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Tuesday
Jul292014

Tuesday's Stock Market report featuring St James' Place, GKN, Domino's Pizza, Tyman and Hutchison China MediTech

The Markets

Lending figures from the Bank of England show that mortgage approvals increased by 8% during June, an unexpected reversal after four consecutive months of falling numbers. Some analysts believe that this means the changes required by the Mortgage Market Review legislation are now fully implemented by lenders and that the bottleneck that this caused has been cleared. Economists from IHS Global Insight said that, “the appreciable rise in mortgage approvals fuels uncertainty as to whether the recent loss of momentum in housing market activity is likely to be lasting or just a temporary development”.

JP Morgan is cutting hundreds of staff in technical support roles, according to a report from Reuters. These cuts are in addition to the net loss of 6,000 employees over the first half of the year, as the bank announced a 12% drop in revenues at its corporate and investment arm. These job cuts reportedly include a managing director responsible for clearing technology. At the London close, JP Morgan shares had fallen by 68 cents to $58.47

At the London close the Dow Jones had decreased by 13.46 points to 16,969.13 and the Nasdaq had dropped by 7.73 points to 3,959.51.

In London the FTSE 100 closed up by 19.68 points to 6,807.75 and the FTSE 250 rose by 70.49 points to 15,687.02. The FTSE All-Share had increased by 11.30 points to 3,626.41 while the FTSE AIM Index declined by 0.36 points to 771.33.

Broker Notes

N+1 Singer re-iterated its “buy” rating on Sweett Group (CSG), but reduced its target price from 61p to 45p. The broker wrote that allegations of corporate wrongdoing are never helpful but the decision by the Serious Fraud Office to review an allegation of impropriety, concerning the conduct of a former employee in 2010, should help to bring matters to a close. N+1 Singer added that this issue has put a number of company positives in the shade - good FY results, a record order book, progress on legacy issue resolution and encouraging demand trends. The shares closed flat at 36p.

Legendary Investments (LEG) has been rated “speculative buy” by Beaufort Securities as the brokerage feels that the firm has significant upside potential given the returns on its investments in the last year. However, this upside is contingent on continued success at two of the firm’s key holdings, Virtualstock and Bosque Energeticos. The shares closed down by 0.005p at 0.11p.

Panmure Gordon and Berenberg have reiterated “buy” ratings and respective target prices of 977p and 860p on St. James’ Place (STJ) after the wealth management firm released broadly positive results, despite a miss on IFRS profit targets, for the first six months of the year. Analysts from Panmure Gordon believe that “wealth management is very good, particularly for HNW clients given the recent changes to ISA’s and pension arrangements post Budget” in explaining the decision to keep their rating. The shares fell by 19p to 771p.

Brokers believe wealth manager offers value

Blue Chips

Oil giant BP (BP) recorded reduced replacement cost profits of $3.63 billion (2.14 billion pounds) for the first half of 2014, down from $6.86 billion (4.04 billion pounds) over the same period in the prior year. The company has continued its divestment program and received $1.8 billion (1.06 billion pounds) of proceeds from asset sales over the six months ended 30th June. The shares fell by 12.6p to 484.25p.

High street fashion chain Next (NXT) performed ahead of expectations over the six months ended 26th July, with sales growth of 10.7% exceeding guidance of 5.5 - 9.5% for the full year given in April. As a result of this, management raised its full year forecasts to 7-10% and anticipated that profits before tax will now fall in the range of 775 - 815 million pounds. The shares rose by 170p to 6,690p.

Engineering firm GKN (GKN) reported sales of 3.56 billion pounds for the six months ended 30th June, a 2% drop on the same period last year. However, profits before taxation increased by 76% to 224 million pounds due to improvements in operating margins. The land systems division struggled with a 9% drop in sales and falling margins. The share price grew by 22.9p to 366p.

Efficient engineering ups profits at GKN

Mid Caps

Energy firm Drax (DRX) recorded a pre-tax loss of 10.4 million pounds over the six months ended 30th June, a substantial fall from the profit of 205 million pounds in the prior year. This comes as the firm continues its investment push to switch to predominantly biofuel generation and as there has been a level of uncertainty around regulation and investment from the UK government. The shares rose by 13p to 699.5p.

Food delivery chain Domino’s Pizza (DOM) increased total sales in the 26 weeks ended 29th June to 375 million pounds, an increase of 14.9% over the prior year. Profits before tax for the period grew to 24.5 million pounds. Business was particularly strong in the UK and Ireland, whilst the German division continued to struggle. Panmure Gordon re-iterated a “buy” rating on Domino’s after the update. The share price increased by 5p to 547.5p.

