Today I am looking at a cluster of FTSE plays attracting investor glances in midweek trade.
Water pressure on the rise
Britain’s water industry came under fresh scrutiny in Wednesday business after a damning report from the National Audit Office (NAO). The body advised that Severn Trent (LSE: SVT) and its peers have gulped down an £800m windfall since 2010 thanks to a combination of tax reductions and favourable borrowing costs.
The NAO advised that Ofwat has failed to “appropriately balance the risks” between water providers and consumers, and called on the regulator to pass down these discounts more effectively to households. The likes of Severn Trent have already seen their charge plans repeatedly flung back by Ofwat in recent times, and today’s news raises the pressure still further on the industry to refrain from imposing price rises in the future.
Fish for chips play
Investors in microchip manufacturer ARM Holdings (LSE: ARM) would have kept their eyes peeled for the release of American rival Intel’s (NASDAQ: INTC.US) latest results released yesterday. And at first glance the numbers would have made for worrying reading as Intel’s Client Computing division — which encompasses its smartphone and tablet PC operations — saw revenues dive 7% in July-September.
However, this weakness was prompted by the continued slide of PC sales as tech users switch increasingly into mobile devices. And ARM Holdings is the dominant player in this field thanks to its strong relationship with industry titans like Apple, and increasingly with major players in the growth regions of China. I believe the Cambridge firm has little to worry from Intel’s update.
In rude health
Healthcare play Al Noor Hospitals (LSE: ANH) lit up the boards in Wednesday business and was recently tearing 18.3% higher. The company advised that it had recommended an £11.60 per share to merge with Mediclinic, a deal that will see the soon-to-be-created health giant listed on the London Stock Exchange.
The new entity — Mediclinic International — will become the largest private healthcare provider in the United Arab Emirates and the third biggest in South Africa. With exposure to the UK, Switzerland and Namibia, too, the company will control 73 hospitals and 35 clinics globally, giving it terrific exposure to rising healthcare demand in emerging and developed markets alike.
Retailer in fashion
Clothing retailer N Brown (LSE: BWNG) was also in the green in midweek business following a bubbly set of interims, and was last dealing 6.3% higher from Tuesday’s close. The Manchester company advised that total revenues leapt 4.2% during March-August, to £415.8m, helped by encouraging online sales — internet transactions clocked in at 63% of aggregated group sales versus 58% a year earlier.
The operator of the Jacamo and JD Williams brands saw underlying treading pre-tax profit drop 15.9% in the period, to £19.4m, due to the cost of new store openings and other restructuring costs. But I expect total sales, and consequently earnings, to tick resolutely higher in the months and years ahead as N Brown’s transformation strategy from mail order to e-commerce pays off.
Fermenting solid returns
Pub chain Marston’s (LSE: MARS) has failed to stoke investor appetite following its own financial update, however, and was recently 0.7% lower in Wednesday’s session. The firm advised that like-for-like sales advanced 1.8% during the 12 months to September 2015, and that underlying revenues sped up during the final 11 weeks, to 2.2%.
Marston’s rolling restructuring plan is clearly paying off handsomely. The brewery opened 25 new pub-restaurants during the year, and plans to unveil 27 new outlets in the current period. With the closure of many smaller, ‘wet-led’ pubs also driving margin growth, and ale demand steadily increasing — total ale sales excluding Thwaites rose 5% in 2015 — I believe Marston’s is a strong selection for growth hunters.
