FTSE 250 movers: Home REIT plunges on vicious Viceroy report

(Sharecast News) - FTSE 250: 19,396.65, -0.13% at 1418 GMT. Home REIT shares plunged in response to a recent report published by a Delaware-based short-selling firm.

The company, which funds the acquisition and creation of properties across the UK that are dedicated to providing accommodation to the homeless, said the report was published without any engagement with the board, investment advisor, or wider advisory team.

"It is the board's belief that the report is inaccurate and misleading in its comments about the company, being based on mistaken assumptions, misinformed comments, and disputable allegations," it said.

Home REIT said it will publish a full and detailed response "demonstrating the factual inaccuracies and selective use of information in due course". This will be done "as soon as reasonably practicable".

At 1320 GMT, the shares were down 25% at 58.22p.

Although Home REIT did not mention the name of the Delaware firm, the company was no doubt referring to a note put out earlier by Viceroy Research, in which it said that its investigation into the group's investments and tenants "suggests significant downside".

"Poor operating results are already reflected in Home REIT's financials, however management incentives are not aligned with 'fixing' these problems, but only rolling up more bad assets," it said.

Viceroy said financial data of Home REIT's tenants show that many cannot afford rent, have not been paying rent, are in administration, are run by bad actors, or simply do not provide social housing services.

In the conclusion of its report, Viceroy said: "Home REIT's tenants raise questions about the financial viability of Home REIT's portfolio, and also about the appropriateness of this venture.

"We strongly believe that these are not the people who should be entrusted to look after the vulnerable, nor should they be entrusted with your taxes to do so. This industry is nascent, subject to limited oversight, and has begun breeding a plethora of for-profit vultures who have limited ability to actually run a charity or social enterprise.

"Scrutiny in these industries should be encouraged. Viceroy Research is short Home REIT."

Pets at Home reported a drop in interim profit on Wednesday as energy and freight costs rose, but backed its full-year profit guidance.

In the 28 weeks to 13 October, underlying pre-tax profit fell 9.3% to £59.2m. The pet supplies retailer said this was "in line with the plan", impacted by increased freight and energy costs and the year-over-year increase in investment in digital assets.

Total revenue grew 7.3% to £727.2m, with group like-for-like revenues up 6.4%. Pets said the second-quarter LFL rate accelerated versus the first-quarter run rate.

The retailer said it continues to expect full-year underlying pre-tax profit to be in line with consensus expectations of £131m.

Pets said the business, and the wider pet care market, remains resilient and in growth. New customer acquisition remains strong, it said, with registrations into its Puppy & Kitten club accelerating throughout the second and customer spend maintained across the group.

"Consumer demand remains strong, with a record number of UK pet owners continuing to prioritise spending on their pets, underpinned by the structural trends of humanisation and premiumisation.

"Trading post period end has continued in line with the Q2 run rate with LFLs in mid-single digits."

At 0920 GMT, the shares were down 5.2% at 288.06p.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Higher energy prices are partly why the Pets At Home update has put the cat among the pigeons but changing customer behaviour during the cost-of-living crisis is also behind the dent to profits. Rising costs pushed down underlying pre-tax profit by 9.3% with higher freight and energy bills taking their toll.

"Although essentials like cat litter and hygiene products have provided a sunnier spot of rising sales, people are clearly putting off highly discretionary spending on toys and fashion for pets with accessories spending down 3.5%. The group's growing customer base does add resilience though because overall petfood sales grew by more than 15.1%. That's helped keep full year guidance unchanged, with full-year profits still expected in line with expectations but until inflationary pressures ease there will be a distinct lack of cat nip in updates."

Shares in electronics maker discoverIE Group surged on Wednesday as interim profits more than doubled.

Revenue for the six months to September 30 rose 26% to £219.7m. Pre-tax profit came in at £14.8m from £6.4m a year earlier and rose 46% to £23.5m on an underlying basis.

The company said sales growth had been driven by operating leverage through efficiency gains and stable gross margins".

Its order book hit a record £257m, up 30%.

"The second half has started well with continued organic sales growth over last year and a record order book level, which we expect to begin to normalise as it converts into sales through the second half of the year," said chief executive Nick Jefferies.

"The group is on track to deliver full year underlying earnings in line with the board's expectations."

An interim dividend of 3.55p a share was declared, a rise of 6%.

Flow control equipment manufacturer Rotork said on Wednesday that revenues had grown 18.6% year-on-year in the four months ended 30 October, with the group benefiting from higher selling prices and supply chain improvement measures.

Rotork said activity in the period was driven by customers' operational expenditure and continued spend on automation, electrification, and digitalisation projects as well as modernisation and maintenance.

The FTSE 250-listed group also stated that order intake was up "a low single-digit percentage" year-on-year on an organic constant currency basis and highlighted that it retains "a strong balance sheet" with net cash of £79.4m at the end of October.

Rotork added that it expects 2022 adjusted operating profits to be in line with expectations on an organic constant currency basis and anticipates that it will enter 2023 with a record order book that is "significantly higher" than when it started the current year.

FTSE 250 - Risers

Discoverie Group (DSCV) 908.00p 4.25% Aston Martin Lagonda Global Holdings (AML) 127.05p 4.18% Britvic (BVIC) 800.00p 4.03% Virgin Money UK (VMUK) 169.65p 3.98% Wizz Air Holdings (WIZZ) 2,081.00p 3.43% Rotork (ROR) 295.20p 3.36% Watches of Switzerland Group (WOSG) 1,029.00p 3.16% Abrdn (ABDN) 204.20p 2.87% Telecom Plus (TEP) 2,400.00p 2.35% Ferrexpo (FXPO) 146.70p 2.16%

FTSE 250 - Fallers

Home Reit (HOME) 59.90p -22.61% Petrofac Ltd. (PFC) 99.60p -6.04% International Distributions Services (IDS) 232.20p -4.91% Pets at Home Group (PETS) 290.00p -4.61% Balanced Commercial Property Trust Limited (BCPT) 89.20p -4.29% Petershill Partners (PHLL) 173.00p -4.10% Bridgepoint Group (Reg S) (BPT) 201.20p -3.82% Warehouse Reit (WHR) 110.60p -3.66% Genus (GNS) 2,996.00p -3.48% Darktrace (DARK) 362.00p -3.26%