Edison Investment Research

Car makers sharing data is the real story

HERE has begun its strategy to increasingly automate and improve transport but the most impressive feature so far is the fact that the 3 owners of HERE are sharing their data with each other. Far more data than has been historically available is being used to create four new services that should be deeper, richer and more useful than any that have gone before. These are:

Snap (chat) – Spectacular experiment

Snap’s new product is a mere toe in the water

-  Snapchat (now rebranded Snap) has launched spectacles that work in a similar way to Google Glass but try to deal with the many shortcomings of their predecessor.

Market Commentary - Serco, Kier, Mitie, Carillion, Interserve

There is no new news this morning in the sector though the announcement at 11am yesterday from Serco is worth mentioning. Kier’s results meeting was uneventful save that the company is clearly going to be pushing more capital into its property operations. It has also signalled that it believes 10% growth in earnings will not happen this year. Kier commented on its work in Housing maintenance which provided some read across to Mitie and Mears. Kier’s experience of the market echoed the statements from others that it has become more challenging but the impact has been managed. Mitie seems to be an outlier in terms of the difficulties it has faced suggesting the issues are company specific rather than market ones.

Construction and Services

Kier and WYG provide news to guide investors this morning, the former has released numbers for the year to end June 2016 and the latter its AGM trading update.  Our indication of the EPS consensus for Kier, provided on Tuesday was a tad high and the number released today show EPS at 106.7p , 11% higher than last year’s 96.0p and in line with the 10% CAGR to 2020 promised two years ago.
Yesterday was a good one for the stocks most likely to be affected by interest rates. No buyers yet for Mitie which fell 3.1% at close to 187.1p and was the largest loser.

Just don’t mention the yen

Today’s “Comprehensive Assessment” by the Bank of Japan of its stimulus efforts has in our view underemphasised the role of the weaker yen in bringing Japan out of deflation. The data show a very strong link between lagged moves in USD/JPY and Japan’s core inflation rate, Exhibit 1. Moves in the yen over the last year indicate that Japan’s core CPI may once again be falling back towards zero which may induce the BOJ to engage in further stimulus efforts. However, we wonder if the lower bound on interest rates is not the only constraint central banks are now facing.

Market Commentary - Housing, Infrastructure, Construction and Services

Two pieces of news of interest in the sector this morning. Interserve has announced that it has won a project worth £81m to expand and extend a shopping mall in the UAE. SWP has received a recommended offer from a company comprising several of the existing management team, all of whom are existing shareholders, which will mean that, subject to acceptances, it will cancel its AiM registration and become a privately owned company.There were few risers in the sector with Mears, up 1.1% to 446.5p being the leader. It recovered a little from Monday’s wobble triggered by the Mitie warning

Market Commentary - Housing, Infrastructure, Construction and Services

Kingfisher, owners of B&Q, have released half year financial statements this morning. The important issue Brexit impact, is dealt with early and the news is that despite creating uncertainty there has been no clear evidence of an impact on the business. Mitie’s 28.6% decline is the story that caught the eye of most of the market yesterday. We may see a bounce today as the reaction to this unexpected statement was strong and the likely downgrades at 10-15% for earning this year are much lower than the share price move yesterday. Kier had the biggest increase yesterday, just a few days prior to its Finals for 15/16 to be released on 22nd September.

The debate about the A380 rages on

Singapore Airlines will not extend lease on first A380

The A380 programme has taken another blow with the news that Singapore Airlines (SIA) – the aircraft’s first buyer and currently its second largest customer - will not renew the lease for its first A380. My 19 July blog ‘The end of the road for the A380’ highlighted that the future of the aircraft looks uncertain, with one of the issues being the unknown shape of the market for second hand A380s. The end of this first lease marks a new chapter for the aircraft and so far the outlook does not look that positive. 

Market Commentary - Housing, Infrastructure, Construction and Services

It promises to be a quiet Friday with no new news and the market expected to be subdued. Miller Homes issued an interim report yesterday for the period to end June 2016. The company pulled its float last year. It reported no discernible impact from the Referendum, so far. The mood among investors in the sector yesterday was safety first.

The ‘special’ relationship?

Carter and Trump's speeches raise big questions about US and UK defence

Events of the past week have raised some fascinating questions about the ‘special relationship’ between the United States and the United Kingdom. Firstly we saw Ash Carter (US Secretary of Defense) hold Theresa May and Michael Fallon’s feet to the fire to ensure the UK supports the US in its role as global policeman, and continues to spend 2% of GDP on defence. Subsequently Donald Trump set out his plans to increase the size of the US military without any explanation of how he would fund it. So what do these two acts of showmanship actually mean for the defence landscape?