See what was trending this week...
Companies: BAG, CYAN, FTC, FLA, KBT, MAFL, BWNG, OTC, SOLO, TRI, WTB, XTR
Featured: Support Group
"In light of the UK election, we highlight our favoured overseas earners, operators in defensive markets and those capable of taking market share, but our main topic is the structure of the UK employment market. The UK has the lowest unemployment rate since 1975 at 4.6%, and there are, consequently, fewer and fewer candidates to fill vacancies. This suggests recruitment companies may struggle to grow, but there are structural changes in the UK labour force that offer growth opportunities. Temporary labour continues to expand relative to the point in the economic cycle, its importance accelerating since 2008, and part-time labour has grown at twice the rate of full-time labour throughout both the last cycle and over the long term. There are, of course, specialist temporary recruiters, but the part-time market appears relatively untapped (at least by the quoted companies) despite being c.5x the size of the temporary segment in terms of numbers."
N Brown Group (BWNG)
Start to the year confirms BWNG transformation benefits emerging | N+1 Singer, 20 June
"Product sales growth of 10.2% clearly highlights the strategic transformation is gaining momentum, and marks the 5th consecutive quarterly improvement in performance, comfortably beating market expectations. Whilst Financial Services income is down 5%, we continue to expect the trend within FS on both interest and non-interest lines to shift to growth from H2, with important implications for profitability from the improved quality of the file and arrears rates. There is no change to core guidance today although we expect small (1-2%) EPS upgrades and a c£10m downgrade to ND in response to the news 5 loss-making stores will be closed, having completed the review of that business. Given the online transformation, anticipated F4F benefits, and as we near an inflection point for international growth (in Q2), we have raised our 12-month target by 16% to 350p and continue to point investors to the re-rating potential. Buy."
"Q1 trading is encouraging overall, with positive Costa LFL and robust Premier Inn RevPAR. FY18 consensus looks appropriately conservative, with no change expected at this early stage of the year. At c.10x FY18 EBITDA the valuation feels well poised, with upside from Costa initiatives likely to be capped by challenging UK consumer/high street dynamics. HOLD. Call 7:45am..."
"A G Barr’s (BAG LN, HOLD, T/P 600p) share price since their FY2017 results on the 28th March has increased 18.6%. Their prelim results were in line with expectations and highlighted the company’s strategy to tackle the incoming sugar tax levy in the UK. We take this opportunity to adjust our FY2018 and FY2019 forecasts.A G Barr’s (BAG LN, HOLD, T/P 600p) share price since their FY2017 results on the 28th March has increased 18.6%. Their prelim results were in line with expectations and highlighted the company’s strategy to tackle the incoming sugar tax levy in the UK. We take this opportunity to adjust our FY2018 and FY2019 forecasts..."
"Filtronic, the designer and manufacturer of microwave electronics for the wireless telco market, announced last month (12th May) that trading was ahead of expectations and we raised our FY17 PBT forecasts by 36.5%. This morning Filtronic has issued a follow-up trading update, providing additional detail. The last 12 months were undoubtedly a watershed period for the business, with revenues jumping from £13.6m in FY16 to £35.4m in FY17 (driven by Filtronic Wireless). In terms of new news, cash flows were stronger than expected and the business ended with net cash of £2.6m (PG forecast £1.2m vs net debt of £0.3m May-16)..."
"FinTech Group (FTG) is growing strongly. Management has created an integrated online broking business which can offer products across the value chain, from white labelled technology platforms to banking services. In our view, this gives it a significant advantage over its peers. The online broking sector in Germany has been consolidating and the fintech sector remains buoyant. Despite being the fastest growing major broking business in Europe, the shares trade at a discount to the sector..."
"As already announced, record FY17 profits have exceeded management expectations and growth was delivered with a strong cash performance and a sharp rise in the dividend. We have increased our EPS estimates marginally for 2018 with restrained growth expectations. As Trifast continues to deliver on its strategy, the 10% rating discount to peers should moderate..."
"K3 recently announced a Placing and Open Offer at 140p to raise £8.5 million before expenses. The Placing is subject to shareholder approval. The proceeds will be used to strengthen the Group’s balance sheet and provide additional working capital to give the management team flexibility as it makes strategic decisions (a further review of Group resources and operations was announced in May). The fundraising is also key to securing certain amendments to the terms of the Group’s existing facility agreement with K3’s lenders. Several Board changes have been announced and K3 will recruit a new Chairman. The trading comment in the announcement anticipates an operating loss of between £0.4 million and £2.4 million. We reintroduce estimates for FY 2017E (a 17 month period) and 2018E which reflect the change to a November year end. Meanwhile, management again underlines the positive momentum in the profitable business units..."
""US equities yesterday enthusiastically reversed the declining trend of the past week, taking the S&P-500 and Dow Jones to new record highs, while the recently punished Nasdaq chalked up the largest rise as bargain hunters searched for oversold situations. Apple, for example, made a good recovery after having declined for the previous six sessions. Closing at their best levels of the day, buying confidence was clawed largely from a display of strength amongst overseas markets whose foundations had been established during early morning trade in Asia. A prediction from New York's Federal Reserve President, William Dudley..."