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A Couple of brief updates today...

26/3/2015

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Brief update on statements from Easyjet (EZJ) & KCOM for you. Easyjet as expected suggested that currencies and fuel prices have had a beneficial impact on the business in the first half, although currencies may have a negative impact for the full year. On the back of this they have upgraded their half year loss guidance form £10 to 30m to £5m to a potential £10m profit.

So steady as she goes for Easyjet with some signs of the expected benefits from currencies and fuel coming though, although their costs were up too due to more de-icing. So guess we could see some upgrades which may help the price, but as it is a volatile stock that has recovered recently, I guess they may suffer some turbulence in a likely weaker market today after falls on Wall Street last night.

Beyond that though with increasing consumer confidence and rising real incomes it seems their
strategy of making travel easy and affordable for passengers should continue to benefit from these trends. I certainly found my trip to Amsterdam with them recently easy and affordable and as a shareholder it was good to see that they sold out of expensive sandwiches!

Meanwhile KCOM have provided a very brief pre-close update in which importantly they say they are trading in line with market expectations. In the limited detail they say that take up of their fibre offering at 30% is higher than the national average and that they therefore plan to accelerate the roll out over the next two years, but they will make you hold the line until 5th June when they will announce their results.
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Busy day today...

21/1/2015

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...lots of results to plough through today so I haven't had a chance to write any up in detail. But of those that have reported in the last day or two that may be worthy of further research based on their announcements and ranking within the Compound Income Scores (in no particular order) are:

Computarcenter -  CCC
Fairpoint - FRP
WH Smith - SMWH
Diploma - DPLM


Meanwhile for income we have had an update from Picton Property Income Ltd (PCTN) which has seen some good NAV growth and has been raising fresh equity to invest as it stands at a premium. This has brought the gearing down a bit and they are paying a covered dividend which gives a yield of around 4.4%.

Finally, talking of yield while many of the telecoms companies have been racing up and getting excited about the prospects of quad play deals, KCOM has been sinking faster than Hull in the Premier league. This has left it towards the bottom of its twelve month trading range where it offers a decent well cover and growing yield in excess of 6%, which is the main attraction with this one as it is struggling to grow its top line. It looks good value and somewhat oversold to me as you can see in the chart below. If it can get back to around 100 pence which it has done on four occasions in the last couple of years then it could provide a decent total return from here.
Picture
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KCOM Group - Final Results to 31 March 2014

7/6/2014

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PictureClick for more information about KCOM
Kingston Communication is a small (£500 million or so) telecommunications service provider to both domestic and corporate sectors. They are centred in Hull where they were previously owned by the local council as a local monopoly before they converted to a plc in 1987 and partially floated in 1999 (See here for the full history), although they compete like every one else these days. They do this nationally by offering their own network with value added services and a wholesale partnership with BT, they also carry out consultancy work and offer IT support to businesses. 

They describe the results themselves as being in line with expectations which seems about right although they seem to have matched next years earnings number this year given that only very modest growth had been forecast. Meanwhile the dividend was in line with their guidance being up by 10% to 4.88 pence in total with the final dividend being 3.25 pence. Within the numbers debt came dwon to be 1x EBITDA from 1.2X as they have strong cash flow. They did however flag that this will go back up to around 1.5x next year as they have some capital expenditure requirements on some contracts, but this reflects timing differences rather than a step up in capital expenditure requirements. There is also a pension deficit of £59 million which seems manageable. They have also agreed some new facilities with which they hope to pursue some new organic and inorganic growth opportunities especially in value added services to businesses to help offset some declines in traditional network revenues. They are also apparently seeing a good consumer uptake of fibre services.

Overall a fairly small, dull but solid company in a fairly competitive field. However, the rating reflects this with it being on around 12x current earnings and offering a yield in excess of 5% which is expected to be increased by a further 10% this coming year and next as they have committed to this rate of growth until March 2016. So the yield is the main attraction with this one as the shares have been weak recently, having come down from 100 pence to the low 90's where I would have thought they should be well supported by the valuations discussed above. Thus there could even be a trade in it as I wouldn't be surprised to see it back up towards 100 pence or above in the not too distant future plus you have a yield of 3.5% to come from the final dividend alone which goes xd on the 25th June 2014. 

According to a website that tracks analysts recommendations called wkrb (sounds more like an American FM station) two research analysts have rated the stock with a sell rating, one has issued a hold rating and three have assigned a buy rating to the company. KCOM Group PLC currently has a consensus rating of “Hold” and a consensus target price of GBX 103.67 ($1.74). The range of their price targets is 75 pence to 130 pence for what that is worth. 

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