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Today’s market overview

Equities are marginally ahead in early trading and The Trader Dominic Picarda is happy with his assertion that we are in the early stages of another rally.

IC TIP UPDATES:

Gulf Keystone Petroleum (GKP) has appointed Deutsche Bank to help push through its planned move to the main list by the end of this year.Buy.

Sell recommendation. Morrison (MRW) has issued flat figures for the first half with revenues flat at £8.9bn and like for like store sales down by 1.6 per cent. Underlying profits are down by 10 per cent.

Oil services company Amec (AMEC) has confirmed that it has no plans to bid for Kentz Corporaton (KENZ). We keep our buy on Amec.

The board of Simon Thompson recommendation. Noble Investments(NBL) has indicated its willingness to accept an indicative offer of 255p a share in cash and paper from Stanley Gibbons (SGI) should the approach be firmed up. Stanley Gibbons will have to raise £37m from shareholders towards the deal.

Another Simon Thompson recommendation, Thalassa Holdings (THAL), has said that strong trading means full year results will ‘significantly exceed’ expectations.

A third Simon Thompson recommendation, 32Red (TTR), has issued strong result for the six months to June showing a 15 per cent rise in revenues and 12 per cent improvement in profits.

Full year results from Kier Group (KIE) reflect tough end markets with underlying pre-tax profits slipping from £70m to £63.4m. Looking ahead all of the construction division and 95 per cent of the services division order books are already secured for 2014. Buy.

Document storage specialist Restore (RST) has benefited from acquisitions with half year results showing a 35 per cent surge in revenues and a near doubling of adjusted pre-tax profits to £4.1m. We maintain our buy recommendation.

KEY STORIES:

The government has confirmed its plans to seek an initial public offering for the Royal Mail. The exact details are not yet known but employees will receive 10 per cent of the company and priority in the public element of the float. Investors will be able to buy shares through intermediaries or direct through a postal system.

Online grocer Ocado (OCDO) has posted a 16.4 per cent rise in gross sales and a 15.3 per cent increase in orders per week but the size of the average order has remained static at £113.54, up just 1 per cent. The company has completed the sale and leaseback of its second fulfilment warehouse to Morrison (MRW) which has helped to tidy up its balance sheet.

Retailer Next (NXT) has issued a strong set of results for the six months to July with operating profits coming in towards the top end of expectations, up by 7.2 per cent, as the company managed to sell more product at full price than the previous year. Overall sales rose by 2.2 per cent, primarily down to new store space, it added 145,000 square foot in the period, and continued strength in performance at the Directory business. The high street retail business actually posted a marginal reduction in sales, down 0.9 per cent to £1bn.

Continuing the retail theme, Home Retail (HOME) enjoyed a stronger performance in the second quarter of its financial year as its self help initiative at Argos kicked in and the improved weather gave Homebase a significant boost. At the half year stage, Argos like for like sales were up 2.3 per cent and Homebase sales up 5.9 per cent, boosted by a standout 11 per cent improvement in like for like sales at the DIY chain in the second quarter. Both chains actually reduced their sales space marginally during the year as management rationalise their store base.

Finally on the retail front, homewares specialist Dunelm (DNLM) continues to grow strongly having added another 14 stores in the year to June, increasing its portfolio to 126 with another 10 openings contracted for this year. Overall annual sales rose by 12 per cent to £677.2m and pre-tax profits rose by the same margin to £108.1m.

OTHER COMPANY NEWS:

Trinity Mirror (TNI) has confirmed that police are at an early stage in establishing whether Mirror Group Newspapers should face criminal charges in relation to phone hacking at the Sunday Mirror.

Ultra Electronics (ULE) has won a £6.3m contract for power distribution systems on the UK’s Warrior armoured vehicles.

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