Informa (INF) increased first half pre-tax profits by 25% to 100.2 million pounds. The business information services firm recorded organic revenue growth of 1.9% on a constant currency basis, with the company making a number of acquisitions over the period and experiencing exchange headwinds which reduced revenues by around 26 million pounds. The shares fell by 5.3p to 485.3p.

Informa scores well on interim report card, but markets not overly impressed

Small Caps


Window and door firm Tyman (TYMN) increased it’s revenues on continuing operations from 123.7 million pounds in the first half of 2013 to 167 million pounds. Pre-tax profits rose to 5 million pounds from a 1.4 million pound loss in the prior year. Management believe that these results position the firm to meet full year expectations. The shares rose by 3p to 287p.

Synectics (SNX), a specialist in control room surveillance, recorded revenues of 31.8 million pounds for the first half of the year, a decline from 40.7 million pounds in the same period last year. The company made a pre-tax loss of 2.6 million pounds, but management remain hopeful and said that “none of the fundamental factors which will drive profitable growth have changed”. The shares dropped by 7.5p to 335p.

Oil re-refining firm Hydrodec (HYR) recorded EBITDA of $0.5 million (0.29 million pounds) over the six months ended 30th June, the first positive EBITDA result since the company’s founding. Revenues increased by 82% to $25.4 million (14.97 million pounds) as sales from fresh acquisitions outweighed poor results from some existing brands. The board feels that this represents good momentum towards the firm’s long term goals. The shares grew by 1p to 12p.

Bar and nightclub operator Eclectic Bar Group (BAR) has increased its number of trading venues to 21, with three new sites opening over the last six months. Trading over the period has been broadly in line with market expectations and the company intends to pay a dividend for the year ended June 2014 pending shareholder approval. Full results for the year will be published in September. The share price increased by 1.5p to 182.5p

Messaging and data management firm Escher (ESCH) expects revenues of around $11.1 million (6.54 million pounds) for the six month period ended 30th June, a fall from the $12.9 million (7.6 million pounds) achieved in the same period of the prior year. The drop was due to a major contract leaving the development phase and being rolled out. The shares fell by 2.5p to 300p.

China-based consumer goods and healthcare firm Hutchison China MediTech (HCM) recorded revenues of $30.3 million (17.85 million pounds) for the six months ended 30th June, an increase of 73% over the comparable period in the prior year. Management feel that the outlook for the remainder of the year is strong, with the company currently running ten clinical trials. The shares fell by 25p to 970p.

Testing times at Hutchison China lead to improved financial results

Monday
Jul282014

Monday's Stock Market report featuring RBS, Reckitt Benckiser, BSkyB, Pace and Forbidden Technologies  

The Markets

The government will open the applications process for licences to extract shale gas in the UK via hydraulic fracturing. Firms wishing to begin test drilling will need also need planning permission and environmental permits. Areas of outstanding natural beauty have been excluded from the pool of potential exploration sites and given the requirement for local planning permission, drilling may be further restricted. As this represents an early stage in the process, it is likely to be some time before production begins. Amy McLellan from Oilbarrel.com commented, “British Geological Survey figures for Oil and Gas reserves in the UK make for good headlines but, in reality, only a tiny fraction of this resource would ever be extracted and it is far too early to say how economic it would be to produce from these wells”.

A survey of the UK property market carried out by Halifax has found that high prices and expectations that interest rates will rise in the near future are discouraging potential buyers. The survey showed that the balance of responses to the question of whether it was a good time to buy a house fell to positive 5% from positive 34% in the first quarter. 70% of respondents believe that prices would continue to rise over the next year and 57% thought that now would be a good time to sell property. Halifax said that, “over the past two years consumer confidence has continued to grow, however it appears that we’ve reached a tipping point with the equilibrium between buyers and sellers much more out of sync”.

At the London close the Dow Jones had decreased by 23.82 points to 16,936.75 and the Nasdaq had dropped by 7.60 points to 3,957.56.

In London the FTSE 100 closed down by 3.48 points at 6,788.07 and the FTSE 250 decreased by 75.28 points to 15,616.53. The FTSE All-Share was down by 4.23 points at 3,619.34 while the FTSE AIM Index finished down by 1.94 points at 771.25.

Broker Notes

Deutsche Bank, UBS and Canaccord Securities all reiterated “buy” ratings on African Barrick Gold (ABG), with respective target prices of 280p, 290p and 330p. Meanwhile, Beaufort Securities has bucked consensus with its “sell” rating, with the analysts writing that the firm is “a victim to weaker gold market with a likelihood of further downfall in gold prices. This gloomy outlook on gold price continues to cast a shadow on the company’s profitability”. The shares rose by 1.5p to 261.3p.

