Shares in London have started the week in downbeat mode as investor sentiment has been hampered by yet more unrest in Hong Kong and, closer to home, an inconclusive result in the Spanish general election and weak UK economic growth figures. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Greggs (GRG) has upgraded profit guidance for the full year. The food-on-the-go retailer has been expecting its growth rate to slow, given its strong performance last year and at the beginning of this year, driven in part by the success of its vegan sausage roll. Shares in the group are up more than 16 per cent on the news. Buy.
According to a report in The Sunday Times, US private equity group Lone Star – a specialist in distressed assets – is understood to be amongst the bidders circling to buy parts of Kier (KIE). The embattled contractor announced in June that it was looking to divest non-core parts of the business such as its housebuilding arm, Kier Living. This latest development follows news from last week suggesting Kier’s lenders are trying to offload its debt at a discount, raising the prospect the group could be taken over via a debt-for-equity swap. Shares are down over 8 per cent this morning. Sell.
Shares in Dignity (DTY) have fallen 2 per cent this morning following a trading update. The funeral provider is still being wrongfooted by the stubbornly low number of deaths in the first half of the year. The number of deaths in the third quarter was broadly in line with last year, but management warned that even if deaths in the fourth quarter of the year were 1 per cent above last year, the total for the year would still come in 3.7 per cent below the previous years, at the lowest level since 2014. Sell.
Shares in AFH Financial (AFHP) are up four per cent in early trading, after the wealth management firm said it remained confident of hitting a five-year target to manage £10bn, hit annual revenues of £140m and achieve an underlying Ebitda margin of at least 25 per cent. In the 12 months to October, that margin widened, while a spree of acquisitions pushed funds under management to £6bn and should also lift earnings per share for the fifth consecutive year. We remain buyers.
KEY STORIES:
Eco Animal Health (EAH) has warned that African Swine Fever continued to hinder performance in China, the largest market for the pharmaceutical group. Management expects trading results for the first half of 2019 to be below the prior year and that full-year performance will be significantly below market expectations if trends persist.
Rightmove’s (RMV) finance director, Robyn Perriss, has announced her intention to step down. The exact date of her departure has not been decided, but will most likely be in the second quarter of 2020. Ms Perriss has worked for Rightmove since 2007, and has been the finance director since April 2013.
Prosus has posted the document for its cash offer to buy Just Eat (JE.). The terms are unchanged, valuing the food delivery platform at 710p a share, a level management says is too low. The board is still recommending shareholders reject the offer, believing the combination with Takeaway.com is more attractive.
Kainos (KNOS) unveiled a 29 per cent rise in revenue for the first-half, with the software group’s digital platforms business reporting growth of more than a third. Sales orders were up 10 per cent to just under £100m, in addition to an order backlog that was up 4 per cent. The group also announced the acquisitions of Formulate and Implexa, consulting partners to financial and business planning software business Adaptive Insights.
OTHER COMPANY NEWS:
Finablr (FIN) has delivered adjusted cash profit growth of 22 per cent for the nine months to September 30th, while margins expanded 167 basis points to 15.6 per cent. Management attributed the growth to strong momentum in the B2B and payment technology division. Indeed, the payments and foreign exchange group has announced two commercial partnerships and an MOU since the period end.
Asset management consultancy Alpha FMC (AFM) has acquired cloud-based software business Obsidian Solutions, in a push to add a “highly complementary suite” of business intelligence, reporting, automated subscription and know-your-customer management products. The purchase will be paid for in £5.7m in cash in two instalments and a four-year performance-driven earnout.
Underlying revenue growth at Informa (INF) came in at 2.8 per cent for the 10 months to October this year. Management said a strong trading performance was tempered by a strong comparator from last year. The group is entering its two most significant trading months, November and December, which represent around 20 per cent of annual revenues. The group is guiding to revenue growth of 3.5 per cent for the full year.
Carr’s (CARR) financial performance during 2019 was “moderately ahead” of group expectations with flat overall revenue at £403.9m, but an 8.4 per cent increase in adjusted operating profit to £18.9m. Amid unseasonal weather and Brexit uncertainty, agriculture sales dropped 0.6 per cent to £357m. Meanwhile in engineering, improved performances in ‘UK service and manufacturing’ and ‘global technical services’ boosted the division’s adjusted operating profit by 31 per cent to £5.3m. With the acquisition of Animax and NW Total, net debt has increased by 55 per cent to £23.8m.
