The Week In Review: Property firm fears shaky high street
Saturday 18 November 2006
Land Securities, Europe's largest quoted property company, - it even owns the lights at Piccadilly Circus - has had a good run since we tipped the stock a year ago. Boosted by recovery in the London office market and strength in its core retail division, the company's net asset value per share has increased by almost 11 per cent. Its shares have not quite kept pace with its peers, but they have nonetheless risen by almost 50 per cent since last November.
The concern for investors, however, is what might happen next, given the much less stable outlook for the commercial property sector. Retail, which accounts for more than half of Land Securities' portfolio, is the biggest worry. With consumer confidence already fragile, and interest rates having risen again, the high street is likely to come under additional strain in the New Year.
Still, Land Securities' outsourcing business, Trillium, which accounts for 17 per cent of group profits, is enjoying rapid growth, and has built up an impressive pipeline of future business. Meanwhile, its conversion into a real estate investment trust in January will make it a much more tax-efficient vehicle for investors. Buy.
Inmarsat offers phone services through its network of satellites, which cover 85 per cent of the earth's landmass, and third quarter results showed it could prove a very profitable niche. While revenue in the period grew 8 per cent to $129m (£68m), net profit tripled to $11.1m. Hold.
Gaming VC Holdings boasts that its online casino does not do any business with Americans. But most of its clientele are German, where the authorities are also less than keen on foreign gambling websites. Still, the business is in good health, with rising revenues and customer numbers. The company also has the support of the EU, which has been moving against gambling monopolies. Even so, avoid the shares until the regulatory situation becomes more clear.
For a British luxury goods group, Burberry sure is fond of installing American bosses. Angela Ahrendts has made it clear where her heart lies by putting the US at the centre of her expansion plans. In the half year to 30 September, pre-tax profits were £73.4m, down from £78.1m. But there is a momentum at all three of its profit streams: retail, wholesale and licensing. Don't lose faith. Buy.
The chances of anyone in London getting their morning latte from Coffee Heaven are slim because the group only operates in eastern Europe. But that's no reason to steer clear. An update this week confirmed trading is ahead of expectations. First-half revenue is up by 61 per cent and it expects a pre-tax profit of £400,000. Buy.
When BTR and Siebe formed Invensys in 1999, the former was in pretty bad shape while the latter was struggling. The combination of the two has been little short of a disaster. However, investors greeted last week's interim results enthusiastically, and the chief executive, Ulf Henriksson, seems to think the turnaround is complete. Investors have to decide whether they believe that - despite the surge in the share price, the results were only slightly ahead of market forecasts. Hold.
After the turmoil of recent years, life has settled down for Britain's biggest dairies. Robert Wiseman wound up with Tesco and J Sainsbury as its biggest customers, and reckons it's got "the two best horses in the race". Analysts at Panmure Gordon have lifted their full-year profits estimates by 7 per cent to £31m. Hold.
This year, Mecom emerged as a major owner of newspapers in Europe. While most London investors want to get as far away from newspapers as possible, Mecom has shown that conditions are more promising on the Continent. A trading update this week said that advertising revenues were growing in all its major markets - Denmark, Norway, Poland and Holland. Buy.
Gambling shares are, well, a gamble. When punters have a good run, the bookies take a hit. Such is the story at Ladbroke, which has warned investors that it had a string of bad results last month. Of 19 Champions League matches, 18 were won by the favourites, while five out of seven favourite horses won at Newmarket on Champions Day. Trading at 15 times next year's earnings, the company is fairly valued. But with the possibility of a private equity approach and potential for expansion in Europe, the shares have further to run. Buy.
South African financial services group Investec has been firing on all cylinders over the past year, with each part of its business growing at a pace. Publishing its interim results this week, the group posted an overall 34 per cent rise in operating profits, driven by a 68 per cent increase in its private client arm, and a near doubling of profits in its specialised finance division. Buy.
Sales growth at Mothercare is not proving sufficient to offset its rising costs. To tackle this, the group is taking the axe to its own estate, cutting back stores that are too big. In five outlets it has reduced its space by 40 per cent, its rent bill by 30 per cent but its sales by just 7 per cent. It is counting on the internet to make up any difference. All very sensible, but this newest Mothercare baby will take time to grow up. Take profits.
The above recommendations are taken from the daily Investment Column
Oh, bring us a figgy pudding - but avoid tasting the shares
In the next five weeks, Northern Foods will sell 26 million Christmas puddings. Which means a lot is riding on how well the food group performs over the festive season.
Investors are all too aware of the company's propensity for welcoming in the new year with a profit warning, so this week they were busy scouring its interim results for signs of something rotten. The alarm bells are already ringing over the firm's chances of getting £200m proceeds from a disposal programme that will see it shed 40 per cent of its business by a self-imposed target of next May. Profits from the businesses to be sold collapsed to almost nothing - but Pat O'Driscoll, the company's head chef, insisted this was only what it had flagged six months ago.
Following the divestments, Northern will comprise three divisions: chilled, bakery and frozen, making pizzas, ready meals, biscuits, sandwiches, salads and those figgy puddings. The interim numbers suggested its chilled business was on the road to recovery, with a 9 per cent rise in sales and a 2 percentage-point gain in margins to 3.8 per cent.
But the 38 per cent fall in interim profits before tax to £16m showed the rest of the company has some way to go. Avoid.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Jeremy Clarkson 'sees no problem' with his racist language on Top Gear, says BBC
- 2 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 3 London restaurant 34 creates champagne glass modelled on Kate Moss’ left breast
- 4 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 5 James Foley beheading: Fox news presenter Megyn Kelly annoyed by Ferguson update during broadcast about murdered journalist
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£45000 - £55000 per annum: Harrington Starr: A well-established financial soft...
Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...
Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...
£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony