Brexitdämmerung?
Source: The Times

It is not so long ago that the red skies and premature twilights of earlier this week would have been seen as an omen and perhaps the weather will be seen as symbolising a fundamental change in the Brexit process driven by three important developments. First, while they are not (yet) publicly admitting it, many ministers, senior officials and business leaders appear to have realised that the legal and practical logistics will take many years to implement if a major recession is to be avoided. It will be interesting to discover eventually when this first happened but it helps to explain Mrs May’s recent travels. Second, pro-EU MPs across all parties  seem to have worked out a formula for sufficient Tory MPs to join in a majority to block any ‘no-deal’ outcome. Thirdly, and still somewhat murky (merky?), is Mrs Merkel’s emerging strategy of refusing early compromises while preparing a blueprint for UK to retain access to the Single Market once a UK government (whoever that might be) formally abandons any plans for an early or unilateral Brexit. Clearly, these three developments are closely related and are starting to be reflected in UK share prices with more to come.

Alastair.winter@danielstewart.co.uk Chief Economist

Belvoir: Good prospects?
Source: Company Website

Property lettings services franchiser Belvoir Lettings (LSE: BLV) is growing organically with earnings enhancing acquisitions. Twelve acquisitions were made in the first half of 2017 as Belvoir is one of the main consolidators in the property lettings market. The private rental sector continues to grow even after the changes to stamp duty in 2016. Around 50% of landlords use a lettings agent but as more regulation comes into the market it is likely that this percentage will rise. Legislation to ban tenant fees in England & Wales should not have a significant effect on earnings growth and could be provide  opportunities to  acquire struggling smaller entities. In recent years, Belvoir has widened its services to include property sales and has also developed a hybrid service combining group expertise and online access. Brook Financial Services was acquired this year, taking the group into mortgage broking, which will be offered throughout the network. In the six months to June 2017, pre-tax profit was 55% ahead at £1.7m and earnings per share jumped from 3.4p to 4.8p even after financing the acquisition of Northwood. Full year profit is expected to increase from £2.8m to £3.9m for a prospective P/E of 10x and dividend yield of 6.5%

jon.levinson@danielstewart.co.uk Corporate Broking

Zenith Energy plc – far from its Zenith?
Source: Google Stock Image

Zenith Energy is an Oil and Gas production company listed in Toronto (ZEE) and since January this year in London (ZEN).  Over a ten-year period Zenith has transformed itself from an Exploration company with a focus is the acquisition of large onshore Oil and Gas fields in stable and low cost production activities. It is one of only two independents operating in Azerbaijan in partnership with the State Oil Company of the Azerbaijan Republic in the country’s largest onshore field. Zenith brings modern drilling technology to restore production from new wells as well as those dating back to the Soviet era. The cost of production is currently $16 per barrel but is expected to fall to $8.

Robert.emmet@danielstewart.co.uk Corporate Broking

ASOS Plc: In festive mood
Source: Company Website

ASOS on trend – ASOS [ASC.L], the global online retailer giant yesterday revealed record sales and profit for the year; ahead of expectations, with a 145% leap in full-year profit before tax stemming from a strong international performance, which saw sales increase 47% to £1,178.3m. The Group believes that its international performance was boosted by the reinvestment of the FX tailwind, at a faster rate than initially planned. Additionally, group revenues increased 33% to £1,923.6m and UK retail sales grew 16% to £698.2m. ASOS continued increasing its capacity and efficiency at Barnsley as it successfully transitioned to phase 1 of the new Eurohub fulfilment centre, with ongoing work to further double its capacity and automate its operations. The Group has increased its sales guidance to 25-30% for FY18, inclusive of a modest FX tailwind, and with EBIT margins stable at c.4% in line with market consensus.

Rebecca.Shea@danielstewart.co.uk Investment Hub


By Alastair Winter

Chief Economist at Daniel Stewart

alastair.winter@danielstewart.co.uk