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UK Investor Magazine podcast – Taylor Wimpey, China and UK Banks with Alan Green
Alan Green joins the UK Investor Magazine for a broad discussion of UK Banks, China and results from Taylor Wimpey.
We discuss Natwest #NWG, LLoyds #LLOY, Taylor Wimpey #TW. and Mode #MODE.
Natwest and Lloyds reported after we looked at Barclays results on last week’s podcast and where largely similar in terms of earnings growth driven by a reversal of COVID provisions that ravaged profit last year.
Taylor Wimpey released bumper half year results which demonstrated the robustness of the UK housing market and we look at what investors can expect going forward.
We also pay attention to China and how relevant their growth story is as we emerge from the pandemic.
Alan Green discusses inflation, Barclays #BARC, Lloyds #LLOY & Open Orphan #ORPH on the UK Investor Magazine podcast
Alan Green joins the UK Investor Magazine Podcast to discuss Barclays (LON:BARC), Lloyds (LON:LLOY) and Open Orphan (LON:ORPH).
UK inflation rose to 2.5% in June up from 2.1% in May. Fuel prices were a large component of the rises as oil prices increased having cratered last year.
The FTSE 100 slipped in the wake of the announcement as sterling surged to highs of 1.3800 against the dollar.
Those companies operating in the consumer space were some of the bigger fallers whilst those that typically benefit from higher inflation and rates were among the top risers.
Ken Baksh – UK and US financials a hot sector for 2018?
by Ken Baksh
Ken has over 35 years of investment management experience, working for two major City institutions between 1976 and 2002.
Since then he has been engaged as a self-employed investment consultant. He has worked with investment trusts, unit trusts, pension funds, charities, Life Fund,hedge fund and private clients. Individual asset managed have included direct equities and bonds pooled vehicles currencies, derivatives and commodities.
Projects undertaken in a number of areas including asset allocation, risk control, performance measurement, marketing, individual company research, legacy portfolios and portfolio construction. He has a BSc(Mathematics/Statistics) and is a Fellow Member of the UK Society of Investment Professionals.
Phone 07747 114 691
Polar Capital Global Financials Trust PLC (PCFT)
One of the sectors which may outperform next year, and which has received a barrage of better than expected news over the last few weeks could well be financials, especially UK and US names, which have lagged many other sectors over 2017 and offer good value on several investment ratios.
Over the last week investors poured $1.5 billion into funds that buy US financial stocks, extending a rotation into the area, on optimism about the prospects of lighter regulation and lower tax. The regulatory backdrop has become more favourable which increases the likelihood of buy backs and dividend increases, while the progression of tax cuts through Congress has further increased the positive sentiment. If that was not enough, the Federal Reserve is about to raise interest rates with the prospects of more hikes in 2018, further aiding the sector.
Meanwhile, across the pond, rules agreed following the Basel III agreement proved less onerous for European Banks than feared causing the start of a rally, led by Lloyds, which is strongly tipped to increase its dividend, and whose ordinary and preference shares are strongly on my buy list of direct stocks
A good way to gain this exposure is through the Polar Capital Global Financials Trust (PCFT-138p)
- This investment trusts seeks to generate a growing dividend and capital appreciation by investing primarily in a global portfolio of securities issued by companies within the financial sector operating in the banking, insurance, property and other sub sectors.
- The trust was launched in July 2013 since when the asset value and benchmark have outperformed the financial benchmark.
- As at end November 2017, the fund was split geographically as 41% USA,34% Europe (incl UK) and 13% Asia (excl Japan). By sector banks represented over 63% with names such as JP Morgan, Bank of America, ING Group, Chubb, BNP Paribas, KBC, Sampo, Citigroup amongst the top holdings.
- The trust currently trades at a discount to assets of around 4%.
- The fixed life of May 2020 should limit significant discount widening and it should be remembered that the trust has traded at a premium for significant periods.
