The Morning Call - Ultra Electronics nosedives as it warns on revenue

Highlights of the Day

Asian Markets

Asian markets wavered after U.S. stocks closed mostly lower on Friday, with Japan’s index ending lower for the fourth straight session.

U.S. Markets

The major U.S. stock indexes closed mostly lower on Friday as they snapped multi-week winning streaks while some of the largest tech stocks pulled back.

Today's News

The average asking price for a house in the UK was down 0.8% on month in November, property tracking website Rightmove said on Monday. That followed the 1.1% increase in October. On a yearly basis, prices advanced 1.1% – slowing from 1.4% in the previous month.

Rio Tinto said it has successfully completed its off-market buyback of Rio Tinto Ltd shares, a transaction increased to AUD750m from the indicative AUD700m announced due to strong demand. The buyback price was AUD63.67 per share which represented a discount of 14% to the market price. The Rio Tinto Ltd buyback was announced back in September as part of a £2.5bn share buy-back programme, returning the proceeds from the sale of Coal & Allied to Rio Tinto shareholders.

Underlying operating profits at Carr’s fell by 28.5% to £9.3m in the eyar to the 2 Sep. Revenue rose by 9.9% to £346.2m but EBITDA fell by 18.8% to £13.4m and reported operating profit was down 38.3% at £7.9m. Underlying pre-tax profits fell by 20.2% to £11.4m and reported pre-tax profits were down 29.0% at £10.0m. The board has proposed a final dividend of 2.1p resulting in a total for the year up 5.3% at 4.0p (2016: 3.8p), excluding the special dividend of 17.54p paid in October 2016.

Taylor Wimpey said it was on track to meet its expectations for the full year as UK housing market conditions remained positive in the second half. “While we are alert to potential political and economic risks, demand for new housing remains high across the UK and market conditions are favourable,” chief executive Pete Redfern said. “Notwithstanding the recent small increase in the base rate, we have continued to see stability in trading patterns.” The company expects to deliver an increase in its annual operating profit margin of over 30%, compared to 20.8% last year. It also confirmed that it will pay total dividends in the 2018 financial year of around £500m, subject to relevant shareholder approvals.

Polymetal International reported the initial ore reserve estimate for its Nezhda gold property on Monday, in accordance with the JORC Code, confirming that open-pit ore reserves were estimated at 15.5 Mt of ore with an average gold equivalent grade of 4.0 grams per tonne for 2.0 Moz of gold equivalent contained. The company said additional mineral resources were estimated at 55.9 Mt of ore with an average gold equivalent grade of 5.0 grams per tonne for 8.9 Moz of gold equivalent contained.

John Laing Infrastructure Fund updated the market on its trading on Monday, reporting underlying growth in its portfolio value for the nine months to 30 September of 5.5% to £1.23bn, on a rebased value of £1.16bn. The firm claimed a net asset value of £1.22bn as at 30 September, including £34.5m of cash allocated to the dividend that was paid in October.

Ultra Electronics warned on revenue and said it expects a tougher second half, as it announced that Rakesh Sharma has stepped down as chief executive with immediate effect. In a trading statement ahead of its year end on 31 December 2017, the company said that while the majority of its markets have been “satisfactory”, the UK has been difficult and has become increasingly so in the second half. It pointed to mounting pressures in the funding of UK defence programmes and said this has resulted in the UK Ministry of Defence pausing, cancelling or delaying a number of programmes.

Senior has appointed former BAE Systems boss Ian King as its chairman-designate, won a long-term component supply contract with Boeing on a range of its next generation of aeroplanes and said its expected full year results to be slightly better than forecast. King has joined the board as a non-executive director with immediate effect and take over as chairman from Charles Berry when he retires this coming April.

Gold price were little changed, but held near the previous session’s low, pressured by a firmer dollar and expectations of a series of interest rate hikes by the U.S. Federal Reserve.

Oil Prices was cautious amid ongoing tensions in the Middle East and after a rising rig count in the United States.

Companies Reporting this week

Day	Companies
Today:	Ladbrokes Coral * Carr’s
Tuesday:	McCarthy & Stone * Aveva Group * DCC * Electrocomponents * FirstGroup * Vodafone Group * Land Securities
Wednesday:	Experian * Premier Foods * TalkTalk Telecom Group
Thursday:	Assura * British Land * Dart Group * Investec * Mediclinic * Royal Mail

Early Market Movements

Market	Index	Change	% Change
UK 100	7,459.8	+26.8	+0.4%
UK 250	19,981.2	-39.7	-0.2%
GER 30	13,162.9	+35.4	+0.3%
FRA 40	5,384.8	+4.0	+0.1%
U.S. 30	23,422.21	-39.73	-0.2%
U.S. 500	2,582.3	-2.3	-0.1%
OIL (BRENT)	63.54	+0.02	+0.0%
GOLD	1,276.69	+1.62	+0.1%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
Intu Properties	207.65	+2.65	+1.3%
Vesuvius	576.5	+14	+2.5%
Aggreko	973.25	+22.75	+2.4%
Ultra Electronics	1180	-347	-22.7%
Provident Financial	846.75	-18.75	-2.2%
Royal Mail	377.7	-0.6	-0.2%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Smith and Nephew	JPMorgan	Neutral	1346	1369
Paddy Power	Barclays	Overweight	8610	9400
Marks and Spencer	RBC Capital	Outperform	317.2	375
Vodafone	Goldman Sachs	Conviction Buy	218.8	300