Shares in London have consolidated yesterday's strong gains with a small rise in early trading. Click here for The Trader Nicole Elliott's latest views.
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It's the usual story from Ocado (OCDO). It’s managing to lure new customers via its new Smart Pass and sales are flying. But while management hints at ongoing deflationary pressures, interestingly, there’s no information on margins or profits. We expect the damage to reveal itself at the results. The shares are off 3 per cent this morning and we remain sellers.
DS Smith (SMDS) said it remains confident about the outlook for the business as it raised its interim dividend by 15 per cent and recorded half-year earnings growth. Pre-tax profits during the six months to Oct. 31, were 60 per cent to the good at £146m. Buy.
Net reservations rose by 20 per cent at regeneration specialist MJ Gleeson (GLE), with 14 new sites opened in the last six months. This takes site numbers up to 50 compared with 44 a year earlier, with strong customer demand underpinned by the government’s Help to Buy scheme, which 65 per cent of customers now use. On the strategic land side, two sites were sold with planning consent, while negotiations are proceeding on a further 11 sites. So the timing of these sales means that the second half performance will be significantly stronger than the first half. Buy
Shares in Amino Technologies (AMO) climbed 4 per cent in morning trading after management said full-year results would slightly exceed expectations. The group’s gains reflect buoyant demand for its multimedia-streaming devices and beneficial currency movements. Under review.
Half year results from Sports Direct (SPD) show a real crunch in gross margins, which are down 450 basis points over the first six months. That, together with foreign exchange movements, explains the crash at the bottom line too. Reported pre-tax profits are down 25 per cent to £140m, while on an underlying basis they’re down a whopping 57 per cent to £71.6m. More to follow, but we remain bearish. Sell.
National Grid (NG.) has sold a 61 per cent stake in its gas distribution business to a consortium of institutional infrastructure investors including Hermes Asset Management. The company will retain a 39 per cent stake in the business and receive £3.6bn in cash as part of the deal. Shareholders will receive £4bn of the net proceeds via special dividends and share buybacks. Buy.
Car finance group S&U (SUS) reported a 34 per cent uplift in customer numbers for its Advantage Finance business during the second half of the year. Transactions were also up 16 per cent and receivables have now reached £189m. The group now collects around £8m in receivables a month. Buy.
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Alongside interim results where revenues grew, but profits became losses, handbag maker Mulberry (MUL) ha announced a new partnership out east. The group will team up with Challice - a company owned by Mulberry’s majority shareholder Ong Beng Seng - to create Mulberry Asia which will look after operations in China, Hong Kong and Taiwan. Mulberry PLC will own 60 per cent of the new company, which will start with four stores, wholesale and omni-channel, including a Chinese language mulberry.com site. It is expected to be loss-making in its first two years.
Alternative Networks (AN.) stomached a 7 per cent slide in turnover as sales fell by more than 5 per cent across the advanced solutions, mobile and landline businesses. Daisy’s takeover of the managed IT services group is on track to close before the new year.
The newsflow from palm oil producer MP Evans (MPE) is coming thick and fast at the moment. The company remains locked in a battle to convince its investors an offer for the business by KLK at £7.40 a share significantly undervalues the business. The latest chapter is the sale by MP Evans of its stake in a joint venture plantation it owned for $100m (£78.7m). Management says if it can sell part of a plantation it owned for $100m then KLK’s offer definitely undervalues the whole business. A valuation conducted by a third party suggests £10.82p a share is fair value for MPE’s assets. A special dividend of 10p a share is being proposed, something which may help shareholders come round to management’s way of thinking. Shareholders who support KLK’s bid must say so by Friday (9 December) but KLK could extend the offer period to as long as 17 January.
Capita (CPI) delivered even more bad news for shareholders this morning, announcing the performance of its troubled IT enterprise services division has worsened since its last trading update. The group is also selling its asset services business and other small non-core businesses in an effort to simplify the business and improve the balance sheet. On that note, net debt is expected to increase to 2.9 times cash profits at the end of December, up from 2.5 times at July, although management expects this to reduce to between 2 and 2.5 times after the sale of its asset services business. Shares fell another 7 per cent on the announcement.
