The summer lull feels like it has well and truly kicked in on London's markets but those traders who have not hit the beach are displaying a sunny disposition as shares have ticked back upwards. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Housebuilder Persimmon (PSN) has reported good interest in the aftermath of the ‘Brexit’ vote, despite fears of a slowdown in completions. What’s more, the first half of the year got off to a good start with pre-tax profits up 29 per cent and a much-boosted net cash position. More to follow later in our full results write-up.
Gambling outfit Rank Group (RNK) certainly isn’t folding in spite of having to walk away unsuccessfully from its joint bid for rival William Hill (WMH). Chief executive Henry Birch reckoned there would have been “enormous” benefits for all three sets of shareholders but insisted his company still had a strong organic growth plan. This seems a fair assumption given the recent migration onto a new digital platform which has allowed it to make in-roads into the online poker arena - which significantly lacks scale compared to its land-based poker operations - and sports betting. It has also continued its investment in the business, with capex expected to also be elevated in the current financial year before returning to more normal levels in 2017/18. The company has spent some of this money on the latest gaming machines, which it says it has seen a decent return on so far. The dividend per share jumped 16 per cent to 6.5p a share. Buy.
Photo booth owner and operator Photo-Me International (PHTM) has snapped up supermarket chain Asda’s photo division. The deal had been mooted earlier this year while Asda considered bids but now the deal between the two companies will go ahead on 31 October. The supermarket’s 191 photo centres and 172 self-service kiosks will now be run under a 10-year concession and its employees will transfer to Photo-Me. It will also run the online service for at least a two-and-a-half year period. The total consideration to be paid is currently estimated at £5.35m and is capped at a maximum of £6m. Buy.
Telit Communications (TCM) has unveiled a portfolio of high-speed ‘internet of things’ modules, scheduled for launch in early 2017. It includes four modules for the key US market and one for Europe. Buy.
Kier (KIE) has been awarded three construction framework deals worth a total £5bn during the next four years. These include a £4bn contract with the Department of Health to act as one of six supply chain partners. The shares on our buy tip were up 3 per cent on the news. Buy.
National Grid (NG.) should pay £17.7m in unanticipated costs for ‘Black Start’ contracts, according to a ruling by Ofgem. The contracts are with Drax (DRX) and SSE-owned (SSE) Fiddler’s Ferry power stations for re-energising the grid if it fails. The shares have performed well in the wake of the referendum and are well up on our tip. Buy.
Higher commission bookings at Hostelworld (HSW) which are made through its Elevate product jumped more than a quarter which gave the shares a fair nudge this morning too. The stock is pretty much leading the FTSE All-Share having leapt nearly 9 per cent in early trading. Bookings from mobile devices rose to 45 per cent of the total with bookings through its app now making up a quarter of reservations. The half-year results only go to the end of June but management said the key months of July and August had been in line with expectations in spite of the UK referendum and a recent spike in terrorist activity globally. Income hunters will also no doubt take notice of the stock’s 8 per cent yield. Buy.
KEY STORIES:
It’s tough out there for critical industrial services provider Cape (CIU), as half-year results underline. A 10 per cent increase in revenue, thanks partly to the contribution of Redhall Engineering, was one of the few bright spots in a period where margins contracted, statutory pre-tax profit dropped 92 per cent, and oil and gas clients gave few indications of an uptick in demand. Good working capital management allowed the company to keep net debt roughly in line with the 2015 year-end, while the interim dividend payment was maintained.
Hansteen (HSTN), which invests in industrial property in the UK and continental Europe, grew normalised income profit by 28 per cent to £29.2m in the first half of 2016. Its property portfolio rose in value by 1 per cent or £15.5m, and the group raised its stake in Ashtenne Industrial Fund to 85.6 per cent.
Shares in JRP Group (JRP) rebounded 16 per cent following a sunnier trading update for the 10 weeks to the end of July. Management expects embedded value a share upwards of 200p and states the merger between constituents Just Retirement and Partnership remains on track to deliver the £40m of expected synergies.
OTHER COMPANY NEWS:
Inflight catering specialist Journey Group (JNY) has attracted a 240p a share takeover offer from Jaguar Holdings, a bid vehicle formed by key shareholder Harwood Capital. Non-executive director Christopher Mills is also a director of Harwood. The Journey board is recommending the takeover offer.
