IC TIP UPDATES:
CLS (CLI) reported a 5 per cent uplift in its adjusted net asset value for the first-half, boosted by a 1.9 per cent rise in portfolio valuation. Net rental income rose 5.9 per cent, at 5 per cent above estimated December 201 rental values. Germany and France drove the rise in the value of the portfolio, both increasing by 4.5 per cent. Buy.
Half-year results from Balfour Beatty (BBY) indicate a 5 per cent increase in group revenue to £3.4bn for the six months to 30 June while underlying operating profit has risen by 9 per cent to £72m. In the UK, underlying operating profit from construction has more than tripled to £17m with a 1.2 percentage point expansion in the margin to 1.7 per cent. Projected full-year average net cash of £280m-300m is £50m higher than previously guided. Shares are up 12 per cent this morning. Under review.
Lookers (LOOK) has reported adjusted pre-tax profits down 40 per cent in the first half of the year. The auto retailer sector has been difficult in recent times due to Brexit uncertainty and falling levels of new car registrations, but cost increases also weighed on the group's profit levels. Management is maintaining expectations for the full year. Sell.
KEY STORIES:
The Department for Transport (DfT) has awarded FirstGroup (FGP) and Trenitalia’s 70:30 joint venture First Trenitalia West Coast Rail the West Coast Partnership, with effect from 8 December 2019. This rail franchise will be operated through two phases – in the first phase to March 2026, will operate existing InterCity West Coast services while also acting as shadow operator to the High Speed 2 (HS2) programme. In the second phase, First Trenitalia will operate HS2 and the reshaped InterCity West Coast rail services together as an integrated operation, from March 2026 to March 2031. Shares in FirstGroup were flat in early trading.
Admiral (ADM) beat market consensus expectations for pre-tax profit during the first half, reporting a 4 per cent increase despite incurring a £33m charge to take into account the change to the Ogden rate. That’s largely due to higher-than-anticipated prior year reserve releases, although after stripping those out, the loss ratio moved up to 90 per cent from 85.9 per cent. UK motor premium growth also continued to slow as the insurer focuses on protecting margins over volume. The interim dividend was raised to 63p a share, from 60p the prior year.
Grant Thornton is standing down as the auditor of Sports Direct (SPD). The auditor gave notice following the publication of Sports Direct’s annual report this week, and will step down following the group’s annual general meeting. The Financial Times reported this morning that the group was “struggling” to find a replacement. The announcement is the latest in a series of dramas for the retailer, which came under scrutiny for repeatedly delaying its results announcement last month. The group’s shares are down 10 per cent in early trading.
Henderson Park Real Estate Management has made a €1.34bn offer for Green Reit (GRN), under which shareholders will receive €1.9135 in cash for Green Reit each share. The recommended offer values the Irish property group at a 24.7 per cent premium to the undisturbed share price. Green Reit chair Gary Kennedy said the board “determined that it was in the interests of shareholders to conduct a sale process to solicit offers for the company or its assets”, given that it had consistently traded at a discount to its underlying NAV since early 2016.
OTHER COMPANY NEWS:
Shares in cyber-security group Avast (AVST) climbed by as much as 9 per cent this morning, reaching a 52-week high, following the release of its half-year numbers to June. Statutory revenues grew by 9.5 per cent to £425m. Pre-tax profits were up 91 per cent to £144m. On a like-for-like basis, adjusted revenues rose by 9.2 per cent – buoyed by double-digit growth within the largest consumer direct desktop business. On the back of this first-half performance, management now anticipates like-for-like group revenue growth for the full year to be at the upper end of its previously guided high single-digit percentage range.
Interim results for Bank of Georgia (BGEO) showed a 140 basis point drop in the lender’s net interest margin in the 12 months to June, as the FTSE 250 constituent absorbed higher regulatory costs and moved to lower-risk loans. Despite this, the bank has had little trouble growing; its loan book is up 30.5 per cent over the same period, while client deposits are up 23.4 per cent. Though down, the first half average return on equity of 23.7 per cent is also twice the target level for several major UK banks.
In what looks like a co-ordinated effort to boost investor confidence amid the war of words with short-seller Muddy Waters, Burford Capital (BUR) is keeping up the daily trickle of director purchases. Today, the litigation funder said deputy chairman Steven Wilson has purchased 29,410 shares at an average price of 703p since acquiring 25,000 shares last Thursday. Mr Wilson now owns 254,410 shares in the group.
