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FTSE 250 public transport firm Stagecoach said like-for-like revenue grew 5.9 per cent in the half year to October and expects revenue growth in the second half to be 'relatively modest'. Total operating profit, before intangible asset expenses and exceptional items, for the six months to October 31st climbed 33.7% to £142m while revenue for the period increased to £1.403bn from £1.293bn in 2011. Earnings per share surged 66.3% to 16.8p after profit growth from its bus operations and as its rail operations were boosted by revenue at East Midlands Trains. Stagecoach, which runs Virgin Rail with Richard Branson's Virgin and is the current operator of the West Coast rail network franchise, said revenue at UK rail rose 6.6% to £599.9m in the last six months. UK bus revenue slipped 0.6% to £116.4m while revenue at its North American division rose 19.8% to £316.4m. Chief Executive Sir Brian Souter commented: "In the UK, we have achieved further growth in our regional bus operations and we continue to make good progress at our contracted London bus business. Passenger revenue growth remains good on our UK rail networks and we have further developed the alliance with Network Rail at South West Trains."
Wednesday 5th Decembersaw the price rise nearly 6%... Good figures coming, or an early Christmas?
Stagecoach Group: Barclays reduces target price from 340p to 335p and keeps an overweight rating.
Ahead of interim results from bus & rail group Stagecoach (SGC), broker Nomura seemed happy to take a leap of faith on the near future performance. Indeed, it highlighted that ‘just £260m of the £1.6bn rail value at Stagecoach is reflected by the market. During the last refranchising round, in the mid-2000s, the sector outperformed the wider market by 40%.’ Expect an update from Nomura shortly after the announcement.
Nomura said that Stagecoach (rated 'buy'), despite its premium rating, is its preferred choice on the back its total shareholder return track record. Go-Ahead is also marked as a 'buy': the broker said that the current valuation reflects "an attractive risk-reward rail profile and [the business] has a self-help bus story that should offer underlying earnings momentum over the coming years". While National Express (rated 'neutral') is "attractively priced", it suffers from its exposure to Spain. Meanwhile, First Group (also rated 'neutral'), is said to have "enviable" market positions but an "unenviable" balance sheet.
Nomura has highlighted 'the missing value of rail' in its review of the public transport sector and labelled Stagecoach as its key 'buy' in the category. The broker highlighted that public transport companies each operate in a diverse set of businesses - bus, rail, coach, student transport and sightseeing tours - and each division has its own set of margins, returns, capital intensity and regulatory risks. Nomura said: "Through this rigorous process, we have identified that while UK rail contains some of the higher-risk characteristics of the public transport businesses, its value is barely considered at current sector share price levels. "As the debacle of West Coast fades and the market turns to refranchising once more, we calculate that just £260m of the £1.6bn rail value is reflected by the market. During the last refranchising round, in the mid-2000s, the sector outperformed the wider market by 40%." While the broker recommends buying a basket of public transport companies to lock in to the rail upside, it said that its sector preferences are those companies with strong balance sheets, good management track records and exposure to the more solid transport businesses.
Stagecoach: Nomura moves target price from 305p to 310p, buy recommendation maintained.
Les Warneford, Managing Director of Stagecoach UK Bus, said: "This is a good fit with our existing successful bus network in Greater Manchester. We believe there is scope to develop the business and attract more customers to bus travel through our good value fares and high quality of service."
Stagecoach Group, the FTSE 250 transport company, has announced that its wholly owned indirect subsidiary, Greater Manchester Buses South, has agreed to acquire the bus business and assets of private operator Bluebird. The business is being acquired for a consideration of £2.0m, and will allow the company to expand its bus operations in the Greater Manchester region, where it already operates around 630 buses and employs 1,850 staff. The Bluebird operations will become part of Stagecoach Manchester. In the year ended January 31st 2012, the business had revenues of £4.0m, EBITDA (earnings before interest, tax, depreciation and amortisation) of around £480,000 and an operating profit of around £330,000. Under the agreement, Stagecoach is committed to acquiring the business only if clearance is given by the Office of Fair Trading. If approved, Stagecoach expects the acquisition to be completed in the first quarter of 2013.
Passenger transport group Stagecoach is to acquire the Wigan bus business and assets from First Manchester, part of FirstGroup. Stagecoach is paying £12m for a business which operates both commercial bus services and a small number of school contracts. In the 12 months to the end of March the business had revenues of £13.2m, made earnings before interest, tax, depreciation and amortisation of £2.2m and an operating profit of £1.5m. The acquisition will allow Stagecoach to expand its bus operations in the Greater Manchester region, where it already operates around 630 buses and employs 1,850 staff. The acquired business employs around 300 workers, and these will transfer to Stagecoach's Greater Manchester Buses East Limited business under Transfer of Undertakings (Protection of Employment) arrangements. Stagecoach expects the acquisition to be completed in early December 2012. Bus and train operator FirstGroup said the disposal was part of its strategy to reposition its UK bus division to focus on those areas that offer the greatest potential for growth. "The sale of our Wigan bus business marks continued progress in our programme of selected asset and business disposals as we review the scope and scale of our UK Bus portfolio and reposition it for the longer term," said Tim O'Toole, Chief Executive of FirstGroup. "With a clear focus we are working through a detailed plan to recover performance in our UK Bus division and equip the business to achieve sustainable growth and improved returns," O'Toole added.
