Savills revenue growth offset by falling sales volumes

Jamie Gordon
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1
Savills revenue growth offset by falling sales volumes
Global real estate services provider Savills plc (LON: SVS) saw its profits dip during the first half of 2019, despite seeing Group revenue jump on a year-on-year basis. The Company reported a 16% growth in first half group revenue, up 16% to £847.0 million. Despite this, its underlying profit for the period dipped 12% on constant currency, down £4 million to £38.4 million (£1.6 million relating to implementation of IFRS 16). Group profits before tax dipped 7% to £24.7 million.

Though ahead of market trends, UK Residential sales volumes were down 1.5%, however Letting revenues grew 26%. Further, Savills Investment Management revenue rose by 20% and Facilities Management revenue jumped 27%.

Savills comments

Commenting on the results, Mark Ridley, Group Chief Executive, said,

“Given the lag effect of significant investment in recruitment in the preceding period and facing some challenging transactional market conditions, we had anticipated a slight decline in profits for the first half of 2019. The Group has delivered a resilient first half performance reflecting both the robustness and geographic diversity of our market positions generally, and the strength of our less transactional businesses.”

“In many markets, particularly the UK and Hong Kong, political and economic uncertainty has considerably reduced the volume of real estate trading activity in recent months, although occupier demand remains robust. Underlying demand for the secure income qualities of real estate remains high, but these macro uncertainties weigh on investor sentiment and make predictions in respect of near term market activity difficult to determine with accuracy. Continued investor demand, restricted supply and expectations of continued low interest rates suggest that, if political clarity emerges, the medium and long term dynamics of the real estate markets in which we operate remain positive.”

“Despite this environment, we have a robust pipeline of activity for the second half, and we currently continue to anticipate that our performance for the full year will be in line with the Board’s expectations.”

Investor notes

The Company’s shares are down 1.90% or 18.00p to 929.50p 08/08/19 13:31 BST. Peel Hunt reiterated their ‘Hold’ stance on Savills stock. The Group’s p/e ratio stands at 12.18, their dividend yield is 1.68%. Elsewhere in property development and estate agency news, there have been updates from; Bellway plc (LON: BWY), Tritax Big Box REIT PLC (LON: BBOX), Belvoir Group PLC (AIM: BLV), Intu Properties plc (LON: INTU) and LSL Property Services plc (LON: LSL).

Bellway revenues expected to rise, attempt to cut affordable homes rejected

Jamie Gordon
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1
Bellway revenues expected to rise, attempt to cut affordable homes rejected
UK residential property developer Bellway plc (LON: BWY) issued its update for the full-year today, and it is expected that both revenue and profits will rise on a year-on-year basis. The Company said that its growth strategy for FY19 had yielded strong results, with full-year revenue expected to rise 8% on-year to £3.2 billion, and profits expected grow in line with market estimates. Bellway also noted volume growth, with completions rising 5.7% to a record level of 10,892. It said its margin continued to moderate towards a ‘more normalised’ level. The Company boasted a strong order book of 4,878 homes and in turn potential to deliver further volume growth. They also stressed their commitment to build quality and customer care, despite having attempted – and failed – to reduce the proportion of affordable homes by 10% at the Shepherds Walk development

Bellway comments

Jason Honeyman, Chief Executive, commented, “Bellway has concluded another successful year, further increasing the supply of much needed new homes and delivering a record number of housing completions. Quality and customer care remain a priority for the business and this has helped the Group achieve recognition as a five-star homebuilder2 for the third year in succession. Trading conditions remain stable and customer confidence is resilient. This, together with a strong forward order book and a healthy balance sheet, ensures that Bellway is well placed to continue its long term growth strategy.”

Investor notes

After a slight recovery, the Company’s shares are down 2.91% or 84.00p to 2,798.00p 08/08/19 12:53 BST. Peel Hunt analysts retained their ‘Add’ stance, while Liberum Capital analysts reiterated their ‘Buy’ rating on Bellway stock. The Group’s p/e ratio stands at 6.81 and their dividend yield is 5.11%. Elsewhere in property development and estate agency news, there have been updates from; Tritax Big Box REIT PLC (LON: BBOX), Belvoir Group PLC (AIM: BLV), Intu Properties plc (LON: INTU), LSL Property Services plc (LON: LSL) and Countryside Properties PLC (LON: CSP).

