This page contains a Flash digital edition of a book.
MARKET WATCH


Expect the unexpected


EHN’s financial analyst, Nick Spoliar of WH Ireland, reflects on the Government’s surprise decision to hold a snap election, and considers the general economic outlook for our industry.


Most of us were probably as surprised as many (most?) of the Prime Minister’s colleagues when the general election was announced. If the local elections and the opinion polls are accurate soothsayers, there is only an outside chance of a trip down Memory Lane starting next month with a hike in Corporation Tax and large-scale nationalisations.


Nevertheless, in the short term, some degree of economic hiatus is to be expected, however much the electoral projections point the other way from this prospect.


That said, recent economic indicators have not all been negative. Q1 GDP growth was disappointing - less than half Q4-16 and well below expected rates. However, the latest export data was encouraging - the cheap pound helping - and the April confidence indicators have been strong, well above consensus for the services sector and positive for manufacturing as well. Clearly some at least are ‘looking through’ the uncertainty and seeing further opportunities on the other side.


Interest rates


Could interest rates rise earlier than expected? The Bank of England has revised its forecasts down for 2017 - but raised them slightly for ’18 and ’19, and explicitly addressed the possibility of a hike. Raw materials and inflation generally are rising. Wage cost inflation would be a worry for the Bank.


Speedy could deliver annual results well ahead of last year’s figures.


Corporate news from the domestic client base has included some upgrades in the last few days - from Barratt Developments,* to the top of the range, highlighting the highest volumes in nine years, and from Marshall’s,* who cited positive numbers from the Construction Products Association. Building services contractor T. Clarke* upgraded and flagged an order book up 22%.


It seemed for some time last year that Market Watch was going to become M&A Watch, given the oft-cited need for further consolidation in the rental sector. However with the departure of Lavendon from the quoted sphere, the next move is perhaps no longer so evident.


Among the quoted rental players, 13 June will bring another set of full year results from Ashtead,* which delivered strong double-digit revenue growth both pre- and post-exchange rate when it reported its Q3 results in March. Speedy Hire* will report just as we go to print - inline numbers will be well ahead of last year.


HSS’s results on 5 April showed EBITDA falling year-on-year. The shares are down from 71p in last month’s Market Watch to 53p at the time of writing (12 May). As before, we expect Vp** to provide a welcome distraction with the results which it reports two days before the election.





*Not under formal research coverage. **Vp is the only stock/issuer mentioned in this note under formal research coverage.


Vp, Hire Station’s parent, is expected to announce good results. 9


WH Ireland states that this is not an offer or a solicitation to buy or sell any security. Estimates contained herein are sourced from already published information (Bloomberg). See http://wh-ireland.co.uk/website-policies#disclaimer for full disclaimer. WH Ireland Ltd is authorised and regulated by the Financial Conduct Authority (Financial Services Register number: 140773)


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44