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Today’s market overview

Equities are ticking upwards again, although cautiously ahead of jobs data out of the US later on today. There are also growing concerns over a potential housing bubble in China and warnings of property bubbles in Germany’s main cities.


Engineer GKN (GKN) says trading in the period since 30 July has been in line with expectations as continued strong demand from the commercial aerospace sector has outweighed weaker conditions in the defence sector. Total sales were up 16 per cent to £1.87bn, of which 6 per cent was delivered organically. We keep our buy rating.

Cineworld (CINE) has enjoyed continued strong trading during the 16 week period to 17 October with total group revenues up by 11 per cent, helped by a strong performance from the Picturehouse acquisition, which grew proforma sales by 30.6 per cent. The company had a 25.9 per cent share of the market during the period. Two more cinemas will open before the year end, with four scheduled for next year although Cineworld also has to dispose of three of the Picturehouse cinemas following a Competition Commission ruling. The company also warned that the fourth quarter will struggle to compete with the strong 2012 showing which was boosted by the success of Skyfall. Nonetheless we retain our buy recommendation.

Development Securities (DSC) reports a 2 per cent increase in net asset value during the six months to August. The company is continuing to actively trade its portfolio, posting £13.3 of development and trading gains in the period. It also secured planning consents on seven new developments, mostly anchored by supermarkets. Buy.

Spirit Pub Company (SPRT) grew its cash earnings by 2 per cent to £150m in the year to 17 August. Its managed estate grew like for like sales by 1.6 per cent with the leased pubs showing a decline in like for likes of 2.1 per cent. The company continues to wrestle with its debts, reducing them to 4.7 times cash earnings by the period end and launching a debt reprofiling proposal today. We keep our buy recommendation.

North sea oil producer Enquest (ENQ) has acquired Centrica’s 50 per cent stake in the Greater Kittiwake area and also its 100 per cent interest in the Kittiwake to Forties oil pipeline. This strategic move opens up the potential for Enquest to create a hub by tying in the nearby Scotty and Crathes fields. The deal will cost $39.9m initially, as well as $5.1m of net debt with a potential deferred consideration of $30m if the field development plan for the Scotty or Crathes fields is approved. Buy.

Simon Thompson recommendation. BP Marsh & Partners (BPM) has posted a 9.3 per cent year on year increase in net asset value to £52m for the six months to July. The company delivered £25.2m of pre-tax gains during the first half and ended the period with £16.5m of cash available.


ARM Holdings (ARM) has posted strong third quarter figures with revenues up by 27 per cent in sterling and pre-tax profit up by 36 per cent to £92.6m, which means year to date profits are 37 per cent higher at £268.6m. The company reports that 2.5 billion Arm-based chips shipped during the period and a solid order backlog means management are confident of hitting fourth quarter expectations of revenues of $290m.

Interim results from Whitbread (WTB) showed a 12.4 per cent rise in total revenues to £1.14bn with group like for like sales up by 2.8 per cent. Underlying profits were 12.6 per cent higher at £216.1m. The prime driver of performance was Costa Coffee, which grew underlying profits by 20.5 per cent although the Hotels and Restaurants grew profits by 7.9 per cent and Premier Inn sales rose 12.2 per cent.

BHP Billiton (BLT) has posted a strong operational performance for the three months to September which means it is able to confirm guidance for full year production for petroleum, copper and coal and raise iron ore guidance to 212m tonnes. The company has slashed $2.7bn in controllable costs during 2013 and is aiming to reduce capital and exploration spending by $16bn next year.

Reckitt Benckiser (RB.) says third quarter revenues rose by 5 per cent, helped by a good showing in emerging markets although the pharmaceuticals division remains a weak spot and a strategic review of this business has commenced.


Industrial chains and transmission specialist Renold (RNO) confirmed that it is planning to drastically reduce its UK facility at Bredbury after a strategic review. Meanwhile, a focus on margin improvement has offset weaker volumes and first half underlying adjusted profit is now expected to beat market expectations.

Budget airline and holidays specialist Dart Group (DTG) flew 4.1m passengers in the six months to September, up 13 per cent on last year and also more than doubled the number of package holiday passengers to 634,866. First half profits are expected to be 37 per cent ahead of last year but second half losses will also be higher due to the increased seasonality of the business. Nonetheless, management remains ‘cautiously optimistic’ about delivering full year profit growth.