Shares in London started the week flat after the strong end to last week. Click here to find out what The Trader Nicole Elliott makes of the markets.
IC TIP UPDATES:
Reports over the weekend show that Clinton Cards is planning to close 120 stores in the UK, which could be good news for rival group Card Factory (CARD). If the disposals go through, Card Factory could clinch another 3 per cent of the market, which demonstrates its value proposition is still causing havoc for its competitors. We remain buyers.
It’s a done deal for coach-focused business National Express (NEX) which has successfully sold of its last UK rail franchise, c2c, to Trenitalia for £72.6m. The price means a small net profit for the UK company thanks to Trenitalia’s parent company paying a £35m existing intercompany liability due from the franchise. The company still has rail contracts outside the UK and hasn’t ruled out in the future returning to the domestic rail market, although this looks unlikely in the next few years. Buy.
KEY STORIES:
Chemring’s (CHG) US subsidiary, Chemring Sensors and Electronic Systems, has been awarded a contract from the US Army for 10 ground penetrating radar trial systems, which will incorporate the group's enhanced detection technology capabilities.
OTHER COMPANY NEWS:
Fidessa's (FDSA) full-year results are modestly ahead of expectations, reflecting a greater currency benefit and a very strong derivatives performance. The dividend also moved up by 11 per cent. However, analysts at Numis are quick to point out that £3.5m one-time costs in FY17 relating to the relocation of the Manhattan office to Jersey will hurt profits this year.
The latest grocery market share figures from Kantar Worldpanel shows Aldi is now Britain’s fifth largest supermarket. With sales up 12.4 per cent year on year, the retailer increased its market share by 0.6 percentage points to clinch fifth place for the first time, over-taking the Co-op. Just a decade ago Aldi was the UK’s tenth largest food retailer, accounting for less than 2 per cent of the grocery market. But an aggressive new store opening programme has attracted hundreds of thousands of more shoppers to the chain, which now sits just outside Britain’s big top four: Tesco (TSCO), Morrisons (MRW), J Sainsbury (SBRY) and Asda. Speaking of Tesco, according to a BBC investigation Britain’s largest supermarket has been overcharging customers via expired promotions. In 33 of 50 stores visited, promotions were marked on the shelf, but the discounts were not applied at tills. In response, Tesco said it would double-check the accuracy of pricing at all its stores.
There’s no standing still for floorcovering specialists Victoria (VCP) which has snapped up Dutch artificial grass businesses Avalon BV and GrassInc BV. The company has only just finished an acquisition in Australia but has now splashed out €11.2m (£9.7m) on the two companies. A further €5.1m might be paid depending on the performance of the businesses, which will be immediately earnings accretive. Victoria’s net debt to cash profits ratio remains below 2 times in spite of the recent purchases.
