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Today’s market overview

Equities resumed their positive momentum in early trading, with the FTSE threatening the 6,700 level as investors responded positively to better economic data from China overnight.

IC TIP UPDATES:

Simon Thompson Bargain Shares constituent Heritage Oil (HOIL) has expanded its exploration portfolio through a farm in with Kina Petroleum for two licences onshore Papua New Guinea.

Retailer Debenhams (DEB) has posted results in line with expectations after a tough period on the high street. The year to August saw gross transaction values rise by 2.5 per cent, with UK sales up 2.3 per cent and international sales 3.7 per cent better. Like for like sales rose by 2 per cent on flat margins but pre-tax profits dipped by 2.7 per cent to £154m after the company invested in a number of stores. Management says it remains cautious on the health of the consumer. We maintain our buy rating.

Another Simon Thompson recommendation IQE (IQE) has won a ‘major’ three year contract with Philips to supply epi-wafers for its solid state laser production.

First Property Group (FPO) is aiming to take advantage of the surging property market and changes in planning which allow office buildings to be converted to residential through a new partnership with clients of a ‘leading global investment business’. A partnership has been formed to which the investors will commit up to £35m, with First Property committing up to £5m, to invest in office properties that will be converted. First Property will take no fees but will get 20 per cent of the profits earned. The partnership has a closed life and will end in May 2018. We keep our buy recommendation.

Rail scheduling and maintenance specialist Tracsis (TRCS) posted a 25 per cent rise in revenues for the year to July but cash earnings only rose by 3 per cent to £3.4m after increased investment in the business. New contracts, clarity on rail franchising and the acquisition of Sky High during recent months mean management is confident of further progress this year. Our recommendation is under review.

Molins (MLIN) says that trading is in line with expectations and order books suggest full year performance will be solid. We keep our buy.

Care homes provider Caretech (CTH) says that trading is likely to meet forecasts and that the recent acquisition of the freeholds of two portfolios will result in a £4.4m rent saving in 2014. Buy.

Simon Thompson recommendation. Bloomsbury Publishing (BMY) posted a 13 per cent rise in interim revenues to £49.2m and a 33 per cent rise in pre-tax profits to £1.1m.

Fellow Simon Thompson recommendation Crystal Amber (CRS) grew its net asset value by 26 per cent to 133.05p in the year to June and this has risen a further 11 per cent in the three months to September. 

KEY STORIES:

Unilever (ULVR) posted underlying sales growth of 4.4 per cent for the nine months to September but turnover dipped by 2 per cent to €38bn after adverse currency movements shaved 5 per cent off. The third quarter has been tougher with underlying sales growth of 3.2 per cent and growth in emerging markets of 5.9 per cent.

Media giant WPP Group (WPP) saw third quarter revenues rise by 7.4 per cent, with like for like sales growth accelerating to 5 per cent. Nine months sales are 7.2 per cent higher. The company has booked £4.9bn of new business in the opening nine months of the year.

Senior directors of Asos (ASC) have taken advantage of its soaring share price by placing some of their shares in the market. Chief executive Nick Robertson and finance director Nicholas Beighton sold 1.88m shares between them at £50 a share, raising £94.1m.

Serco (SRP) has won a £355m extension to its contract to run the Dubai metro. The five year extension runs to 2019.

Property company Segro (SGRO) has signed six new pre-let agreements including its largest ever, a 72,000 square metre distribution centre for ASICS Europe near Dusseldorf. 

OTHER COMPANY NEWS:

Spirent (SPT) says trading has been in line with expectations but delays to some sales which were expected before the year end will push around $12m of revenue into 2014.

AZ Electronic Materials (AZEM) reports that the softness experienced in some of its end markets has continued in the third quarter which means second half revenues will come in around the same level as the first half.

Property business Workspace (WKP) has agreed to sell its Tower Bridge business complex to Grosvenor Britain & Ireland for £51m. In May Workspace won planning permission to build 800 residential units and 60,000 square foot of new business space on the site.

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