Tritax Big Box expands portfolio and widens profits

Jamie Gordon
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3
Tritax Big Box expands portfolio and widens profits
Real estate investment trust Tritax Big Box REIT PLC (LON: BBOX) posted profit growth alongside an expanded portfolio during the first half of 2019. The Company told investors that operating profit before changes in fair value had extended 5.7% on a year-on-year basis, to £60.7 million for H1 2019. Its portfolio value also grew 12.6% in an on-year comparison, up to £3.85 billion, with rent roll also rising 3.5% to £166.8 million. Its shareholders also enjoyed improvements on-year, with the company declaring a dividend for the period of 3.425p per share, up 2.2% on-year. Similarly, adjusted EPS lifted modestly, up 0.9% to 3.41p a share. Despite these positives, Tritax Big Box total return for the six month period was down by 4.68 points to 0.42%, and EPRA net asset value per share dipped 1.8% to 150.08p.

Tritax Big Box comments

Company Chairman Sir Richard Jewson KCVO, JP, stated,

“The long-term fundamentals of our market are positive. The sector continues to benefit from the structural change in shopping habits, as consumers switch from the high street to buying online, creating ongoing demand for logistics space to fulfil these orders.”

“With Brexit contributing to an uncertain economic environment and making it more difficult for companies to grow their profits, the operational efficiencies and cost savings offered by Big Boxes remain compelling to occupiers. Businesses across industries have signalled their intentions to invest in logistics infrastructure, including new warehouse facilities as well as systems and automation, to facilitate efficient supply chains. The environmental impact of real estate also creates demand for modern, energy efficient buildings like ours, which support our customers’ sustainability programmes.”

“The quality of our Portfolio and customer base means that, irrespective of conditions in the wider economy, we are confident of continuing to deliver secure and growing dividends to Shareholders, as part of an attractive Total Return over the medium term.”

Investor notes

The Company’s shares have dipped 1.50% or 2.20p to 144.60p a share 08/08/19 12:03 BST. Liberum Capital Analysts reiterated their ‘Hold’ stance on Tritax Big Box stock. The Group’s p/e ratio stands at 21.49 and their dividend yield is 4.61%.
Elsewhere in property development and estate agency news, there have been updates from; Belvoir Group PLC (AIM: BLV), Intu Properties plc (LON: INTU), LSL Property Services plc (LON: LSL), Countryside Properties PLC (LON: CSP) and Ashley House Plc (LON: ASH).

Burford hit by short selling criticism

Andrew Hore
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Burford hit by short selling criticism

Litigation finance provider Burford Capital (LON: BUR) has an impressive share price record since flotation a decade ago, and it is still around six times the original placing price, but it has fallen sharply over the past month. A report by a short seller has knocked the share price of the AIM-quoted company.
The share price slumped 516p to 605p having fallen the day before, and this is barely much more than one-third of the price less than a month ago. The stated NAV is $7.17 a share, so the share price is still trading at a small premium, even after the fall.
Muddy Waters published a 25 p...

Morgan Sindall construction posts 18% profit growth

Jamie Gordon
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0
Morgan Sindall construction posts 18% profit growth
British construction services company Morgan Sindall Group PLC (LON: MGNS) saw its shares rally as it booked impressive first half profits and boasted strong yields for its shareholders. While revenue was flat between H1 2018 and 2019, adjusted operating profit grew 18% to £37.5 million and adjusted profit before tax jumped 20% to £36.3 million. The state of play for investors was equally positive. Morgan Sindall declared an interim dividend of 21.0p a share, up 11% on-year. Further, adjusted earnings per share rose 15% on-year to 64.2p. Notable divisional performances came from Partnership Housing and Urban Regeneration, up 39% and 36% respectively.

Morgan Sindall comments

Commenting on today’s results, Chief Executive, John Morgan said,

“We have had a strong first half of the year and these results underline the significant operational and strategic progress being made across the Group. Our strong balance sheet including our net cash position is a significant differentiator for us, allowing us to make the right long-term decisions for the business, which best positions us in our markets for continued sustainable growth.”

“There is much positive momentum across the Group and with our high quality, growing order book, we are excited by the opportunities ahead. Following our strong first half performance and with the current visibility we have of the rest of the year, we now expect to deliver a result for the full year which is slightly ahead of our previous expectations.”

