Date: Wednesday 09 Jul 2008
There are few signs that the markets on which Bradford & Bingley depends are easing, and much of the evidence suggests they are in fact deteriorating at a faster rate, increasing the pressures on the mortgage lender.
Meanwhile the company is still committed to buying £350m of assets from GMAC every quarter, against the threat of rising funding costs.
The underwriters are currently sitting on a hefty paper loss and any attempt to offload their shares following the offer could depress the shares even further. Depositors' money is safe, but any investor with money still tied up in the shares should get out now. Sell says the Telegraph.
Social housing contractor, Connaught issued an upbeat trading statement yesterday. The stock is up by 16% in the last 12 months, but that should continue to progress nicely. As a huge number of companies struggle in what is increasingly looking like a recession in the UK, Connaught should be a relative safe haven and even looks good against its peer group. Buy says the Independent.
Online betting group Partygaming issued a mixed trading statement yesterday, showing revenues falling and a disappointing performance in its poker division, but also that its bingo games are thriving. Some brokers uggest the group is cheap to the rest of the sector trading at 15 times 2008 earnings, falling to 12.1 next year but Partygaming will be a bumpy ride, Cautious hold says the Independent.
Yesterday's share-price fall appears to be overdone, adds the FT, as the stock is now trading at about 13.2 times 2008 earnings, lower than the 16 times for rival 888. The company has reported a dip in overall second-quarter trading as the poker division struggled, but there is no evidence (yet) to believe that the decline in poker player volume will go through to the second half of the financial year. Trading in the casino side continues to increase impressively and the prospect of a settlement with the US DoJ should give the stock further upside.
The group reckons that full-year results should meet expectations, although, with a settlement with the US Department of Justice still to be negotiated, the shares, at 223½p, or 13 times 2008 earnings, are only for the brave. Avoid says the Times.
Dunelm Group, the out-of-town homewares retailer, yesterday turned in another solid trading update. Total sales for the 12 months to June 30 were up 10.5%, with like-for-like sales ahead 2.5%.A forward rating of seven times might seem mean for a strongly cash-generative company with negligible net debt and a secure yield of nearly 4%. However, with profits likely to be flat this year and sentiment on its sector dire, there is little to drive the shares higher. Pass says the Times.
Animal drugs specialist Dechra is making steady progress in securing US regulatory approval for Vetoryl, a remedy for Cushing’s disease in dogs, which could boost sales by an annual $25m within three years. Dechra sits in a defensive niche (its products are used for critical care) where a shift in sales away from veterinary services to higher-margin pharmaceuticals has yet to run its course. At 417½p, or nearly 18 times current-year earnings, hold on says the Times.
Jacques Vert's trading in the last 10 weeks, which is down 5.9%, indicates that the worst is not over for specialist fashion house and retailer. Investors would be rash to buy any retail stocks for the foreseeable future. Sell says teh Independent.
As it has probably trimmed all available fat from overheads and cut land spend to the minimum, it is almost inevitable housebuiler Persimmon will need to make hefty land bank writedowns at some point. Persimmon is better placed for the downturn than some but the next 18 months will still not be pretty says the FT.
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