FTSE 250 movers: No party for Carnival, Kainos outperforms

(Sharecast News) - FTSE 250: 19,082.64, -1.92% at 1555 GMT. A Berenberg upgrade to 'buy' from 'hold' lifted software firm Kainos on Wednesday along with a hiked price target to 1,700p from 1,200p following the company's "strong" first-half results.

The bank said growth exceeded its expectations. "While margins were lower, this was not for the reasons that we had feared," it said.

"In fact, the underlying profitability of the business was masked by an exceptionally large investment in the company's software products (a good thing) and by fewer billable days caused by bank holidays (a one-off).

"With management commenting that many customers are 'accelerating' their digital investment agendas, it appears there will be no slowdown in the near term."

Berenberg said that as the true profitability of this business swings through in the second half, there is scope for upside.

"While circa 30x 2024 price-to-earnings looks expensive, we are now far more confident in upside scenarios playing out. This would reduce the multiple to beneath 20x."

UK-based transport infrastructure provider Hill & Smith gained as the company said annual profits to be at the upper end of guidance, driven by strong trading and foreign exchange tailwinds.

The company, which makes highway safety barriers, said trading in the four months to October 31 remained robust with revenue from continuing operations 18% ahead of the prior period on an organic constant currency basis.

"Our operating companies continue to take pricing actions to offset cost input inflation and we are pleased to report that operating margins were ahead of H1 2022 and the same period last year," it said in a trading statement.

Hill & Smith now sees underlying operating profit to be at the top end of its compiled analyst expectation range of £84.9m-£89.7m on a continuing operations basis. It added that it expected to see a material improvement in cash generation during the second half of this fiscal year.

"While mindful of current macroeconomic uncertainty, the group has a proven track record of resilience and, with exposure to the structural growth markets of sustainable infrastructure and safe transport, is well positioned to deliver against its strategic goals. Consequently, we expect to make further progress in 2023."

Carnival shares tumbled on Wednesday after the cruise operator announced plans to raise $1bn with convertible senior notes to make principal payments on debt and for general corporate purposes.

The convertible notes are part of the company's 2024 refinancing plan. They will pay interest semi-annually on 1 June and 1 December of each year, beginning on 1 June 2023, at a rate of 5.75% per year. The notes will mature on 1 December 2027, unless earlier repurchased, redeemed or converted.

CMC Markets shares fell despite the company saying its three-year growth plan was on track as it reported a rise in first-half net operating income amid increased activity.

In the half year to 30 September, net operating income grew 21% to £153.5m, while pre-tax profit nudged up 1% to £36.6m.

Trading net revenue was up 27% at £128.4, while investing net revenue fell 14% to £20.8m.

Trading active client figures were down 7% during the half, but CMC said all regions saw an increase in revenue per client, up 36%, largely due to higher client income along with an increase in client income retention to 83% from 80%.

Chief executive Lord Cruddas said: "I am pleased to report another strong performance for the first six months of the year. We saw an acceleration in activity across FX and commodities in addition to the normal activity across our index flow during a period of heightened focus on monetary policy action around the globe and a pickup in market volatility and trading volumes.

"Against this backdrop, we are on track to deliver our three-year expansion initiatives aimed at driving higher revenues and diversifying our earnings."

New business expansion is expected to grow net operating income by 30% over the next three years, with expansion in profit margins expected from FY 2024 onwards.

The company also said on Wednesday that CMC Invest had successfully launched in the UK and will be launched in Singapore by the end of FY 2023. Further regional expansion in New Zealand and Canada is also being considered.

FTSE 250 - Risers

Kainos Group (KNOS) 1,525.00p 5.83% Hill and Smith (HILS) 1,132.00p 3.66% Vietnam Enterprise Investments (DI) (VEIL) 507.00p 1.40% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 396.00p 1.02% Tate & Lyle (TATE) 710.20p 1.00% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 309.00p 0.98% FirstGroup (FGP) 95.70p 0.74% Plus500 Ltd (DI) (PLUS) 1,834.00p 0.71% Abrdn (ABDN) 198.60p 0.61% SDCL Energy Efficiency Income Trust (SEIT) 105.00p 0.57%

FTSE 250 - Fallers

Carnival (CCL) 728.20p -13.70% CMC Markets (CMCX) 233.00p -13.06% Bridgepoint Group (Reg S) (BPT) 213.80p -8.63% Syncona Limited NPV (SYNC) 169.00p -8.55% Aston Martin Lagonda Global Holdings (AML) 123.25p -7.40% HGCapital Trust (HGT) 351.00p -6.65% Elementis (ELM) 98.75p -6.40% Marshalls (MSLH) 278.40p -6.20% Synthomer (SYNT) 135.00p -6.05% UK Commercial Property Reit Limited (UKCM) 59.40p -5.86%