Top UK Stocks to Watch: NXT, DCC, FXPO, SCT
Joshua Warner January 5, 2021 9:10 AM
Next shares soar as it banks on a recovery in 2021, DCC expands in the US, Softcat says trading has remained positive, while Ferrexpo announces it will pay a special dividend.
FTSE 100 news
Below is a list of the top FTSE 100 shares to watch today.
Next forecasts partial recovery in 2021
Fashion retailer Next said it expects pretax profits in the year to the end of January 2021 to be around £342 million, down from over £700 million last year. Although it is a steep drop, the figure is better than previously expected as Next factored in better than expected sales throughout November and December. Full price sales in the nine weeks to December 26 fell by 1.1%, far less than Next’s guidance for an 8% drop.
The company has struggled as shops are forced closed during lockdown, and Next’s central guidance is assuming they will remain shut throughout January, February and March. Based on that, Next believes pretax profit will partially recover to £670 million in the year to the end of January 2022.
It has also managed to keep paying down debt during the pandemic and net debt is expected to be cut by £487 million during the current financial year.
Next shares were up 7.6% in early trade at 7461.0, marking its highest level since late 2015.
Morrisons reports strong growth over holiday season
Morrisons said like-for-like (LfL) sales rose 9.3% over the Christmas and New Year period. That marked an acceleration from the 7.1% growth reported in the third quarter. It said online sales had tripled during the initial weeks of the fourth quarter, bolstered by its relationships with Amazon and Deliveroo. Its wholesale division has also continued to grow and remain profitable.
‘All customer and brand metrics have improved, market share has grown, and our online and wholesale channels are growing very rapidly as we develop as a multi-channel business,’ Morrisons said.
The supermarket expects annual pretax profit to be within the previously-guided range of £420 million to £440 million, before it returns the rates payment of £230 million. It warned about £10 million of additional costs will be incurred as a result of COVID-19, taking the total expense for the financial year to £280 million – with further to be booked in the new financial year too.
Morrisons shares were down 0.1% in early trade at 181.1.
Mondi to buy packaging provider in Turkey
Mondi has agreed to buy 90.38% of Olmuksan International Paper Ambalaj Sanaayi ve Ticaret from International Paper for EUR66 million. The deal should be completed in the first half of 2021 and Mondi will look to buy the remaining 9.62% of the company afterwards.
Olmuksan is a corrugated packaging provider in Turkey that has five plants providing packaging for food, beverage, agriculture and industrial applications. The company generated EUR150 million in annual revenue in the 12 months to the end of September. Mondi already has a number of plants in the country and said it was strengthening its position in the ‘fast-growing’ market.
Mondi shares were up 0.2% in early trade at 1756.5.
DCC makes biggest acquisition in US LPG market
DCC announced it has bought United Propane Gas (UPG) to expand its business in the US LPG market. UPG sells and delivers LPG and other related products to residential, agricultural and commercial customers.
The company said it was the biggest acquisition it had made since entering the US market in April 2018. Combined with a recent and much smaller bolt-on acquisition, DCC said it has spent $145 million. UPG will expand DCC’s presence to 21 states from just 14 at present, while doubling the number of customers it has to 230,000.
DCC shares were up 1.9% in early trade at 5445.0.
FTSE 250 news
Below is a list of the top FTSE 250 shares to watch today.
Wizz Air operates at 32% capacity in December
Airline Wizz Air said it operated at less than a third of its full capacity during December as the coronavirus pandemic and lockdown restrictions continues to weigh on the travel sector.
The airline carried just 665,722 passengers in December, down 80% from over 3.3 million the year before. Capacity dropped by 68% while load factor fell to 56.1% from 89.4%.
For the rolling 12 months to the end of December, passenger numbers were down 58% to 16.7 million, capacity was down 47% and load factor declined to 74.8% from 93.6%.
Wizz Air shares were down 0.1% in early trade at 4461.0.
Ferrexpo announces special dividend
Ferrexpo said it will pay a special dividend of 13.2 cents per share following ‘the strong operational and financial performance of the group in 2020, and strong balance sheet.’ The dividend will be paid on January 28 to those on the register at the close on January 15.
The company said the latest payout takes total declared dividends for the 2020 financial year to 33 cents, up from 19.8 cents last year. Ferrexpo intends to announce its annual results on March 17.
Ferrexpo shares were up 2.8% in early trade at 304.7, marking its highest level since March 2018.
Balfour Beatty begins £50 million share buyback
Balfour Beatty said it will begin buying back up to £50 million worth of shares today. The housebuilder announced the buyback last month and it should be completed before it releases its annual results on March 10.
Balfour Beatty shares were up 0.5% in early trade at 272.1.
Softcat says trading ‘positive’ ahead of interim results
Softcat said trading has ‘continued to be positive’ since it released its first quarter update in November. The company released a brief update ahead of the publication of its interim results covering the six months to the end of January on March 24.
The company said demand from public sector customers has remained strong, while business from corporate clients has improved but remains uncertain.
‘Much still needs to be done in the second half of the financial year which remains difficult to forecast, but with the seasonally important December trading period behind us we are significantly ahead of where we expected to be at this stage,’ said Softcat.
Softcat shares were up 8.9% in early trade at 1522.0, marking a new high for the stock.
John Laing buys interest in Colombia’s Pacifico 2 project
Infrastructure investor and manager John Laing said it has agreed to buy a 21.15% stake in the Pacifico 2 road PPP project in Colombia. It has paid £32 million for the stake and expects to complete the deal in ‘early 2021’, after which it will work alongside the majority owner of the project, Odinsa.
The project is being developed under a partnership between the government and businesses and includes the construction of a new dual carriageway, two tunnels, and upgrading an existing road. It has an operating concession that runs to 2043.
In a separate announcement, John Laing said it has appointed Rob Memmott as its new chief financial officer. His most recent role was CFO of a privately-owned financial services business named Praetura Group.
John Laing shares were broadly flat in early trade at 336.3.
Network International Holdings names Nandan Mer as new CEO
Network International Holdings said chief executive Simon Haslam will retire at the start of February and be replaced by Nandan Mer. Mer is currently the head of strategy for international markets at MasterCard and has previously worked for other financial giants like American Express and Citigroup.
Network International Holdings shares were down 0.7% in early trade at 294.9.
PureTech Health appoints George Farmer as CFO
PureTech Health said it has appointed George Farmer as its chief financial officer. Farmer joins from BMO Capital Markets, where he was an equity analyst focusing on biopharmaceutical firms, and he was previously the CEO of Cortice Biosciences.
PureTech Health shares were down 1.2% in early trade at 402.0, having lost ground since ending 2020 at a record high.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.