London's FTSE 100 and FTSE250 are both in positive territory despite humdrum economic data from the eurozone today while the UK's junior Aim market has slipped into reverse. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Babcock International (BAB) shares edged down by around 5 per cent this morning after the defence support services group announced that it had lowered its forecasts for its aviation division, which has been hampered by contract delays and a challenging oil and gas market. Babcock said that it would write down assets and leases in its oil and gas business, incurring an exceptional charge of around £85m. But its marine business continues to outperform expectations while the overall group combined order book and pipeline sits at a record level of £34bn. Buy.
Shares in Dunelm (DNLM) have rocketed up more than a tenth this morning after another strong update from the homewares retailer. Like-for-like sales were up 5.6 per cent, with improvements in footfall, tablet-based selling and click & collect. In spite of a reportedly soft homewares market, the group also improved gross margins 120 basis points, thanks to sourcing gains and a reduction in markdowns. Buy.
Primary Health Properties’ (PHP) net rental income jumped by more than half last year following the medical centre landlord’s merger with MedicX in March. However, a revaluation loss arising from that transaction pushed the group into a £70m pre-tax loss. The average uplift on rent reviews was 1.9 per cent, which will add around £1.6m in rent a year. The dividend for the year was increased by almost 4 per cent to 5.6p a share. However, with the shares trading at a substantial premium to NAV, we place our buy rating under review.
Having slumped by as much as 28 per cent so far this year, shares in Arbuthnot Banking (ARBB) are rallying this morning, after the lender said pre-tax profits for the fourth quarter of 2019 would be “at the upper end of the range of market expectations”. Franchise growth was reportedly strong in the period as confidence returned following the election result, while full-year customer loan balances and deposits grew 31 and 22 per cent, respectively. Under review.
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Scapa (SCPA) shares fell 33 per cent in morning trading after the adhesive products outfit warned that its full-year trading profits would come in at £28m, significantly below consensus forecasts of around £34m, while industrial revenues of around £128m are also below expectations. The group blamed adverse macroeconomic conditions, “particularly in the automotive and specialty products markets”, and expects this backdrop to continue to hamper some of its industrial markets. Healthcare turnover of around £139m was ahead of market expectations, however, despite the loss of a significant contract with ConvaTec (CTEC). The group is making slower-than-expected progress in cutting costs in its healthcare arm, though.
Plus500 (PLUS) started 2019 by drastically cutting guidance, but finished the year with a strong rebound. Second half net profits came in at $100.1m, well down on the prior-year period but 94 per cent up on the first six months of 2019. The full-year view is less flattering, as numbers of active customers crashed 34 per cent, average user acquisition costs rose 12 per cent, and average revenue per user fell a quarter. However, confident of this momentum carrying into 2020, the spread-betting outfit is to commence a fresh $30m share buyback. Shares in the group are up 3 per cent in early trading.
