FTSE 250 movers: Chemring surges on order book; Asos slips

By Frank Prenesti

Date: Tuesday 06 Jun 2023

(Sharecast News) - Chemring posted a drop in interim profit and revenue on Tuesday, but shares surged as it reported a record order book.

In the six months to 30 April, underlying pre-tax profit fell 23% to £25.6m, with revenue down 4% to £212.1m. However, order intake jumped 81% to £338.2m and the order book rose 54% to £749.5m - its highest level in more than a decade.

Order intake for Sensors & Information was up 35% at £100m, while intake for Countermeasures & Energetics grew 113% to £238m, driven by strong demand at the company's niche energetics businesses.

Chemring said the half was in line with the board's expectations. "As previously announced, delays to order intake in 2022 following the extended US Continuing Resolution have resulted in a heavier weighting of trading performance and cash generation expected in the second half of the financial year," it said.

Chief executive Michael Ord said: "It has been a period of heightened activity across the group as we adapt to changing customer spending priorities. In response to increased global uncertainty and competition, demand for both technology-driven solutions and a resurgent demand for traditional defence capabilities, has resulted in record H1 order intake and an order book at its highest level for over a decade.

"The outlook for the global defence market is increasingly positive, with strong growth predicted over the next decade."

The company backed its full-year guidance.

Russ Mould, investment director at AJ Bell, said: "While profits fell in its latest half-year results due to contract delays, investors seem to like the fact that Chemring is one of many companies experiencing stronger prospects thanks to the Russia-Ukraine war encouraging governments around the world to spend more on defence.

"It is also worth noting that Chemring's cybersecurity arm Roke continues to see fast revenue growth as companies and governments boost their digital defences."

Paragon Banking lifted its full-year guidance for net interest margin and mortgage lending on Tuesday, and increased its buyback programme, sending shares sharply higher.

In its results for the six months to the end of March, the company said underlying profit rose 22.2% to £128.9m, while underlying earnings per share were up 28% to 42.5p.

Statutory pre-tax profit fell 67.7% to £46.4m, reflecting the unwinding of £82.5m of the £191.9m of fair value gains recognised in 2022.

The net interest margin improved to 2.95% form 2.57% in the same period a year earlier.

Paragon said total new lending increased 6.9% to £1.59bn, driving 4.6% year-on-year growth in the loan book. Meanwhile, new mortgage lending was up 19.1% at £0.86bm, with a continued focus on professional landlords, who represented 98.6% of completions in the period.

The company said the results were achieved "despite material market volatility and substantial increases in market interest rates", which opened with the impacts of the September 2022 mini-budget and closed with the repercussions of the collapses of Credit Suisse, Silicon Valley Bank and other US lenders.

Paragon lifted its guidance for 2023. It now expects mortgage lending advances of between £1.75bn and £1.9bn, up from previous guidance of £1.6bn to £1.9bn, while net interest margin is seen increasing to at least 300 basis points, up from guidance of 289 bps.

Guidance for commercial lending advances and operating expenses was unchanged, at £1.1bn to £1.3bn, and circa £170m.

Paragon also announced that it was lifting its share buyback programme from £50m to £100m.

Chief executive Nigel Terrington said: "We are delighted to deliver another strong financial and operational performance, achieving record interim operating profits, alongside robust growth in our loan book."

Asos shares fell back after Monday's rally, driven by speculation it could be a bid target. On Tuesday Mike Ashley's Frasers Group lifted its stake in online fashion retailer again.

Frasers upped its stake to 8.8% from 7.4%. This compares to around 5% in October 2022.

Frasers Group, which owns House of Frasers and Sports Direct, among others, also has stakes in luxury handbag maker Mulberry and Hugo Boss.

FTSE 250 - Risers

Chemring Group (CHG) 293.00p 9.12%
Paragon Banking Group (PAG) 549.00p 9.04%
Indivior (INDV) 1,653.00p 3.96%
OSB Group (OSB) 535.50p 3.88%
IntegraFin Holding (IHP) 256.00p 2.65%
Bakkavor Group (BAKK) 94.40p 2.61%
Pennon Group (PNN) 786.50p 2.48%
NB Private Equity Partners Ltd. (NBPE) 1,590.00p 2.45%
RHI Magnesita N.V. (DI) (RHIM) 2,626.00p 2.42%
IWG (IWG) 158.80p 2.39%

FTSE 250 - Fallers

Warehouse Reit (WHR) 96.50p -6.67%
ASOS (ASC) 358.80p -4.37%
Molten Ventures (GROW) 293.00p -3.24%
Urban Logistics Reit (SHED) 136.40p -2.99%
Tullow Oil (TLW) 25.40p -2.38%
Hunting (HTG) 219.50p -2.23%
Currys (CURY) 51.40p -2.19%
Harbour Energy (HBR) 239.30p -2.13%
Syncona Limited NPV (SYNC) 150.00p -2.09%
SThree (STEM) 384.00p -2.04%


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