UK100

UK 100 equity research

Explore the most viewed and latest equity research and media content for the top 100 largest listed companies in the UK.

UK 100 Equity Research

Broker research, valuations, & analysis on the UK 100

14 Jan 19

UK Housebuilding Sector in 2018

‘From the deserts of East Ham to the gardens of Cottenham’, the UK Housebuilding Sector was whacked to the tune of 27% in 2018; and not one share price (out of 18) rose on the London Stock Exchange.

Companies: BWY CRST BDEV WJG PSN RDW TW/ MCS CSP TEF BKG ABBY GLE

21 Jan 19

LIBERUM: The 4S’s - The negative working capital model in Construction is changing

Four measures are being considered to protect the supply chains in the wake of the Carillion collapse, a year or so ago; 1) Project Bank Accounts, 2) The Prompt Payment Code; 3) Retentions Reform; and 4) Assigning non-executives for the supply chain. (Read here). This means that in most cases, Costain is an exception, working capital will become less negative, which has a negative impact on cash flows, while Construction companies grow.

Companies: AA/ BAB BBY CPI COST GFRD HSV IRV KLR KIE MER MTO MGNS PAY RPS SRP STAF

16 Jan 19

Disposal of Sage Payroll Solutions in the US

Sage Group entered into an agreement to sell Sage Payroll Solutions in the US to iSolved which is specialised in Human Capital Management solutions. In FY2017/18, Sage Payroll Solutions had revenue of £38m and an operating loss of £-1m. We believe that the consideration price of £78m, which corresponds to a P/Sales multiple of c.2x, is a fair price.

Companies: The Sage Group

04 Jan 19

Christmas Trading

Next has reported sales for the first two months of 4Q 2018/19 in line with its own guidance at +1.5% with retail -9.2% and online product +15.2%. The company has very slightly reduced its central PBT guidance for the current year from £727m to £723m. Generally, the online figure will re-assure investors who have been cautious post the December ASOS profit warning. To reinforce this the company’s first guidance on 2019/20 is at broadly the level of existing market expectation at £715m (mkt £725m).

Companies: NEXT

18 Jan 19

The undesired shareholder

The group has confirmed its intention to kill two birds with one stone through the buy-back of shares held by the Treasury. From a shareholders’ standpoint, beyond the positive signal sent, we see limited share price support from the reduction in the State’s stake or of the excess equity.

Companies: Royal Bank Of Scotland Group

18 Jan 19

Robust Q3 FY18/19 performance

The Q3 results came in ahead of our expectations, gaining strength from the robust US performance. Also, the UK provided much-needed support to its topline, led by positive B2B growth and moderating B2C losses. LatAm and EMEA/Asia also remained positive. Moving forward, regulatory risk (dealing with data privacy laws) seems to be the only risk in the US, whereas in the UK, we maintain our cautious stance given Brexit-led uncertainty stretching further. We have revised our estimates upwards. No change in the stock recommendation.

Companies: Experian

25 Jul 18

Some relief in India

Q1 revenues declined by 2.1% yoy but this includes a 2.8% negative impact from forex and a 0.8% adverse impact from the disposal of Vodafone Qatar. On an organic basis, service revenue was quite as expected, increasing indeed by 0.3%. A number slightly lower than the 1.4% recorded in Q4 which still reflects strong growth in AMAP, but which was mitigated by a decline in Europe driven by the drag from UK handset financing and the EU roaming regulation. Excluding these factors, Europe grew by 0.5% yoy: a correct number but nothing more. AMAP grew by 7.0% yoy, as in H2 2017/18, with growth that was faster than local inflation in South Africa, Turkey and Egypt. Although Indian revenues (not consolidated) declined by 22.3% yoy due to price competition and MTR cuts, note that it was down by only 1.4% compared to Q4, reflecting finally an appreciated stabilisation. The full-year guidance was reiterated. The group expects EBITDA growth of 1-5%, excluding the impact of UK handset financing in both years, and the significant benefit in the prior year from regulatory settlements in the UK and a legal settlement in Germany.