Investor notes

Following the update, the Company’s shares rallied 8.11% or 90.00p to 1,200.00p a share 07/08/19 16:36 BST. Peel Hunt analysts reiterated their ‘Buy’ stance on Morgan Sindall stock. The Group’s p/e ratio stands at 7.31, their dividend yield is 4.42%. Elsewhere in property development and estate agency news, there have been updates from; Belvoir Group PLC (AIM: BLV), Intu Properties plc (LON: INTU), LSL Property Services plc (LON: LSL) and Countryside Properties PLC (LON: CSP).      

Cora Gold confirms further gold mineralisation at Selin Project

Jamie Gordon
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5
Cora Gold confirms further gold mineralisation at Selin Project
Gold mining company Cora Gold Ltd (LON: CORA) continued an eventful few weeks with the publication of results for a selective infill drill programme for its Selin project at the Sanankoro Gold Discovery in Southern Mali. This comes only days after announcing further mineralisation at the Zone A project on the same field. The Company said that gold oxide mineralisation extended up to s depth of 90 metres. They recorded potential commercial mineralisation subsections of 25 metres at 2.81 g/t, 19 metres at 1.61 g/t and 9 metres at 2.37 g/t. In addition to the mineralistion at the Selin prospect, the Company noted potential deposits at the North Bokoro project.

Cora Gold comments

Jonathan Forster, CEO, stated, “We are extremely pleased with the results of the infill drilling, which continues to demonstrate potentially economic mineralisation in the near surface oxide portion of the Selin prospect. Infill drilling has provided a good measure of the continuity of gold mineralisation at the Selin prospect with the zone now totalling approximately 2,250m in length with oxide mineralisation extending locally up to 90m at depth. The Selin prospect demonstrates good potential for future extraction through low cost open pit mining and the enhanced knowledge of the continuity of oxide mineralisation significantly justifies a further exploration programme to investigate the deeper sulphide mineralisation.” “Reconnaissance exploration drilling has confirmed that primary, potentially economic gold structures exist in areas extending away from the Selin prospect and provides guidance for future drilling in these areas. Our regional exploration work is demonstrating that there is still significant further potential available across Sanankoro and Cora’s portfolio.”

Investor notes

The Company’s shares have rallied 2.13% or 0.12p to 6.00p a share 07/08/19 16:30 BST. The Group’s p/e ratio and dividend yield are unavailable, its market cap isb £5.81 million. Elsewhere in the mining and minerals sector, recent updates have come from; Glencore PLC (LON: GLEN), Jubilee Metals Group PLC (LON: JLP), Kavango Resources PLC (LON: KAV), Ariana Resources plc (LON: AUU), Rio Tinto plc (LON: RIO) and Bushveld Minerals Limited (LON: BMN).

TT Electronics shares dip despite impressive fundamentals

Jamie Gordon
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1
TT Electronics shares dip despite impressive fundamentals
Global electronics components manufacturer TT Electronics has seen its share price dip during trading on Tuesday, despite booking a bumper set of fundamentals. The Company posted strong sales ahead of costs, with revenues jumping 23% (20% on constant currency) on a year-on-year basis to £238.2 million for the first half, and operating profits up 32% (27% on constant currency) to £19.2 million. Regarding its investors, underlying earnings per share grew 28% to 8.8p, while statutory EPS dipped from 4.4p to 3.3p between H1 2018 and H1 2019. First half dividends increased 8% on-year from 1.95p to 2.10p. TT Electronics said that during the period, it had undergone improvements in operational efficiency and secured ‘significant’ customer wins.

TT Electronics comments

Richard Tyson, Chief Executive Officer, said:

“We have delivered strong revenue and profit growth alongside further margin progression in the first half despite a tougher market backdrop.”

“The evolution of TT into a higher quality, better balanced Group reflects our strategic focus on picking the right customers in the right markets and investing in the right capabilities. The actions we have taken to concentrate on sensing, power and connectivity solutions across aerospace and defence and medical, whilst refining our portfolio of businesses through acquisitions and disposals have transformed TT.”

“We believe our strategy to position TT to benefit from “electronics everywhere” will continue to strengthen the Group. Despite the current macroeconomic environment, our first half performance and order momentum position us well to make further progress in 2019 and beyond.”

Investor notes

After a slight recovery, the Company’s shares are down 3.76% or 8.30p to 212.70p a share 07/08/19 13:47 BST. Peel Hunt Analysts have reiterated their ‘Buy’ stance on TT Electronics stock. The Group’s p/e ratio stands at 13.64 and their dividend yield is 3.04%. Elsewhere in the tech sector, there were updates from; SDL plc (LON: SDL), Dialight Plc (LON: DIA), Seeing Machines (LON: SEE), Bidstack Group PLC (AIM: BIDS) and Nektan PLC (LON: NKTN).

