From UK-Analyst.com: Tuesday 9th March 2010

Proof of the Government's rabid insanity (if more were needed), was provided as it announced plans for an 'insurance scheme' for all dogs. Another initiative designed to penalise the vast majority while ignoring the root of the problem. Our technical analysis: the plot has been lost. Exports in January dropped to their lowest level since August 2008, with the trade gap expanding to 7.99 billion pounds, above the expected level of 7 billion pounds. Ironic eh, given the hopes that a weak pound would boost exports? This lamentable performance sent the pound reeling 0.4% lower against the euro and 0.75% down versus the dollar. London stocks made little headway, and US markets were also quiet, on the anniversary of global stock market lows. At the London close the Dow Jones was up by 31.14 points at 10,583.66 and the Nasdaq was ahead by 11.93 points at 2,344.14.

In London the FTSE 100 lost 4.4 points to 5,602.3; the FTSE 250 fell by 11.71 points to hit 9,774.68; the FTSE All-Share dropped by 2.21 points to 2,862.26; and the FTSE AIM Index finished almost unchanged, down 0.03 points to close at 689.58.

Brokers' Notes

Charles Stanley noted that a successful conclusion to debt facility renegotiations could lift pub operator JD Wetherspoon (JDW), as it would allow management to outline a plan for the resumption of dividend payments. A 2011 date is the most likely, although the broker noted that the group has sufficient free cash flow to support a 2010 resumption. A greater availability of funds and suitable sites has allowed the group to open 15 new sites to date in 2010, with a total of 50 planned for the full year. Like-for-like (LFL) growth is expected to be 1% in 2010, with a forecast dividend of 12p for 2011. The broker's 'buy' stance and 600p target price were repeated. Wetherspoon shares bubbled up by 9.5p to 467.7p.

Improved results from inter-dealer broker Tullett Prebon (TLPR) prompted Nomura to increase its 2010 earnings per share forecast by 3% to 42.5p and raise its target price from 360p to 380p, encouraged by the firm's net cash position. Keeping a 'buy' stance, the broker said that Tullett is the least expensive stock in the sector, on a multiple of 7.1, whereas the average is 11 times estimated average earnings for 2009. The shares fell by 14.6p to 310.1p.

Astaire Securities said that it expects continued growth at infection control firm Tristel (TSTL), after interim results for the half year to 31st December showed a jump of 39.9% in pre-tax profit to 0.656 million pounds and revenue up by 28% to 4 million pounds. The firm's NHS instrument disinfectant products continued to propel growth, and this is expected to increase as it widens its product offering to the health service. Successful conclusions to several trials that are currently ongoing will add further impetus to growth. Margin improvement is also expected, with the full margin benefit of the Medichem acquisition yet to be achieved. Astaire reiterated its 'buy' stance for the shares, which rose by 2p to 62.5p.

Interserve (IRV), the building and maintenance firm, is expected to report good results on 10th March, having reported in-line trading in January and good order momentum achieved from November 2009 onwards, claimed one broker. The firm's exposure to "essential infrastructure spend" affords Panmure Gordon confidence in the outlook, although clarification is expected in relation to Middle East demand levels and cash collection efforts. Net debt is also forecast to fall from its first half 2009 level of 85.1 million pounds, given the firm's "excellent cash generation". A final attractive factor for the broker is the 8.8% dividend yield, and it restated its 'buy' stance and 280p target price. The shares finished down by 1.4p at 207.6p.

Blue-Chips

Antofagasta (ANTO) was hit by lower copper prices in 2009, as turnover fell by 12.2% to 2.96 billion dollars, with net earnings plummeting by 60.9% to 667.7 million dollars. Both earnings per share and the total dividend for the year were down by the same percentage, at 67.7 cents and 23.4 cents respectively. Copper production was down 7.4% to 442,500 tonnes, although this was ahead of a forecast of 433,000 tonnes. Production in 2011 is expected to be 700,000 tonnes, after the commissioning of the Esperanza site in Chile in late 2010. Liberum Capital said that the low dividend payout was disappointing, and raises the prospect of an upcoming acquisition. Antofagasta shares rose by 15p to 1,008p.

Shares in satellite communications firm Inmarsat (ISAT) descended by 2p to 770.5p as 2009 EBITDA rose 11.9% to 594.2 million dollars, while revenue was up by 4.2% at 1.038 billion dollars. Adjusted earnings per share jumped 26.7% to 38 cents, and the full year dividend was raised by 10% to 33.36 cents. The firm said that revenue growth momentum and new opportunities, such as the satellite phone market, would propel it forward into 2010.

