Stock Exchange demands too high a premium

Grundig deal makes ambitious Alba a hold: Crest Nicholson's rise built on firm foundations

Taking heart that the economy is looking up, many in the City have had a spring in their step in the past few months, and that has been reflected in the flurry of companies bursting on to the stock market.

Some 81 companies braved public ownership in the three months to December - almost twice the number to list in the same period in 2002. That is good news for the London Stock Exchange, which saw turnover from its issuer services department, which handles IPOs, rise 23 per cent to £10.7m for the period, according to figures out yesterday.

The Exchange has also made good progress in the services it offers brokers, through its electronic trading platform, SETS. The number of transactions that passed through the platform rose 26 per cent in the third quarter compared with 2002.

Clara Furse, the chief executive of the LSE, has also focused on shunting the tradition-loving Exchange into the twenty-first century, modernising the once archaic institution and cutting its costs. In the past six months she has built up derivatives trading, launching EDX, a derivatives and equity trading platform in the summer. But all that activity cannot disguise the fact that growth prospects for the LSE look slim. Its turnover from information services - which provides data for terminals used by analysts and other City employees - continued its downward trend. While IPOs were up in the run up to Christmas, January blues seem to have taken over, with the Exchange warning that appetite has been subdued in recent weeks, and below last year's levels. The LSE's shares fell 5p to 363p.

The prices the Exchange charges are also coming under ever more competitive pressure. The UK's competition authorities have also waded into the arcane world of the cost of trading, forcing the LSE to cut prices for new listings.

An upturn in the economy would alleviate some of these pressures, though it would probably take the long-awaited bid for the LSE from the likes of Deutsche Börse to inject real life into the shares. However, as the Exchange already trades on 18 times future earnings, there may not be much of a premium to be gained. Avoid.

Grundig deal makes ambitious Alba a hold

The consumer electronics business Alba - best known, perhaps, for buying up flagging but well-known brand names and turning them around - has snapped up another. This time it is buying the Grundig brand - albeit in a 50-50 joint venture with Beko of Turkey - from the administrator for a maximum of €80m (£54m).

The deal is key for Alba. About 85 per cent of its total turnover comes from the UK - where it owns brands including Bush and Goodmans.

With Grundig on board, assuming the deal goes through, the company reckons half of its turnover could come from overseas in three years' time - making Alba a truly pan-European business.

Grundig is a well known brand, with TVs, video recorders, DVD players and cordless phones among its range. It currently trades under the Roadstar name in Europe.

The advantage of buying from the administrator is that much of the cost-cutting has already been done. Staff levels have been cut to about 350 compared with a peak of 2,700.

Nor does Alba expect that investment costs will shoot up. Its best guess is that Grundig will be at a break-even position in the year to April 2005 but enhancing thereafter. Analysts' early estimates are that the deal could lift earnings by as much as 7 per cent in the 2006 financial year.

Unsurprisingly, Alba shares shot up 14 per cent yesterday to close at 765p, reflecting the potential upside from the deal. Given that sharp rally, the shares are a hold.

Crest Nicholson's rise built on firm foundations

Crest Nicholson is the sort of housebuilder that John Prescott, the deputy prime minister, should love. This government has outsourced much of the delivery of social policy to the private sector and housing is no exception.

The company, which reported full-year results yesterday ahead of expectations, has shifted its strategy to become an urban regenerator. It has moved increasingly into the area of affordable housing and social (housing association) housing. It has moved into the lower priced end of the market more generally and away from the inflated South-east.

It has done this not for reasons of philanthropy but because it sees opportunity. Crest Nicholson has tuned into government policy, which manifests itself through the planning system, and also to demographic pressures - we need more homes at the bottom of the market. The company has already established itself as a favourite among local authorities - it is doing up a sink estate in Birmingham, for instance.

The change in strategy did hit margins initially but yesterday it reported a healthy 15.9 per cent operating margin. Pre-tax profit for the year ended October were up 18 per cent at £74.6m. The shares eased 5p at 318p yesterday.

With low interest rates and high employment, the housing market should be resting on firm foundations. Add to that Crest Nicholson's less risky positioning in the market and the fact that it is seen as a takeover target. Buy.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
people
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
News
news
ebooks
ebooksA special investigation by Andy McSmith
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
News
i100
News
Perry says: 'Psychiatrists give help because they need help. You would not be working in mental health if you didn't have a curiosity about how the mind works.'
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?