Despite the blow out in oil prices after yesterday's OPEC production cut, London shares continue to struggle for positive momentum. Click here for The Trader Nicole Elliott's latest views.
IC TIP UPDATES:
The planned injection of £23bn into the UK economy as announced by chancellor Philip Hammond should prove fruitful for project management and consultancy business WYG (WYG). The group is already heavily involved in central and local government work, including in areas such as defence and energy. Management reckons they are well-placed to benefit from this wad of cash given their strong track record working with central and regional government bodies. Its international division has also returned to profitability thanks to the finalisation of an EU capital spending budget, which had been delayed. Now it has been approved, WYG can start on projects it had lined up in the likes of Croatia and Turkey. Reported pre-tax profits look dire compared to the same half last year, but they are impacted by a £17m credit which the company received last year linked to the closure of its defined benefit pension scheme. Adjusted pre-tax profit rose 18 per cent to £2.6m. Buy.
Whether you love or hate her, Peppa Pig once again stole the show for toymaker Character Group (CCT). The character remained its lead brand in what was a decent year for the group, with sales up 22 per cent to £121m, helping to push underlying operating profit up by the same percentage to £12.7m. The ‘value for money’ priced toys contributed positively in the UK and abroad and international sales grew to £31.7m - an increase of 50.3 per cent. New products, including Stretch Armstrong toys, have started well. The company still has more than 2.7m shares it can buy back, and it said it will do where appropriate. Buy.
Fulcrum Utilities (FCRM) has been chosen to install a £4m gas network for a major food manufacturer in the south west. The project is expected to begin in the spring and upon completion Fulcrum will own and operate the pipeline and gas meters, adding to the group’s growing asset based which has served it so well in recent years. We eagerly await interim results next week for more detail on the growing asset base. Buy
Vernalis (VER) has had a tough 2016. Sales of its first ‘home grown’ drug Tuzistra failed to take off in the way management had hoped (and analysts had forecast) and the shares have tanked. But today’s trading update is reassuring as now 75 per cent of US insurers cover the drug. Despite the tough year we rate these shares a buy and expect enhanced Tuzistra sales to spark a share price rally in 2017.
KEY STORIES:
Daily Mail & General Trust (DMGT) revealed flat sales and an 11 per cent fall in underlying operating profits in the year to 30 September. But the Daily Mail publisher’s management pointed to an improving trend in print advertising, sending the group’s shares up 7 per cent. Underlying sales rose in the information, risk and events businesses, but fell 4 per cent at Euromoney and 2 per cent at the media arm.
The extension of click and collect services for retailer John Lewis across the nation has certainly helped sentiment behind the shares of Clipper Logistics (CLG). A trial of the click and collect service had been run previously and due to its success, is now nationwide thanks to a joint venture agreement between the two companies. Management has also agreed new contracts with M&S for returns and Halfords for inbound bulk handling and storage. Revenue rose 16.5 per cent to £164.9m while group operating profit jumped more than 23 per cent to £7.6m.
OTHER COMPANY NEWS:
Shares in convenience chain McColl’s (MCLS) nudged up 2 per cent in early trading after the group reported a slowing in the decline of like-for-like sales during the fourth quarter. Total revenue is up 1.7 per cent for the quarter and 1.9 per cent for the full year. The group has also tipped over the 1,000 threshold when it comes to store numbers, having added a further 58 sites to its estate during the period. Store openings will accelerate next year as the company makes further progress with integrating its recent purchase of 298 Co-op stores.