Companies: Vodafone Group

25 Oct 18

Ongoing resilience

Quarterly trends show that operating trends have remained immune to the Brexit uncertainty. We expect the stock to continue to demonstrate stronger resilience vis-à-vis not only its domestic peers but also continental European players.

Companies: Lloyds Banking Group

30 Oct 18

Q3: high asset reliability generates cash

Impressive results from BP, with every divisions performing well. The growth in the US division makes the case for the BHP assets even more compelling.

Companies: BP

13 Nov 18

Vodafone maintains its dividend

Following a correct H1 release from an operational viewpoint, management has announced it intends to propose a total dividend of €0.1507 per share for 2018/19, stable yoy. So, we still do not see a case for a cut in the dividend for 2018/19 or 2019/20. This is why we are sticking with our Buy opinion.

Companies: Vodafone Group

04 Dec 18

Horlicks out, oncology in

GSK made two major announcements on 3 December 2018. It has finally found a buyer for its nutrition drinks business. Unilever will be buying its Horlicks and other health food drinks brands in over 20 markets for £3.1bn. This announcement was followed by the acquisition of cancer specialist, Tesaro, for £4bn ($5bn) in cash. The deal with Unilever will be executed in three parts: GSK India, the Indian consumer health arm of GSK will be merged with the Indian arm of Unilever, HUL, and GSK will get a 5.7% stake in the combined entity. This overall deal is valued at £2.6bn. The deal is likely to be completed by 2019, post which GSK can start monetising its stake in tranches. GSK will be selling its 82% stake in the Bangladesh unit for £150m in cash. The deal also involves the sale of brand rights and consumer healthcare nutrition activities in other countries for £416m in cash. In addition to the above terms, the two companies will also enter into a five-year distribution agreement with GSK’s OTC business in India. Under this agreement, HUL will market these OTC brands, which mainly include Crocin, Eno, Iodex, and Sensodyne. Tesaro’s £4bn-acquisition (acquisition price of $75 per share) represents a premium of over 60% above Tesaro’s share price on Friday, 30 November 2018. Tesaro currently markets a cancer drug, Zejula (niraparib), which was approved in March 2017 to treat adult patients with recurrent ovarian cancer. As a reminder, Tesaro was also reported to be of interest to Sanofi, which has also been bulking up its oncology portfolio.

Companies: GlaxoSmithKline

19 Dec 18

The beginning of an end

After averting the spin-off for years, GSK has finally made up its mind about letting go of the consumer health business. It has announced a JV of its consumer health business with Pfizer’s, which had repeatedly failed in securing a buyer for its consumer health business for quarters. The deal, expected to close in H2 19, is part of the bigger plan to offload eventually the business completely. Within three years of closing the transaction, GSK will look at a separate listing of the JV in the UK, leaving with it just the pharma and the vaccines businesses. GSK will hold 68% stake in the JV, with combined sales of £9.8bn ($12.7bn). The transaction will be accretive to GSK’s non-adjusted earnings in the second full year after the closing. The transaction will involve cash costs of £0.9bn (to be funded by divestment worth £1bn) plus non-cash charges of £0.3bn and aims at cost synergies of £0.5bn by 2022 (with a target of adjusted operating margin in the ‘mid-to-high 20s’ by 2022). To pacify the investors, it has confirmed a dividend of 80p per share in 2019 as well.

Companies: GlaxoSmithKline

12 Dec 18

An upbeat investor update presentation

Anglo American has presented an optimistic operational outlook for the next two-three years. The company expects to exceed its 2018 production guidance by 2%, while costs would be 5% lower. In 2019, 3% production growth is targeted, and cost inflation is guided to be offset by productivity improvements. During 2020-21, another 5% annual production growth is targeted. Below is the production summary for the respective divisions – Production outlook Source – Investor Presentation December 2018 In effect, most of the growth is being targeted in the iron ore (primarily Minas-Rio) and met coal divisions. For Minas-Rio, management expects a restart of operations in December 2018. Sustaining capex through to 2021 is guided to be $3.2bn p.a. – which includes spending that would help increase some of the mining assets’ average life by c.10 years, while the long-term sustaining capex is guided to be $2.8-3.1bn p.a.

