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News & Tips: Thomas Cook, Bellway, Barclays & more

Equities are bouncing higher

Equities have started the day in positive fashion and The Trader Dominic Picarda sees further gains to come.

IC TIP UPDATES:

Thomas Cook Group (TCG) has continued with the sale of non-core assets by offloading Gold Medal, a long haul flights, hotels and car hire business to dnata of Dubai for £45m. The company also announced first quarter results which showed a significant turn around in performance, posting a £10m improvement in underlying earnings, resulting in a £56m loss although lower customer demand for winter holidays to Egypt meant a slight reduction in revenues too. We maintain our buy recommendation.

Housebuilder Bellway (BWY) reports continued strong progress in its pre-close trading statement for the six months to end January with revenues up by 41 per cent to £690m with the number of houses sold up by 25 per cent and the average selling price 13 per cent higher. We keep our buy.

Home wares retailer Dunelm (DNLM) grew revenues by 4.8 per cent in the first half of its financial year but like for like sales dipped by 0.9 per cent. Most of the damage here was done in a subdued first quarter with second quarter like for like sales up by 2.9 per cent Pre-tax profits rose by 2.9 per cent to £61.6m. The company opened six new stores in the opening half with five more expected in the second half. Buy.

Babcock International (BAB) reports continued solid trading in its third quarter with the business in line to meet full year expectations. The order book is now £11.5bn having won around £700m worth of contracts during the third quarter and the forward bid pipeline stands at £18.5bn. We keep our buy rating.

Industrial property specialist Hansteen (HSTN) has signed terms to acquire the ‘Spice’ portfolio of 17 industrial estates across England and Wales for its Hansteen UK Industrial Property unit trust in a deal worth £42.25m. Buy.

Simon Thompson recommendation Conygar Investment Company (CIC) has sold the freehold to the Brunswick Point office building in Leeds for £6.6m, £625,000 above its valuation in September. It has also sold off an industrial building in Worcester for £2.9m. Both deals reduce the vacancy rate in the portfolio and void costs.

ISG (ISG) has won a £30m contract to remodel and refurbish the art deco Adelphi building on Victoria Embankment in London. Buy.

KEY STORIES:

Barclays (BARC) has announced full year income of £28.2bn and adjusted pre-tax profits of £5.2bn, representing a 32 per cent reduction. Costs associated with the ongoing restructure of the business being carried out by chief executive Anthony Jenkins saw reported profits dip to £2.9bn. Notably, investment banking income dropped by 9 per cent to £10.7bn. Further pain is likely with the company announcing plans for a further 12,000 job losses.

Full year production figures from Glencore (GLEN) showed a 26 per cent increase in copper production with gold production up 14 per cent and coal by 4 per cent.

Segro’s (SGRO) European Logistics Partnership joint venture has acquired a portfolio of logistics properties in Germany, France and Poland for €472m with Segro funding its €142m share from cash resources.

OTHER COMPANY NEWS:

Hargreaves Services (HSP) has posted a 28 per cent rise in continuing revenue for the six months to November with continuing profit before tax up by 41.4 per cent to £29.7m. The company’s bulk and speciality coal operations have performed ahead of expectations but production has been hampered by slower than expected start up of mining at new sites in Scotland.