Liberium Capital downgraded Air Partner (AIP) from a “buy” rating to a “hold” and reduced its target price from 700p to 400p after the private aviation firm issued a profit warning this morning. The broker cut its forecast for the second half of the year, which has historically outperformed the first half, by 45% following the news and said that the lack of earnings visibility makes it difficult to incorporate the potential for recovery into forecasts. The shares fell by 66.375p to 336.125p.

Royal Bank of Scotland (RBS) has been upgraded to a “neutral” rating by UBS, which also increased its target price from 320p to 378p. Rivals at Credit Suisse reiterated their belief that the shares will “underperform”, but increased the target price to 310p, and Deutsche Bank stuck to a “hold” rating and upped their target price by 10p to 335p. Analysts at Credit Suisse feel that performance has been at the better end of estimates, but worry about capital ratios in the coming months. The shares fell by 12.2p to 352.2p.

RBS shares worth face value?

Blue Chips


Reckitt Benckiser
(RB) recorded revenues of 4,667 million pounds for the six months to June, a decline of 7% against the comparable period due to the effect of currency movements. On a constant currency basis, sales increased by 3%. Despite the fall in revenues, operating profits increased by 16% to 1,059 million pounds, due to increased margins in Europe and North America. Management believe that conditions will remain tough in second half and the company will work to improve structural efficiencies, as well as consider a plan to hive off its drug business RB Pharmaceuticals. The shares rose by 135p to 5,205p.

Entertainment and communications firm British Sky Broadcasting (BSY) has made an investment of $400,000 (235,590 pounds) in early-stage video capture and display company Jaunt. This is in addition to the $350,000 (206,141 pounds) investment made by Sky in an earlier round of funding. Management believe that the investment provides Sky with insight into developments in the field. The shares grew by 30p to 904.5p.

Infrastructure operator National Grid (NG) continues to expect its regulated assets to grow by 5% over the year ending May 2015 after a strong start to the trading year. However, the impact of a New York court decision regarding a temporary tax on energy firms is likely to cause a $120 million reduction in revenues for the year due to a mandated refund on past overcollections. The share price increased by 8p to 879p.

National Grid carries charge in to current fiscal year

Mid Caps


Food producer Cranswick (CWK) traded in line with expectations over the three months ended 30th June, with revenues 5% ahead of the same period last year and stable operating margins. The board believes that the company remains on track for long-term success. Broker Numis Securities downgraded its rating to a “hold” after the update. The shares fell by 23p to 1,260p.

Pre-tax profits over the first six months of the year fell by 31% to 124 million pounds at insurer Hiscox (HSX), as gross premiums dropped to 978.9 million pounds. The insurer suffered from adverse currency movements and when considered in local currencies, gross premiums written increased by 4.6%. However, there is continued pressure on reinsurance rates and revenues for that segment fell by 13% in local currency terms. The shares dropped by 19.5p to 683p.

Subscription TV and broadband services provider Pace (PIC) recorded a 13.6% fall in revenues to $1.13 billion (0.67 billion pounds) over the six months ended 30th June compared to the same period in the prior year. Profits before tax increased to $72 million (42.4 million pounds) due to a focus on improving operational efficiencies. The share price fell by 13.4p to 355p.

Pace losing steam?

Small Caps


Veterinary pharmaceutical firm Eco Animal Health (EAH) increased group sales for the year ended 31st March to 31.9 million pounds and pre-tax profits were increased from 3.31 million pounds to 3.68 million pounds. The company continues to make progress in new markets, including China where sales increased by more than a third. The results in some areas where severely affected by currency movements. The shares grew by 2p to 173.5p.

Business media outfit Progressive Digital Media (PRO) recorded group revenues of 30.7 million pounds over the six months ended 30th June, an increase of 8.1% compared with the same period in the prior year. Pre-tax profits fell by around 94% to 213,000 pounds due to costs associated with the acquisition of business information and market analysis firm Pyramid, which should normalise in the second half of the year and add to profits. The shares closed flat at 270p.

Electrical design and installation group Stadium (SDM) has bought United Wireless, a machine to machine communications specialist, for a consideration of 8 million pounds payable in cash and shares. The acquisition should be earnings enhancing from the first year and management believes that it will complement Stadium’s existing technologies. The 5 million pound cash component of the initial consideration will be funded by a new rotating credit facility. The share price increased by 7p to 73p.

APC Technology (APC) has won a contract to install LED lighting at three buildings operated by a major UK bank and has begun delivery on a previously announced deal to provide lighting in 500 stores of a supermarket chain. These deals have a combined value of 1.425 million and should be invoiced during the calender year. Full year revenues during the company’s last reporting year were 21.6 million pounds. The shares grew by 1.625p to 33.875p.