Market and Currency Outlook with Spreadex and Vanguard Capital

Jamie Gordon
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8
Market and Currency Outlook with Spreadex and Vanguard Capital
Ok, the bull may not be THAT appropriate. Last week we were told there is a one-in-three chance that recession is coming – sadly, markets don’t seem to want to get it over with. Manufacturing PMI is at its lowest level in months, miners are struggling (outside of gold and vanadium), the US bond market hasn’t resolved its inverted yield curve and the world superpowers are still toying with the prospect of a currency war. All that being said, market’s have proven surprisingly resilient and have steadied since Monday’s currency dive. Aware of sounding like a game show host, its still all to play for; there are still exciting opportunities for investors and there is potential for a bounce-back, however we should remain vigilant of poor performance within growth indicators. Spreadex thoughts on markets today Discussing currency movements over the week, financial advisor Connor Campbell described a return to something that resembles business as usual, despite what remains a tentative and unsteady status quo. “A hellish start to the week settled into a tense quiet on Wednesday morning, investors nervously waiting for the next major skirmish in the US-China trade war.” “A continued […] rebound from the pound – which is up 0.2% against both the dollar and the euro – and trouble in its commodity sector, with Glencore (LON: GLEN) the worst hit after a 32% fall in earnings, ensured the FTSE wasn’t able to lift itself back above 7200. Instead the UK shed 10 or so points, straining to keep above 7160.” “Choosing, seemingly, to ignore a sharp, and potentially recession-suggesting, plunge in German industrial production, the DAX rose half a percent after the bell. That leaves the index teasing 11650, compared to the sub-11400 lows struck at its worst moments on Tuesday. As for the CAC, a 0.2% increase pushed it back to 5250.” “Looking ahead to the rest of the day and, without much on the economic calendar, the markets are going to remain incredibly susceptible to the minutiae of the trade war, especially if Donald Trump wants to work out his itchy thumbs.” Ultimately, markets are still holding their breath, and rightly so. With China and the US locking horns ones again and negative news on growth indicators emerging daily, you’d think market sentiment could only take so much fraying before it snaps. Vanguard overview and advice Perhaps its not all doom and gloom, though. Speaking to the CEO of Vanguard Capital AG, Sezer Sherif, and the Company’s senior financial advisor, Imran Lakha, it appears markets still have a leg to stand on. Speaking to the UK Investor Magazine, Vanguard representatives said that markets would only encounter severe turbulence should there be a downturn in the credit market. The pair noted that fundamentals throughout the market were poor, with indicators for global growth (PMIs, auto sales etc) and the earnings outlook (based on guidance for the third quarter of the calendar year) were both rolling over. However, they stressed that bonds and equities should not be tarred with the same doom and gloom brush as other indicators, and that current liquidity conditions – as ensured by central bank policy – have not changed enough to make them think that equity markets couldn’t bounce back. Summing up his current position, Mr Lakha stated,
“I’m not a bull, but I’m very conscious of the market’s ability to bounce back.”
Looking forward, Vanguard representatives said that they expected Trump’s hawkishness to persist and that Jay Powell would likely be forced into further accommodative monetary policy. Regarding the inverted yield curve, the consensus was that the Fed needed to continue its rate cuts, with the hope that developing markets would follow suit. The Company remained optimistic and highlighted potentially fruitful leads for investors to pursue. Discussed as almost a given, there was a bullish long-term outlook for gold, and for more proactive investors, Mr Lakha advised looking into deep-out-of-money-puts on a two-month rollover. Other market and macro financial news has come from; the London Stock Exchange Group (LON: LSE) and Sterling.

Glencore earnings drop by a third and EPS dive 89%

Jamie Gordon
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5
Glencore earnings drop by a third and EPS dive 89%
British-Swiss commodity trading and mining company Glencore PLC (LON: GLEN) informed investors today that its first half fundamentals suffered a prolonged freefall. With a sense of poetic justice, the Company announced that with metal prices plummeting, its Mutanda prospect in Congo was ‘no longer economically viable’. As such, it said it would halt production at the site, which is the world’s largest cobalt mine. This comes after swathes of litigation being brought against the Company last summer, regarding its operations in the Democratic Republic of Congo and alleged corrupt practices. Today, Glencore posted its results for the first half of 2019 and revealed a damning set of fundamentals. The Group’s first half adjusted earnings EBITDA were down 32% on a year-on-year basis, down to 5.58 billion; its adjusted EBIT were down 56% to £2.23 billion. The Company also announced that its net debt had widened 11% to £16.30 billion and its funds from operations had narrowed 37% to £3.52 billion. Its investors fared even worse, with earnings per share diving 89% to US $0.02 and net income attributable to equity holders collapsing 92% to £226 million.

