Market Prognosis

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

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February 29, 2024

LSEG indicates pipeline of UK IPOs

Macro

US GDP data for Q4 2023 was revised down marginally to 3.2%, but today’s PCE inflation data will be more significant in determining the path to rate cuts, which still look most likely in H2.

The London Stock Exchange Group reported that it is optimistic about a revival in stock market listings this year, saying there is an “encouraging” number of companies to float.

UK Companies

CVS, the veterinary services company, remains confident that FY results will align with market expectations, and its strategy remains appropriate to deliver longer-term sustainable growth. It said that profitable expansion through acquisition in the UK and Australia will continue, with at least ten further acquisitions in Australia expected in H2 2024

Energean, the oil and gas company focusing on the Eastern Med, announced that the first gas from Karish North was safely achieved. It has also signed a new 15-year, $2bn supply agreement with Eshkol Energies. 

Energean is an oil and gas company with utility-like characteristics, underlined further today with a new long-term gas supply agreement with an Israeli electricity generator. The long-term development of its huge offshore gas reserves can rapidly repay its development debt and provide shareholders with attractive cashflows and dividends well into the 2030s. 

Facilities ADF, the supplier to the on-location film and TV production industry, warned that following the end of the strikes in November, it expects H1-FY24 to be significantly ahead of H2-FY23. However, it sees a one-off reduction in utilisation in H1-FY24 before returning to a full second half, more in line with pre-strike levels. The Board will provide further guidance when publishing its audited FY23 results.

ADF has weathered the writers’ and actors’ strike disruptions and guided investors through the inevitable downturn well. However, recovery paths seldom take a straight path. This setback appears to be a buying opportunity for a well-positioned provider to an industry still in a secular growth phase.    

Howden, the UK’s largest kitchen supplier, reported EPS down 29% yoy, but revenue growth in the new financial year has been encouraging compared to last year. It continues to invest in the business and will experience higher freight costs in 2024.  

Hunting, the oil services company, reported solid financial metrics. Its primary market drivers, such as security of supply and affordable energy, remain key investment themes. It reported a record order book and cash inflow of over $50m in H2. Development cycles in South America and South West Africa continue to accelerate. It sees another year of growth and retains previous guidance for 2024.  

Spectris, the precision measurement company, reported LFL sales up 10% and EPS up 25%, with cash conversion of 103%. It expects another year of further progress in 2024, including margin expansion, but weighted towards H2. It reports an improving outlook in several key end markets.

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