Shares in London traded up a little in the morning session. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Hotel Chocolat (HOTC) has reported a 12 per cent rise in revenues which, along with strong cost control and improve operating margins has allowed pre-tax profits to double to £11.2m. A total of 12 new shops opened during the period, taking the entire estate to 94. The retailer also announced a maiden dividend of 1.6p. Buy.
Grainger (GRI), the UK’s largest residential landlord, expects to deliver another year of strong growth in the year to September 2017, with adjusted earnings of around £70m, up from £53.1m a year earlier. Like-for-like rental growth of 3.7 per cent has been achieved, while around 60 per cent of its £850m investment pipeline has already been secured. Buy.
Shares in Fulcrum (FCRM) ticked up this morning following a pre close trading statement. The group is expecting its half year results to be in line with forecasts. Perhaps more significantly it has continued to grow its order book, now up 11 per cent to £33.7m at the end of August. Management also report it is “on track” to receive an independent network operator licence by the end of the year, opening it up to new markets. Buy.
SSE (SSE) issued a pre-close this morning, warning total adjusted operating profit would be impacted by a roughly £150m reduction from the networks business. However, it has maintained both its target for RPI-linked increases in the dividend and dividend cover within the 1.2-1.4 range. Profit in both the Wholesale and retail businesses is expected to be up on last year, due to improved performance across the energy portfolio management, generation, enterprise and energy related services businesses. Buy
KEY STORIES:
Embattled construction and support services specialist Carillion (CLLN) has seen a surge of speculative interest in its shares today on the back of rumours that the company is potentially a target for a takeover. Carillion has already said it is in talks over the potential disposal of business units including its Middle Eastern operations with the region now rumoured to be home to a suitor who could bid for the whole business. Carillion shares leapt 18 per cent in response.
Interserve (IRV) shares saw a 3.6 per cent rebound from their recent fall this morning, after the company announced its place on an £8bn homes and communities framework. The framework is divided into five regions - Interserve has been appointed to all five - and aims to aid construction of increased housing provision on public sector land. While good news, this does not address our concerns about the company and we stay at sell.
Shares in online fast-fashion e-tailer boohoo.com (BOO) took a tumble this morning despite a good set of half-year numbers. The problem lies in margins, specifically full-year margins, which are expected to reported within the 9 to 10 per cent range. This compares to previous guidance of 10 per cent and last year’s number of 11.4 per cent. The nudge down is the result of higher investments in pricing, promotions and marketing as well as a higher sales mix from lower-margin acquisition PrettyLittleThing.
Shares in RedT Energy (RED) were on the rise earlier this week as the company announced the sale of 14 of its 40-kilowatts-an-hour energy storage modules to an unnamed Botswana-based customer. So release of half-year figures detailing a cash loss of €3.2m and a near doubling in the headcount was always going to take a back seat. There was €13.2m in the kitty at the end of June, but attention centres on how rapidly the West Lothian company will move to commercialise its recent contractual success. Buy.
Like RedT, Xeros Technology (XSG) has been able to provide the market with a positive update ahead of its half-year figures, signing its first ‘Symphony Project’ development agreement with a “leading manufacturer” of commercial washing machines. Again, commercialisation is someway off and it is likely that the producer of polymer bead technologies will come back to the market at some point. Adjusted cash profits came in at £13.2m, against £7.4m at the 2016 half-year. Buy
Despite continued regulatory uncertainty regarding the trading of contracts for difference, Plus500 (PLUS) continues to prosper. Shares were up 5 per cent in early morning trading after management revealed business has continued to trade strongly since the end of June. As a result it expects revenues and profits for the year ending December 2017 to be ahead of market expectations.
Management at PZ Cussons (PZC) warned that cost inflation outstripping wage growth and general economic uncertainty is pushing UK consumers to shop more cautiously. Product launches in the washing and bathing division this year have been “well received” though volumes remain very sensitive to price point. The Naira, the Nigerian currency that hurt the consumer goods company at the half-year in January, has begun to stabilise, though credit has tightened and the environment for consumers in Nigeria remains challenging. Shares fell more than 2 per cent in early trading.
Renewi (RWI) shares are up 1 per cent this morning following the release of a pre-close trading update. The group is on track to deliver in line with expectations for the year, with the commercial division putting in a particularly strong performance. Management expects growth to continue due to increasing waste volumes and a focus on recycling and recovery in the construction market. Hold.
OTHER COMPANY NEWS:
BNN Technology (BNN) announced that its independent committee of the board of directors has, with external advisers Ernst & Young, confirmed the group’s cash position “by way of a review and confirmation of its bank accounts in the UK, Hong Kong and China.” The amounts provided are in keeping with BNN’s own financial records and expectations. The company "is continuing to discharge its commitments" regarding outstanding commercial contracts. This announcement follows the suspension of BNN’s shares on Aim on 4 September, on the news that chief financial officer Scott Kennedy had resigned, having made “a number of serious allegations” regarding the company and “the actions of” chief executive officer Darren Mercer and Wei Qi, China chief executive and group chief operating officer. Both executives were suspended. It was announced on 8 September that PwC has been appointed to conduct an independent investigation into the aforementioned allegations.
FairFX (FFX) reported 33 per cent revenue growth in the first half, with an improved gross profit margin and its first ever half-year profit (£0.2m, up from a net loss of £0.9m a year earlier). Shares in the international payments group rose 4 per cent in early trading.
Quartix (QTX), the software provider for vehicle tracking systems, announced that Daniel Mendis has been appointed chief financial officer. This will come into effect on 1st January 2018.
appScatter (APPS), the Aim-listed company allowing paying users to manage their apps on multiple app stores, released its maiden set of results since floating earlier this month. The business achieved the successful soft launch of its platform in January, which saw recurring revenues of £0.9m.