Procurement and e-commerce platforms provider Cloudbuy (CBUY) has begun work on translating its core platform in to Hindi, and traditional and simplified Chinese to meet customer requirements for the company’s expansion in to Asian markets. Procurement invoicing has increased by 50% over the six months ended 30th June and Clouldbuy has been working with the NHS Shared Business Service on the new NHS procurement strategy. The shares rose by 1.5p to 35p.

Video software developer Forbidden Technologies (FBT) saw operating expenses increase from 538,191 pounds to 1,461,888 pounds over the six months ended 30th June, as the company doubled its R&D head count and hired more support staff. However, revenues fell to 348,077 pounds compared to 401,278 pounds in the same period in the prior year. The shares fell by 2.5p to 17.5p.

Are profits Forbidden at technology firm?

Friday
Jul252014

Friday's Stock Market report featuring RBS, Lonmin, AG Barr, Cyan and Miton Group

The Markets

Official figures from the Office for National Statistics suggest that the UK economy grew by 0.8% over the second quarter of the year, implying that the economy had grown by 3.1% since the same quarter a year ago. The figures also imply that the economy is now 0.2% ahead of the pre-crisis peak which was recorded back in early 2008. However, some experts still hasten to add that GDP per head has yet to recover because of lower productivity and an increased population. Chris Williamson, Markit’s Chief Economist, said, “Any celebrations will of course also be marred by the fact that the milestone reminds us that it has taken some six years for the country to merely regain the economic might it had before the financial crisis struck.”

The International Monetary Fund has downgraded its global growth forecasts for 2014 from 3.7% to 3.4% after poor first quarter figures in the United States and downgrades for a number of other states including Brazil and Russia. The organisation did upgrade its view on UK growth in 2014, from 2.8% to 3,2%, but maintained the current forecasts for future periods. The organisation’s chief economist commented that the change to the global forecast “largely reflects something that has already happened”.

At the London close the Dow Jones had decreased by 135.95 points to 16,947.85 and the Nasdaq had dropped by 28.15 points to 3,955.03.

In London the FTSE 100 closed down by 29.91 points at 6,791.55 and the FTSE 250 decreased by 56.88 points to 15,691.81. The FTSE All-Share was down by 15.10 points to 3,619.34 while the FTSE AIM Index declined by 0.05 points to 773.19.

Broker Notes

Beaufort Securities stuck with its “buy” recommendation on pub company Mitchells & Butlers (MAB) after the firm released an interim management statement today. The broker notes that the company delivered positive revenue growth for its third quarter, notwithstanding a slump in the UK eating and drinking out market in the months of May and June. Beaufort also argued that the proposed acquisition of the Orchid estate would expand MAB’s share of the UK branded pubs and restaurants market. The shares fell by 3p to 377p..

Panmure Gordon stuck with its “buy” recommendation on platinum miner Lonmin (LMI), leaving its target price of 339p in place. Although no mining took place in the previous quarter due to strikes, Panmure notes that the company ended the period with no debt. Furthermore, the process of ramp up has begun more rapidly than forecast by the broker and Beaufort feels that the company is well placed operationally to recover rapidly from the strike, helped by headroom on its balance sheet. The shares rose by 11.3p to 241p.

N+1 Singer re-iterated its “sell” stance on industrial products supplier Brammer (BRAM), sticking with its target price of 440p. The broker feels that the company’s exposure to Europe will slowly start to reap rewards as the region continues to slowly recover. N+1 Singer feels that the current valuation is up with events but insists that it remains alive to the possibility of changing its stance if the share price begins to fall. The shares fell by 12p to 403p.

Brammer maintained by N+1 Singer

Blue Chips


Royal Bank of Scotland
(RBS) reported a pre-tax profit of 1.01 billion pounds for the second quarter of 2014, well ahead of the small loss which was largely expected by the analyst community. The bank - which is 81% owned by the government - explained that the better than expected result was due to a turnaround in losses from bad loans. Looking ahead, the bank went on to remind investors that income from its fixed income products is expected to be lower in the second half of this year, reflecting the continuation of the bank’s reduced balance sheet risk appetite. The shares grew by 35.4p to 364.2p.

Financial times owner Pearson (PSON) increased sales by 2% to 2 billion pounds over the first half of 2014, reflecting good levels of growth in digital and emerging markets. Management went on to re-affirm its guidance for 2014 and again warned that its profits would be affected by currency fluctuations and portfolio adjustments. The update comes after broker Nomura re-iterated its “reduce” stance and 980p target price on the shares earlier this week. Pearson finished up by 31p at 1,132p.

