Updates from portfolio holdings: Persimmon, AstraZeneca, Synthomer and WPP

Today was always going to be a busy day for my portfolio in a busy day of company announcements. It was a mixed bag but AstraZeneca once again was the standout company with a great update and it’s little surprise to see the share price rise even further.

Persimmon (LSE: PSN)

Persimmon which has started reopening building sites this week said it saw a “strong” start to the year before the Covid-19 lockdown. Average private sales rate per site around 10% higher year-on-year in the first 11 weeks.

Persimmon’s current forward sales position, including legal completions taken to date in 2020, remained robust at £2.4bn, down from £2.7bn year-on-year.

The company said its liquidity was in a “robust” position, with a current cash position of £600m as at 24 April, deferred land commitments of £163m to the end of the current year, and access to an undrawn £300m revolving credit facility.

The housebuilder will reassess recommending dividend payments in the second half of the year.

AstraZeneca (LSE: AZN)

AstraZeneca maintained its full-year guidance as it posted a rise in first-quarter profit and revenue. Net profit increased to $780m from $593m in the same quarter a year ago, with revenue up 17% at $6.35bn amid growth across all three therapy areas and in every region. Product sales were 15% higher at $6.31bn.

AstraZeneca left its financial guidance for FY 2020 unchanged. Total revenue is still expected to increase by a high single-digit to a low double-digit percentage and core EPS is expected to increase by a mid- to high-teens percentage.

Covid-19 has not disrupted the firm’s supply chains with factories back to full capacity within weeks in China, which is a key growth region for the pharmaceutical giant.

It is likely AstraZeneca will pay an increased interim dividend is September.

Synthomer (LSE: SYNT)

The chemicals company withdrew full-year guidance on Wednesday adding that it was cutting capital expenditure and executive salaries in order to weather the Covid-19 storm. It also withdrew its full-year guidance.

Synthomer said covid-19 had started to weigh on its trading, with sales in the automotive and oil sectors hurt in Q2, leading the group to cut capital expenditure for 2020 to around €50m – down from the €73.5m originally anticipated.

It has seen strong demand for nitrile, used to make medical gloves, and highlighted that underlying earnings in the three months ended 31 March were up 5% year-on-year, in line with expectations.

Synthomer is operating 37 of its 38 global manufacturing sites. It made no mention of its dividend plans.

WPP (LSE: WPP)

WPP posted a sharp drop in revenue in March as clients across the globe slashed marketing budgets due to covid-19.

The advertising giant reported a 7.9% fall in like-for-like revenue last month, while revenue slipped 3.3% in the first quarter as a whole. Revenue in China plummeted by 30% but most office there are now back open.

To address these issues, WPP had already pulled its dividend, suspended a £950m share buyback and scrapped its guidance for the full year.

Now it will had taken further cost-cutting measures, including voluntary, salary cuts for over 3,000 workers and some job cuts.

Despite the challenges, WPP said it had won $1bn of new business in the first quarter, including Intel’s global creative account, which is thought to be one of the largest in recent years.

WPP said that while roughly a fifth of pitches had been put on hold, the group had not lost a significant account from any client.

My view

I think the shares in Persimmon are undervalued and have significant potential to improve, especially if the economy recover. Housebuilding is still a very profitable market with an almost in-built inability to match supply and demand, which favours the developers. The results today were more upbeat and gave more reason for optimism then I expected.

Shares in AstraZeneca are looking very expensive but I’ll hold onto mine as they have been driven up to new all time highs recently. Worth holding a high-performing defensive share in a market that goes up or down and it’s just a great company with a fantastic pipeline of new drugs. The latest positive news is not a surprise at all.

Synthomer shares I should have sold a long time ago when they started declining. Chemicals seems as a sector to be out of favour at the moment and the company just isn’t releasing any good news. I’ll hold for a long-term turnaround but wishing I had invested elsewhere. I’m now unwilling to crystallise my losses (which I know may be a mistake, but time will tell).

WPP shares I think have potential with debt being driven down and new client accounts being won. Given how badly China has performed as a region for WPP recently I think future results could have a very healthy comparison if things stay more normal there and the virus is kept at bay. I’m holding onto my shares but don’t intend to add any time soon as the business does still face some major challenges around marketing budgets and technology-driven industry change.

If you liked this article please do share on social media or read my latest post about my holdings and what I’ve been buying when the stock market fell in March.

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