Companies: Anglo American

14 Dec 18

New plan to renew with growth

WPP presented a new plan for 2019-21 in order to renew with growth. The medium-term targets include amongst others organic net revenue growth in line with peers and a headline operating profit margin (excluding associates) of at least 15% of revenue by the end of 2021. Furthermore, it was confirmed that the future of Kantar should be with a strategic or financial partner and WPP as a minority shareholder. The final decision is due to be announced in Q2 19.

Companies: WPP

17 Jan 19

Good start to FY2018/19

Sage Group posted rather good business development in Q1 18/19. Organic revenue grew by +7.6% and was sustained by strong recurring revenue growth of +10.5% (vs +7% in Q1 17/18). Although this has to be tempered by the favourable comparative yoy, it is a good start to FY2018/19.

Companies: The Sage Group

13 Apr 17

London Stock Exchange - Companies to Inspire Africa

20 Apr 17

Geoff Drabble, Ashtead Group CEO

Premium

09 Sep 15

Alkane Energy - Interim Results

03 Jun 15

Guidance Marine - ELITE at London Stock Exchange

04 Jul 14

Executive Interview - Rolls-Royce

02 Jun 15

BE-Thinking - ELITE at London Stock Exchange

14 Feb 17

London Stock Exchange Group - Your Guide to ESG Reporting

02 Jun 15

Marmalade Technologies - ELITE at London Stock Exchange

06 Jul 15

Alkane Energy - Trading update

02 Jun 15

Workshare - ELITE at London Stock Exchange

03 Jun 15

Clinova - ELITE at London Stock Exchange

02 Jun 15

RealityMine- ELITE at London Stock Exchange

14 Jun 17

NHAI - Market open

16 Sep 15

Alkane Energy - Recommended cash offer

03 Jun 15

Celtic Renewables - ELITE at London Stock Exchange

Latest Content

AA/ BAB BBY CPI COST GFRD HSV IRV KLR KIE MER MTO MGNS PAY RPS SRP STAF

LIBERUM: The 4S’s - The negative working capital model in Construction is changing

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21 Jan 19
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Royal Bank Of Scotland Group

The undesired shareholder

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18 Jan 19
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Experian

Robust Q3 FY18/19 performance

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18 Jan 19
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The Sage Group

Good start to FY2018/19

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17 Jan 19
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The Sage Group

Disposal of Sage Payroll Solutions in the US

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16 Jan 19
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Tesco

A good Christmas for Tesco

Tesco’s ability to regain lfl momentum after a softer Q3 in the UK is noteworthy. However, the company needs to improve the international operations (especially in Poland and Thailand) in order to be re-rated upwards. We have tweaked the earnings estimates but maintain the stock recommendation.

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14 Jan 19
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BWY CRST BDEV WJG PSN RDW TW/ MCS CSP TEF BKG ABBY GLE

UK Housebuilding Sector in 2018

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14 Jan 19
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J Sainsbury

Managing through uncertain times

Negative lfl is not a surprise but the magnitude of the slump surely is. There seems to be no short-term solution to turnaround the performance of the non-food business, which puts Sainsbury’s at a much higher risk vs other competitors. We continue to believe that the proposed merger with Asda will go-through, albeit with some store disposals. A harsh verdict might make it very difficult for Sainsbury’s to extract much desired cost savings and a simultaneous cut in the price of essential products.

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10 Jan 19
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Marks And Spencer Group

A weaker Christmas boost and bright online growth in Q3

Sales were a bit disappointing in Q3. Group revenue was down 3.9% at CER. Food sales benefited from price investment and Christmas boost to soften their decrease to -2.1% lfl. Clothing & Home have deepened their slowdown to -2.4% lfl. The positive news is the 14% surge in online sales.

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