Equities followed the lead of their US peers overnight with a sharp sell off in London this morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Van Elle (VANL) fell over 20 per cent after the ground engineering specialist warned that contract delays will reduce revenue for the year to April by around 5 per cent. The problems are in the specialist piling division where deferral and delays mean that rail activity is likely to show just a modest improvement. The other three divisions are all performing as expected, and a final dividend will be paid in line with expectations. Peel Hunt has revised its forecasts, and now expects adjusted pre-tax profits for the year to April 2017 of £11m and EPS of 11.7p (from £10.7m/12.1p in 2016). Despite the setback - much of the delayed work will be picked up in the new financial year - Van Elle is still performing well and has cash on the balance sheet. The shares now trade on just 8 times forecast earnings, falling to 7 for the year to April 2018. Buy.
Inland Homes (INL) has secured planning consent to to develop 239 residential units and 15,845 sq ft of commercial space in High Wycombe. The site carries a gross development valuation of £75m. Resolutions to grant planning consent have also been secured for a further 992 residential units on sites in Buckinghamshire and Hampshire. Buy.
Cello (CLL) has put the £15m equity it raised to use, acquiring Defined Health as it aims to move further into the US biotech market. Settling a VAT payment with HMRC took a bite out of pre-tax profits, however, the healthcare marketing specialist managed to boost its revenue 5 per cent last year. While the shares solidly up on our buy tip, we reckon there’s more upside to come as it expands further into the US. Buy.
KEY STORIES:
Last year’s turnaround at pellet specialist Ferrexpo (FXPO) was nothing short of spectacular. While the year started with multi-year iron ore price lows and a balance sheet stretched to breaking point, the Ukraine-based group managed to more than double net cash flows to $332m, and leading to a sharp fall in net debt to sustainable levels. Investors who bought into the recovery at almost any point last year were rewarded for their patience (and risk-taking) with a return of both the final and special dividend.
IT services company Softcat (SCT) has reported yet another period of strong revenue and profit growth. Although a 36 per cent increase in pre-tax profits and 39 per cent increase in EPS was somewhat flattered by the absence of last year’s IPO costs, on an underlying basis adjusted operating profits rose by a tenth.
Medical imaging company Medica (MGP) enjoyed an excellent first day of trading yesterday. Having raised £121m at 135p a share via a placing, the group listed on 21 March and finished its first day of trading up 37 per cent at 185p a share.
OTHER COMPANY NEWS:
Xaar’s (XAR) shares lost 6.5 per cent of their value on early trading, following release of full-year figures that were broadly in line with management expectations. Reported earnings benefitted from reduced restructuring and administration costs, but the inkjet printing group delivered flat gross profits of £44.7m on a 140 basis point contraction in the underlying margin. Lower costs and charges fed through into earnings of 19.4p a share, compared to 16.6p in 2015, while the full-year dividend of 10p was 6 per cent in advance of the previous year. A mixed bag overall, though investments made over the past couple of years have improved the group’s product offering appreciably.
