Equities have continued their rebound as trading remains volatile. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
The engines are purring slightly more than they’re stuttering over at bus and rail company Stagecoach (SGC). The company has sold off the retail element of its megabus Europe business to FlixMobility, meaning it will no longer be in charge of things such as timetabling and marketing. It will, however, run some services on a contract basis but how many in the long term is unclear. Investment in the division had meant it was unprofitable to management probably won’t be shedding any tears. Elsewhere, its East Coast rail franchise win helps the rail division look rosy while operating profits and margins fell in its UK regional, London and North America bus business. The shares are up 2 per cent though. Sell.
The delay to a US-bound shipments of stevia from ingredients group PureCircle (PURE) has been resolved. The US border and customs protection agency had halted its entry into the country based on what was an inaccurate allegation that the shipments contained products that were produced using forced labour. The shipments have now been released. The company said it was working actively with the the border patrol agency to effect a full resolution of the issue for further shipments and would update the market “when appropriate progress is made”. Buy.
Retirement home builder McCarthy & Stone (MCS) released 58 new sales outlets in the first 43 weeks of its financial year that ends in August. Weekly net reservation rates were up by 18 per cent, supporting a 23 per cent increase in the forward order book. The group now holds all the reservations it needs to deliver full-year completions in line with market expectations. A further 58 new development sites have been acquired, 43 of which have already secured full planning consent, and now has sufficient sites to meet targeted completions for the year to August 2017. The group continues to target return on capital employed of over 25 per cent in the medium term. The shares have dropped 36 per cent in the last month and now trade on just 1.3 times net asset value. Buy.
In a sign that some parts of the government are still functioning, the UK Ministry of Defence has awarded energy services group Amec Foster Wheeler (AFW) a contract to supply the Royal Navy’s submarine flotilla with nuclear propulsion safety and technical advice. The contract is worth around £75m and will cover a period of five years, adding to the group’s bulging order book and pushing the shares up 5 per cent this morning to just below last Thursday’s price. Buy.
KEY STORIES:
Greene King (GNK) grew like-for-like sales by 1.5 per cent in the year to 01 May. Sales and adjusted pre-tax profits soared by more than 50 per cent, reflecting the pub giant’s takeover of Spirit Pub in June 2015. However, management expects post-referendum uncertainty to weigh on consumer sentiment in the coming months.
Shares in Sophos (SOPH) soared 8 per cent after the provider of end-user and network security software announced that comparable first-quarter billings were likely to rise by 20 to 23 per cent, ahead of the board’s expectations.
Industrial maintenance specialist Brammer (BRAM) has reported a significant slowdown in sales since its May trading update. There has been a weak trading performance in both the UK and continental Europe. As such, the group now anticipates adjusted profit before tax in the first half to be below expectations at approximately £5m. As a consequence, the group will be close to its net debt/cash profits bank covenant at the period end.
Distribution company Bunzl (BNZL) said group revenue for the half year is forecast to increase by 9 per cent at actual exchange rates and 6 per cent at constant rates, largely due to the impact of acquisitions.
Watkin Jones (WJG) specialists in providing a conduit for institutional funds to invest in student accommodation, has secured planning consent to redevelop Duncan House in Stratford into 420 beds and 91 studios as well as 30,000 sq ft of academic space, with a total gross development value of around £100m. The group is in advanced negotiations with its investment partner the University of London who will be forward funding the development. Buy.
Shares in Cobham (COB) climbed 5 per cent after the defence contractor appointed a new finance director: David Mellors, finance chief of Qinetiq.
OTHER COMPANY NEWS:
Shares in GB Group (GBG) climbed 4 per cent after the identity intelligence group agreed to splurge £45m on IDscan Biometrics, which provides software that simplifies identity verification and data capture and can authenticate passports, driving licences, utility bills and other documents. GB also announced a £25m placing to help finance the deal.
