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“Markets across Europe and Asia soldiered ahead at the start of the new trading week. China’s Shanghai composite index and Hong Kong’s Hang Seng index were particularly strong. In the UK, the FTSE 100 nudged 0.2% higher to 7,066 with miners, healthcare services and banking stocks among the strongest performers, compared with weakness in gambling and pharma companies,” says Russ Mould, Investment Director at AJ Bell.
Ryanair
“The key takeaway from Ryanair’s results is that life doesn’t seem to be getting worse. A decline in profit isn’t a surprise given it had already laid the foundations for a bad set of numbers in a previous trading update. Instead, the market is breathing a sigh of relief that full year earnings guidance hasn’t had to be downgraded again.
“There had been some concern that ongoing disruption to its flights would put more people off from flying. Many travellers would prefer paying a bit more money for a ticket with an airline which hasn’t developed a reputation for flights being cancelled because of strikes or staff shortages, rather than chance their luck with Ryanair just to save a few quid.
“Nevertheless, Ryanair is still treading a thin line given its warning that full year guidance is heavily dependent on air fares not falling further, plus other factors like the oil price and the impact of Brexit developments.
“If you drill down into the latest numbers, it is the little things that count. For example, there has been an improved uptake of reserved seating and priority boarding. Ryanair has always been very good at driving up so-called ancillary revenues and shareholders will be pleased this trend remains intact. These little positives are welcome, yet it is worth noting that Ryanair’s profits aren’t expected to start growing again until the financial year ending March 2020.
“From an investment perspective, anyone owning Ryanair’s shares over the last three years would have lost 11% based on total return figures, which includes capital gains or losses plus dividends reinvested.
“On the same basis, EasyJet is down 27% and the worst performer among the London-listed stocks is Flybe, down 81%. The best performing airline share on a total return basis is Jet2-owner Dart, up 85% over the past three years. Wizz Air is second best, up 38%; and British Airways-owner International Consolidated Airlines is up 8% over the same period.”
NMC Health
“Upgraded guidance from Middle East private health care provider NMC Health should help bolster the company’s growth credentials. This is likely to be welcomed by investors after a sticky spell for the shares, largely relating to wider market weakness.
“The business has gone from a small cap valuation at IPO in 2012 to the heights of the London market, rubbing shoulders with blue chip names in the FTSE 100, all while engaging in M&A activity to augment its organic growth.
“Today NMC Health is the largest private healthcare company in the United Arab Emirates (UAE). In 2017, 70.5% of overall sales were generated through medical services at its network of clinics and hospitals. The company also has a distribution business, representing the remaining 29.5% of sales.
“The forecasts given today are impressive both in what they reveal about the growth trajectory and for their clarity. However they do not include anything for the company’s new joint venture in Saudi Arabia which is expected to be signed, sealed and delivered in the final quarter of 2018.
“This impressive performance contrasts sharply with the difficulties faced by rival Mediclinic, which has been having problems with the more mature Swiss market where it has a significant footprint.”
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