Wednesday’s Master Investor Market Report featuring Legal & General, Sainsbury’s, JD Wetherspoon, Boohoo.com and Aveva

• The Greek Government has avoided default for the time being after making a €200 million (£148.8 million) interest payment to the International Monetary Fund. However, a further €750 million (£550 million) is scheduled to be paid on the 12th May and it remains to be seen if this obligation will be met. Talks between Greece and the so-called Troika are ongoing, as creditors clash with the ruling Syriza party.
• The latest Services PMI survey data for the UK has shown the rate of expansion in the sector hit an 8 month high in April, exceeding economists’ forecasts and providing a boost to the Government’s economic record directly before the election, even after performance in other sectors was lower than had been hoped. Chris Williamson, Chief Economist at Markit said that “fears of the economy slumping amid election jitters are allayed as an upturn in service sector activity has helped offset sharp slowdowns in both manufacturing and construction”.
• The FTSE 100 rose by 6.16 points to 6,933.74 points; the FTSE 250 declined by 39.99 points to 17,412.08; the FTSE All Share grew by 1.64 points to 3,746.75 points; and the FTSE AIM All Share finished the day down by 0.22 points at 751.46 points.

Legal & General (LGEN) saw its net cash generation for the 3 months ended 31st March grow by 11% to £326 million, with a 13% rise in revenues from its Investment Management arm. Total asset values increased by 17% to £736.8 billion as the firm expanded in the US, Asia and the UK private rental market whilst leveraging its pension de-risking position. Analysts from Nomura said that “we believe the underlying investment thesis for L&G remains intact, namely a strong yield accompanied by strong dividend growth. We continue to believe there is operational momentum in the group, and its market-leading position in bulk annuities is a differentiator when compared with peers”. The shares grew by 1.8p to 259.1p.

Supermarket chain Sainsbury’s (SBRY) recorded a 0.2% drop in retail sales during the year ended 14th March, and a number of impairments and writedowns on the value of the firm’s property portfolio pushed the company’s pre-tax results to a £72 million pound loss – its first annual loss for more than a decade. These results were ahead of ShoreCap’s expectations and the broker said Sainsbury’s is “adapting to market realities and so seeking to tough it out in a very challenging market where price and gross margin investment are at the fore”. The shares dropped by 8.7p to 266.3p.

Pub operator JD Wetherspoon (JDW) said that like-for-like sales in the nine months to 26th April rose by 3.6% with overall turnover up by 7.9% after the firm opened 20 new venues during the period. Management blamed the decelerating growth rate on competition from supermarkets, with particular emphasis on tax differences hindering Wetherspoon’s ability to offer more attractive pricing. Canaccord expect Wetherspoon to continue to buy back shares at the current price. Wetherspoon closed the day up by 24p to 760p.

Online fashion retailer Boohoo.com (BOO) posted revenues of £139.8 million during the year ended 28th February, a 27% increase over the prior year driven by strong growth in the UK and throughout Europe but still below levels forecast before the firm issued a warning in January. Gross margins improved to 60.8% following the launch of expanded product ranges. N+1 Singer published a note saying that “today’s results in absolute terms are disappointing when compared to forecasts from six months ago. However, they are fractionally better than revised market forecasts and the key development projects were completed on time and to budget”. The shares dropped by 0.25p to 27.75p.

Rumours are circulating that engineering software firm Aveva (AVV) will be targeted for a takeover by US rival Emerson. There was prior interest last year before the falling oil price led to Aveva issuing a profit warning but, according to reports from Credit Suisse, Emerson’s management is looking to pursue sizeable targets to satisfy its investors. The shares grew by 125p to 1,875p.

Tomorrow’s news today

BT Group (BT.A), Imperial Tobacco (IMT) and Friends Life Group (FLG) will publish results tomorrow.

Vehicle registration figures for the UK will be posted, as will US unemployment data and German PMI figures.

Quote of the day

“An investment in knowledge pays the best interest.”
― Benjamin Franklin