Equities in London has rebounded in early trading as investors wait to hear testimony from Fed chair Janet Yellen later today. Click here to see what The Trader Nicole Elliott makes of the markets.
IC TIP UPDATES:
Great Portland Estates (GPOR) revealed it had enjoyed record lettings in the financial year to date, securing annual rent of £29.3m. Management also revealed the group had nine committed schemes for development, 59 per cent of which were pre-let or pre-sold. Shares rose 3 per cent on our buy tip on the news. Buy.
Bellway (BWY) have announced average house prices rose 17 per cent to a record £275,000 in the six months to 31 January 2016. Management also announced a 11.6 per cent rise in housing completions to 4,188. Buy.
Shares in Renold (RNO) plummeted 29 per cent after the supplier of industrial chains and power transmission products issued a gruelling profit warning. Volatile trading in both its divisions and across most of the territories it serves led to about a 10 per cent decline in sales and roughly £2m decline in adjusted operating profit. Self-help measures helped to ease the blow slightly. Our buy advice is under review.
Tough oil and gas and weaker consumer electronics demand sparked a difficult first-quarter trading period for Victrex (VCT). Fortunately, the medical unit performed better and management expect volumes to improve across the business in the second half. This optimism sent the shares up 2 per cent. Buy.
The Force is with Disney (US:DIS). The global success of Star Wars: The Force Awakens drove the media titan’s sales up 14 per cent in the first quarter to 2 January, sending operating profits up a fifth to $4.27bn (£2.94bn). Its gains reflected higher turnover in all four divisions - including a 46 per cent rise in studio entertainment - and operating profits soaring more than 20 per cent in both the parks and resorts and consumer products and interactive media businesses. Buy.
US based healthcare services and technology company, Constellation Healthcare (CHT) announced today that it has successfully completed the acquisition of MDRX Medical Billing, further reiterating its growth promise. This is the group’s fourth acquisition since IPO in December 2014. CEO and major shareholder Paul Parmer commented that the acquisition “will further increase revenue CHT’s revenue and significant cost saving will be borne out by MDRX being part of the CHT platform”. We retain our buy rating.
KEY STORIES:
Full-year results from Arm (ARM) sent shares in the microchip giant down 3 per cent. That was despite a 15 per cent rise in revenues and a 24 per cent rise in adjusted pre-tax profits. The group signed 173 processor licenses and shipments of Mali graphics processor leapt 36 per cent to 750m.
Studio and production services group Pinewood (PWS) has launched a review of its capital base and structure that could lead to a sale of the company. Management says the group’s concentrated shareholder base has thwarted its efforts to join the main market. It also raised growth expectations for the year to March due to strong, film, TV, media hub and international progress.
They clearly know how to have a good knees-up in the north as one of Greene King’s (GNK) pubs managed to take £19,000 on Christmas Day helping the group to reach record turnover on the day of £6.8m if its acquisition of Spirit Pub Co is included. In all, combined retail sales rose 67 per cent for the 40 weeks to to 7 February which includes a 33-week contribution from Spirit and 6 per cent growth within the core estate. The transition of the estate is going well too, with 10 new sites opened and 33 sites disposed of. The brewing division also had a helping hand from China, which apparently acquired a taste for Greene King IPA - the group’s own-brewed volumes rose 3.9 per cent.
In a Q3 update WS Atkins (ATK) said trading has remained in line with expectations since the start of October despite tough trading conditions in some of its markets. The group remains on track to hit its 8 per cent operating margin target, although the engineering consultancy expects limited revenue growth from its UK & Ireland division. The oil & gas division continues to struggle in the face of the oil price slump, but in general the group is making solid progress against a challenging backdrop. Buy.
Shares in generic pharmaceuticals company Hikma (HIK) dropped 12 per cent this morning, following the announcement of revised terms for its acquisition of Roxanne Laboratories, initially announced on 22nd January. In light of new disappointing financial information on Roxanne, Hikma has reduced its upfront cash consideration for the business. Roxanne is anticipating lower revenues and higher costs for the 2015 financial year and the outlook for the next two financial years is looking decidedly bleaker as well.
Shares in Africa-focused explorer Tullow Oil (TLW) shed as much as 8 per cent in early trading, after the group posted wider than expected losses for 2015. Amid the oil price slump, revenue fell by 27 per cent to $1.6bn, while net debt ratcheted up to $4bn, prompting plans to reduce capital expenditure by $1.1bn in 2016.
Defence contractor QinetiQ (QQ.) refused to change its outlook for the current financial year, citing that the impact of improved UK defence budgets was not yet clear. The group also confirmed that trading in Europe, the Middle East and Africa performed in line with expectations, despite encountering some order delays.
OTHER COMPANY NEWS:
Maker of model trains Hornby (HRN) hasn’t surprised anyone with yet another profit warning this morning. The shares are down a whopping 45 per cent after like-for-like sales grew 17 per cent in the run up to Christmas, but moved negative in January. Bosses hope trading will recover in February and March, but even they admit sales won’t reach previously anticipated levels. In short, trading losses will widen considerably.
Synectics (SNX) has been awarded a contract extension with UK transport heavyweight Stagecoach (SGC). Synectics, which has a 13-year partnership with Stagecoach, will continue to supply, install and maintain CCTV systems on Stagecoach's 8500-strong vehicle fleet in Europe. In the last three years, Synectics has equipped 1,660 new vehicles with the latest on-vehicle CCTV solutions whilst maintained existing systems.
Shares in Frontier Developments (FDEV) slid 5 per cent even as the video game developer recorded a 50 per cent rise in sales and swung to an operating profit of £400,000.The group sold an estimated 1.4m units of flagship game Elite: Dangerous by the end of 2015.