Telecommunications giant Vodafone (VOD) saw group revenues decline by 4.4% after a slump in revenues from its Spanish and South African operations. Its South African operations, for instance, were hit by regulatory changes which cut some of the fees which it could charge. Separately, Vodafone has extended the deadline in which shareholders in Cobra Automotive Technologies can accept its takeover offer, until 1st August. The shares fell by 4.2p to 202p.

Vodafone reception poor in South Africa and Spain

Mid Caps


Irn Bru manufacturer A.G Barr (BAG) has maintained growth over last year’s strong performance, with revenues up by 5.6% at 135 million pounds in the first half of the year. Competition in the soft drink market remains intense, but figures from Nielson show A.G. Barr’s offerings outperforming the wider market. Trading in the second half of the year to date is said to have been good. The shares grew by 9p to 632p.

Carillion (CLLN) confirmed that it is in preliminary discussions regarding a potential merger with Balfour Beatty (BBY). The boards believe that such a merger would create a firm with a market leading position in construction and services. Any merger would be subject to both parties’ due diligence and shareholder approval, and the companies must announce their intentions before 21st August. Shares in Carillion grew by 24.3p to 362.8p while those in Balfour Beatty increased by 21p to 253.1p.

Gold production was 8% higher in the second quarter than the same period in 2013 at the mines owned by African Barrick Gold (ABG). However, revenues for the first half of the year were down by 11% as the average realised price per ounce fell. The board has revised full year production estimates upwards and believe costs will remain with current ranges. The shares rose by 5.8p to 259.8p.

African Barrick Gold increases production, but revenues don’t glitter

Small Caps


Software provider to the travel and logistics industries Belgravium Technologies (BVM) claimed that trading over the first six months of 2014 has been “satisfactory and in line with management expectations”. The company explained that trading picked up significantly in Q2 and, as a consequence, results for the six months ended 30th June will show a significant improvement in profits compared to the equivalent period last year. The shares grew by 0.25p to 5.3p.

Engineering firm Hightex Group (HTIG) last night admitted that it did not see any reason for the 27% increase in its share price yesterday. The firm noted references online to an article in the Berliner Morgenpost newspaper, but said that the article refers to a previous contract already announced. The update comes after the firm said it was cautiously optimistic for “one or more contract wins in the second half of 2014” back in June. The shares fell by 0.625p to 0.25p..

Fund management group Miton Group (MGR) increased its net assets under management by 29 million pounds over the first six months of the year as equity funds attracted new money and cash flowed out of multi-asset funds. The board expects profits before tax for the period to be substantially ahead of the previous year. The shares rose by 0.875p to 38.25p.

LED and lighting firm Holders Technology (HDT) saw revenues of 7 million pounds over the six months ended 31st May, roughly equivalent to the same period in the prior year. This result was below the management’s expectations and as a result the company lost 0.2 million pounds over the half year due to increased in the LED division’s cost base. The shares fell by 5.5p to 52.5p.

Better Capital (BCAP) has acquired OfficeTeam for a consideration of 80 million pounds on a debt free basis. The office supply firm had revenues of 143 million pounds in 2013 and EBITDA of 13 million pounds. The company has committed 90 million pounds for the acquisition and restructuring costs. Better Capital shares grew by 0.25p to 110.75p.

Smart metering technology company Cyan Holdings (CYAN) has raised 3.5 million pounds of new capital it looks to roll out its smart metering technology. Some of the funds will be used to provide particular support for Cyan’s roll-out into Brazil, where it has partnerships in the metering and lighting sectors. To raise the funds Cyan is issuing 1 billion new shares priced at 0.35p as well as 500 million warrants, exercisable at 0.6p. The shares fell by 0.07p to 0.375p.

Cyan measure new funding  for meter programme

Thursday
Jul242014

Thursday's Stock Market report featuring GlaxoSmithKline, easyJet, CSR, Nichols and Clinigen 

The Markets

Following yesterday’s CBI data, figures from the Office for National Statistics have shown that British retailers had their strongest quarterly performance for ten years between April and June. Sales increased by 1.6% compared to the first quarter, the fastest rise since March 2004. The timing of Easter this year contributed to the strong result, with the majority of the improvement coming during April. Sales in June disappointed, which analysts from Capital Economics attributed to the World Cup, saying that, “in the past six World Cup years, sales have fallen by 1% on average in June before bouncing back in July”.

There are signs of life in Spain after unemployment fell below 25% for the first time in two years, with hiring bolstered by seasonal trade. The official figures show that 5.6 million people were out of work, a rate of 24.5%. The central bank yesterday announced that growth over the same period was 0.5%, the highest level since 2008, and predicted full year GDP growth of 1.3% and 2% for 2015. Economists from Citi commented that, “these figures are much better than expected and while there’s an important seasonal element, seasonally adjusted figures are also strong”.

