The Week Ahead: Put faith in trusts, say City analysts
Monday 01 October 2012
Private equity may have been labelled (along with hedge funds) as the scourge of the City by some. But whether you love them or hate them, they could be a good investment. Private equity trusts are trading at attractive discounts to the value of their investments, according to analysts at Numis Securities. While scribes at Liberum Capital have rated private equity trust Pantheon International Participations a buy. Today it will update the market with preliminary results. Liberum scribes said: "We like the mature portfolio. The fund relates to pre-2007 vintage and we would therefore expect the fund to generate a steady flow of NAV-accretive realisations going forward." According to Liberum, Pantheon trades at a 37 per cent discount to net asset value (NAV) which is "one of the wider discounts in the private equity fund-of-funds sector".
Results/Updates: Pure Wafer, Sabien Technology, Andor Technology.
Wolseley has been blowing hot and cold, but analysts at Numis Securities think the plumbing and heating business is well-placed to maintain profit recovery. However, its European exposure, which accounts for about half of profits, is still an issue. Numis thinks the shares are "now trading at the right valuation" and has put the stock on hold at 2,400p. Wolseley will report its full-year results tomorrow, and investors will be looking to see if its stornmg US business is still offsetting a weaker Europe. Jefferies analysts expect few surprises in the results as only one quarter is still left to update on. They estimate a trading profit of £646m, below the consensus estimate of £666m due to their concerns on Europe.
Results/Updates: Walker Greenbank, Antisoma, St Ives, Ultimate Finance, Babcock International.
Is Dunelm Mill the new John Lewis? The cheap cushions and curtains business is now leading the £11bn homewares retail market with 0.1 per cent more market share than the middle classes' favourite retailer, according to Verdict. The research agency estimates Dunelm now has 6.9 per cent market share, up from 6.1 per cent last year. Just two weeks ago, Dunelm reported its full-year results, and on Wednesday it will reveal its first-quarter trading update. Numis Securities' Andrew Wade thinks Dunelm has a number of initiatives to drive growth, including "store refits, online growth, increased advertising and its first full catalogue", and expects like for like sales to stay positive.
Results/Updates: Tesco, Sportingbet, Marston's, J Sainsbury, easyJet, Cerep, Aberforth Smaller Companies Trust, Findel.
Fashion brand Ted Baker has quite a few fans but analysts at Goldman Sachs are so enamoured with the brand that they liken it to a luxury goods brand, rather than one of its more common high street rivals, in terms of valuations. Goldman reiterated its buy rating and raised its 12-month price target to 1,241p from 1,083p. It now expects sales to grow by 13 per cent and 11 per cent over the next two years. Its New York flagship store looks to have made a good start, and Goldman is even optimistic on margins over the medium term. Analysts at Panmure Gordon are equally keen, and like Ted Baker's "tightly managed distribution chain, its opportunities in licensing, management strength and the company's strong net cash balance sheet".They also rate it a buy and give it a target price of 975p but note the difficulty in actually buying its shares — "the opportunities to get on the very stable share register are limited".
Results/Updates: Animalcare, Matchtech, Aer Lingus, Carillion, Halfords, Robert Walters, Victrex
The Aberdeen-based oil services specialist Wood Group rejoined the FTSE 100 last month and will give a trading update on Friday. It is likely to keep investors happy, Numis Securities' scribes reckon. They think "deepwater expansions and strong subsea/pipeline engineering demand will continue to be core drivers" for the full year to 2013 and its expansion into the North American onshore maintenance market is promising. Numis rates the shares a hold with a target of 791p.
Results/Updates: Kcom Group, St Ives
Halifax HPI, Purchasing Managers' Index, net consumer credit, mortgage approvals, M4 money supply, Lloyds Business Barometer.
Construction purchasing managers' index, Nationwide House Prices.
Services purchasing managers' index, British Retail Consortium – shop price index, official reserves.
Bank of England asset purchase target, Bank of England and European Central Bank interest rate announcements, new car registrations, ECB press conference, US factory orders update and US unemployment claims.
US average hourly earnings, US non-farm employment change and US unemployment rate
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