Edison Investment Research

Market Commentary - Housing, Infrastructure, Construction and Services 7th October 2016

The HICS sector fell 0.5% yesterday, roughly in line with the market. The only news today is that HSS Hire is taking some analysts on a site visit to its distribution centre in Oxford. Capita’s lack of any friends continues with the stock falling another 3.6% to 632p, the largest faller in our universe. Mitie is now trading at 10% higher than its post profit warning low. It is possible there could good news on a large multi site FM contract soon at Mitie which will aid confidence as the business is not as bad as a share price of 170p reflects but not as good as the earlier 300p level indicated.

Are airlines weathering the impact of Brexit and terrorism?

Passenger traffic growth analysis

In my 27 July blog ‘The Summer of Hate’ I espoused that summer 2016 could be a defining moment for the aerospace industry. I questioned whether the new wave of terrorism on mainland Europe would lower our propensity to travel by air and therefore encourage more people to holiday closer to home. The IATA passenger data is now in for July so what does it show?

Samsung – Collision course

Market Commentary - Housing, Infrastructure, Construction and Services 6th October 2016

There is no reported news this morning from HICS stocks of the falls yesterday were plus/minus 1% but five stocks fell by more than 2%, Interserve (2.1%), G4S (2.5%), Travis Perkins (2.5%), SIG (2.7%) and Compass (3.3%). The positive sentiment shown on Monday and Tuesday gave way to the opposite yesterday with only one riser among the 22 stocks we look at most closely.

Do tanks have a future?

A look at how armour is evolving

Last month the British Army caused traffic chaos in London by driving a replica First World War tank and a modern Challenger tank around Trafalgar Square. This impressive, yet slightly anti-social display was to commemorate one hundred years of tank service. Seeing these two goliaths of warfare side by side, it struck me that whilst major technological advances have been made over the past century, a modern tank still looks remarkably similar to its predecessor. It made me question whether tanks one hundred years on will still look so similar? Or whether in fact modern warfare no longer needs tanks? These are questions that are likely to be preoccupying the military vehicle manufacturers such as General Dynamics, BAE Systems and Nexter.

Skipper oil - heavier and more viscous than expected

Independent Oil & Gas(IOG) drilled its Skipper appraisal well in August this year, but despite initial indications that the heavy oil was moveable in the reservoir, the company has now announced that sample analysis points to a significantly higher viscosity than expected, forcing a rethink on potential development options.

Google – Brain distribution.

Devices are merely the vessels for distribution of Google’s brains.

Google – Brain distribution.

Devices are merely the vessels for distribution of Google’s brains.

Market Commentary - Housing, Infrastructure, Construction and Services 5th October 2016

There are no directly relevant RNS announcements in the sector this morning. The PMI data for UK construction released yesterday was more positive than expected at 52.3 for September, versus 49.2 in August and it is the first time it has been over 50 since May. The only way was up for most stocks in the sector yesterday. Mitie breached the 200p level at one point yesterday closing up 3% at 199.85p and is up 10% from its lowest point.

Market Commentary - Housing, Infrastructure, Construction and Services 4th October 2016

Carillion’s announcement of the retention of its FM contract with Nationwide is the only formal sector news today. Monday 3 October was a good day for the sector, clearly boosted by Hammond’s support for housing and Infrastructure, Grayling’s support for HS2 and airport expansion and the dip in sterling that will be a net boost for UK materials stocks and international services companies.  Capita was the only stock in our universe of 22 to decline yesterday, though a fall of just 0.4% to 667p is arguably only the ebb and flow of trade.