Market Commentary - Housing, Infrastructure, Construction and Services - 19th January 2016
Workspace is the only sector related stock to provide news this morning with an IMS which informs us that it is seeing strong demand for its rental space in London and for its developed sites. The main move yesterday was at Mitie, as you might expect but the stock ended the day down just 4.9% to 195p.
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The Merchants Trust announces benchmark change
Performance measure moved from FTSE 100 to FTSE All-Share index
The Merchants Trust (MRCH) has announced that it will be changing its benchmark with effect from 1 February 2017.
Norway awards 56 new licences
Norway has awarded 56 new production licences under the 2016 Norwegian APA (Awards in Pre-defined Areas) Licence Round, which covered the more explored areas of the Norwegian Continental Shelf . Interest was strongest in the North Sea area with 36 awards, while 17 were awarded in the Norwegian Sea. Only three awards went in the Barents Sea, reflecting the frontier nature of the basin. Link to awards maps
Read more...MITIE CONFERENCE CALL FEEDBACK 18th January 2017
The main talking point in the call was about accounting Rinky Dinkies that few knew about. We discuss those below but first the main substantive points.
Our contention that within Mitie there exists a business capable of £2bn+ a year revenue, 5% margins and 3-5% pa growth is unchanged
SFO shows its metal with £497m fine for Rolls-Royce
Black cloud over engine manufacturer should now start to lift
The Serious Fraud Office’s (SFO) five year investigation of Rolls-Royce has finally come to a conclusion, with a verdict that shows the SFO is getting tough on corruption, but one which should hopefully allow the dark cloud over Rolls-Royce to start lifting.
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 18th January 2017
The unexpected update from Mitie, along with the replacement of FD Suzanne Baxter are the main issues of the day. The moves yesterday saw Babcock rise 1.4% to 955p which is not substantial but the stock has steadied in a 920-870p range which is a positive. Mitie has a few things to tell us today about trading, none of which are good and that the FD is to be replaced. The company tell us that operating profit for last year will be £60-70m versus earlier expectations that the out-turn would be nearer to last year’s £129m at around £90m.
Read more...2017 Senegal appraisal to kick off in January
Cairn Energy confirmed today that it will return to drilling offshore Senegal by the end of January this year, with two firm wells designed to further evaluate its 473mmbbl SNE discovery. The Stena DrillMax is contracted for these two appraisal wells together with multiple follow on options yet to be confirmed but which could include exploration wells in addition to further appraisal.
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Earnings Revisions: Waiting for upgrades?
Though global equities continue to benefit from significantly increased investor optimism, US and continental European earnings forecasts for 2017 have remained stubbornly static over the last 3 months. However, in the UK 2017 earnings estimates continue to move higher, tracking the decline in sterling and providing a degree of fundamental support for the FTSE100. For US and continental European equity markets, the increasing divergence between 2017 profits forecasts and their respective price performance, when added to the lack of valuation support, puts a question mark over how much further the rally can run.
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