Bus and rail group Stagecoach said overall current trading remains good and its prospects remain positive with like-for-like revenue growth up in nearly all of its divisions. The Scotland based group added there has been no significant change to its expected profit before tax for the year ending April 30 2013. LFL revenue at its UK Bus regional operations during the 24 weeks ended October 14th 2012 rose 3.6%. The 0.9% decline in revenue at UK Bus (London) was expected as it lets go of less profitable contracts and restructures the acquired business. "For the year as a whole UK Bus (London) is well placed to maintain revenue with contract losses being offset by some contract wins and inflationary price increases on existing contracts," Stagecoach explained in a statement. LFL revenue at UK Rail during the period gained 7.9% while its North America operations, which includes Megabus.com and excludes the disposed Wisconsin school bus business, saw revenue growth 10.7%. Revenue at Virgin Rail rose 2.7% during the period.
Stagecoach: Jefferies keeps buy rating and 335p target; Nomura keeps buy rating and 305p target; Investec keeps buy rating and 320p target.
The Independent advises investors to hold tight on Stagecoach but buy FirstGroup. It says Stagecoach is a ruthless well oiled machine that doesn’t make mistakes. “But I wouldn’t be buying any more just yet and the shares have enjoyed a good run recently. Buy only on weakness.” Of FirstGroup it comments: “Worries abound. But the shares have settled at a low enough level that it might be worth taking a speculative interest.
Meanwhile, Stagecoach released a statement this morning, saying: "Stagecoach also notes the DfT's plans to conduct independent reviews into both the specific InterCity West Coast competition and rail franchising more widely. We will be in discussions with the DfT regarding these developments and will update the market as appropriate." Stagecoach's shares were up 1.31% at 287p this morning.
Other events In August 2012, the Department for Transport announced that the Group's joint venture, Virgin Rail Group, had not been awarded the new West Coast Trains rail franchise. Virgin Rail Group will cease to operate the West Coast Trains franchise in December 2012 when the new franchise commences. Further details are given in our announcement of 15 August 2012. Stagecoach Group is shortlisted for both of the other UK rail franchises it applied for and we are making good progress with our bid for the Great Western franchise. We will also consider other rail franchise opportunities as these arise. Outlook Overall current trading remains good and we believe the prospects for the Group remain positive.
The 5.7% decline in revenue at UK Bus (London) is consistent with our previous expectation that some less profitable contracts would not be retained as we restructured the acquired business and improved its overall profitability. The decline reflects the revenue lost from contracts that ended during the year to 30 April 2012. For the year as a whole to 30 April 2013, UK Bus (London) is well placed to maintain revenue with contract losses being offset by some contract wins and inflationary price increases on existing contracts. Financial position The Group continues to maintain a strong financial position with investment grade credit ratings and appropriate headroom under its debt facilities. In July 2012, the Group completed the acquisition of businesses and assets from Coach America, Inc. The transaction was financed from available, committed bank facilities and further details are given in the announcement made by the Group on 23 July 2012.
Interim Management Statement Stagecoach Group plc ("the Group") is today publishing an interim management statement, covering available information for the period to the date of this announcement. Financial performance The overall profitability of the Group has remained good, and there has been no significant change to our expected Group profit before tax for the year ending 30 April 2013.
http://www.investegate.co.uk/Article.aspx?id=201208220700065056K
Completion of acquisition of businesses and assets from Coach America Stagecoach Group plc is pleased to announce that, further to its announcement on 18 May 2012, certain of its subsidiaries (together, "Stagecoach") have completed the acquisition of businesses and assets from Coach America, Inc. ("Coach America"). As previously announced, nine businesses and related assets and liabilities have been acquired for a cash consideration of US$134.2m. The consideration will be potentially adjusted based on the working capital of the acquired businesses and US$3.0m of the US$134.2m consideration is being held in escrow pending the finalisation of any working capital adjustment. In addition, in its announcement of 18 May 2012, Stagecoach confirmed that the Sellers had the option to sell certain coaches to Stagecoach for a cash consideration of up to US$25.6m. To date, Stagecoach has acquired a further 12 coaches for a cash consideration of US$2.9m and the Sellers retain the option to sell vehicles to Stagecoach for the balance of the potential cash consideration (i.e. up to the US$22.7m). The transaction has been financed from available, committed bank facilities.
http://www.investegate.co.uk/Article.aspx?id=20120723070022H8457
Jefferies International upgrades Stagecoach Group from hold to buy, target price raised from 240p to 335p.
Shore Capital maintained its "buy" rating for Stagecoach Group (SGC), noting the company's strong share price momentum, which has outperformed the FTSE All Share by 11% since the end of May 2012. The broker believes that the public transport provider is capable of increasing earnings by 40% over the next three years, based on the prospect of rail franchise wins. Shore also pointed to the stock's defensive characteristics and the firm's strong cash generation.
As a North Devon resident and occasional bus user - and SGC holder - it's a real shame for the area. First are an absolute nightmare and i would rather stand in the rain and wait 20 mins for a Stagecoach bus than give that shower of ****e a fare!! While some routes are shared with SGC i feel sorry for those on First routes who will lose their service if First decide to pull out. ATB.
nvestec upgrades Stagecoach Group from hold to buy, target price raised from 270p to 305p.
"We do not believe we can justify spending further money and management time on what has already been a lengthy process. "As a result, we have reluctantly decided not to proceed with the acquisition and have informed First we are withdrawing." The £2.8m acquisition was announced on March 12th.