London Stock Market weekly report (4/11/2013)

Week commencing 4 November 2013

 What a week for stock market flotations.

Twitter, hit Wall Street yesterday and the share price immediately went north. It appears that we are also seeing continued acceleration ion the number of companies in the pipeline to float on the UK Stock markets over the coming months. Recently the Royal Mail and Foxtons have featured among the most successful flotations and fund raisings with early investors seeing their shares rise 27% and 19% respectively.

A renewed desire among global fund managers to invest in the UK has helped fuel the strongest year for UK Stock Market Flotations since 2007.  Now investors have the opportunity to buy a piece of some of the most rapidly expanding companies, and those that are well-established.

There are signs of more high profile flotations  to come in the following months, and speculation regarding the following;

• Infinis Energy, the independent renewable energy generator, is set to join the market in just over a week. The company, which in the year to March generated 7% of the UK’s renewable power, operates 147 power generating plants in the UK. The share offer period has just begun, with shares priced at between 260p to 310p per share. At the top end that would mean a market valuation of £930 million.
• House of Fraser, is reported to be considering a flotation early in 2014 with the company valued at £300-£4500 million.
• Saga, the insurance group for the over-50s, is said to be set for a £3 billion flotation on the UK stock market next year.

 Key announcement reported this week.

Experian – Half Year Results see total revenue up 5% at constant exchange rates at USD2.34bn with total EBIT from continuing operations ahead 3% at actual exchange rates at USD608m. A first interim dividend of 11.5 cents is proposed, a rise of 7%. It noted subdued trading conditions in some of its emerging markets but for H2 it expects organic revenue growth to be in a similar range as in H1 and for the full year it continues to expect modest margin improvement (at constant currency) and to convert at least 90% of EBIT into operating cash. It also separately announced the proposed acquisition of Passport Health Communications Inc. for USD850m, which will enable it to offer one-stop shop payments capability in the US healthcare market.

Persimmon- notes that the improvement in sales activity reported at its Interims in August has continued for Q3 with visitor levels around 20% ahead of the prior year. The introduction of the Government Help to Buy scheme has proved ‘particularly attractive’ with it selling over 3,000 homes under the scheme. It noted that it was fully sold up for the current year and has GBP650m forward sales reserved beyond 2013, a rise of 41% on the corresponding period. Selling prices in all its regional markets remain firm and added that it anticipates holding an increased level of cash by the year end.

Foxtons – reports on the period from 1 July to date, its first as a public company with turnover in the 3 months to end September 2013 up 17.9% at GBP41.1m with the proceeds from its IPO being used to pay down its debt facility so it is now debt free. It added that London property sales in 2013 have remained relatively flat with trading in Q4 starting positively. However, Q4 adjusted EBITDA is expected to be impacted by the opening costs of new two new branches and ongoing operating costs as a listed entity.

Wm Morrison – reports that performance was in line with its expectations. In the quarter to 3 November 2013, total store sales excluding fuel rose 1% (up 0.1% including fuel) with lfl sales 2.4% lower (down 3% including fuel). It noted that consumer confidence remains subdued and it continues to see heavy promotional activity across the industry with its low exposure to convenience and online continuing to impact upon its sales performance. It added that it expects the market to remain challenging for the rest of the year but its full year financial outlook remains unchanged.

Aviva- Progress was in line with its expectations and it remains focused on delivering cash flow plus growth. Capital generation in the 9 months to 30 September 2013 was stable at GBP1.3bn and its economic capital surplus now stands at GBP8bn with operating expenses 10% below its 2011 baseline. It added that the company remains in the early stages of turnaround with much work to be done.

Tate & Lyle- Half Year Results see adjusted PBT 3% lower at GBP173m on sales 7% higher at GBP1.73bn. The dividend is raised 5.4% to 7.8p and noted that whilst its overall results were held back by a soft beverage season in the US, it performed ‘solidly’. It added that overall it expects to deliver another year of profitable growth.

Rolls-Royce-Reports that trading is consistent with the guidance issued with its Interim Results in July and for the full year it continues to expect ‘modest growth in underlying revenue and good growth in underlying profit, with cash flow around break-even’. Guidance for its business segments remains unchanged except for Defense Aerospace where it has moved from broadly flat underlying profit to modest growth and in Marine from modest growth in underlying profit to broadly flat. Tognum where it is providing guidance separately this year continues to trade in line with expectations.

Bovis Homes-Reports it has continued to trade strongly in Q3 and is confident of achieving its targeted result for the year as a whole. It noted that its forward order book is in its best position for many years, adding that with further increases in active sales outlets, supported by ongoing assertive land buying, it is confident of its future prospects and ability to deliver significantly improved returns.

Merlin Entertainments – Announcement of Offer Price. The IPO offer price has been set at 315p to give a market cap at the start of conditional dealings of GBP3.19bn. Retail investors who applied for a minimum of GBP1,000 of shares have been allocated 317 shares corresponding to GBP998.55. Conditional dealings will commence this morning under the ticker MERL with admission to the premium listing segment of the Official List, main market and start of unconditional dealings expected to take place on 13 November 2013.