While most British housebuilders are depressed, Kier Group, which combines housebuilding with support services and other construction, is proving resilient. It announced yesterday in a trading update that it expects to report full-year profits before tax in line with market expectations of about £88 million and ahead of last year’s £77.6 million.

Coming after a fortnight in which almost every day brought a new profit warning from the big housebuilders, and on a day in which mortgage lending fell by 32 per cent in the year to June, this announcement, which would once have seemed routine, appeared to be an excuse to hang out the bunting. Kier’s shares had risen by 6 per cent by the close yesterday – although at 965p they are a long way from the high of £25 reached in April last year.

Cash generation in the group’s construction unit helped it to reach the year-end with a reassuring £140 million in the bank. Kier’s other main driver of shareholder value, support services, has a promising order book pipeline, and the two divisions now provide almost 80 per cent of revenue.

However, the company has urged caution in its statements and spoken of a “tough” housing market. It announced yesterday that it will sack about 350 staff, or 60 per cent of workers in its residential division, close four of its five residential division offices and stop work on several sites.

In its housing unit, sales for the year were down 23 per cent, while visitor levels and reservations continued to fall during the second half of the year. As of last month, its order book of exchanged contracts and reservations was almost half the level of the year before.

This unit will have to be increasingly focused on regeneration and affordable housing in the next few years. While this may be a good way of keeping the housing business afloat, margins are generally lower than in the more lucrative private housing market.

Kier is focusing on its publicly financed projects, with a particular emphasis on prisons and schools. Repairs to social housing is also thought to be a growth area for the business. Although these are less vulnerable to recession than the housing market, there is a chance that a more cash-strapped government will have a smaller budget for big projects.

Although its mixed structure is positive in the current climate, it is still vulnerable to the slowing of both the residential and commercial property markets. Pure construction companies with a higher share of state projects, such as Balfour Beatty, are a more defensive bet.

With further bad news anticipated on the housing market, and interest rate rises a possibility, it is best to remain cautious on the stock for now. Hold.

Anite

Anite’s management may well have to cancel their summer holidays after the software and consultancy group reported disappointing results yesterday. Over the next few weeks the directors will have to endure a series of meetings with disgruntled investors who have seen the stock shrink from 85p to 38p over the past year.

The company’s wireless testing business, which sells to mobile handset makers, has been the biggest drag. The company may be No. 2 in its particular sector of the market, but with the next wave of work not expected for the best part of a year, the board may be reflecting on the adage, the bigger you are, the harder you fall.

Anite’s bright spot is its public sector business, which supplies software to local authorities. The division, which has attracted attention from acquisitive rivals, may look even more appealing, with the prospect that a management on the backfoot may be forced into a sale.

Selling reservation systems to the travel industry is the company’s third line of work, and trading is holding up, although there is too much downside risk among its customers to trumpet the unit.

Despite giving a positive outlook there will be little to cheer the stock in the near-term, apart from a possible sale of its public sector business, which is likely to come at a lower price and leave the company overexposed to less reliable and troubled markets. At present, this is not one to remember. Avoid.

Global Mena

In times of uncertainty, investors will always be willing to look further afield in search of better returns. Perhaps no surprise then that Global Mena Financial Assets, the Kuwaiti private equity fund, was able to raise £252 million this week and was ushered on to the main market yesterday.

The fund will focus on the booming financial sector across the Middle East and North Africa, a region where GDP growth is running at more than 5 per cent a year and populations are growing, all supported by rising oil prices and increasing foreign direct investment.

While shareholders of the typical British financial institution may pick up this paper each morning anticipating the latest round of market turmoil, those in the Gulf appear only to read good news.

Moreover, Global Mena benefits from the backing of Global Investment House, its part-owner and investment manager, which has a track record of healthy returns.

Seven companies from the Middle East have joined the London Stock Exchange this year, raising about £1.5 billion, with Commercial Bank of Qatar being the last significant float.

Of course there may be growing pains, but, for those looking to play the region or wanting financials exposure amid uncertain times at home, Global Mena is a buy.

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