Thursday's Stock Market Report from UK-Analyst: featuring Manchester United, Burberry, Centrica, Ted Baker and Spectra Systems

From UK-Analyst.com: Thursday 14th November 2013 The Markets UK retail sales unexpectedly fell during October, according to new data from the Office for National Statistics. The figures revealed that retail sales were down by 0.7% compared with September, below analyst estimations for flat sales growth. A breakdown of the figures revealed that the usual spend on winter clothes at this time of the year was not as strong as normal, perhaps because of the milder than usual weather. The announcement comes just a day after Bank of England Governor Mark Carney raised UK growth forecasts and said that the economic recovery in the UK was truly beginning to take hold. However, Philip Rush, an Economist with Nomura, argued, "I think that there's too much optimism around UK demand prospects at the moment and there needs to be a reassessment of relative UK growth prospects." Meanwhile, new data revealed that the Eurozone's economy grew by a meagre 0.1% over the July-September quarter, down on the 0.3% growth which was delivered over the previous quarter. The overall figures were dragged downwards by a French economy which swung back into contraction as well as a continued squeeze in Italy. However, there were more promising signs in the south of Europe as Spain returned to quarter-on-quarter growth for the first time since the first quarter of 2011, while Portugal's economy grew by 0.2% over the period. Chris Williamson from Markit commented, "The region's periphery continues to show signs of reviving, and the region is on course to expand at a slightly stronger, though still modest, pace in the fourth quarter." Premier League champions Manchester United reported a 29% increase in revenues to 98.5 million pounds for the three months ended September, while EBITDA increased by 36% to 22 million pounds over the period. The Ryan Giggs-like acceleration in revenues and earnings was boosted by TV deals and new sponsorship agreements with the likes of PepsiCo. Manchester United are now forecasting revenues of 420-430 million pounds as it looks to encroach on the financial power of Spanish giants Barcelona and Real Madrid. ADVERTISEMENT At the London close the Dow Jones was up by 34.27 points at 15,855.90 and the Nasdaq was up by 4.36 points at 3,409.82. In London the FTSE 100 closed up by 36.13 points at 6,666.13 and the FTSE 250 was down by 78.09 points at 15,257.93. The FTSE All-Share was up by 19.45 points at 3.548.98 while the FTSE AIM Index grew by 5.87 points to 808.47. Broker Notes N+1 Singer stuck with its "sell" recommendation on sausage skin maker Devro (DVO) and put its 285p target price under review. Although the broker believes in the long term prospects of the company, it finds it hard to look past the 4 profit downgrades which have come over the last 12 months. On this basis, N+1 Singer feels that Devro is struggling to transition from a recovery/new management play into a genuine growth story. The shares were down by 3.3p at 316.7p. Panmure Gordon upgraded its "hold" recommendation to a "buy" stance on insurer esure (ESUR), increasing its target price by 2% to 255p. Panmure notes that esure in Q3 has done better than expected, which is reflected in a small increase to its 2014 forecasts. The broker goes on to argue that the material outperformance of rival Direct Line versus esure since the start of October means that there is now materially more upside to esure. The shares inched up by 1p to 225p. Canaccord Genuity stuck with its "buy" recommendation on software supplier SQS Software Quality Systems (SQS), upping its target price to 560p. The broker is encouraged by the planned acquisition of a majority stake in Thinksoft and feels that it has the potential to be a "game changer". In particular Canaccord believes that the acquisition could provide the opportunity to increase the proportion of high margin test centre work delivered through offshore resources. The shares were up by 6.5p at 487.5p. Blue Chips Fashion retailer Burberry Group (BRBY) saw revenues for the 6 months ended 30th September increase by 17% to 1,031 million pounds while adjusted pre-tax profits grew marginally to 174 million pounds. The numbers mark the first time the fashion giant has reported revenues of over 1 billion pounds for a 6 month period. The 1 million pounds increase in pre-tax profits reflected the strong growth in retail, offset by expected lower wholesale revenue, the dilutive impact of the transition of its Beauty unit and a higher performance-related pay charge. The shares grew by 27p to 1,489p. Packaging company Rexam (REX) claimed that trading since July has been in line with its expectations, while the process of divesting the Healthcare business is apparently progressing according to plan. However, the firm did warn that its performance next year could be adversely affected by the difficult macroeconomic backdrop in Europe, the impact of a maturing specialty can market in North America and foreign exchange translation headwinds. The shares fell by 12p to 