Theresa May's struggles in Europe coupled with weak Chinese economic data have hit sentiment towards shares again. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Reach (RCH) were up 7 per cent this morning on the news that management expects 2018’s performance to be “marginally ahead of market expectations”. Group revenues in the fourth quarter were up 23 per cent, buoyed by the acquisition of Express & Star. But like-for-like revenues in the fourth quarter are expected to fall 5 per cent - though this is better than the third quarter. The group disposed of two vacant properties in Liverpool and Cardiff during the quarter, generating net proceeds of £5m. This will help net debt to fall to around £55m by the year-end, from £81m at the half-year stage. We remain sellers.
Restaurant Group (RTN) announced that its 13 for 9 rights issue at 108.5 pence was 92 per cent subscribed. The new shares have now begun trading. The rights issue is meant to fund Restaurant Group’s acquisition of Wagamama, the Asian inspired casual dining chain. Shares fell more than 3 per cent in early trading. Buy.
Shares in SThree (STHR) are up 4 per cent this morning after management upped profit guidance for the year. Adjusted profit before tax will be “slightly ahead of the top end” of consensus. The group has seen strong growth in Continental Europe, with gross profits up 20 per cent. The group’s focus on technical fields has continued to serve it well. All sectors grew, but it was strongest at 33 per cent. Buy.
KEY STORIES:
Fresh disposals will generate profits of around £65m for Balfour Beatty (BBY) which means the group’s performance for the year will be better than expected. Improvements to the balance sheet have included paying down the remaining convertible bonds and cutting gross debt by 45 per cent.
Shares in Low & Bonar (LWB) collapsed 19 per cent after the performance materials group admitted that trading conditions remain tough. Underlying pre-tax profits for the year are now expected to be around £17m against £30.7m the previous year. Self help initiatives have provided some relief but these have been offset by continued increases in raw material costs. Hold
Go-Ahead Group (GOG) announced that it has won its first contract in Australia in the role of Systems Integrator for the Digital Systems Program for Sydney for Transport for New South Wales. The Digital Systems Program will replace existing signalling and train control systems with modern, intelligent technology. It enables more trains on the track and therefore a higher frequency of reliable services for passengers of Sydney Trains.
OTHER COMPANY NEWS:
Consumer goods company Kerry Group (KYGA) announced that it will acquire Ariake USA, the North American business of Ariake Japan Co, and Southeastern Mills North American coatings and seasonings business. Kerry will pay a total of €325m (£292m) for both acquisitions, and will fund them through existing credit facilities. The acquisitions are meant to update the company’s technology and strengthen its foodservice position.
