Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

August 2, 2023

Fewer houses, more tanks

UK Company News

UK small cap caught another bid today, with Blancco Tech accepting an agreed offer at a c 25% premium, valuing it at about £175m. 

Ibstock and Taylor Wimpey have revealed the related pain trades of housebuilding and brickmaking. However, both retained previous guidance post-H1 updates, indicating astute management in volatile conditions.    

Meanwhile, BAE’s H1 results show that despite buying fewer houses and requiring fewer bricks, we are spending more on our defence. A £66bn order backlog, up by a third in the last six months, is a powerful indication.  

Spirent’s H1 revenue of $224 million (first half 2022: $280 million) was impacted by the industry-wide slowdown in customer spending. It is encouraged by the strong uptick in orders in the second quarter, which will feed into H2 revenue. Its order book has increased by 5% since December, including wins for 5G Open Radio Access Networks (O-RAN). There are signs of improvement in customer confidence, and trading performance will be more weighted to H2 than usual.

Blancco has agreed to an offer at a 25% valuation premium. 

Ibstock reported H1 revenue down 14%. But a disciplined approach to pricing, an intense focus on cost and capacity management mitigated its impact on profits. Its balance sheet remains strong with leverage of 0.7x. Notwithstanding the more cautious outlook, it remains confident in its ability to respond to market conditions, and the Board’s expectations for FY are unchanged.

Gamma issued inline guidance. See note here.  

Haleon reported H1 revenue of +10.6%, 7.5% price, and 2.9% volume/mix. Profit increased 8.9% profit, indicating a margin of 22.2%, down 40bps. 2023 organic revenue growth is now expected to be 7-8%, with 9-11% profit growth. 

Convatec reported on accelerating revenue growth and expanding operating margins. It is raising FY guidance and is increasingly confident of delivering sustainable future growth and an operating margin in the mid-20s.

Taylor Wimpey expects UK completions to be 10,000 to 10,500, the upper end of its previous guidance.

BAE H1 order intake was £21.1bn, resulting in a record order backlog of £66.2bn. Its earnings per share increased by 17%. 

Prognosticator 

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