Most popular equity research this week | 7-11 Nov

 
The Macro View

Panmure Gordon, 9 November

"President-elect Trump set to have four important implications for the UK economy. Market action is set to be dominated by the surprise victory of Donald Trump in the US Presidential Election. The impact closer to home in the UK is difficult to ascertain give the absence of a political track record from the President-elect however four domestic themes I think are set to result from the result..."

Accounting misstatements | Redcentric Plc | RCN 

N+1 Singer, 7 November

"Redcentric has announced that an internal review by the company's audit committee, in relation to the interim results for the six months ended 30 September 2016, has discovered misstated accounting balances in the Group's balance sheet. It appears that the impact of correcting these misstatements will result in the need to reduce net assets by at least £10m. The board now believes that net debt at September ’16 was approximately £30m, c.£10-£15m higher than previously thought. There are limited details available at the current time, as such we are placing our forecasts and recommendation under review."

The Oily Rag | Oil and Gas Sector Note

finnCap, 11 November

"Topic of the quarter: We discuss the outlook for the North Sea following the Wood Review and restructuring within the industry since the downturn in the oil price. Consistent with other mature regions, the North Sea has struggled with declining production and a stubbornly high cost base. Following the Wood Review and changes to the fiscal terms and regulatory environment, we discuss how these developments could prolong production and maximise economic recovery in the long term. Issues remain surrounding decommissioning..."

Investment in place for an H2 harvest | Majestic Wine PLC | MJW

Liberum, 7 November

"A resurgent Majestic Wine is likely to be a theme at the group’s upcoming interim results. The removal of non-productive work out of stores, the freeing up of staff to be customer centric and accountability within Retail, are all contributing to an improvement in trading."

War & Peace | Aerospace & Defence Sector Note

Panmure Gordon, 11 November

"The UK Aerospace & Defence sector has gained 9% in the last two days following news that Donald Trump is the President-elect. This is understandable given his stated aim to: 1. fully repeal the defence sequester and submit a new budget to rebuild the “depleted” military; and 2. ask NATO allies to increase their defence spending. Current budgets imply a modest CAGR of 1% to FY2020 so it would appear that there is some scope to increase the rate of US defence spending. However, we would caution that the Trump team has not made any explicit..."

Exceptional trading continues | Keywords Studios Plc | KWS

Edison, 8 November

"Keywords has announced that the strong trading in localisation and audio services has continued into H216. In particular, the Synthesis business acquired in April continues to benefit from exceptionally strong trading. Full-year results are now expected to be materially ahead of consensus and we upgrade our FY16e EPS by 13%. Erring on the side of caution, we have not changed our FY17 estimates significantly. Nevertheless, we believe the company does have a platform to sustain double-digit earnings growth, and hence medium-/long-term prospects for further share appreciation remain good."

Long term growth opportunity? | Aberdeen Frontier Markets Investment Company | AFMC

QuotedData, 10 November

"Aberdeen Frontier Markets Investment Company (AFMC) offers investors a diversified exposure to the superior growth prospects offered by frontier markets (stock markets that aren’t classified as developed or emerging). Its managers believe that weak commodity and energy prices, as well as concerns over Chinese growth, have weighed heavily on this area and the vast majority of investors are now underweight. A valuation gap has opened up, versus developed markets, but AFMC’s managers see the potential for a strong recovery in frontier markets..."

FY16 guidance maintained | Paysafe Group Plc | PAYS

Edison, 9 November

"Paysafe has confirmed that trading year to date is in line with management expectations and therefore its FY16 guidance remains unchanged. The group expects to achieve revenues of $970-990m and EBITDA of $287-293m. We leave our forecasts unchanged and note that Paysafe continues to trade at a discount to its peer group on an EV/EBITDA and P/E basis."

Breakfast Today (Day after the US election) | CPT | AVV | IMB | MKS

Beaufort Securities, 9 November

"Take a deep breath and weigh up the consequences. At the time of writing, Trump appears poised to capture the ultimate protest vote in a most divisive race that has exposed the deep divides across the States by class, race and gender. Just about every significant domino fell his way with even the Senate looking like it has been captured, which now leaves investors to ponder the pace at which he will attempt to fulfil his multitude of campaign pledges. While US equities closed overnight on a nervous, but still upbeat tone with all principal indices rising, only the Asian markets remained open as the results actually trickled in. Plunging amid wild volatility, the Nikkei was seen almost in panic as the Yen/US$ spiked sharply, with the ASX and Hang Seng also falling significantly while the Shanghai Composite held up surprisingly well despite Trump’s anti-free-trade rhetoric being pointed very much at the emerging markets. Treasuries, normally the best place to park money during times of turmoil are lurching lower as investors price in a less predictable occupant of the White House, along with expectations that Janet Yellen, who he accused of being Democratic stooge, is now unlikely to be given a second term as expectation of a Feb December rate hike also dives to below 50% from a peak of 84% in October. Europe will rue the likely collapse of TTIP while environmental campaigners also foresee Trump abandoning Obama’s Clean Power Plan. With S&P futures slumping as much as 5%, markets in Europe are predicted to suffer similar losses with the FTSE-100 seen down over 200 points in this morning’s opening trade. Largely irrelevant against this background, the UK will today will release trade data while also awaiting OECD leading indicators, although a scheduled speech from the Fed’s Kashkari this afternoon could throw up some significant points. A large number of UK corporates, including Burberry (BRBY.L), esure (ESUR.L), Experian (EXPN.L), Flybe (FLYB.L), Sainsbury’s (SBRY.L), SSE (SSE.L) and Tullow Oil (TLW.L). Today markets worldwide, that had been comfortably positioned for a ‘business as normal’ Clinton victory, will be subject to quite rampant volatility as they try to reposition themselves and seek out international safe havens, including gold. For the brave, this will throw up some quite exceptional buying opportunities as traders seek out the likely sectorial winners which seem to include Financials, Defence and Healthcare."

"Carpe Diem" | Non-Standard Finance Plc | NSF

Hardman & Co, 11 November

"In the UK, unsecured, non-standard lending market, NSF has the market leading network in branch-based lending, is number three in home credit, and has a scalable platform in the growing guaranteed loans market. It’s medium term targets of 20% loan book growth and a 20% pre-tax return on assets look credible. NSF is under-geared and existing debt facilities will finance our projected growth through to mid-2018. Management is using technology to improve efficiency while not compromising the core personal relationships which are critical to managing credit. Our valuation methodologies indicate c67% upside."