Shares in London's main indices have kicked on again today. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Unsurprisingly, clothing chain Joules (JOUL) performed strongly over Christmas. The group has reported an 11.7 per cent increase in sales, with e-commerce accounting for more than half of total retail revenues in that time. It means the group is still firmly on track to meet its FY2019 pre-tax profit forecast. Buy.
It was a good Christmas for pub group Greene King (GNK), which reported a 3.2 per cent improvement in like-for-like sales over the 36 weeks ended 6 January 2019 - representing growth ahead of the market. Like-for-like sales during the last two weeks, including Christmas and the New Year, were up 10.9 per cent, with record Christmas day sales of £7.7m. The group’s cost cutting programme also continues, with the intention to relieve some of the expected £10m-£20m input cost inflation this year. We remain buyers.
Footasylum (FOOT) is down another 11 per cent in early trading after the group admitted - again - that FY2019 gross margins would fall short of market expectations. The group is still discounting its wares heavily, with only a 14 per cent uplift in revenues unable to offset the damage further down the P&L. The group is still planning on opening new stores, however, having reported a 5 per cent increase in store-based sales over the 18 weeks ended 29 December 2018. Sell.
Secure Trust Bank (STB) has proposed ceasing to write new mortgage business, due to competitive pressures within the market. While no final decision has been made, management cited increasing loan-to-value and lower lending margins as prompting its consultation into the future of the business. We remain buyers.
Considering its share price fell by a third in 2018, iron ore pellet group Ferrexpo (FXPO) did not have a terrible year. A rise in fourth quarter production, highlighted in figures released today, have led to a 1.6 per cent bump in full year output to 10.6 million tonnes. And while sales volumes were down 3 per cent year-on-year, Ferrexpo expects a stronger first half of 2019, and can look back to a 9 per cent hike in the average received price in 2018. Higher cash costs failed to dent de-leveraging plans; net debt now stands at $340m. Buy.
Gateley’s (GTLY) revenues rose 20.1 per cent to £46.4m over the first half to October, buoyed by a combination of acquisitive and organic growth. Pre-tax profits rose 18.6 per cent to £5m. The legal and professional services group’s total headcount rose 17.3 per cent from April 2018 to 928, including eight new lateral legal partner hires. It expects to deliver full-year earnings in line with market expectations, which were upgraded after November’s trading update – with a top line of at least £102m. The shares have fallen in recent months, but were up 6 per cent in morning trading. Buy.
Strong second half trading and a better than expected valuation uplift are likely to push full-year headline profits up from earlier forecasts for Harworth (HWG). Planning consent has been secured for 761 residential plots and around 77,000 square feet of commercial space. Total returns for the year are now expected to be around 12 per cent. Buy
StatPro (SOG), the provider of cloud-based portfolio analytics and asset-pricing services for the asset management industry, has secured a three-year contract extension with a large UK investment manager for its ‘Revolution Delta’ service. The minimum contract value is £2.35m. Shares in small-cap StatPro have fallen in recent months, but were up 7 per cent this morning. Buy.
James Fisher (FSJ) has acquired the entire share capital of marine equipment and services provider Martek for £9m, and a 60 per cent stake in Saudi-based marine construction specialist MSMC for £4.1m. The group could eventually pay an additional £4.6m for MSMC depending on certain profit targets being met this year. We remain buyers.
KEY STORIES:
Shares in Codemasters (CDM) were up more than a tenth this morning, on the news that the video games publisher has entered a joint development agreement with NetEase (US: NTES) – one of China’s leading internet and online game services providers. This is with a view to developing a new mobile game for the global market. Codemasters will receive at least $8m in revenues over the next three years, starting with an expected $4m in the current year to March 2019. Its total lifetime revenue from the deal will depend on sales performance. Codemasters’ management now expects its adjusted cash profits for FY2019 to be ahead of expectations.
Shares in Staffline (STAF) have plunged more than 6 per cent this morning after the group announced exceptional costs from the restructuring of the PeoplePlus division will lead to an increase in net debt for 2018. The group has been working to turn PeoplePlus into the market leader for skills and training in the UK, yesterday announcing it had secured £104.6m in prison education contracts. Hold.
It might have been the fourth consecutive Christmas of growth for supermarket chain Morrisons (MRW), but the market is clearly nervous about its decision to slash the prices of hundreds of prices in order to remain competitive - particularly against German discounters Aldi and Lidl. Over the nine weeks ended 6 January 2019, like-for-like sales rose 3.6 per cent - a performance house broker Shore Capital said deserved credit amidst the backdrop of a significant slowdown in grocery sales last Autumn.
Shares in SIG (SHI) have fallen 6 per cent this morning. The construction materials provider has struggled with the trading environment in the UK in recent times, though this morning it noted conditions in Europe had also slowed materially, which is likely what has caused this morning’s sell-off. House broker Peel Hunt cut its 2019 pre-tax profit forecast 4 per cent to £96m. Hold.
OTHER COMPANY NEWS:
Shares in WANdisco (WAND) were up 4 per cent this morning, on the news that the live data company has launched a new joint engineered service with IBM. The ‘IBM Db2 Big SQL’ solution was jointly engineered by both parties to extend the capability of IBM Big Replicate (IBM’s product name for WANdisco’s flagship product, ‘Fusion’), so that it can support scenarios where customers are hoping to use hybrid cloud. WANdisco says this new solution significantly expands its addressable market.
Sigma Capital (SGM), the private rented sector, residential development and urban regeneration specialist, expects profits for 2018 to be substantially ahead of the previous year, with pre-tax profits likely to be more than double at £12.5m. Together with its PRS partner Countryside Properties, a further 20 PRS sites were secured during the year, taking the total of completed or contracted sites to 43, capable of developing 3,575 homes. Buy
Shipping group Clarkson (CKN) has confirmed this morning that, ahead of the announcement of full-year results on 11 March 2019, figures are in line with management’s expectations.
Abcam (ABC) has revealed that first-half revenues will rise by 11 per cent when it reports interim results on 4 March 2019. Gross margins are also expected to be “modestly” ahead of last year, while the group confirms it has been working on a contingency plan in case of a ‘no-deal’ Brexit outcome.