- A dividend is paid twice yearly, and the current yield is 2.65%
Sources:London Stock Exchange,Numis,Winterflood,Trustnet.
www2.trustnet.com/Factsheets/Factsheet.aspx?fundCode=JFFOC&univ=T&pageType=overview&skipre=1
www.londonstockexchange.com/exchange/news/market-news/market-news-detail/PCFT/13456340.html
Full fourth quarterly report will be available in January and suggested portfolio strategy/individual recommendations are available. Ideas for a ten stock FTSE portfolio, new model pooled fund portfolios (cautious, balanced adventurous, income), 30 stock income lists, hedging ideas and a list of shorter term low risk/ high risk ideas can also be purchased, as well as bespoke portfolio construction/restructuring. I expect more clients to consider switching some final salary pots to SIPP over coming quarters, as transfer values start to slip (partially in line with rising gilt yields) and can work with you providing bespoke portfolios according to client needs.
Disclaimer
All stock recommendations and comments are the opinion of writer.
Investors should be cautious about all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal ownership, may influence or factor into a stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is not indicative of future price action.
You should be aware of the risks involved in stock investing, and you use the material contained herein at your own risk
The author may have historic or prospective positions in securities mentioned in the report.
The material on this website are provided for information purpose only.
Please contact Ken, (kenbaksh@btopenworld.com) for further information
Lloyds Loses Robustness in Quarter Three
Lloyds Banking LLOY produced what it describes as a robust underlying performance during the first nine months of the year with underlying profit down by 4% and operating costs down by 2%. Statutory profit before tax surged by over 50% and earnings per share rose from 1.8p to 2.5p. Third quarter figures however could in no way be described as robust, with earnings per share falling by 75% from last years 0.8p to this years 0.2p Statutory profit before tax fell by 15%, whilst after tax the fall was much greater with a decline of 68%.
Bunzl plc BNZL Weak sterling has made a significant positive impact on 3rd quarter results but Bunzl can not bring itself to enlighten us as to how large that impact was. Group revenue rose by 7% including contributions from acquisitions.
Metro Bank MTRO, that upstart bank which dared to come to the UK with promises of actually trying to meet its customers needs and give them a taste of what proper banking customer service should be, has moved into profit as customers rise towards the million mark.With strong third quarter trading, deposits rose by 66% year on year, lending was up by 73% and revenue by 78%. Underlying profit before tax for the quarter came in at £0.6m compared to the second quarters loss of £3.4m.
Red24 plc REDT Apart from a robust performance by the special risks business, the company has outperformed in some areas and under performed in others. Overall margins have been impacted by a changed sales mix and by adverse currency movements particularly in South Africa and Singapore which have materially affected the cost base and more than offset the weakness in sterling. The outcome is that the company is now cautious as to its full year performance.
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Lloyds Claims “Robust” Profits Fall & “Operating Jaws” Success
Lloyds Bank LLOY claims to have delivered a robust first quarter performance with underlying profit down 6% and statutory profit before tax down by 46% – you can’t get more robust than that. And then just to illustrate how banks are prepared to show their teeth when necessary it does not seek to hide the fact that it achieved positive operating jaws of 1 per cent. Well,from a bank, what else would you expect – once bitten, twice shy.
Taylor Wimpey TW claims it has performed well so far in 2016 with customer demand up by 14%. Average private net reservations per outlet have risen to 0.80 from 0.76 and the total order book is up by 16.6% on a year ago and 21.9% from the beginning of this year. further help has come in the form of a fall in the build cost inflation rate which it is anticipated will be between 3-4% for the rest of the year. As ever the main prop to the market continues to be mortgage availability.
Pendragon PDG on the other hand is not so happy with prospects for the rest of the year. Registrations for year to 31st March grew by 5.1% but that growth rate is expected to halve to 2.5% for the remainder of 2016. Pendragon’s underlying profit before tax rose by 8.7% for the period from 1st January to 27th April. Gross profit from new car sales led the way with like for like rise of 15.2% but this is not expected to continue for the rest of the year as growth in the new vehicle market will moderate.
Harvey Nash HVN is increasing its final dividend by 8.7% for the year to 31st January as preliminary results show an increase of 13% in profit before tax and 18% in earnings per share. revenue for theb year grew by 5%. Strong growth in the USA produced a 25% rise in gross profits there and Germany and Sweden were both good performers, although held back by those currency headwinds (such as the fall in sterling ??). The UK on the other hand was weak with business confidence falling, the economy slowing and Brexit creating those dreadful things called fears.
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