive losses then gains in subsequent months. But these numbers could help smooth things out after it delivered a 17.6 per cent rise in operating profits of £97.4m thanks to a growth in air passenger travel and its own initiatives. North America was the stand-out single region with like-for-like sales up 7.8 per cent to £201.6m while UK revenues rose 3.7 per cent on the same basis to £727m.

Charles Stanley (CAY) is making progress on its long-term restructuring plan, returning to profitability in the six months to the end of September despite tough equity markets. It registered EPS of 2.41p, from a loss of 5.77p in the same period last financial year, as its core wealth management services grew the top line much faster than costs. Losses were also reduced at its in-house fund management, financial planning and online broking divisions.

Water utility Severn Trent (SVT) grew underlying pre-tax profit by a 2.6 per cent during the first half, while revenue was flat due to regulatory price reductions. The group also managed to find another £72m in efficiency savings, meaning it has now locked in £372m of efficiency savings for the AMP6 regulatory period.

Shares in PayPoint (PAY) fell 9 per cent after management revealed a 5 per cent drop in operating profit during the first-half, due to investment in its mobile business and lower revenue in its online payments division. However, the group did grow its dividend 14.5 per cent.

Wood Group (WG.) has won a new contract worth around $90m to deliver services to one of the world’s leading blue-chip international oil companies in Iraq. The oil service provider will give project management support for an onshore facility under the three year contract. Hold.

Mining royalty specialist Anglo Pacific (APF) increased its income in its latest quarter helped by coal mine Narribi's contribution. Royalty related income rose to £1.9m in the three months to September, up from £0.5m a year ago. Hold.

Tesco (TSCO) has settled a class action lawsuit filed by shareholders in New York in relation to the group’s profit scandal last year. Tesco will pay $12m (£7.8m) to settle the case with no admission of liability. The supermarket is still embroiled in another case in Ohio in the US.

OTHER COMPANY NEWS:

Aim-listed hVIVO (HVO) has tapped the market for £20.5m through the placing of 9.1m new shares all with existing institutional shareholders. The proceeds will be used to advance hVIVO’s clinical work, specifically with treatments for respiratory diseases.

Shares in Skyepharma (SKP) rose 3 per cent in early trading after the group released an update on recent trading. According to bosses there, everything’s in line with expectations and all being well, the group should finish up the year with more cash in the bank than previously forecast.

Timber specialist James Latham (LTHM) reported a rise in profit in the six months to September, boosted by revenue growth of 8 per cent.

The low oil price battered revenues at marine engineering services company James Fisher & Sons (FSJ) in the four months to October. But despite a 4 per cent dip in year-on-year sales, shares were up slightly in early morning trading.