Despite a late rebound yesterday afternoon, equities have slipped back again in early trading today. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Half year results from JD Sports (JD.) are - unsurprisingly - overwhelmingly positive. Revenues grew 20 per cent to £971m, margins grew by 0.7 percentage points to 48.1 per cent (helped by foreign exchange rates) while pre-tax profits soared 73 per cent to £77.4m. The group also announced entry into a new market - Australia. In response, the shares rose more than 4 per cent in early trading. We remain buyers.
The dividend might be up 75 per cent and it has new customer wins including Sun Bingo and Paddy Power Betfair to boast about but some expectations must have been missed for payments specialist Safecharge International (SCH) given it is down nearly 7 per cent in early trading. Revenues rose 5 per cent to $52.2m (£39m) while adjusted cash profits rose 10 per cent to £16.8m. Buy.
It’s the same old story at Ocado (OCDO). A third quarter update revealed gross sales growth of 15.4 per cent, a 3.4 per cent squeeze in the average order size, and “continuing margin pressure”. As per usual, there was little by way of news, even less so on whether the group has managed to secure another licensing deal with its long-promised international partner. The shares fell more than 11 per cent in early trading. We remain bearish - sell.
A spate of acquisitions helped drive sales up by more than three-quarters during the first half of the year for Keywords Studios (KWS). In particular the video games technical services provider boosted its audio capabilities with its purchase of Synthesis. However, like-for-like sales also increased 30 per cent, with the group taking advantage of cross-selling opportunities. We stick with a buy.
KEY STORIES:
Meat packing business Hilton Food Group (HFG) saw turnover rise 9 per cent to £632m on the back of a 4.5 per cent rise in volumes to 133,706 tonnes. This pushed operating profits up a quarter and has put some momentum into the shares this morning with the stock up nearly 2.5 per cent in early trading. Encouragingly the company is now in a net cash position with £21.6m in the bank compared to a net debt figure of £2.5m for the same period in 2015. Operationally, the group’s new site in Melbourne, Australia, has been completed on time and its agreement with supermarket chain Sonae in Portugal has started well.
If you thought it was all over, it looks like it could be now. Burlywood Capital has approached Sportech (SPO) with an offer for the latter’s football pools business. At the group’s recent results, it said while it had spent money and time modernising the pools business, it was still considering a sale. Burlywood is proposing to launch an Aim-listed company to buy the football pools business, whose current managing director Conleth Byrne, would become chief executive. The existing finance director Carl Lynn would also become chief financial officer. The deal will have to be approved by shareholders but the board has said the approach “represents an attractive opportunity to realise the value of The Football Pools following the implementation of its modernisation programme and as it continues to transition its business model”. Shares are up 9 per cent in early trading suggesting there is appetite for the deal.
Insurance group esure (ESUR) intends to demerge its Gocompare .com comparison website through a separate listing on the London Stock Exchange. The move is subject to shareholder approval. On listing, the shares in Gocompare.com will be distributed to esure shareholders, less estimated denerger costs of £19m.
OTHER COMPANY NEWS:
Five-a-side football pitch operator Goals Soccer Centres (GOAL) saw like-for-like sales decline two per cent in the first six months of 2016, though given the sharp drop at the end of 2015 this was probably less than the market had feared. In an effort to improve earnings, management is focused on better engagement with teams and cost control.
Following a disappointing update on two of its wells earlier this month, Pantheon Resources (PANR) needs to put out some good news quick. The Texas-based oil and gas driller has gone straight back to the coal face and spudded the VOBM#3 well in Polk County, East Texas. The slight jump in the shares post-announcement was used as a selling opportunity in early trading.
