IC TIP UPDATES:
Tracsis’s (TRCS) revenues, cash profits and adjusted operating profits for the year to July 2019 are expected to be in line with market expectations, and ahead of the prior year. The group cited a good mix of organic and acquisitive growth. It said trading has been strong for the 12 months as a whole, with a “particularly pleasing” second-half performance. Cash balances sat at around £24m at the year-end, up from £22.3m, after paying around £9m in relation to three acquisitions and contingent consideration. The group is debt-free. The shares were up by around 6 per cent this morning. Buy.
Persimmon (PSN) reported a decline in the underlying new housing operating margin during the first half, compared with the latter half of 2018, as it increased build costs to improve the quality of homes. For that reason, net cash also declined by £200m as the housebuilder increased working capital levels. That was against flat sales prices and a 6 per cent reduction in the number of homes sold. Sell.
Empiric Student Property’s (ESP) revenue rose 14 per cent during the first half thanks to improved occupancy and the contribution from new developments. Property expenses also dipped despite an increase in the number of operating assets as the average cost per bed declined 11 per cent. The gross margin rose to 68.5 per cent, from 62.3 per cent, and is on track to reach the full-year target of greater than 67 per cent. Buy.
Directors at Greene King (GNK) are unanimously recommending that shareholders accept an 850p per share cash offer from CKA Group, a Hong Kong-listed investor, via its subsidiary CK Bidco. This values the pub group’s issued share capital at £2.7bn, with an enterprise value of around £4.6bn or 9.5 times Greene King’s cash profits of £482m for the year to April 2019. The offer price represents a 51 per cent premium to the 563p closing price the business day before the deal was announced or a 42.8 per cent premium to the adjusted three-month volume-weighted average price of 595p. Await documents.
KEY STORIES:
Following the submission of National Grid’s (NG.) initial report last week, Ofgem has officially launched an investigation into the blackout of 9 August. The regulator believes “there are still areas where we need to use our statutory powers to investigate these outages”. It will be examining whether any of the parties involved – National Grid’s electricity systems operator and transmission arm, 12 distribution networks and the two power generators that failed – breached their license conditions. National Grid has reiterated its defence that this was “an extremely rare event” and has blamed a lightning strike as the underlying cause. Its final technical report is due on 6th September. Shares are down almost 1 per cent this morning.
The latest retail market data has once again declared Ocado (OCDO) the fastest-growing grocer in the UK. It increased its shopper base by 7 per cent, bringing its total share of the overall grocery market to 1.4 per cent, and 18 per cent of the online market. What’s more, The Times reported JP Morgan analysts said the group had a “superior model” to its shop based rivals.
OTHER COMPANY NEWS:
IMI (IMI) has announced the proposed acquisition of PBM, a manufacturer of “high-quality industrial valves and flow control products”, for an enterprise value of $85m (£70.3m). PBM will become part of the engineering group’s critical engineering division.
Finablr (FIN) – the cross-border payments and foreign exchange group that floated on London’s main market in May 2019 – delivered half-year results at the upper end of its guidance. Group income – effectively revenues – came in at $734m, up 6.2 per cent. Adjusted group income rose 9.1 per cent to $742m. The group saw growth across all of its three segments, and has reaffirmed its guidance and outlook provided at the time of its IPO – including a medium-term target of high single-digit group adjusted income growth, and a group adjusted cash-profit margin of 20 per cent.
Non-Standard Finance (NSF) is “cautiously optimistic” about its trading for the rest of 2019, though first half statutory results tell a different story. Though adjusted operating profits climbed 28 per cent, the cost of the ultimately fruitless bid for Provident Financial, and a £12.5m goodwill impairment on the carrying value of Loans at Home meant a reported pre-tax loss of £22.8m. Was it worth it?
A pre-close trading update from Kin and Carta (KCT) has sent shares tumbling by 9 per cent this morning after the group warned that pre-tax profit for FY2019 will be “marginally lower” than market expectations. This comes as the international digital transformation specialist has increased investment in its turnaround programme by 50 per cent to £3m. While the innovation pillar is seeing double-digit revenue growth, management is hoping a shift away from lower margin work and restructuring can spark a return to growth in communications and strategy in 2020.
