There are further gains across the UK's main indices in mid morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Babcock International (BAB) chief executive Archie Bethel will retire from his role of chief executive, after 16 years at the defence support services group. Mr Bethel will remain in his role until his successor is identified. Buy.
The ongoing decline in new car registrations made things difficult for Lookers (LOOK) in 2019. The auto-retailer reported like-for-likes down 6.6 per cent in the final three months of the year, compared with a 1.6 per cent drop in the market. However, the used car business performed far better, with like-for-likes up 3.8 per cent. The group also announced the appointment of former finance director Mark Raban as chief executive, and Cameron Wade as chief operating officer. Sell.
Shares in Frontier Developments (FDEV) are down 3 per cent this morning after the release of the group’s interim results. Revenues for the six months to November were up 28 per cent on the six months immediately prior at £32m, but the release timing of Planet Zoo in early November meant the game only contributed marginally to the half-year figures, while last year’s interim results included almost a full six months of sales from Jurassic World, which led to sales of £64.7m over the period. Buy.
As expected, Redrow (RDW) reported a 10 per cent reduction in revenue during the first-half as legal completions declined 14 per cent. However, the housebuilder is guiding towards results being second-half weighted due to the timing of apartment block completions. The average selling price was only slightly down on the prior year but management expects cost inflation to moderate to around 3 per cent this year. Buy.
Grainger (GRI) revealed 3.5 per cent like-for-like rental growth over the four months to the end of January, including a 3 per cent increase on its private rented homes and 4.5 per cent on regulated tenancy reviews. Occupancy on the PRS portfolio remained at 97.5 per cent and pricing on the sale of regulated tenancy homes was achieved on average 0.8 per cent ahead of valuations. Buy.
Sir Malcolm Williamson is stepping down as non-executive chairman of OneSavings Bank (OSB), four months after the group’s merger with Charter Court Financial Services. Prior to that, Sir Malcolm was chairman of the CCFS, and will now hand the reins to David Weymouth, who formerly served as chairman of OSB. He leaves, ahead of his 81st birthday, to reduce his work load and spend more time with his family. Buy.
KEY STORIES:
Smurfit Kappa (SKG) shares rose 6 per cent after full-year results that revealed a swing back into pre-tax profit and free cash flow of €547m, representing an 11 per cent rise on 2018. The packaging group resisted a difficult industrial environment over 2019 and grew cash profits by 7 per cent to €1.65bn, raising its cash profit margin to 18.2 per cent from 17.3 per cent. The group lifted its dividend by 12 per cent to 80.9c per share. Smurfit Kappa shares rose 6 per cent in early trading.
Barratt Developments (BDEV) reported a 9 per cent rise in completions during the first-half which helped boost revenue by 6 per cent. The private average sales price reduced by £5,000 to £312,000, reflecting a greater weighting towards London in second-half completions. Costs associated with removing cladding at legacy developments meant the operating margin declined 60 basis points.
OTHER COMPANY NEWS:
Guarantor loans firm Amigo Holdings (AMGO) has appointed Los Angeles-headquartered Houlihan Lokey as an adviser on its strategic review and formal sale process, joining RBC. Amigo put itself up for sale on 27 January, just a year and a half after going public.
Vodafone (VOD) has reported organic service revenue growth of 0.8 per cent in the third quarter, up from 0.7 per cent in the second quarter. European performance was similar to the prior quarter, at -1.4 per cent, with continued recovery in Spain offset by a tougher prior-year comparison in Italy. Retail revenues grew in Germany – helped by strong cable broadband net adds. The Rest of the World saw good growth, up 9.1 per cent versus 8.9 per cent. The group is on track to bring its European TowerCo project into operations by May 2020, with senior management now appointed. The group has reiterated its full-year guidance, with adjusted cash profits (EBITDA) of €14.8bn-15bn, with free cash flow (pre-spectrum) of around €5.4bn.
Halma (HLMA) has acquired Indiana-based gas leak detection company Sensit Technologies for $51.5m (£39.6m).
