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