 Savills (SVS) - Results look strong, as expected, given the property background last year. Thus eps came in at 63.2p versus 60.8p (F) and the dividend total for the year was 26p up 13% from 23p last year and versus 25.1p (F). Commenting on the results, Jeremy Helsby, Group Chief Executive, said:
"Overall in 2015, Savills delivered a record performance across the Group. Our US expansion programme continued well and our Asia Pacific business showed resilience in the face of changeable markets. In the UK the strength of our position in the commercial market offset market weakness in the residential sector. The Continental European business continued to build profitability and Savills Investment Management substantially enhanced its position with the acquisition of SEB Asset Management AG. We have made a good start to 2016 with a solid pipeline of business carried over from last year in many markets, although the impact of global macro-economic and political concerns on real estate markets worldwide is uncertain. At this stage, we retain a cautious view on some Asian markets, particularly the Tier 2 Chinese cities, and we expect the UK residential and commercial investment markets to be subdued, for the former, as Stamp Duty reforms take effect and, more generally, in the run up to the EU referendum in June. However, the strength of our enlarged US operation, the increased size of our Investment Management, Property Management and Consultancy businesses and the breadth of our UK business together with further improvement in Continental Europe, all bode well for the future of your Company. Accordingly, the Board's expectations for the year as a whole remain unchanged." The shares have come off sharply with the market correction this year and are looking oversold. They therefore now seem quite cheaply rated compared to their history trading on around 10x with a 4%+ yield for the current year. Thus given the unchanged outlook statement above and a CIS of 95, they seem like a strong hold to me. Sprue Aegis (SPRP) - out out an update on a supply agreement. As a result of this they said that their operating profits would come in at £8.3m for this year which they say is slightly below market expectations. Looking at the forecasts it seems like it will lead to a 10% downgrade to earnings to me. The shares are off by that amount this morning so probably all in the price now in what looks like being a consolidation year for them. I do however note the recent weakness in the £ v the € as a result of the BREXIT debate which, if sustained, could help to boost their earnings. I note also that there is something about sharing the swings on the US$ with their supply partner more equally. The downgrades will no doubt reduce the current CIS of 97. 32Red (TTR) had their full year results which look like a miss on the adjusted earnings 6.97p v 8.7p (F) although dividend was better than expected at 2.8p v 2.5p (F) and they have already previously announced a 3p special dividend. I note also that the adjusted earnings also exclude all the bad stuff as follows from the statement: Adjusted Earnings Per Share is calculated on Underlying Earnings adding back exceptional items, share option costs, amortisation and losses from the Italian business and uses the weighted average number of ordinary shares for diluted earnings as calculated in note 6 to these accounts. Actual diluted eps including all the bad stuff was er 1.14p which would put it on an astronomical 136x at the current 155p. However taking the adjusted numbers and increased dividend puts it on an expensive looking 22.2x with a 1.8% yield. Thus it will need to produce the strong growth which is currently forecast, but given the miss on earnings today it will be interesting to see if we see any down grades on the back of these figures, which if we do, will not be helpful given the current rating. For now it remains a high scoring stock with a CIS of 98, despite a value score of only 14, so again if we do see downgrades I would expect the Score to fall. Finally not one that is in the CIS Portfolio but I note in passing that Cineworld (CINE) had blow out results which were not only ahead of this years forecasts but also those for 2016 too. So unlike Restaurant Group yesterday, no sign of a slow down there, although I they did benefit from the steady stream of Blockbuster last year which is not expected to be fully repeated this year. CIS currently 72, but may improve on the back of these numbers and if it leads to upgrades.
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Had to check the calendar today to make sure it wasn't Thursday as there were so many results and announcements. Any way the ones that featured from stocks I have mentioned in the past were - Cineworld, which I trailered yesterday, Rolls Royce and Hill and Smith. While yesterday I caught up with the webcast of the Equity Development meeting with Matchtec and I include a few thoughts on that at the end of today's news.
As you may or may not have heard there is apparently a new series of Star Wars films coming out, but I'm not sure what they should be called postquel may be? Any way I'm no great fan of the series as I can honestly say I don't think I have ever sat through a single film of the whole series so far, so why mention it?
