News & Tips: HSBC, Intercontinental Hotels, Provident Financial & more – Investors Chronicle

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Shares across all London’s main indices were trading ahead mid-morning with the FTSE100 up 0.75 per cent. Click here for The Trader Nicole Elliott’s latest views on the markets. 

IC TIP UPDATES:

HSBC (HSBA) posted its highest pre-tax profit in 14 quarters, as Europe’s largest lender by assets saw its revenue climb 5 per cent and reported operating expenses drop 12 per cent. On an adjusted basis, the metrics were similarly strong, with the gap between the two swinging to 6 per cent. On a post-tax basis, this brought earnings to 21¢ per share, meaning HSBC is on course for a 2019 return on tangible equity of 10.6 per cent. On a divisional basis, the group saw strong momentum in both its commercial banking arm, as well as the retail bank and wealth management business, while “a softer rate and growth environment” in Asia failed to stop a 7 per cent rise in report revenue. Buy.

A first quarter trading update from InterContinental Hotels (IHG) revealed a 0.2 percentage point fall in occupancy rates. Revenues per available room, meanwhile, rose 0.3 per cent, against a 3.5 per cent rise over last year’s comparable period. The hotel group has opened 12,000 rooms over the three months and its net systems size has grown 5.4 per cent year-on-year, to 843,000 rooms. Trading conditions are challenging in the Middle East, while revenues were flat in China and down in Australia, the latter impacted by supply growth in certain cities. Under review.

KEY STORIES:

Provident Financial (PFG) today said the costs of handling Non-Standard Finance’s (NSF) hostile takeover bid would run to “between £17m and £22m” in 2019, denting an otherwise encouraging first quarter update. Vanquis Bank saw a 13 per cent growth in customers, year-on-year, while Moneybarn saw a 40 per cent uptick in business volumes, with both the home credit division and Satsuma well up on the equivalent periods in 2018.

Intu’s (INTU) recently-appointed chief executive Matthew Roberts said the commercial property specialist expects the remainder of 2019 to be challenging due to a continuing higher-than-expected amount of company voluntary arrangements being entered into by retailers, and a slowdown in new lettings. The landlord has reduced its 2019 net rental income guidance to minus 4-6 per cent.

Kingspan (KGP) reported first quarter sales 18 per cent ahead of the prior year at €1.06bn, with strong volume growth partially offset by the deflationary effect of lower raw material prices. However, the order intake for UK insulated panels business was subdued during the period, reducing the forward book.

OTHER COMPANY NEWS:

Investors had been forewarned the half-year numbers for Numis Corporation (NUM) would be weak, but a 66 per cent fall in earnings to 5.4p a share may still surprise. Investment banking revenues, though up marginally on the six months to September, were down 24 per cent year-on-year, as poor UK investor sentiment and “a challenging market backdrop” hobbled trading. The group has nonetheless maintained its interim dividend at 5.5p a share.

ContourGlobal (GLO) has announced that a consortium of General Electric (GEC) companies has been selected as the “preferred bidder” for the construction and long-term maintenance of its Kosovo power plant project. Further negotiations are expected to reach an agreement on final terms. Full-year results in April revealed that construction of the “modern efficient coal plant” is expected to commence by the end of 2019.

Ultra Electronics (ULE) has provided a brief trading update this morning, signalling positive developments in its order book and trading performance in line with expectations. In March, the aerospace and defence technologies group announced that it had returned to growth at its full-year 2018 results for the first time since 2011. Today, Ultra adds that a self-improvement initiative and a move to average working capital throughout the year is yielding positive early signs. This may be one to look out for in the second half of 2019.

Meggitt (MGGT) has applied to list 1.5m ordinary shares at 5p each on the London Stock Exchange. The shares are expected to be admitted to the exchange on 8 May 2019.

S4 Capital (SFOR) said it “continued to deliver very strong growth in line with expectations in the first quarter”, sufficient to achieve its three-year plan of doubling its size on an organic, like-for-like basis. Revenues for the advertising group – whose executive chairman is Sir Martin Sorrell – were up over 38 per cent to £40.9m and gross profit was up over 37 per cent to £32.8m. Like-for-like, constant currency revenues and gross profits were up by 35 per cent and 34 per cent respectively. Net debt over the respective three months ran at an average of around £19m, or around half the level of the £44m loan drawn down to fund the tie-up with MediaMonks last July.

Taptica’s (TAP) brand advertising business Tremor Video DSP has launched the Creative Studio – a team of industry experts focused on the “innovation of video advertising solutions”. This launch follows the combination of Tremor Video DSP’s and RhythmOne’s video capabilities. It “will be central to the ongoing development of the group’s offering” as it moves further into programmatic video and connected TV. Separately, Taptica announced that its AGM will take place on Thursday 13th June 2019. Non-executive director Ronni Zehavi has told the board that he will not stand for re-election at the AGM and plans to stand down from the board to pursue other opportunities.

Smurfit Kappa (SKG) shares were flat on a trading update that announced 25 per cent growth in cash profits to €424m over the first quarter, reflecting higher corrugated pricing, demand growth, the group’s focus on cost efficiencies and the benefits of its capital programme.