Glencore comments

Chief Executive Officer, Ivan Glasenberg, commented, “Our performance in the first half reflected a challenging economic backdrop for our commodity mix, as well as operating and cost setbacks within our ramp-up/development assets. Adjusted EBITDA declined 32% to $5.6 billion.” “[Our] African copper business did not meet expected operational performance. We have moved to address the challenges at Katanga and Mopani with several management changes as well as overseeing a detailed operational review, targeting multiple improvements to achieve consistent, cost-efficient production at design capacity. Our teams have identified a credible roadmap towards delivering on the significant cashflow generation potential of these assets, at targeted steady state production levels. At Mutanda, we are planning to transition the operation to temporary care and maintenance by year end, reflecting its reduced economic viability in the current market environment, primarily in response to low cobalt prices. We continue to progress studies on the sulphide project, having the potential to extend operations for many years, and anticipate being able to provide an update at our Investor Day in December.” “Looking ahead, we are confident that commodity fundamentals will move in our favour and that our diverse commodity portfolio will continue to play a key role in global growth and the transition to a low-carbon economy. Our asset teams are focused on delivering the full potential of our business, which together with our promising range of commodities, should see us well positioned for the future. Through continued constructive collaboration, we remain focused on creating sustainable long-term value for all stakeholders.”

Investor notes

After a slight recovery, the Company’s shares are down 1.75% or 4.05p to 227.30p a share 07/08/19 11:01 BST. UBS analysts remain unchanged in their ‘Hold’ stance, while Deutsche Bank reiterated their ‘Buy’ rating for Glencore stock. Elsewhere in the mining and minerals sector, recent updates have come from; Jubilee Metals Group PLC (LON: JLP), Cora Gold Limited (LON: CORA), Kavango Resources PLC (LON: KAV), Ariana Resources plc (LON: AUU), Rio Tinto plc (LON: RIO) and Bushveld Minerals Limited (LON: BMN).

President Energy posts sales and production growth

Jamie Gordon
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2
President Energy posts sales and production growth
Argentina-focused oil and gas producer President Energy PLC (LON: PPC) posted increases in its sales and reduced bank site, alongside growth in average production, in a first half comparison on a year-on-year basis. Sales were up 7% compared to H1 2018, up to US $23.5 million, while adjusted EBITDA stood at $8 million. Additionally, the Group’d bank debt dipped from $10.15 million at period opening to $4.82 million as the first half drew to a close. President Energy average net production stood at 2,500 boepd, which was up 8% on the last financial year’s average. Further, the Company added that it had 1,100 boepd tested, proven and ready to produce, in addition to existing production. The completion of a work-over facility at its Louisiana project should be completed and production should be ‘back in line’ by September.

President Energy comments

Peter Levine, Chairman, stated,

“President has delivered positive results in H1, notwithstanding the headwinds as previously announced which should now, step by step, be receding in the rear-view mirror.”

“In the space of only some 20 months President has enjoyed a period of transformative progress including the successful integration of four valuable acquisitions, a strategic pan-regional pipeline, the bringing on of new production, generation of positive cash flow and attaining good margins. Despite this, President’s share price, uncoupled from such progress, has dropped some 35% in value during that time.”

“President, remains confident as to its future prospects and success as an energy business and is examining initiatives to deliver value for shareholders.”

Investor notes

After rallying healthily, the Company’s surge was mooted and their shares are currently up modestly by 0.76% or 0.050p to 6.60p a share. Analysts from Peel Hunt have reiterated their ‘Add’ stance on President Energy stock. The Group’s p/e ratio is 796.22 and their dividend yield is currently unavailable. Elsewhere in the oil and gas sector, there have been updates from; Mosman Oil and Gas Limited (AIM: MSMN), Nostrum Oil and Gas PLC(LON: NOG), Reabold Resources PLC (LON: RBD) and Trinity Exploration and Production PLC (LON: TRIN).    
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