At the London close the Dow Jones had grown by 17.69 points to 17,104.32 and the Nasdaq had grown by 7.17 points to 3,993.37.

In London the FTSE 100 closed up by 23.31 points at 6,821.46 and the FTSE 250 increased by 22.73 points to 15,748.69. The FTSE All-Share grew by 11.24 points to 3,634.44 while the FTSE AIM Index finished up by 0.15 points at 773.24.

Broker Notes

Analysts from Deutsche Bank, Credit Suisse and Panmure Gordon all reiterated their recommendations on GlaxoSmithKline (GSK) following yesterday’s results, but cut their respective target prices to 1,500p , 1,475p and 1,600p. Whilst the strength of sterling played a role, Panmure Gordon felt that “the miss on Advair (sales in the US down 19% with a 2% re-stock) and cautious language was what spooked the market the most”. The shares fell by 12p to 1,469.5p.

Westhouse Securities initiated coverage on AIM-listed Densitron Technologies (DSN) with a “buy” recommendation and a target price of 8p. The broker believes that the screen manufacturer should be isolated from consumer pricing cycles due to its focus on business customers, but raised concerns about the supply chain and potential competitive pressures. The shares rose by 0.125p to 6p.

N+1 Singer reiterated its “buy” rating on ACAL (ACL) but lowered its target price to 255p following the electronics firm’s 55 million pound rights issue. The broker feels that the acquisition of Noratel strongly complements the firm’s strategy of transition towards specialist electronics. The analysts wrote that “the shares are trading at too large a discount on both a forecast P/E and EV/EBITDA basis”. The shares rose by 5.25p to 225p.

N+1 Singer says that power acquisition can help ACAL transform

Blue Chips

Brewer SABMiller (SAB) organically increased sales volumes by 3% over the three months ended 30th June. There was a particularly strong performance in the African and South African divisions, both in terms of volume and local currency revenues generated, while Asia Pacific saw the weakest growth due to difficult trading conditions in Australia. Overall performance is in line with expectations. The shares.dropped by 25.5p to 3,340p.


easyJet
(EZJ) increased total revenues by 8% to 1.24 billion pounds over the three months ended 30th June, with passenger numbers up 9.4% as load factor increased to 90.4%, The airline’s purchase of rival Flybe’s slots has significantly increased capacity at key airports including London Gatwick and roughly 77% of seats for the second half of the year have been booked. Broker Panmure Gordon moved its recommendation to “buy” on the back of the update. The shares fell by 70p to 1,333p.

Consumer goods group Unilever (ULVR) increased operating profits in the 1st half of the year by 13% to €4.4 billion (3.49 billion pounds) after recognising profits from the disposal of a number of brands. Revenues in Europe declined as prices fell, despite a 1.1% increase in sales volumes. The company remains focused on operational margins and sustaining growth. The shares declined by 20p to 2,663p.

Unilever cleans up, despite mess in Europe

Mid Caps

Revenues at the electronics firm CSR (CSR) for the six months ended 30th June fell from $500 million (293.94 million pounds) in 2013 to $374.5 million (220.1 million pounds) this year due to a 70% decline in revenues on legacy products. The outfit’s operating profits increased to $61 million (35.98 million pounds) due to the reversal of impairments and the management expect revenues of around $200 million (117 million pounds) in the current quarter. The shares fell by 11p to 572p

 

Ben Venue Laboratories’ injectables manufacturing facility in Ohio has been acquired by Hikma Pharmaceuticals (HIK) pursuant to the ongoing exclusivity agreement for no incremental consideration. The site contains four manufacturing plants and a further system for R&D use. The acquisition increases Hikma’s R&D capacity and some production equipment will be transferred to other active sites in the US and Europe. The shares grew by 25p to 1,817p.

Howden Joinery (HWDN) recorded pre-tax profits of 57.6 million pounds over the six months ended 24th June, an increase on continuing operations of 37.5%. Sales from UK depots increased 11.6% and 8.7% on a like-for-like basis after the carpentry and kitchens business raised its prices. Trading has continued strongly through the start of the second half of the year. The shares grew by 53.3p to 364.9p.

Kitchen market heats up for Howden

Small Caps

United Carpets Group (UCG) recorded network sales of 55.7 million pounds over the year ended 31st March, with a like for like-for-like increase in sales of 2.2%, The number of stores is now 57, of which 46 operate as franchises, down from 80 outlets in 2012. Gross margins have fallen, despite a drop in a distribution and administrative. The shares dropped by 0.25p to 9p.

