Yesterday's market sell off has continued apace in London this morning. Click here for The Trader Nicole Elliott's latest view on the markets.
IC TIP UPDATES:
Whitbread (WTB) announced that the sale of Costa coffee to The Coca Cola Company has been approved by shareholders at its general meeting. An overwhelming 99.3 per cent of the 63.8 per cent of shareholders present voted in favour of the transaction. Shares in Whitbread were flat in early trading. Buy.
Liontrust Asset Management (LIO) pushed assets under management up by 15 per cent in the six months to 30 September to £12bn. The group also clocked up net inflows of £723m, thanls to a broader range of clients and a wider product offering. Buy
Learning Technologies’ (LTG) non-executive deputy chairman Harry Hill will step down from the board on 31 October. Mr Hill has been on the board since LTG’s formation in 2013. Chairman Andrew Brode said Mr Hill was “choosing to leave the Board when the company is in an immensely strong position”. The board plans to appoint a new senior independent director in due course. The shares were down 4 per cent in morning trading; we’re still positive. Buy.
IMImobile (IMO) announced this morning that energy provider npower is its first Apple Business Chat client in the UK. npower will be using this platform to improve the experience for customers looking to move to a smart meter. Shares in IMImobile were down in morning trading; we’re still buyers.
Marshall Motor Holdings (MMH) has echoed yesterday’s sentiments from motor retailer Vertu (VTU) by warning that September’s introduction of the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) for all cars sold in the EU has caused further disruption for new car sales. But bosses insist the group has offset most of the damage with operational efficiencies, including managing costs and the dealership portfolio. As a result, guidance for the full-year remains unchanged. Full-year results are not due until next March, but we remain buyers.
Inland Homes (INL) is proposing to buy back one million shares, which amounts to 0.5 per cent of the issued share capital. The shares bought will be held in treasury pending cancellation or re-issue. Buy.
Bathroom and kitchen products specialist Norcros (NXR) expects revenue for the year to 30 September to be up by 12.1 per cent or 13.2 per cent on a constant currency basis. The stronger performance came in spite of a restructuring in the Johnson Tiles business , and reflected a positive contribution from recently acquired shower component specialist Merlyn. Buy
Shares in Circle Property (CRC) rose two per cent after the regional office investment specialist revealed that £677,276 has been added in rental income in the six months to 30 September, while its net asset value since the IPO in February 2016 has now risen by 87 per cent to 278p a share, leaving the shares at a significant discount. Buy
Contemporary hotel group Safestay (SSTY) has acquired its eighth European property with the purchase of Hotel Opera in central Brussels. The 50-bedroom hotel is in a prime location, and cost €1.6m, with a further €200,000 expected to be spent on converting the premises to a 200-bed hostel. Buy
KEY STORIES:
Shares in WH Smith (SMWH) fell more than 10 per cent after the retailer announced it has launched a review of its high street business, where trading profit fell 3 per cent to £60m during the year to August. So far it’s decided that six stores will close and its Cardmarket and WH Smith Local initiatives will wind down, costing the group £11m so far. The company’s locations in airports and train stations fared much better, with trading profit from travel up 7 per cent to £103m.
Shares in Keller (KLR) fell 28 per cent after the ground engineering specialist warned that its ASEAN business, which includes Malaysia, Singapore and Hong Kong, is suffering from a deterioration in market conditions. Consequently its Asia/Pacific division will now sustain a full-year loss of £12-15m against a small profit the previous year.
Trading in the three months to 30 September saw Hargreaves Lansdown (HL.) attract £1.3bn of net new business, from a net new 29,000 clients. Net revenue for the period rose by 16 per cent to £120.8m. Hold
The UK Competition and Markets Authority (CMA) is investigating International Consolidated Airlines (IAG) over whether six of its transatlantic operations in partnership with other airlines are anti-competitive. IAG stated that its transatlantic joint business with Iberia, American Airlines, and Finnair through British Airways has been “bringing significant benefits to millions of travellers” since 2010, allowing for “improved access to cheaper fares and easier journeys”. Over those past eight years the joint business has launched 45 new routes, including 14 between the UK and US. Shares in IAG fell just over 2 per nce tin early trading.
Shares in Countryside Properties (CSP) fell 8 per cent despite the housebuilder delivering a very strong trading update. Total completions in the year to 30 September were up 27 per cent, with sales outlets up by 28 per cent. Net reservations per open outlet per week were at the top of the target range at 0.8. The total forward order book rose by 40 per cent, two-thirds of which comprises partnership agreements with local authorities.
OTHER COMPANY NEWS:
Homeware retailer Dunelm (DNLM) has made a solid start to the new financial year, with online revenues shooting up by a third on a like-for-like basis. Underlying store revenues grew - albeit only by 1.3 per cent - which helped total like-for-like sales rise 4.2 per cent. That’s slower than last year’s very strong growth rate of 9.3 per cent, but the market is clearly pleased to see good momentum online, and a significant improvement in gross margins now that losses from the Worldstores acquisition have been eliminated. Net debt of £109m also marks a £19m decrease since the year-end.
When N Brown (BWNG) released a consensus-beating set of annual results in April, some suggested that the worst was over for the fashion retailer. We erred on the side of the caution and judging by this morning’s share price drop, we were right to do so. The departure of chief executive Angela Spindler in early September was our first clue that all was not well, but a 50 per cent cut to the interim dividend certainly makes things clearer. It follows a 3.1 per cent contraction in product revenues during the first half, and continued statutory losses. The group says it is working hard to prioritise its online businesses, and the sales decline is the result of closing 20 stores. In the first half, online revenue grew by 3.8 per cent, and was ahead by 8.6 per cent for what the group calls its ‘Power Brands’ - Jacamo, Simply Be and JD Williams. But shareholder returns have had to be ‘rebased’ to ensure enough investment can be directed towards the group’s digital transformation.
