Shares in London continued where they left off yesterday with another move upwards this morning. Click here for The Trader Nicole Elliott's latest views on the markets.
IC TIP UPDATES:
Rapid expansion in both Costa coffee and Premier Inn locations helped to boost Whitbread (WTB) revenue by 8.2 per cent to £3.1bn in the year to 2 March. The restaurant division, where sales fell by 0.3 per cent, acted as a drag on the group’s pre-tax profit, which grew by 5.7 per cent to £515.4m. The group I set to focus on organic growth this year but warned of a tougher consumer environment due to rising inflation and sluggish wage growth. Shares fell by more than 7 per cent in early trading. Buy.
Equipment rental company VP (VP) has expanded its UK operations with the acquisition of Zenith Survey Equipment for £3.85m, plus assumed debt of £2.3m. Zenith trades out of seven locations in the UK. It will be integrated into VP’s ESS Safeforce, the specialist tool hire business. We stay at Buy.
Despite a 50 per cent surge over the course of 2017 so far, shares in Carpetright (CPR) were thrown off track this morning on news of a slightly disappointing fourth quarter. A better than expected third quarter period galvanised the share price at the start of February, but it seems full-year numbers will report in at the lower end of market expectations. This is due to a tougher trading climate in the UK, although the group’s European business continues to benefit from improving economic confidence and a foreign exchange rate tailwind. Our recommendation is under review.
Shares in Connect Group (CNCT) were down 3 per cent in early trading following release of its full year results. The group has continued to struggle against market conditions, which pushed adjusted operating profits down 4.4 per cent on the back of a 0.6 per cent decline in revenue for the six months to February 28 2017. Net debt, however, was down £11m to £149.9m. We are taking a look at our buy recommendation.
Stagecoach Group (SCG) and Virgin Group have joined forces with French rail operator SNCF to bid for the West Coast Partnership rail franchise, which the government announced will run from 2019 and will include current West Coast Services and the first few years of the High Speed II operation. Stagecoach has a 50 per cent stake in the bid vehicle, while 30 per cent held by SNCF and the remainder by Virgin. We retain our sell recommendation.
Luxury goods conglomerate LVMH (MC) has announced its plans to take full control of luxury brand Christian Dior - of which it already owns close to 75 per cent. The remaining stake will cost around £10bn or, more specifically, €260 per share - a figure analysts have called a “reasonable valuation”. The deal will effectively bring the entire house under control of the Arnault family. We remain buyers.
St James’s Place (STJ) has reported another quarter of strong inflows during the three months to the end of March, which were a net £2bn. Along with a £2.8bn net investment return, this took funds under management to almost £80bn. UK and North American equities comprise almost half of the wealth manager’s assets. The shares are 18 per cent up on our tip but we think this vertically-integrated manager has further room for growth. Buy.
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Specialist administrator Equiniti (EQN) is trading in line with market expectations, it announced in a trading statement released today. The group has retained all clients and won some new ones including Sainsburys and House of Fraser. Shares were up slightly in early trading.
Virgin Money (VM.) reported net mortgage lending of £0.9bn during the first quarter of this year, with balances at £30.7bn. Credit card balances also grew 8 per cent to £2.7bn, closing in on its £3bn target by the end of this year. However, investors hoping for an uplift in the net interest margin were disappointed. This was flat on the end of 2016’s 1.6 per cent.
Shares in Blancco Technology (BLTG) slumped 26 per cent following release of the group’s third quarter update. The group announced it would need at least £4m in additional funding in coming weeks for the working capital position. It has also revised its projection for group net debt to around £5.5m.