IT services provider SCISYS (SSY) finished the first half of the year with a full order book and management have announced that results will be broadly in line with those of the same period in the prior year. It is expected that the full year targets, including those for margins and operational efficiencies will be delivered. The shares rose by 2.5p to 91p.

Specialist pharmaceuticals firm Clinigen (CLIN) reported revenues of 126 million pounds over the year ended 30th June and significantly improved gross margins to 30%. All three major divisions of the firm have increased sales, but management of clinical trials has been particularly noteworthy. Numis Securities raised its target price from 620p to 650pb after the update. The shares grew by 2.75p to 397.5p.

Shares is the conference and recruiting firm RTC (RTC) rose by 4.5p to 41.5p after it was announced that pre-tax profits for the first half of the year were 405,000, well ahead of the equivalent point in 2013. Cashflow for the period was a positive 1.3 million as opposed to a 1.3 million pound shortfall in the prior year. Management are confident that the full year targets will be achieved.

IT consulting firm Sagentia (SAG) has been substantially affected by the current foreign exchange markets over the course of the six months to 30th June and pre-tax profits have fallen from 2,7 million pounds in the same period of 2013 to 1.4 million pounds this year. However, last years’ profits were inflated by the recognition of prior year tax losses as assets. Sagentia had a cash balance of 22.8 million pounds at the period end and net funds of 13.5 million pounds. The shares fell by 1.5p to 132.5p.

The soft drinks producer Nichols (NICL) saw a slight increase in revenues in first six months of the year, but pre-tax profits fell significantly due to a court judgement imposing a one-off cost of 8 million pounds. However, excluding this item, the underlying profits rose 11% as the company focused its efforts on higher margin products. The board expects the firm’s full year performance to meet expectations. The shares rose by 64.5p to 1,000p.

Nichols full of fizz

Wednesday
Jul232014

Wednesday's Stock Market report featuring ITV, GlaxoSmithKline, TalkTalk, 32Red and Staffline

The Markets

New data from the Confederation of British Industry showed that retail sales exceeded expectations in July. Over 46% of surveyed businesses said that sales were better than in 2013, compared with 25% which experienced a decline on last year. The sectors with the strongest performances were food, clothing and furniture, as consumers took advantage of the summer weather. Barry Williams from the CBI said that, “retailers expect an even faster rise in sales volumes next month, and are stocking up in anticipation of growing demand”.

Minutes from the last meeting of the Bank of England’s Monetary Policy Committee show that the members agreed unanimously to hold rates at 0.5%, noting that while “employment had continued to increase robustly […] wage growth had been surprisingly weak”. The Institute of Directors has criticised the decision as it believes that economic recovery is strong enough to begin movement towards interest rates of 3-4%, despite the Bank noting signs of potential weakness in the global recovery. However, Governor Mark Carney today said that, “the Bank is well aware that a prolonged period of historically low interest rates could encourage other risks to develop. In the UK, the biggest risks are associated with the housing market,”

At the London close the Dow Jones had declined by 16.99 points to 17,096.55 and the Nasdaq had grown by 26.78 points to 3,987.40.

In London the FTSE 100 closed up by 2.81 points at 6,798.15 and the FTSE 250 increased by 75.23 points to 15,725.96. The FTSE All-Share grew by 3.94 points to 3,623.13 while the FTSE AIM Index finished up by 0.82 points at 773.38.

Broker Notes

Panmure Gordon increased its target price on Provident Financial Group (PFG) from 1,700p to 2,000p after the lender announced first half profits were higher than had been anticipated. The broker believes the home credit division’s performance will be fairly flat in the near future, whilst the provision of credit cards to subprime borrowers will continue to provide strong growth. The shares rose by 11p to 2,084p.

Westhouse Securities reiterated its “buy” rating and 220p target for ITV (ITV) ahead of the publication of the broadcaster’s interim results. These are likely to deliver a year-on-year improvement in performance, despite disappointing fall in the firm’s share of viewers. However, the broker believes that Liberty Global’s recent move to take a position in the company indicates its strategic value and that the fundamentals of the stock justify a price higher than the current market level. The shares fell by 0.6p to 206.8p.

Chariot Oil & Gas (CHAR) has been rated as a “speculative buy”, with a target price of 16p by analysts at Beaufort Securities. This is on the basis of the firm’s diverse range of licences in proximity to major firm operations and the company’s track record of farm-down success. Rival broker Northland Capital reiterated its “buy” rating on the shares but cut its target price from 40.5p to 28p. The shares closed flat at 15.5p.

