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Today’s market overview

Equities are flat in early trading as investors await the long anticipated announcement from the Federal Reserve on tapering of its QE3 programme, and The Trader Dominic Picarda is sitting on the sidelines until the dust settles.

IC TIP UPDATES:

Retailer JD Sports (JD.) turned in a solid performance during the six months to 3 August despite continued poor trading at its outdoor businesses Milletts and Blacks. The core sports fascias saw like for like sales rise by 7.5 per cent in the UK and Ireland and operating profits leapt by 55 per cent. The company has begun expanding its sports stores in Europe. The fashion fascias performed less well with like for like sales down 2.2 per cent and outdoor fared poorly too. The two outdoor brands have been separated with management dedicated to each and further costs taken out. If JD can turn around outdoor and fashion it has a seriously strong business on its hands, we keep our buy rating.

Smiths Industries (SMIN) has posted flat results for the year to July with revenues up just 2 per cent at £3.1bn and profits flat at £498m. Emerging markets sales rose by 14 per cent and now account for 16 per cent of the whole business. Smiths continues to refocus away from government contracts and has identified further cost savings to take out. Meanwhile investors can look forward to a 30p special dividend on top of the 39.5p full year payout. Buy.

Construction specialist Carillion (CLLN) has been awarded preferred bidder status on a Canadian highways contract worth more than £100m over 12 years. We maintain our buy recommendation.

Simon Thompson recommendation. Global Energy Development (GED) has updated investors on its development plan for the Bolivar contract area in Colombia, where it has identified a substantial shale oil resource. The drilling plan has been simplified and should yield more output when in place, but it has slightly delayed discussions with potential partners.

Fellow Simon Thompson recommendation. Town Centre Securities (TCSC) has produced results on a par with last year with underlying profits of £7.3m and a net asset value of 267p, which leaves the shares at a 23.4 per cent discount. Occupancy remains strong at 98 per cent and the group’s car parking business increased profits by 3.2 per cent.

Sirius Minerals (SXX) has attempted to shore up shareholder confidence after the recent delays to its planning application for its York potash project with a maiden resource estimate which indicates the potential size of the mine. The company has announced an ore reserve of 250m tonnes of polyhalite at an average grade of 87.8 per cent from just 1 per cent of the project area. This means a mine life of at least 50 years, possibly double that. Nonetheless until the permission is granted for the mine shares are likely to remain depressed.

Faroe Petroleum (FPM) announces that operator Statoil has spudded the Snilehorn exploration well in the Norwegian Sea. Faroe has a 7.5 per cent interest in the well. We keep our buy recommendation on Faroe.

London Metric Properties’ (LMP) joint venture with the Universities Superannuation Scheme, the Metric Income Plus Partnership, has acquired five Wickes retail warehouses for £28m. We maintain our buy rating.

KEY STORIES:

Interim results from M&C Saatchi (SAA) show a 5 per cent rise in revenues and a 13 per cent leap in underlying operating profits with revenues in the UK up by 8 per cent and like for likes in the Americas and Europe up by 24 per cent and 21 per cent respectively.

Housebuilder Redrow (RDW) is benefiting from the buoyant conditions the sector is enjoying and has posted a 26 per cent rise in revenues in the year to June which, with improving margins, helped produce a pre-tax profit uplift of 63 per cent to £70m. Management is confident enough to reinstate the dividend at 1p a share. Weekly reservations are now running 40 per cent ahead of last year.

OTHER COMPANY NEWS:

Eland Oil & Gas (ELA), which is trying to restart oil production on the OML40 licence area in Nigeria has reaffirmed that it expects first production to flow in October.

Unite Group (UTG) has agreed a deal with Schroder Real Estate Investment Trust to acquire a one acre site in Wembley for £7.4m on which it will build a student residence and office building through its London Student Accommodation Vehicle joint venture with a development value of £47m.

Half year results from Highland Gold Mining (HGM) showed a small increase in production to 105,630 ounces of gold and a similar increase in gold sales. The group has also reduced cash costs of production but lower realised gold prices hit profitability with net profits down from $48m to $17m.

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