506.5p. British Gas owner Centrica (CNA) warned investors that it will struggle to deliver profit growth this year because of the weather, commodity prices and weaker asset performance. This is in contrast to a July announcement by the much criticised company which suggested that earnings would grow over the course of 2013. The warning comes a month after the company said it would increase gas and electricity bills by an average 9.2%, citing the cost of wholesale energy and higher distribution costs. The shares slipped by 18.6p to 345.3p. ADVERTISEMENT Mid Caps Sports media group Peform Group (PER) posted year-on-year revenue growth of 31% to 51.8 million pounds for the three months ended 30th September. However, the group conceded that the EBITDA generated by its Technology and Production business will be 4 million pounds lower than expected because many of the projects in the pipeline, especially those with an upfront fee, have not materialised. The update comes after broker Numis retained its "add" recommendation and 608p target price on the shares, which were down by 80p to 460p. Security services group Serco (SRP) warned on 2014 profits, explaining that the impact of multiple high profile contract problems in Britain and Australia will hit margins and could deter other potential customers using the firm. The outsourcer - which has recently been accused of fraud on one of its public sector contracts - also revealed that it will cut around 400 jobs in the UK as it looks to keep a handle on costs. The shares plunged by 84.9p to 419.1p. Fashion retailer Ted Baker (TED) confirmed a 24.4% increase in revenues in relation to the 13 week period ended 9th November in a performance boosted by a surge in wholesale sales, especially in the US. Looking ahead, Ted Baker said the initial response to its Autumn/Winter collections has been encouraging while upcoming store openings in Hong Kong, Gatwick South and the Middle East all remain on track. The shares surged by 97p to 1,887p. Small Caps Cable manufacturer Volex (VLX) announced a 21% fall in revenues to $196.5 million (122.5 million pounds) for the 6 months ended 29th September while last year's $4.2 million (2.6 million pounds) worth of pre-tax profits were practically wiped out. Volex attributed the deterioration in performance to "challenging" market conditions as well as delays in certain customer product launches. Separately, the company revealed a management re-shuffle which included David McKinney stepping down as Chief Operating Officer with immediate effect. The shares slid by 25.75p to 91p. CCTV installer 21st Century Technology (C21) announced that it has been awarded a contract to supply advanced CCTV systems for one of the UK's leading rail franchises in a deal with an initial value of 1.9 million pounds. The deal - from which the majority of the income will accrue in 2014 - includes ongoing maintenance support for three years. Management praised the contract win, arguing that it maintains the sales momentum within its UK Rail Division following previously announced work. The shares increased by 0.625p to 7.375p. Security services provider Croma Security Solutions (CSSG) swung into a pre-tax profit of 43,000 pounds for the year ended 30th June, well up on the 486,000 pounds loss which was recorded in the prior-year period as revenues swelled by 34% to 13.25 million pounds. According to Croma, the bulk of the growth as driven by improvements resulting from the acquisition of the CSS Companies in 2012 and the financial restructuring which occurred at the time. The shares fell by 1.75p to 18.25p. Coal miner Atlantic Coal (ATC) revealed that it has entered into a joint venture and coal sale agreement with China based CIC Brancepeth Coal Limited. Under this agreement, Atlantic Coal will provide coal mining and processing expertise to CIC-Coal and, in exchange, CIC-Coal will purchase coal mined and/or processed by Atlantic Coal. Atlantic Coal will sell a minimum of 100,000 tonnes per year to CIC-Coal with the price dependant on market conditions at the time of sale. The shares soared by 0.07p to 0.3p. Energy services company Lamprell (LAM) claimed that it continues to make good progress and that it expects 2013 results to be in line with expectations. The group was keen to praise its operations in the Middle East, the North Sea and offshore India, with a range of projects being completed over the year so far. Looking ahead, Lamprell maintained that demand for its services remains high with the company's order book currently standing at a value of $1 billion (620 million pounds). The shares were down by 7.75p to 151.5p. Banknote technology specialist Spectra Systems (SPSY) revealed that it has received approval from an unnamed G8 central bank customer to manufacturer and deliver upgraded sensors beginning this month in a deal worth around $8 million (4.9 million pounds). These upgraded sensors are expected to support the sale of the current generation consumable to the central bank for at least the next 10 years. The shares inched up by 2p to 26.5p. ADVERTISEMENT

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