A trading update from FTSE 100 constituent Capita (CPI) feels like a firm rubbing salt in the wounds of its disgraced rivals. As Serco (SRP) struggles with a profit warning and G4S (GFS) continues to be surrounded by negative market sentiment, Capita makes a big point of how well its business is doing. Yet record levels of new contract wins and strong cashflow is not news to the market which explains why the shares fall 2.6% to 957.25p. The market already knows it has done well so investors are looking for earnings upgrades to sustain momentum in the share price. These haven't come. Without such catalyst, the highly-rated shares may run out of steam, particularly because some analysts reckon its earnings growth has peaked as we discussed in a recent issue of Shares. We have a 'sell' stance on the stock. Chief executive officer Paul Pindar is leaving the company next February after 22 years in the hot seat. He's going to pursue positions within private equity companies and will be replaced by his deputy, Andy Parker.
Aberdeen Asset Management (ADN) rises 13.4% to 484.1p as it has agreed to buy asset management business Scottish Widows Investment Partnership from Lloyds Banking (LLOY) for a deal that could be worth up to £660 million in cash and shares. Read our more detailed article here.
Computer-aided design (CAD) software supplier AVEVA (AVV) is marked close to 10% lower to £23.17 after missing expectations in its Enterprise Solutions arm. Worth 12% of revenues, that's a shocking reaction to other robust half-year results as we discuss in more detail.
FTSE 100 oil services firm Petrofac (PFC) slumps 15.3% to £12.19 as it warns on 2014 (and 2015) growth. This undermines our argument in last week's magazine that the group's cashflows and prospects are being undervalued by the market. According to Investec, the interim management statement implies a cut to forecasts of 15% in 2014 and 10% in 2015. There are two main factors behind the disappointing statement: the onshore Upper Zakum project in Abu Dhabi has been delayed as the client is looking to increase the field’s capacity and, in Malaysia, phase two of the offshore Berantai field is also being redesigned. Analyst Neill Morton comments: 'The one crumb of comfort is that this is the result of clients seeking to re-engineer existing projects that Petrofac is working on in Abu Dhabi and Malaysia, rather than, for example, a shortfall in new orders.'
On a more positive note, its sector peer Kentz (KENZ) ticks up 1.7% to 548p as it indicates continued strong performance and flags order intake of $1.8 billion in the first ten months of the year. We looked at the story in detail here.
Safety equipment specialist Latchways (LTC) falls 7.3% to £13.05 after a full-year profit warning. This is caused by two factors. There's lower spending with a long-standing utility customer whose 2013 fiscal budget is running low. The utility needs the remaining cash to fund other projects which means Latchways won't get any more orders until the start of the utility's new financial year in April 2014. There's also tough comparative numbers. Last year Latchways benefited from a big Airbus order; this year it is filling the revenue gap but there's not enough new business to produce year-on-year revenue growth. This overshadows decent half-year results which include a 12% rise in half-year pre-tax profit to £4 million and a 10% hike in the dividend.
Office cleaner MITIE (MTO) falls 1.2% to 310.15 as half-year results revealing 13.3% rise in operating profit to £62.3 million. Liberum Capital says the results are flattered by one-off items. Previously criticised by analysts for being dependent on acquisitions to drive earnings, today's results show 5% organic gains. Overall revenue is up 10.5% to £1,044 million.
Broadcast camera kit supplier Vislink (VLK) comes off 3.4% to 46.62p after flagging ongoing visibility issues in its end markets. Management insist it will meet expectations for the year to December, pitched at £4.2 million pre-tax profit on £61.5 million, but 2014 is clearly the issue for investors.
Majestic Wine (MJW:AIM) rises 2.5p to 550p as solid half-year figures to 30 September show taxable profits 4.2% ahead at £9.5 million on total sales 3.3% ahead at £130.2 million. The wine merchant's results are delivered despite headwinds including the timing of Easter, last year's tough Jubilee comparable and the planned reduction in wholesale business. With like-for-like sales 3% ahead in the 17 weeks to the end of the half and momentum healthy ahead of the peak Christmas period, analysts are sticking with their full-year forecasts. Investec Securities' Kate Calvert raises her price target from 495p to 620p and looks for 9% growth in pre-tax profits to £25.8 million for the year to 31 March.
Moscow-focused commercial property play Raven Russia (RUS) improves 1% to 75p on a positive market update. Under-supply in the market has led to 97% occupancy of its 1.4 million square foot portfolio, while it expects it to generate an operating income of $192.2 million for the year. It has $181 million cash.