Tuesday’s Stock Market report featuring Britvic, easyJet, Foxtons and Greenko

The Markets

UK GDP growth slowed to 0.5% from 0.7% in the final quarter of 2014, but annual growth was at its highest level since 2007 according to new figures from the Office for National Statistics, at 2.6%. Joe Grice, Chief Economist, at the ONS, commented, “The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic.” Into 2015 and the fall in the oil price is expected to boost consumer spending. But analysts and the ONS have both warned that growth may not pick up until May due to mounting uncertainties around the general election.

Standard & Poor’s has downgraded Russia’s foreign-currency credit rating to junk status for the first time in over ten years due to the recent oil price collapse, the struggling financial sector and the country’s reduced ability to cut interest rates. The ratings agency noted that a 750 basis point increase in rates last month had had a temporary effect on exchange rates. William Jackson, Senior Emerging Markets Economist at Capital Economics said that, “Bank recapitalisations of between 1.2tn roubles (2% of GDP) and 2.5tn roubles (5% of GDP) might be needed to bring the banking sector’s capital adequacy ratio back to the regulatory minimum of 10%”.

At the London close the Dow Jones had decreased by 338.82 points to 17,339.88 and the Nasdaq rise by 95.51 points to 4,180.20.

In London the FTSE 100 closed down by 40.79 points at 6,811.61 and the FTSE 250 fell by 116.64 points to 16,353.88. The FTSE All-Share had decreased by 22.18 points to 3,650.80 while the FTSE AIM Index dropped by 1.09 points to 695.46.

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Broker Notes

Broadcaster and entertainment firm Sky (SKY) has been given a “neutral” rating by Westhouse Securities ahead of the company’s interim results for the six months to December being published early next month. The broker expects that the firm has made significant progress following the acquisition of SKY Deutschland and SKY Italia late last year but recently moderated is stance to reflect a period of strong share price outperformance. Shares in the firm grew by 3p to 941p.

Soft drinks producer and distributor Britvic (BVIC) was rated as a “buy” by Shore Capital after the release of its trading statement for the 12 weeks ended 21st December, which showed that the UK market was less subdued that the broker had anticipated. Shore believes that the firm’s stock looks attractive at its current price given the strong profit growth over recent years. Britvic shares rose by 42.5p to 688.5p.

Graphite exploration and production firm StratMin Global Resources (STGR) has had its “buy” rating reiterated by Shore Capital its the target price cut to 14.7p after the firm raised 0.9 million pounds via a new share issue yesterday. The broker cut its target due to the dilution, but believes that the placing was a good alternative to debt funding at current prices. The shares ended the day flat at 4.87p.

Broker pencils in “buy” for graphite miner

Blue Chips

Budget airline easyJet (EZJ) said that revenues for the three months ended 31st December were 931 million pounds, an increase of 34 million pounds over the equivalent period of 2013. Load factors improved by 100 basis points to 89.7%. Full year costs per seat are expected to be flat as increased fees at previously anticipated fee increases at German and Italian airports balanced out the effect of currency movements. The shares climbed by 33p to 1,789p.

Engineering firm Meggitt (MGGT) has won a contract worth $19 million (12.59 million pounds) to supply cabin surveillance systems for Embraer’s E-Jets E2 range. The deal comes after similar agreements were signed in recent years for a range of Airbus models in light of increasingly stringent safety requirements being introduced. The contract covers the E175-E2, E190-E2 and E195-E2 variants. Meggitt shares fell by 1.5p to 538.5p.

Real estate investment trust British Land (BLND) recorded solid growth in the last three months of 2014, with investment lettings and renewals 10.9% higher than anticipated. Improvement in the office market was less dramatic, with 168,000 square feet of lettings and renewals arranged at 0.4% above the estimated rental values. British Land completed 900 million pounds of property sales over the nine months to 31st December. The shares dropped by 9.5p to 823.5p.

Rental market growth not letting up for British Land

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Mid Caps

Estate agency Foxtons (FOXT) saw group turnover for the three months to 31st December drop by 12.1% as a sharp decline in property sales commission outweighed an increase in rental commissions. However, full year turnover was up by 3.4%. The sales market in central London is currently subdued and the firm does not expect a recovery before May’s general election. The shares fell by 19p to 180p.

Also in the property business, housebuilder Crest Nicholson Holdings (CRST) said that it is on track to increase revenues by 70-80% by 2016 after the firm reached the volume targets it set at its IPO, in February 2013, well ahead of schedule. Profit margins for the year ended 31st October were up by 160 basis points from 2013 at 20.1% as open market average selling prices rose by 15% to 287,000 pounds. Shares in Crest Nicholson rose by 7.4p to 379.7p.

Multinational consumer goods business PZ Cussons (PZC) recorded a 10.4% decline in revenues for the six months ended 30th November relative to the same period of 2013, caused by disposals and negative currency translation effects. Underlying performances in the UK, Australia, Indonesia and segments of the Nigerian business were said to very positive however, sending PZ Cussons shares up by 6p to 317p.

Soap maker cleaning up?

Small Caps

Mineral exploration and development outfit Kibo Mining (KIBO) said that testing at the Mihanza Hill prospect has shown results consistent with what would be expected for a major Ni-Cu-PGE suphide deposit. Management say that the findings confirm the potential of the site and presented a compelling case for further exploration and testing. The shares fell by 0.5p to 6.25p.

Indian renewable energy specialist Greenko (GKO) reported that operational performance in the nine months to 31st December was in line with market expectations as the company’s output was 46% higher than in the preceding 12 months. Installed capacity at the end of the period reached 715 MW due to new wind power facilities and the acquisition of the Buhil Hydro project in June. Greenko shares rose by 6.62p to 112.25p.

Communications and software services provider Gamma Communications (GAMA) said that revenue and EBITDA for 2014 were slightly ahead of expectations as set out at the time of the firm’s floatation in October last year. The company won a number of significant contracts over the course of the year, including deals with Oxford University and Hearst Magazines. The shares climbed by 14p to 267.5p.

Revenues at wealth management and employee benefits outfit Mattioli Woods (MTW) for the six months ended 30th November increased by 23% to 16.6 million pounds and recurring revenues made up an increased portion of total income. Adjusted EBITDA rose by 18.5% to 3.65 million pounds, driven by both organic growth and recent acquisitions. The shares grew by 10p to 504p.

IGAS Energy (IGAS) welcomed the news that Parliament had rejected an amendment to the Infrastructure Bill that would have introduced a moratorium on shale gas. exploration and development in the UK. Management say that the proposed bill clarifies several major issues around gas exploration and reinforces existing industry best practice. IGAS shares rose by 0.75p to 19.75p.

IGAS pleased after proposed amendment a load of hot air