Mark Carney’s forward guidance on Interest Rates under-pressure

Further good news on the economy will put Mark Carney’s forward guidance on Interest Rates under-pressure as market are beginning to expect a rate rise next year.    

Financial Times

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Last week …

… after a 0.1% fall in Unemployment to 7.7% and the highest raise in House Prices since November 2006, markets moved forward. The FTSE 100 increased 0.6% to 6583, the FTSE 250 improved 1.1% while the Aim All Share at 780 increased by 1.9%. Chinese economic news was positive while Japanese GPD rose from 0.6% to 0.9%. The Russian moves are putting Syria into a compliant corner.

This week …

… the BOE Minutes are reported on Wednesday but the Governors Forward Guidance reduces its relevance. On Tuesday Inflation numbers are relevant and expected to be 2.7% continuing it’s gentle fall from 2.9% since July. The Eurozone debt problem may again be in the headlines when Portugal renegotiate terms.  The well signaled ‘tapering’ of US QE is likely this week as the FED reduce bond paying by £10bn a month to $75bn. A flat week seems the most likely outcome.

 

Company Reports

NetplayTV (NPT) – £52.5m@17.88p

Game On

Netplay TV interims to June reported net revenues 36% higher to £14.2m, while PBT increased 46% to £2.3m, which was despite an increase in marketing spend.  Around 40% of the net revenues come from players registered for more than one year.  Share of the UK interactive and online casino market was 3.9% in 2012 and is likely to continue to grow as TV operations help to build the online operations. Mobiles and tablets devices users are growing and accounted for 28% of net revenues.  The interim dividend has been increased by 20% to 0.18p a share and will not use up much of the cash pile, which is available for potential acquisitions in new geographic markets. Hot weather in July adversely effected growth but new players are still 38%  up so far. Profits for the December year-end are forecast at £4.6m for an EPS of 1.5p and a prospective P/E of 11.6x while yielding 3.3%

Finance

Net cash has increased by £2.6m to £14.9m and cash generation remains strong.

 

 

 

Brady (BRY) – £51.4m@63.5p

Uneven but Growth

The Interims from this global commodity trading and risk management software company were disappointing even though expectations were reduced in a trading statement a few weeks ago. Despite half revenues being 23% higher at £14.9m and recurring revenues increased 27% to £8.5m,   profits fell from £759k into a loss of £151k. New business was signed at a slower pace than anticipated although a number of deals are expected in the second half some of the revenue may not be recognised until 2014. The order pipeline is reported to be strong with some significant deals being negotiated particularly in Asia.   A cost reduction programme in July identified that £2.2m could be cut from the overhead base. The recovery should come from a combination of higher revenues and lower costs. So although full year profits to December 2013 are forecast to decline from £5m to £3.2m they could recover to £6.8m in 2014. This gives EPS of 3.5p and 7p so a 2013 prospective P/E of 18x before falling to 9x. Directors brought 200,000 shares at around 62p suggesting some confidence in the recovery.

Finance

There is strong operation cash flow and net cash was £5.13m which is around 7p per share. 

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