Well it seems that according to reports the latest film could break records for advanced sales and this together with other blockbusters this year such as the latest Bond film should augur well for cinema attendances. This expectation is backed up by improving consumer incomes in the UK and therefore suggests that this should be a bumper year for cinema operators. ...after the excitement at the end of last week with PLUS500. Today we have had a couple of trading updates from Cineworld (CINE) and Micro focus (MCRO). Cineworld saw pretty good growth across the board in both the UK and emerging markets in which it operates. They also opened a few new cinemas with lots of screens in the UK and overseas with 16 planned for the rest of the year split evenly between the UK and overseas. This together with what looks like a more attractive film schedule for this year means they are probably well set to deliver decent growth again. However, the rating anticipates this to a certain extent with the shares standing on over 18x with a sub 3% yield and an earnings yield of less than 5%. So overall not cheap, but looks like it should continue to grow well against an improving consumer background so I guess it could continue to show some good price momentum despite the rating. However having been bored by the Marvel Avengers Assemble film on TV last night I still remain somewhat bemused by the attraction of all these comic book films but each to their own. On Micro focus today we have had a new piece of management speak. In the past I have pointed to managements saying they are trading "broadly in line" which is code for slightly behind. In today's statement they say: "At the Interim results presentation in December 2014, management provided guidance of combined pro-forma full year* revenues of c. $1,330 million and combined pro-forma full year* Underlying Adjusted EBITDA** of c. $500 million, based on the exchange rates then prevailing. The Board is pleased to reconfirm that the Group expects to report revenues and Underlying Adjusted EBITDA comfortably in line with this guidance on a constant currency basis." So I take "comfortably in line" to mean were confident of meeting or slightly beating expectations but don't want to upgrade them at the moment. On this basis I assume the forecasts will be fine but with scope for upgrades especially if the integration of last years acquisition goes better than expected as is sometimes the case. They may need this as these are also looking more fully valued now on around 16.5x with a 2.5% yield and an earnings yield of close to 3% so probably a hold up here. Hmm comfortably in line - puts me in mind of a song appropriate for post bank holiday blues... ...or cinemas, computers, convenience stores & CCR. The cinemas part is the final result from Cineworld (CINE) which look very good and in fact the adjusted eps of 24.4p was close to the 25.8p forecast for 2015 and the bumper dividend of 13.5p (+33%) was ahead of the 13.1p forecast for the year to 2015. With the shares up by about 4% to 465p this morning, this leaves them on a fullish looking historic 19x PE with a reasonable 2.9% yield. The shares had a good run prior to these numbers but they seem well placed with a strong film release schedule for this year, benefits from the merger with Cinema City the Israeli and eastern European cinema chain being upgraded to £5m from £2m and with 20 new cinemas (about 10%) planned. Thus while they have done well and look a bit expensive now, with consumer confidence and incomes improving, the prospects looking good and upgrades likely they seem like they should be well supported or could still show some further momentum to the upside. Late morning update I see that Numis have upgraded to £90m Pre Tax for this year which I estimate would translate to around 27p of earnings for a 17.5x P/E @ the now 473p price. The second C today came from Computacenter (CCC) the independent provider of IT infrastructure and services that enables users which reported final results today. These are somewhat difficult to interpret due to the recent return of capital and resulting share consolidation. Thus the numbers which are adjusted for this don't seem to square with the forecasts, which presumably were not adjusted. Nevertheless there seems to be underlying progress here in the UK and Germany but continued losses in France on the back of poor older contracts and they say a return to profit here is still some way off and it has led to a write off. These shares have also risen recently ahead of and post the return of capital and as a result they have enjoyed something of a re-rating. So taking the reported adjusted numbers of 46.8p eps and 19.8p dividend (although confusingly they also mention 19p in the headlines) this leaves them on a fair looking historic PE rating of 15.4x and a yield of 2.75%, although with the overall operating margins being up to 2.77% the earnings yield comes in at a decent looking 10%. On balance it seems like a well managed group with a shareholder friendly management, although the operations in Germany and France continue to struggle, they seem confident of making further progress this year. As such I can't honestly say you should rush out and buy it here as I suspect forecasts may reset downwards as the confusion surrounding the consolidation clears, but it would seem like a solid hold as part of a diversified income portfolio. The final C is C-Stores or convenience stores as mentioned in Morrison's (MRW) final results today. They have taken a write off and are closing some of these which seems bizarre given they were charging into this last year as they played catch up, obviously they were not discerning enough about the sites they were buying. Apart from that the headline numbers all seem to be reasonably in line with the guidance they set out about a year ago, which is quite an achievement given the industry background. This saw a big drop in profits as they invested in lowering their prices and it seem this will be on going when the new Chief executive joins next week. It also means, unsurprisingly that they are also cutting the dividend from this years promised 13.65p to a minimum of 5p for next year for a 2.4% yield. So on that basis and given the on going price war etc, in the industry I'm not tempted to buy this one here, although I could see that some might want to buy it as a recovery / new management turnaround play or maybe there's a bad moon rising so here some CCR for you? |
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