Macro & Overnight

Banks recovered on a relief rally on news of SVB’s rescue. Broader equity markets followed.

Oil prices increased as fears of economic meltdown faded, and European supply concerns surfaced. Precious metals edged lower amidst stable FX and bond markets. Is it panic over?

Israel has stepped back from the brink of civil war.

UK Company News

Printhead manufacturer Xaar has reported FY results. (See note here).

Animalcare, the animal health business, had FY results. Growth from product launches was offset by moderation in demand post-pandemic, the conclusion of distribution agreements and the impact of reduced antibiotic use in Spain.  The focus on the Top 40 brands and an improved sales mix drove a 3.5% improvement in gross margins and PBT. It remains confident in the business’s continued resilience and attractive market fundamentals. Despite inherent uncertainties in the current macroeconomic climate, the company anticipates a return to revenue growth over the year.

Housebuilder Bellway had H1 results. Revenue rose by 1.6% with the completion of 5,695 homes (2022 – 5,694 homes) and a 1.6% increase in the overall average selling price to £316,929. It reported that reservations fell significantly. However, demand has improved YTD, helped by a seasonal uplift and a fall in mortgage rates. It has launched a new £100m share buyback.  

Insurance services provider CPP reported mixed FY results. However, it confirmed its product-led global InsurTech strategy was on track. It expects to deliver on its objectives for 2023. 

Building technology provider Eleco had FY results.  Flat revenues resulted from its SaaS transition, reducing reported profit and EPS. It announced a special dividend post a non-core disposal. It has now started phase two of its SaaS transition strategy. Eleco’s solutions improve decision-making and planning throughout the building lifecycle. It is confident of continued progress through 2023 and of meeting market expectations.

Care home landlord, Impact healthcare REIT reported a 2% decline in NAV to 110.2p due to a change in the market value of its property portfolio, partially offset by the benefit of inflation-linked rent reviews and stable operator performance. The average rent cover was reduced to 1.80. Home occupancy continued improving, and the company collected 100% of rent due for the year, with no changes to lease terms or payment schedules. However, there is a small outstanding payment YTD.  

Care homes are difficult businesses to operate and control. Impact has grown steadily with a high-quality tenant base and a successful operating model. Rising inflation and higher interest costs remain challenging as NAVs continue to come under pressure.  

Unbound, the struggling shoe supplier, has received a cash offer at a 160% premium to its market value.  

Unbound is a case of a company being rightly removed from the public market as the sole remaining investee after the Electra Investment Trust break-up. 

Prognosticator