BigDish: Bigdeal

Source: Company Website

There has been a lot of noise around scalable and disruptive tech companies, especially in the food and beverage sector where much excitement has surrounded food delivery and ordering platforms. Continuing along the same theme, Daniel Stewart will be the main broker to a ‘Food Tech’ IPO of our own. BigDish is an app and web based platform that connects empty tables with hungry diners via time based discounts, giving the restaurants flexibility to offer diners better value for money whilst filling seats that may otherwise have been empty. The Company operates in Hong Kong, the Philippines and Indonesia and will expand to the UK with an acquisition at the IPO. In addition, one of the founders of Just Eat, Henry Joseph-Grant, is joining as COO. Daniel Stewart is hosting a sandwich lunch on Thursday, 14th December 2017, to present the pre-IPO opportunity to investors. Please do not hesitate to contact us should you wish more information and fancy some lunch. Corporate Broking

Spire Healthcare plc: building and rebuilding
Source: Company Website

Thursday 14th December on ITV from 7.30pm to 8.00pm ITV  will screen  a documentary called ‘The Butcher Surgeon – A Scandal Uncovered’ featuring the criminal malpractice of Ian Paterson who is serving a 20 year jail sentence. Paterson worked both at NHS Hospitals and at Spire Healthcare’s two West Midland private hospitals. Spire (SPI) is the largest independent hospital group in the UK in terms of revenues (£926m in 2016)  with 39 hospitals, 10 clinics and two special cancer care centres. It was established in 2007 with the acquisition of 27 hospitals from BUPA and is highly regarded in the independent sector for its operational efficiency. Figure 2 is of the new £63M Princes Parkway Hospital in Manchester, which opened in January this year. Spire’s association with Paterson has, however, cost it dear: a £27.2M pre-trial settlement for victims in September sent the share price plunging from 340p per share to a low of 220p. This led to FTSE 100 company Mediclinic making a cash/paper bid of 298p, subsequently raised to 315.5p but only to be rejected by Spire (Mediclinic still own 30%). The share price duly fell back again and is trading at around 240p, giving Spire a market cap of just under £1bn. Investment Hub

United Utilities PLC: more than a half-full glass?
Source: Company Annual Report

United Utilities (UU), the UK’s Largest Listed Water Company covering North West England from Crewe to Carlisle including Manchester and Liverpool, presented its latest half-year results on 22nd November.  Revenue was £876M representing modest growth of 2.7% over H1 2016 and After-Tax Profit actually fell by 2.5% to £197M. UU’s customer charges and capex are imposed  by the OFWAT regulator and because of this the Company has financed some of its debt at RPI-linked rates. Accordingly, it also reports ‘underlying profits’ which this time were up by 5.7%.  Some investors clearly find it difficult to assess UU’s performance and the shares fell to a 3-year low of 765p on 22nd November. However, CEO Steve Mogford was in bullish mode on all fronts as he announced an increased interim dividend to 13.24p per share, which represents a full-year yield of 4.8% and ahead of the company’s policy to match RPI inflation. The share goes ex-div on 21st December and this  together with some deeper analysis may well have helped the recovery to 822p at yesterday’s close. Investment Hub

Safe as houses

Source: Bloomberg

Chart 7 from Rightmove via Bloomberg is the latest in a succession of data’s indicating a slowdown in the UK housing market. Rightmove tracks asking prices and publish at least one month ahead of other surveys and year on year growth for December down to 1.2% represents a low point in a rather grim trend since mid-2016 and, arguably, since mid-2014. My preferred survey is the LSL Acadata Index which dropped to +0.8% year on year in October, which is the slowest since March 2012. The RICS survey of estate agents is a good indication of the direction and pace of house prices and fell to a lowly net +1% in October reporting higher prices. The Nationwide and Halifax indices measure prices of houses newly mortgaged exclusively by them and are also falling, albeit from much higher levels. They all report falls of varying magnitude in London, little change in the South East and  increases of up to 4% in most other regions. Transaction volumes are below normal levels and the Bank of England is reporting lower lending by the banks and building societies. As if all that is not sufficiently depressing, consider another unfavourable ‘planetary alignment’: persisting slow growth in average earnings, higher cost inflation, rising interest rates (albeit very gently) and the prospect of a Labour Government elected on the back of popular discontent (not least over the housing market) and looking to raise taxes on the ‘better off’. This cannot be blamed on Brexit although the trend has definitely worsened since summer 2016. The most likely cause is the previous exuberant cycle. However, the UK’s predilection for house ownership is unlikely to be dampened for so very long and another cycle will surely begin. Chief Economist

By Alastair Winter

Chief Economist at Daniel Stewart