Edison Investment Research

Didi – Jam today

It’s time Didi started trying to make money.

With the ride hailing market in China now wide open for it, Didi has no reason to go on burning billions of dollars for the sake of growth. Consequently, we cannot see a good reason for Didi to raise $6bn as it should be looking to internal cash flow to fund its investments. The one exception is to have a war chest for acquisitions in order to go global, but we think that it is better to buy expensive paper with equally expensive paper rather than cash.

Market Commentary - Housing, Infrastructure, Construction and Services 27th March 2017

The only formal news this morning is that Babcock’s partnership working on the nuclear decommissioning project on 12 Magnox sites has reached agreement with the Nuclear Decommissioning Authority to end the contract in 2019. News later this week comes from Wolseley tomorrow with its interims and from T Clarke with its finals for 2016.

Market Commentary - Housing, Infrastructure, Construction and Services 24th March 2017

Henry Boot, the small property, construction and land development company provides us with its finals to end December 2016 this morning. The sector had a spring in its step yesterday as it recovered some of the fall of the two previous trading sessions.

Market Commentary - Housing, Infrastructure, Construction and Services 23rd March 2017

Kier’s half year numbers are the main headline today, Crest Nicholson has issued an AGM update and WYG has also updated. Kier has announced a bit more than good numbers as in other announcements it also states that it will soon have a new Chairman and it has created a JV with east of England based Cross Keys Housing into which it will transfer some land and developments worth £97m in exchange for £64m cash now and 90% economic ownership of the JV (50:50 split of voting rights).

Market wobble? Still time to re-position portfolios

No clear trigger for recent market declines

Even if some calm has now returned, the market declines this week are perhaps a little more disconcerting than usual as they have occurred with no obvious trigger and followed an extended period of very low volatility. This makes the situation a little more uncertain, as specific triggers can often be analysed, quantified and discounted. There is therefore the danger of investors becoming fearful of the unknown - and risk averse - should the declines become more serious.

Comac C919 aircraft to fly next month, three years late

Challenges remain though to establish a Chinese aerospace manufacturing industry

The first Chinese narrowbody aircraft, the Comac C919 looks set to make its first flight next month. This is a significant milestone which will attract the attention of the aerospace industry across the globe and the event will no doubt be lauded by the Chinese government. However, this maiden flight will be nearly three years late. When the programme was launched in 2008 the target for first flight was June 2014, with the first delivery due in 2016.

Market Commentary - Housing, Infrastructure, Construction and Services 22nd March 2017

Redrow has issued an unexpected trading update today and has organised a visit to its Colindale site on 4th April and Kingfisher’s final results for the 12 months to end January 2017 are released as expected.

Wells to watch in 2017

Since the oil price crash of 2014, exploration has been particularly badly hit as companies looked to trim expenditure. Wood Mackenzie estimates that 2017 exploration will account for 8% of upstream expenditure, down from historic norms of 14%. In this more difficult environment, any surviving exploration has tended to be led by majors, for example ExxonMobil’s giant Liza discovery offshore Guyana in 2015. In our most recent Exploration Watch, we highlight wells due to spud in 2017 that involve independent companies, with resources estimates greater than 100mmboe. Our exception is the much anticipated multi-billion barrel potential Korpfjell prospect in the Barents Sea offshore Norway, which is operated by Statoil and partnered by major companies.

Samsung - Edge dancer pt II.

We think Bixby will struggle against Google Assistant.

Market Commentary - Housing, Infrastructure, Construction and Services 21st March 2017

Mears and Bellway provide results this morning, the former its full year numbers to end December 2016 and the latter interims to end January. There was very little movement among sector stocks yesterday. The sector is currently becalmed as the puzzle of what post Brexit Britain might look like unfolds.