Shares in London sold off in early trading following their strong rebound on Friday on the back of good US jobs figures. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Housebuilder and land developer MJ Gleeson (GLE) pushed completions of its affordable homes ahead by 16.5 per cent in the half year end 31 December 2018. Two new site offices are now fully operational, while on the land development side, three sites were sold to other housebuilders. These were larger than usual sites, and half-year profits are expected to be considerably higher. Buy.
Tracsis’s (TRCS) chief executive John McArthur intends to step down from his role in the first half of 2019, to focus on family and non-business matters. Following a search process, Christopher Barnes will replace Mr McArthur on 4 February 2019. Mr Barnes is currently managing director of Ricardo (RCDO) UK’s automotive consulting division, and has previously held other senior roles within Ricardo. He started out at Ford Motor Company. After leaving his role, Mr McArthur will continue to provide M&A advice and assistance to Tracsis on a part-time basis. The shares were down 2 per cent in morning trading. Buy.
Bloomsbury Digital Resources, part of Bloomsbury Publishing (BMY), has announced strategic sales partnerships with the publishers Rowman & Littlefield and Manchester University Press (MUP). The partnership for Rowman & Littlefield’s ‘Select Collections’ is global and exclusive. For MUP’s ‘manchesterhive’, the partnership is exclusive across the Americas. Shares in Bloomsbury were up 4 per cent this morning. Buy.
Castleton Technology (CTP) has been selected as housing technology partner for Connect Housing Association, which provides more than 3,000 homes in West Yorkshire. The deal is worth £1.3m over five years, and will see Castleton deliver a range of fully-integrated solutions to Connect to support its service delivery and business processes. Castleton’s shares were little moved in morning trading. Buy.
Real Estate Investors (RLE) achieved record rental income in 2018, while pushing occupancy rates up to an all-time high of 96.1 per cent. Focused on the Midlands, the property landlord has avoided becoming involved with the weak retail sector, and concentrates on office space and convenience stores. It has also retained a £25m fund to take advantage of acquiring assets that may have been or may be depressed in value by too much as a result of Brexit uncertainty. Buy
KEY STORIES:
What assets are Medco hoping to acquire in its potential bid for Ophir Energy (OPHR)? Investors in both companies will hope it isn't the UK group's Block R Licence offshore Equatorial Guinea, which Ophir said will not be extended. The licence, which expired at the end of December, contains the Fortuna gas discovery - until a year ago the jewel in the group's crown - and still had a nominal carrying value of around $300m. That will now be written off with full-year results.
Dunelm (DNLM) shares have found renewed momentum this morning following a better than expected second quarter trading update. The homewares retailer reported a 5.7 per cent improvement in like-for-like sales across stores, while online revenues soared by 37.9 per cent over the same period. Gross margins are also expanding now that the group has eliminated lower margin sales from its Worldstores acquisition, and as foreign exchange rates have become more favourable. The group has also been working hard to improve its sourcing techniques.
Churchill China (CHH) has upgraded profit expectations for the full year, sending shares up 14 per cent this morning. In a brief statement, the group said it had strong revenue growth in export markets across 2018, while improved UK performance led operating performance to be ahead of market estimates.
OTHER COMPANY NEWS:
Long-time followers of Avon Rubber (AVON) will know about the popularity of the group's gas masks, though the award of a sole-source contract to supply the US Department of Defense for seven years is something of a coup. With a maximum monetary value of $92.7m, first orders for the M69 Joint Service Aircrew Mask are expected after March.
The board of Aim oil and gas minnow Bowleven (BLVN) has proposed a special dividend of "approximately £50m, or 15p per ordinary share", as part of a long-promised cash return to investors. The company was trading at 27p in the market prior to this morning's announcement.
Car retailer Vertu Motors (VTU) has announced the acquisition of online van merchant Vans Direct. The deal is worth £7.5m, including an estimated amount in respect of an earn-out arrangement rewarding an “on target performance” over a two year period. This could result in an extra £2m being paid out in total consideration. For the year ended 31 October 2017, Vans Direct reported revenues of £34.6m, a gross margin of 11.7 per cent and cash profits of £1.2m. The deal is expected to be immediately earnings enhancing.
Staffline’s (STAF) PeoplePlus division has won prison education contracts worth £104.6m over four years. The group will operate in 22 prisons and have a 25 per cent share of the UK prison education market. The win is good news for the group, which has been working to position PeoplePlus as the UK’s leading skills and training provider, and sent the shares up 3 per cent in early trading.