Beaufort thinks Chariot is worth a bet

Blue Chips

Chemicals firm Johnson Matthey (JMAT) had flat sales of 749 million pounds excluding precious metals sales over the quarter ended 30th June. This compared with 745 million pounds in the same period last year. The ongoing currency climate meant that underlying pre-tax profits were 10% lower than in 2013, but management believe that the business is sufficiently robust to leave full year expectations unchanged. The shares fell by 37p to 3,022p.


Capita
(CPI) increased revenues for continuing business by 13.9% over the six months ended 30th June, with organic revenue growth of 11%. Over 1.3 billion pounds in new contracts have been acquired through the sales pipeline, with a success rate on major bids of more than 66%. Pre-tax profits grew by 16% to 238 million pounds and management are confident that the support services outfit will hit its full year targets and continue to trade strongly through 2015. The shares rose by 55p to 1,210p.

GlaxoSmithKline (GSK) saw turnover fall to 5.56 billion pounds over the six months to 30th June, a drop of 16% in sterling terms against the pharmaceutical firm’s performance in the same period last year. Operating profits declined by a quarter to 1.13 billion pounds as new products are launching at lower prices than earlier comparables and key drugs are facing stronger than anticipated competition from generic rivals. The shares declined by 73.5p to 1,481p.

GSK facing a tough prescription?

Mid Caps

Telecoms operator TalkTalk (TALK) recorded year-on-year revenue growth of 3.1% during the quarter ended 30th June, with continued growth in customer numbers for broadband and TV offerings. Revenues from data products grew by 54%. Management expect this revenue growth to be supported by an overhead reduction campaign to increase returns. The shares fell by 3.2p to 316.8p.


Healthcare services provider Synergy Health (SYR) reported revenues over the three months ended 29th June that were 1,1% lower than the same period last year due to negative currency effects. On an underlying basis, revenues grew 2.6% as sales in the sterilisation techniques division rose by 13.6%, despite hospital sterilisation sales and healthcare solutions falling. Operating margins declined slightly due to increased research spending. The shares fell by 6p to 1,360p.

Renishaw (RSW) had it’s strongest sales yet over the year ended 30th June, with total revenues of 355.5 million pounds and a particularly strong performance in the 1st quarter. The metrology firm launched a number of new products through the year and received FDA approval to enter the US market with some existing product lines. Profits before tax increased by 17% to 96.4 million pounds. The shares rose by 331p to 1,801p.

Renishaw achieving measured success?

Small Caps

The emerging markets focused media company Mobile Streams (MOS) saw revenues fall from 53.9 million pounds to 47 million pounds over the year ended 30th June, with 84% being generated from Argentina. EBITDA also fell due to changes in the currency markets, but remained positive and cash generative. The company is looking to expand its business in Africa and Asia to provide fresh growth. The shares fell by 1.625p to 18.125p.

Recruitment firm Staffline (STAF) increased revenues by 11.1% to 208 million pounds over the six months ended 30th June. Pre-tax profits were 1.9 million pounds, which is a significant drop from the 3.4 million pound profit in the same period last year due to investment costs as the firm opened a number of new divisions. The board believe that their offering continues to outperform the sector and remains committed to a substantial divided increase this year. The shares rose by 50p to 1,010p.

Oil exploration outfit Tangiers Petroleum (TPET) commenced drilling in the Tarfaya offshore block, with the cost of the well fully covered by the firm’s current agreements and resources. The well is testing for two potential stacked objectives, with there being the possibility of deepening the well to look for a 3rd possible deposit contingent on results. The shares grew by 0.25p to 12.25p.

Revenues at EKF Diagnostics (EKF) over the six months ended 30th June were 12% ahead of the same period last year as the medical firm integrated three acquisitions. Sales in June were 5.4 million pounds, the highest ever in a single month, and the firm is confident that it will meet full year expectations. The has been particularly strong performance in the Diabetes and Haemoglobin units following regulatory approval for a number of products in Asian markets. The shares fell by 1.25p to 26p.

Waste management firm Augean (AUG) saw revenues rise by 6% to 24.9 million over the six months ended 30th June. All five major divisions increased sales, with the Energy & Construction departments performing particularly well. During the period the firm also completed two transactions: the sale of its former Waste Network assets and the purchase of the East Kent site. Management said that “the Group continues to trade in line with market expectations for the full year”. The shares closed flat at 26p.

The shares in online gaming firm 32Red (TTR) moved up by 0.25p to 52p after the company reported gross gaming revenues of 22.6 million pounds for the six months ended 30th June. The Italian operation more than doubled its gross revenue to 1 million pounds compared with the same period in the prior year. Given the strong performance in the first half of the year, the board intend to commit further resources to strategic marketing in order to maintain momentum through the second half.

32Red on a winning streak in Italy