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Tempus: refusing to blink with tanks on the lawn

Buy, sell or hold: today’s best share tips
 
 

The great property portals war is quietening down. The comfortable duopoly of Rightmove and Zoopla was blown open in January by disgruntled estate agents fed up with escalating fees, but OnTheMarket, their new rival venture, while making a lot of noise, seems to be running out of puff already, according to the latest update from Zoopla.

Zoopla suffered a net 3,800 defections in the three months to March, taking agent membership down to 12,400, but the attrition rate dropped to only 106 in April. “It will be less in May,” Alex Chesterman, the chief executive, predicts, adding that he expects net gains in members within months.

The number of properties for sale on Zoopla’s websites has grown from 803,000 in February to 866,000 today, hardly the outcome you’d expect if estate agents were deserting it in serious numbers. Revenue per member grew by 13 per cent to £340.

Scale matters in property search. House-buyers want to see all the options when they log in; property sellers want their agent to be using a portal that draws in the most people.

Rightmove is the sector gorilla, but Zoopla is big enough to prosper, it seems. That was not so clear five months ago. OnTheMarket’s insistence that clients use only one other portal looked a serious threat to Zoopla. As the chart shows, it has been clobbered relative to Rightmove.

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A new unknown, however, comes with Zoopla’s decision to diversify into the price-comparison market with its £190 million acquisition of uSwitch. If even a small portion of Zoopla users are persuaded to use uSwitch, too, the deal will sing.

Investors who bought into Zoopla at the 220p float price have just kept their heads above water. The shares closed 4½p lower at 225½p yesterday. The prospective yield after the 1p interim payment announced is 1.6 per cent. The company trades on 26 times prospective profits this year. That’s expensive. But estate agent members who bought the shares at a 20 per cent discount last year should remember to take advantage of additional shares on offer next month, also at the same discount. At the present price, that’s near-certain free money, so long as they sell.

Revenue £42m
Profit £18.2m
Number of visits to Zoopla websites 265.5 million

MY ADVICE Sell
WHY Pricey valuation means the shares would be clobbered by any stumble, while the future shape of the portal market is still not clear

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The low inflation environment and supermarket price wars aren’t helping Britvic. Selling prices at the soft drinks maker are stagnant, if not falling in some cases. Average revenue per litre sold was down 0.5 per cent in the six months to March. Group revenue also fell.

Yet with the prices of sugar and plastic diving and the fruits of a cost-cutting retrenchment coming through nicely, the company still delivered a 13 per cent improvement in pre-tax profits to £51 million.

The lost market share by some of its star brands, such as Robinsons, is a concern, but other more recent products, such as J2O and Fruit Shoot, look more promising. Britvic is also given heft by a long-term licence agreement under which it makes Pepsi in Great Britain and Ireland.

The company reaffirmed its expectation it will make £164 million to £173 million in profit before interest and tax for the full year. That would value it at a multiple of 17 times, which looks about right. The prospective yield is 3 per cent.

Britvic has some strong brands, is an effective innovator and there are cost savings to come through in the second half. Longer-term growth depends on international ambitions.

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Revenue £650m
Dividend 6.7p

MY ADVICE Hold
WHY Revenue prospects and more cost-cutting to come

The growth just keeps coming at Hargreaves Lansdown. In the four months to the end of April, savers and investors placed a net £2.75 billion of new money with the Bristol-based stockbroker and investment manager — a record.

Vantage, Hargreaves’ funds “supermarket”, added 40,000 new customers and, with 707,000 now signed up to the platform, there was talk of that growing to a million in the short term.

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True, it is the busiest period in the calendar for the group, as savers flock to buy Isas and tidy their funds before the end of the tax year. Nevertheless, with its assets under management standing at £55.3 billion, inflows into the business are running at multiples higher than they were three years ago.

That kind of growth pushed the share price to giddy heights, but worries about whether savers would be prepared to pay for financial advice as a consequence of the landmark Retail Distribution Review sent them from a high of £15 a share at the beginning of last year to as low as £10 last autumn. They have crept back again and closed yesterday at £12.56. That puts them on 26 times last year’s earning. Expensive? Yes, but then the bears were saying that five years ago, when the shares were 300p — and the multiple has been as high as 45 times.

Hargreaves clients are sticky, with 93.4 per cent retained, according to the latest figure. With pension freedoms, a growing savings culture and compulsory workplace retirement schemes all trending in Hargreaves’ favour, there should be more growth to come.

Revenue £96.9m
Retention 93.4%

MY ADVICE Buy on weakness
WHY Well placed to exploit changing savings culture

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And finally . . .
Odey Asset Management continued to bet against the crowd yesterday, adding to its wager on Plus500. The AIM-listed company, which takes bets on share prices through contracts-for-difference, admitted this week that some client accounts had been suspended to comply with money-laundering rules. While several rival hedgies, including Ennismore Fund Managment, are “shorting” the stock, Odey snapped up another 1.8 million, taking its stake to more than 16 per cent. The price fell again, down 32p to 380p.

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