Edison Investment Research

Market Commentary - Housing, Infrastructure, Construction and Services

Some interesting news today on several fronts. Purplebricks has issued an AGM update indicating that the outcome of the Referendum has had little impact on its business and that it now believes it has 65% of all on-line instructions. Redrow has announced that at its AGM it will propose a resolution to buy back up to 10% of its own shares. And if Redrow is about to reduce its exposure to the UK market waste management operator Biffa is about to do the opposite and has announced its intention to float.

Market Commentary - Housing, Infrastructure, Construction and Services

Galliford Try is the main news this morning with its full year numbers to end June 2016 and Epwin has issued a positive first half report

August deliveries at Airbus

Slow progress on A320neo

In my blog on 4 September I said I would be watching Airbus’ August delivery numbers with interest. Well they were released last week and despite Airbus CEO Fabrice Bregier saying that staff on the A320neo programme have been working overtime to catch up on deliveries, not much progress appears to have been made so far.

Market Commentary - Housing, Infrastructure, Construction and Services

There is no directly relevant news this morning. The emerging issue on which more column inches is being devoted than usual is London house prices.

Market Commentary - Housing, Infrastructure, Construction and Services

John Laing Infrastructure (JLIF) provides the relevant news this morning. Speedy’s EGM resulted in stalemate with the Chairman retaining his role with support from 63% of the voting shareholders and David Shearer getting support to become a Director from 53%. On Friday last we saw only one riser in the sector, Serco, up 0.2% to 132.3p.

Market Commentary - Housing, Infrastructure, Construction and Services

There is no directly relevant news from HICS sector stocks this morning. The Speedy Hire EGM takes place later this morning when shareholders will vote on two issues. Speculation about the contents of the Autumn Statement are appearing more frequently along with reports that while we may avoid a recession, we are certainly heading for a Brexit slowdown.

Safran and Zodiac - do opposites attract?

A look at two very different French Aerospace companies

Safran and Zodiac are both French, both exposed to the structural growth of the civil aerospace industry, and both have world class products. But it is there the similarities end. Over the past five years, Safran has proved itself to be a well-run company with strong project execution. Zodiac’s management and execution has been found sorely wanting as it struggles to keep pace with the production ramp ups at Airbus and Boeing. Last week saw Zodiac’s ninth profit warning in two years, but interestingly over the past couple of months there has been a resurgence in market rumours that Safran is potentially interested in acquiring the company. Why are the two companies such a different investment proposition, and do they really have a future together?

Market Commentary - Housing, Infrastructure, Construction and Services

There is no news this morning from sector stocks. A big note from Goldman on larger stocks in the Services sector may trigger a few price changes today. It was notable yesterday that G4S reached its highest level since early November last year closing up 2.1% at 239.8p. Forterra’s results meeting was very professional and solid.

Market Commentary - Housing, Infrastructure, Construction and Services

Forterra has released its maiden half year results today following its float in April this year, Barrattt Development has issued full year results and Ashtead its first quarter data. The common thread in all three is that trading July and August was “business as usual” and at Forterra and Barratt revenue was ahead of last year in those two months. The moves yesterday saw Homeserve start seriously to test the 600p level, rising 1.7% to 580p at close having seen 590p at one stage. The main losers included three stocks that have had good support recently, Mears, down 4.3%, Carillion down 1.7% and Interserve down 1.4%; the moves were not much more than ebb and flow of trading, in our view. More significantly Grafton fell a further 1.6% to 512p and is now down over 15% from the closing price the day prior to its recent results on 31st August.

Does a smaller military present an opportunity for industry?

MOD statistics show significant troop shortfall

Last month’s UK Ministry of Defence (MOD) personnel statistics show the UK Armed Forces have a personnel deficit of 4.1%, and strikingly the number of trained soldiers in the Army is at its lowest since 1750. The doomsayers note that this recruitment crisis means the UK would struggle to respond to a major crisis. However, could this not provide an interesting opportunity for the defence industry to show how the right equipment means you do not need as many troops?