Improved data from China coupled with hopes of an agreement to freeze oil production from producing nations this coming weekend have given London equities wings this morning. Click here for The Trader Nicole Elliott's latest take on the markets.
IC TIP UPDATES:
An encouraging start to the year for Robert Walters (RWA) with gross profit (net fee income) for Q1 up 9 per cent. The Asia Pacific and Europe regions both saw double-digit increases in profits, while growth in the UK was muted by comparison at 2 per cent to £2.7m, due to a continued slowdown in recruitment activity, particularly in financial services. Overall, a positive return. Buy
WS Atkins (ATK) reported encouraging trading through the fourth quarter and now expects underlying results for the year to the end of March to be in line with expectations. The engineering consultancy said its UK and Europe business is expected to show an uptick in margins in the second half as it continues to benefit from the UK government's commitment to infrastructure spending. In addition, its operations in the Middle East are moving ahead, with work on the Riyadh metro and two lines of the Doha metro programme progressing well. Buy.
Halfords (HFD) shares rebounded nicely this morning following a fourth quarter trading statement. Like-for-like sales moved up 2.6 per cent at the group level, meaning underlying sales are up 1.5 per cent for the year as a whole. Underlying retail sales did particularly well in the period, up 3.1 per cent. The group still expects full-year profits to fall somewhere between £78m-£82m when it reports annual results on 1 June. Buy.
Shares in Jupiter Fund Management (JUP) rose marginally after the it reported its strongest quarterly inflows in 12 months during the three months to 31 March. The fund manager finished the quarter with £36.2bn in assets under management. However, its mutual funds did suffer a £195m negative investment performance. Buy.
Shares in De La Rue (DLAR) soared on release of a trading update, after the banknote printer revealed that it expects full year earnings to trump City expectations due to the strong performance of its currency business. The company said it now expects underlying operating profit to be around £62m. Our recommendation is under review.
KEY STORIES:
Arguably taking top slot today in many broadsheet headlines in Britain’s largest supermarket chain Tesco (TSCO) which has released annual results this morning. Group sales nudged up a minescule 0.1 per cent while statutory operating profits moved back into the black at just over £1bn (2014/15: loss £5.8bn). There’s no dividend back in sight, but ‘Drastic’ Dave Lewis says he’s confident that “more people are buying more things more often at Tesco”.
Another high street retailer out with results today is stationer WH Smith (SMWH). Like-for-like sales climbed 2 per cent during the first half of the year which, along with a 50 basis point improvement in margins, helped lift group pre-tax profits by 11 per cent to £80m. Although underlying sales on the high street fell flat, that’s actually the group’s best peformance at this segment for many years.
Investors sent shares in Alternative Networks (AN.) up 5 per cent after the IT and communications provider released an upbeat trading update for the six months to 31 March. Management expects reduced roaming to mean mobile revenues and gross profits fall, but predicts around 5 per cent growth in recurring revenues and n order backlog of about £8m in the advanced solutions segment.
After rising spectacularly the Mr Kipling cake has well and truly sunk at Premier Foods (PFD) after its would-be suitor, US spice-maker McCormick (US:MCK), decided to halt its advances. Premier’s board had rebuffed three offers of 52p, 60p and 65p a share leading McCormick to claim it “would not be able to propose a price that would be recommended by the board of Premier Foods while also delivering appropriate returns for McCormick shareholders”. Premier said it saw a “strong future” for company as an independent entity adding the foundations had been laid for “strong growth and shareholder value creation”, particularly in light of its partnership it recently signed with Japanese company Nissin Foods.
The fabric printing business at interior furnishings group Walker Greenbank (WGB) is set to be back on track at the end of the month after it was hit by floods in the north of England in December. Management said its results, released this morning, include £1.4m in insurance proceeds to cover the losses it suffered as a result of the temporary closure of the Lancaster site.Adjusted pre-tax profits rose 10 per cent to nearly £9m thanks to a 3.9 per cent rise in UK brand sales to £40m. Overseas brand sales were also strong, up 8.9 per cent on a constant currency basis with the US being the standout market.
Shares in recently-listed Countryside Properties (CSP) were up 3 per cent after the house builder revealed completions were up 15 per cent during the first half of the year, while forward sales also increased 4 per cent to £205m. Improved sales mix and price growth meant private average selling price was up 18 per cent on H1 2015 to £782,000.
Never one to shy away from the brutal truth, energy services group Hunting (HTG) this morning confirmed weak trading continued into 2016. As a results of falling demand, revenues from the first three months of the year are “approximately 50 per cent lower” than the same period last year, while net debt now stands at $132m.
Shares in Gulf Keystone Petroleum (GKP) rocketed as much as 11 per cent this morning, despite confirmation that funds managed by Prudential have sold their remaining 5 per cent stake in the cash-strapped oil group. The news follows yesterday’s receipt of a $15m gross payment from the Kurdistan Regional Government for last month’s Shaikan crude oil exports.
Shares in Keywords Studios (KWS) leapt 6 per cent after the video game services group announced the €18m (£14.4m) acquisition of Synthesis, a localisation and audio specialist. Keywords will gain ownership of its operations in Switzerland, Italy and Germany, as well as certain assets in a further nine countries. Synthesis counts Disney, Ubisoft and Activision Blizzard among its clients and has worked on titles including Call of Duty, Grand Theft Auto, Skyrim and World of Warcraft.
The Financial Conduct Authority (FCA) has proposed changing the flotation process, so research from syndicate banks will not be issued until after the prospectus. The FCA also warns on syndicate banks rewarding favoured clients with shares.
