Weaker UK economic data has left equities in London flat this morning.
IC TIP UPDATES:
Share in Pets At Home (PETS) were up more than three per cent in early trading after the pet products retailer reported that group revenue was up 7.2 per cent to £834m during the year to March. While heavy promotions on merchandise helped improve like-for-like sales growth to 1.5 per cent, it pushed down margins by 35 basis points. The pet supplies retailer also announced that independent non-executive director Paul Coby will step down in July, to be replaced by former chief executive of Photobox Stansilas Laurent. Sell.
Ingredients maker Tate & Lyle (TATE) reported that sales in the year to March were up 17 per cent to £2.8bn on the back of rising demand, weak sterling and lower costs, giving pre-tax profits an 85 per cent boost to £233m. Shareholders will likely cheer a 109 per cent increase in earnings per share to 54.2p, though the dividend remained flat at 28p. Although most of its divisions performed well profit in food systems dropped by £19m with significant decline in Europe. Shares fell nearly 2 per cent in early trading. Sell.
In a trading update, Henry Boot (BOOT) revealed an “encouraging” start to 2017 with major projects at Markham Vale and a PRS scheme in Manchester getting underway. The Sheffield construction firm said that it expected the group’s performance for the year to be “comfortably ahead” of expectations. Buy
Van Elle Holdings (VANL) said that it expects to report results for the year ended 30 April 2017 in line with revised expectations. The geotechnical engineering contractor confirmed that it is off to a positive start in the current financial year, securing new work across all four of its divisions. Van Elle also confirmed Adrian Barden would take up the role of non-executive chairman from the start of next month. Buy
Conygar Investment Company's (CIC) NAV rose to 201p a share in the six months to the end of March - up from 196.9p at the end of September. The property investment group posted a pre-tax profit of £0.5m compared with a loss of £2.1m a year ago. This was achieved against a volatile geopolitical backdrop, testament to the “strategy of owning a balanced investment portfolio of both UK and overseas based companies and funds”. The company also highlighted “a cushion of cash on the balance sheet which confirms [its] conservative stance, but is also there to take advantage of opportunities”. Buy.
Regional REIT (RGL) confirmed that it has “maintained a strong pace of lettings year-to-date, picking up on the second-half of 2016, with both industrial units and regional offices performing well." Management remain positive on prospects for 2017 with “positive momentum of office and industrial occupancy” and is confident of meeting objectives for the longer-term growth of NAV and returns. Buy
United Utilities (UU.) is confident it can outperform its regulatory incentives, so much so that management committed an additional £100m in investing in operational updates. This will be in addition to the £804m the water group invested in the 12 months to March. The group produced its best ever result in Ofwat’s service incentive mechanism, for billing, wastewater and water services. Reported operating profits were up 7 per cent to £606m. Buy.
Helical (HLCL) grew its adjusted net assets 4 per cent to 473p a share during the 12 months to the end of March. Its investment properties were up 5 per cent in value on a like-for-like basis, but returns gained through the sale and revaluation of investment properties were less than half the previous year at £39m. As a result pre-tax profits were down almost two-thirds. The shares are trading at a discount to net asset value. We’re sticking with our buy.
Defence contractor QinetiQ (QQ.) revealed a solid set of full-year numbers on the back of another "good operational performance". The Hampshire-based group reported turnover of £783m for the year to 31 March 2017, up from £756m a year earlier. Underlying operating profits grew from £109m to £116m. During the year, the firm completed the acquisition of Meggitt Target Systems and secured a £1bn contract amendment to the long term partnering agreement from the Ministry of Defence. Buy.
Petrofac (PFC) is down 30 per cent this morning, after providing further details about its investigation by the Serious Fraud Office. The board has formed a committee and appointed a “senior external specialist” to help manage engagement with the SFO “given the scale of the investigation”. Investors were also spooked by the decision to suspend chief operating officer Marwan Chedid, who alongside chief executive Ayman Asfari had given evidence under caution as part of the SFO investigation. Even more unnerving, Petrofac revealed that the SFO rejected the findings of an external investigation commissioned by the oil services company last year, and that the SFO believes Petrofac has not cooperated with the investigation. The challenge for investors – trying to assess the reputational damage as well and the potential knock-on effect on cash flow – just got tougher. Our buy recommendation is under review.
Unite Group (UTG) announced that Unite Students has purchased two new student blocks of flats in Durham and Birmingham for £56m after selling a studio scheme in central London for £42m. The Unite Students Accommodation Fund bought the 222-bed development in Durham and the 418-bed scheme in Birmingham to offer accommodation in two areas that are home to a combined student population of around 53,000. Buy
In another encouraging sign of institutional investor support, lithium miner Bacanora Minerals (BCN) has successfully raised £7.4m from Capital Research and Management, in a sale of newly-issued shares at 86p a pop. The deal follows similar one-off large share sales to offtake partner Hanwa and Blackrock. Buy.
KEY STORIES:
Acacia Mining (ACA) is sinking like a stone. Yesterday, the Tanzanian government said that an investigation showed the gold miner had failed to declare the presence of gold, copper and silver in its mineral sand exports but did not declare other precious metals in the consignments. The miner countered that it declares everything it produces, but this didn’t stop the shares dropping more 37 per cent since they opened yesterday morning.
Shares in Wizz Air (WIZZ) were up more than 10 per cent in early trading after the budget airline reported record profitability in the year to March, up 27.5 per cent to €246m (£213m). Wizz carried 23.8m passengers last year, 19 per cent more than the previous year, and stated that there have been “no signs of demand weakness” due to Brexit on routes to and from the UK. The package holiday division also performed well with revenues of €18m, a fourfold increase on last year. Buy.
Shares in commercial law and professional services group Gateley (GTLY) announced today it had “exceeded expectations” in revenue for the year to April 30th 2017, facilitating further investment in the business. Revenue for the year is expected to reach £77m, while adjusted EBITDA will be in line with market expectations at £14.7m or more. Buy
Shares in Renewi (RWI) - formerly Shanks Group, dropped 8.5 per cent in early trading following release of the full year results this morning. The group reported a loss before taxation of £61.4m thanks to finance charges and exceptionals related to its merger with Van Gansewinkel Groep, along with an onerous contract charge of £28.3m. The group aims to deliver synergies of €40m annually by the financial year 2019/20 from the merger.
Paypoint (PAY) also saw a drop in shares, falling 2 per cent this morning. The group announced strong growth in its retail services business, growing the number of locations for its PayPoint One retail platform to 3,600 at the year end of 31 March 2017 and 4,227 today. However, the payment services business was hit by a decline in the prepayment meter market, alongside further expected headwinds in 2018.
