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News & Tips: Alumasc, Pennon, Horizon Discovery & more

A bright start for equities has faded fast
September 1, 2016

The FTSE100 bounced back through 6,800 in early trading but the rally has since reversed rapidly. Click here for The Trader Nicole Elliott's latest thoughts.

IC TIP UPDATES:

Shares in Alumasc (ALU) jumped 4 per cent this morning following better-than-expected full-year results. Revenues rose 2 per cent, while underlying pre-tax profits grew 7 per cent to £8.3m. Following the disposal of the last engineering products business in the second half of the year, the group is now free to focus on its niche building products segment. We remain buyers.

Pennon (PNN) has announced Viridor chief executive Ian McAulay will be stepping down with immediate effect. He will be replaced by chief operating officer of Viridor and leader of the energy division Phil Piddington. Buy.

Genetics specialists Horizon Discovery (HZD) saw shares leap 7 per cent this morning following news that the company had entered into an agreement with Ventana - a subsidiary of Swiss pharma giant Roche. The two companies will together develop, manufacture and commercialise cell lines to use as reference standards in cancer diagnostics. Buy.

KEY STORIES:

Shares in convenience chain McColl’s (MCLS) continue to do well, and are up another 2 per cent this morning following a third quarter update. Like for like sales fell 1.8 per cent during the period and are down 2 per cent or the year to date, but that’s a slight improvement in the overall rate of decline in 2016. Total sales rose 1.8 per cent. Preparations continue in regard to the group’s recently announced acquisition of 298 stores from the Co-op too.

Vertu Motors (VTU) issued a pre-close statement today, confirming that profitability for the year remains ahead of FY2015, although bosses there say private new car registrations have continued to soften since April 2016. The strongest growth continues to be found in the commercial and fleet divisions, and the group believes the macroeconomic backdrop - specifically low interest rates and high levels of employment should work in its favour. However, it admits weak exchange rates could affect manufacturer decisions around pricing.

Shares in sub-prime lender Morses Club (MCL) fell 4 per cent despite it increasing credit issued by 16 per cent during the 26 weeks to the end of August. Customer numbers increased 3 per cent to 208,000 and while the gross loan book was flat on last year, the proportion of higher tier customers increased 6 per cent. The group will fully announce its first-half results in October.

Redde (REDD) grew like-for-like sales by a quarter last year to £379m. This was driven by an almost three-quarters uplift in repairs and 14 per cent growth in credit hires. The group continued to reduce its reliance on traditional insurance market sources of revenue with its acquisition of fleet accident management group FGM, which included turnover of £61m for last year.

Speedy Hire (SDY) has written to shareholders advising them to vote against Toscafund’s resolutions to remove chairman Jan Astrand from his position and to appoint David Shearer as director of the group. The group says in its statement Mr Shearer’s experience is no longer relevant to take up the position and also states a potential merger with HSS Hire (HSS) was analysed in detail and rejected. We will keep you updated as the situation progresses.

Another month, another reassurance from Premier Oil (PMO) that discussions with its lenders over a debt restructuring “continue to progress well”. Investors hoping the negotiations will end in the next few weeks may have to wait a little longer; a test of its borrowing covenants has again been pushed back a month to 30 September.