UK’s big win­ners and bat­tered losers in stocks

With im­pend­ing Brexit as an over­hang, there were dra­matic stock move­ments in Bri­tain’s FTSE in­dex

The National - News - - BUSINESS -

From Prov­i­dent Fi­nan­cial’s 66 per cent plunge in a day to Car­il­lion shed­ding two-thirds of its value in three ses­sions, there has been no short­age of drama in UK stocks this year.

The big­gest losers of 2017 have been marked by sen­sa­tional and rapid de­clines, while the win­ners have been grad­ual tri­umphs. There was no uni­fy­ing theme, though an­a­lysts sug­gested a de­gree of in­vestor com­pla­cency and a lack of for­eign buy­ers un­der the shadow of Brexit may have ex­ac­er­bated sell-offs.

In­vestors are “maybe not quite so well pre­pared for the sur­prises,” due to the over­all quiet­ness in stock mar­kets, IG mar­ket an­a­lyst Chris Beauchamp said, not­ing that funds would rather cut the losers com­pletely than give com­pa­nies a chance to re­deem them­selves af­ter profit warn­ings.

At the same time, the UK’s im­pend­ing exit from the EU has dis­suaded over­seas fund man­agers who may in the past have stepped in to buy stocks at bar­gain prices, ac­cord­ing to Lon­don Cap­i­tal ’s se­nior mar­ket an­a­lyst Jasper Lawler. That’s mak­ing de­clines for in­di­vid­ual UK stocks “specif­i­cally no­tice­able,” Mr Lawler said.

Here’s a cu­rated list of the FTSE All-Share In­dex’s big­gest win­ners and losers of the year:

The Win­ners Games Work­shop: Up 266%

The maker of Warham­mer fig­ures up­graded profit ex­pec­ta­tions three times in 2017. The weak pound has made its prod­ucts – table­top minia­ture war games – cheaper for over­seas cus­tomers, who ac­count for more than half the com­pany’s rev­enue. A pos­i­tive re­cep­tion for a new edi­tion of board game Warham­mer 40k, which takes the game out of its Lord of the Rings-style roots and into a far-fu­ture con­flict, has also helped the stock.

KAZ Min­er­als: Up 135%

The Kaza­khstan-fo­cused cop­per miner has been re­warded for “ex­cep­tional project ex­e­cu­tion”, Mac­quarie an­a­lyst Alon Ol­sha said. Two new projects have ramped up “seam­lessly,” which is rare in the min­ing in­dus­try. While cop­per’s gain this year has helped, “ul­ti­mately it was fac­tors within man­age­ment con­trol that led to the stock more than dou­bling over the year”, Mr Ol­sha said.

Sophos Group: Up 115%

With re­turns beat­ing Sil­i­con Val­ley-based cy­ber­se­cu­rity peers, in­vestors and an­a­lysts alike are bullish on Sophos’s cash­flow and the high pro­por­tion of sub­scrip­tion rev­enue, which pro­vides greater vis­i­bil­ity on fu­ture growth. The com­pany is Mor­gan Stan­ley’s Euro­pean tech­nol­ogy pick for 2018. Not to men­tion that Stifel an­a­lyst Ge­orge O’Con­nor says there could be “a whole range of com­pa­nies” who would be in­ter­ested in ac­quir­ing it.

Wizz Air: Up 99%

East­ern Europe’s largest bud­get air­line has been re­warded for its bullish­ness. It said in May it would add more ca­pac­ity in its core East­ern Europe mar­ket and in No­vem­ber de­tailed plans to build a UK arm into a sig­nif­i­cant na­tional op­er­a­tion in its own right. JPMor­gan named it one of its top Euro­pean air­line picks for 2018 on the po­ten­tial for fur­ther growth aris­ing from the fail­ures of Air Ber­lin and Monarch Air­lines.

NMC Health: Up 88%

The Lon­don-listed provider of health­care in the Mid­dle East has been added to both the FTSE 100 In­dex and Europe’s Stoxx 600 In­dex this year. Its also been ac­tive in M&A and part­ner­ships, and is look­ing for more deals, ac­cord­ing to its chief ex­ec­u­tive of­fi­cer. An­a­lysts are over­whelm­ingly pos­i­tive, with 11 out of 12 who cover the stock call­ing it a buy, ac­cord­ing to data com­piled by Bloomberg.

The Losers Car­il­lion: Down 93%

Three years ago, Car­il­lion at­tempted a merger with Bal­four

Beatty. Now its mar­ket cap­i­tal­i­sa­tion is just a frac­tion of its peer. The con­struc­tion firm has is­sued three profit warn­ings since July, brought in KPMG to look at its ac­counts, has been at­tempt­ing to dis­pose of as­sets and may see in the new year by breach­ing its debt covenants. Ri­val In­ter­serve has faced sim­i­lar prob­lems writ­ing down un­prof­itable con­tracts; that stock is down 74 per cent this year.

Prov­i­dent Fi­nan­cial: Down 68%

Car­il­lion won the race to the bot­tom, but Prov­i­dent pro­vided the most spec­tac­u­lar mo­ment. The sub­prime lender fell 66 per cent in a day in Au­gust on a “quadru­ple whammy” of bad news: a reg­u­la­tory probe into its Van­quis Bank credit-card unit, a profit warn­ing, scrap­ping the in­terim div­i­dend and its chief ex­ec­u­tive step­ping down. Prov­i­dent also said in De­cem­ber that car fi­nance unit Money­barn was be­ing in­ves­ti­gated.

Dixons Car­phone: Down 43%

An un­ex­pected fore­cast for a drop in an­nual profit in Au­gust ham­mered the mo­bile phone and elec­tron­ics re­tailer. An­a­lysts com­plained that the com­pany didn’t ad­dress in­vestor con­cerns ear­lier in the year. The re­tailer was squeezed by cus­tomers hold­ing on to hand­sets longer, with a rel­a­tive dearth of hot new de­vices mean­ing less ap­petite for up­grades. A new plan for the mo­bile-phone unit late in the year was wel­comed, but only par­tially made up the ground lost.

Petro­fac: Down 42%

Get­ting in­ves­ti­gated by the UK’s Se­ri­ous Fraud Of­fice is a sure-fire way to land on the losers list. Oil ser­vices firm Petro­fac first flagged a bribery-re­lated probe in May and, a few weeks later, sus­pended its chief op­er­at­ing of­fi­cer. Later in the same dis­as­trous month, Moody’s In­vestors Ser­vice cut the com­pany’s credit rat­ing to junk. RBC Cap­i­tal Mar­kets an­a­lyst Vic­to­ria McCul­loch says the SFO probe will re­main an “over­hang” in 2018.

Cen­trica: Down 41%

It was al­ready shap­ing up to be a dif­fi­cult year for Cen­trica as the UK gov­ern­ment touted plans to cap some house­hold en­ergy bills. But things turned worse in No­vem­ber when shares in the owner of British Gas fell the most in two decades af­ter a profit warn­ing. The en­ergy firm saw UK cus­tomers desert and drew ques­tions from an­a­lysts about the sus­tain­abil­ity of its div­i­dend.

Funds would rather cut the losers com­pletely than give com­pa­nies a chance to re­deem them­selves

Ravin­dranath K; Paulo Vecina / The Na­tional

Among the top FTSE in­dex per­form­ers were Lon­don­listed health­care provider NMC Health, left, and boardgame maker Games Work­shop

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