Edison Investment Research

Innovation in the defence industry

Is it industry or the the MOD that is too old to innovate?

There is uproar in the upper echelons of the defence industry. Last month Tony Douglas, CEO of the government’s Defence Equipment and Support group (DE&S) reportedly berated senior defence industry executives for all being over forty-five, implying that they are too old to be innovative. Ironically, in my previous blog ‘Brave new world for defence industry’ I highlighted that it is the Government’s cost cutting that is jeopardising long term innovation. So is Mr Douglas’ criticism fair? 

Facebook – The dunce.

AI is emerging as a major weakness for Facebook.

Market Commentary - Housing, Infrastructure, Construction and Services 18th October 2016

News this morning comes from Bellway, the housebuilder, which is still partying like it was 22nd June and the world was not about to change. It has released its finals to 31st July today.

Sterling: Lower for longer as the EU strikes back

The UK’s new Prime Minister Theresa May’s honeymoon period is clearly over. Days after emphasising the importance of national sovereignty and appearing to lean towards a ‘hard’ Brexit, a dawn raid on sterling and subsequent weakness has given opponents ammunition to attack the UK’s plan to leave the EU. Furthermore, tough talk from the UK government has been reciprocated from EU leaders and European heads of state. President of the European Council Donald Tusk may even have given the game away by linking the concept of a ‘hard’ Brexit to ‘no Brexit’. For sterling, we believe investors should look through the politics and focus on the economics.

Amazon Music – Table stakes.

40m tracks and a search box does not a service make.

Market Commentary - Housing, Infrastructure, Construction and Services 17th October 2016

Interserve has announced a £38m/three year FM contract with Land Securities at eight of its shopping centres. Babcock is holding an Away Day for city folk at Bovington camp which we are not attending. The only planned news in the rest of this week is on Wednesday when Rentokil and Travis Perkins update on progress YTD and Interserve is holding a gathering to explain the new plan for its equipment hire operation, Kwikform.

Brave new world for defence manufacturing

Hundreds of jobs at risk at GKN Yeovil

Last Friday GKN announced that it may have to “close or significantly downsize” its Yeovil site which employs 227 people. A statement from the company blamed the decision by Leonardo Helicopters to relocate all future A159 Wild Cat helicopter assembly away from the GKN Yeovil site to one of their own facilities. However, the story is more complicated than that and it raises the emotive debate of how much the Government is willing to invest in order to preserve the UK defence industry?

Market Commentary - Housing, Infrastructure, Construction and Services 14th October 2016

Inland Homes has reported its full year numbers to end June 2016 today. The read across from Inland is positive for the housebuilders but the company acknowledges it is still early days on the road to Brexit. We spent a fair amount of time in the last two days at an Offsite Construction event in London. The biggest visible change is likely to come in housebuilding, in our view, where the challenge of using trades on site is increasing, the need for faster build time and greater certainty is rising and because offsite manufacture is becoming cost competitive with other methods

Samsung – Kitchen sink.

Samsung kitchen sinks the note 7 with a massive $5.4bn hit to profit.

Market Commentary - Housing, Infrastructure, Construction and Services 13th October 2016

Only Ashtead supplies the sector with news today and it’s reassuringly dull. The company is holding an event for analysts and investors this afternoon. CMDs can have mixed outcomes. HSS held one last week, 7th October and the price has drifted downwards since that gathering from 74p, closing last night at 70p. Mitie and Capita were always likely to bounce at some point and yesterday was that day. The largest decline yesterday was at Polypipe, which fell by 3.3% to 271p. The company is due to update soon. There must be some nervousness about the costs of its main raw material input costs which are determined in $.