Shopping centre owner Liberty International (LII) succeeded in reducing its losses for 2009, by 87% to 329.1 million pounds, even as revenues fell by 6.3% to 578.9 million pounds. The diluted loss per share was 90% lower than in 2008, at 66.1p, but net asset value was down 39% at 464p. There was no change to the dividend of 16.5p. Separately, Liberty announced its intention to demerge and split into two separate businesses, Capital Shopping Centres and a central-London focussed property and investment division: Capital & Counties Properties. Panmure Gordon called the demerger "welcome news" and said it would give the business greater flexibility and also offer operational cost savings. The broker retained its 'hold' stance and 516p target. Liberty shares slipped by 25.4p to 487.6p.

International Power (IPR) reported pre-tax profit for 2009 of 718 million pounds, up 5% on 2008. The shares rose by 6.8p to 331.9p, although forecasts had been for pre-tax profits of 730 million pounds. Revenue was down 0.3% at 3.471 billion pounds, while earnings per share were down 3% at constant currencies. The full-year dividend was raised by 3% to 12.53p per share. The firm warned that near-term performance was likely to be affected by weak market conditions in the UK and US. Evolution said that the results were "bland" but added that "bland is good for International Power". It also said that bid speculation was unlikely to go away.

Mid-Caps

Investors dumped shares in waste management firm Shanks (SKS), sending them 17.7p lower to 102.3p, as it announced that it is no longer in talks with private equity firm Carlyle Group regarding a potential offer for the company. Shanks said it was unwilling to recommend Carlyle's offer of 120p per share, and added that Carlyle had not been able to make an offer that reflected the value of the group. At the time of the original bid at the end of last year, Shanks had said that a bid of 150p or more per share would be required to deliver "appropriate value to shareholders".

Weir Group (WEIR), the engineering firm, enjoyed a rise of 6% in pre-tax profit for 2009 to 187 million pounds, while revenue was up by 3% at 1.39 billion pounds. Earnings per share were 8% higher at 64.1p, while the full-year dividend was increased by 14% to 21p. Net debt halved to 119 million pounds by the end of 2009. Order input was 18% down at 1.3 billion pounds, with original equipment orders falling 34%, while after-market sales were down only 2% and made up 54% of total revenue. Although project enquiries at the Minerals division are up and the Nuclear division is expected to benefit from a strong workload in the coming months, the group remains cautious on its prospects for 2010. Panmure Gordon increased its target price from 885p to 960p and raised its pre-tax profit forecast for 2011 from 194 million pounds to 204 million pounds. The 'buy' stance was left unchanged. Weir shares jumped by 68.5p to 923.5p.

Equipment rental firm Ashtead Group (AHT) gained market share in a difficult period, with pre-tax losses in the three months to 31st January increasing by 65% to 15.7 million pounds. In the first nine months of the financial year, it made a pre-tax profit of 2.9 million pounds, only a tenth of that in the same period a year ago. Revenue in the third quarter was down by a third to 187.3 million pounds, while the loss per share for the quarter jumped from 0.1p in 2009 to 1.9p. The firm said that good margins and expanding market share left it well-placed for a general recovery in its markets. Ashtead shares edged forward by 0.45p to 88.45p.

Small Caps, AIM and PLUS

UK Coal (UKC), one of the last remnants of the British coal mining industry, responded to press speculation, saying that it was not aware of any proposal from its major shareholders about a cash offer for the group. The firm said that it faces continued difficulties in the performance of its deep mines, but that it is in the early stages of discussions regarding a potential merger which could reduce its exposure to "the volatile performance of its deep mines". The shares leapt by 10.5p to 60p.

Eurotunnel's (GETS) profit of 1.4 million euros in 2009 was a mere fraction of the 39.7 million euros it made in 2008, but the firm said that the figure was proof of the firm's resilience in the face of the troubles caused by fire and ice. Service levels did not return to normal until February 2009 due to the fire at the end of 2008, and the poor weather in December wreaked havoc on the trains, with the infamous 'wrong kind of snow' leaving trains stranded in the tunnels. Total turnover was down 14% at 640 million euros, while earnings per share plunged to 1 euro cent, from 34 cents in 2008. Investors remained confident and the shares jumped by 1.66 euros to 8.42 euros.

Revenue at investment bank Shore Capital (SGR) doubled in 2009 to 38.9 million pounds, and the firm moved into the black with a pre-tax profit of 14.59 million pounds, after a pre-tax loss of 1.268 million pounds for 2008. Diluted earnings per share stood at 27.8p, up from a loss per share of 0.07p in 2008. Increases in revenue from research, broking services and asset management were the main drivers behind the strong performance, and the dividend for the year was almost tripled to 0.875p per share. Shore shares gained 4p to 37p.

Ark Therapeutics (AKT) withdrew its bid to sell its brain cancer drug Cerepro in Europe, after regulators requested a further clinical trial before giving approval. The European Medicines Agency said that there was insufficient evidence of clinical benefit. Ark said that it is in discussions with a number of parties about a potential offer being made for the company. The shares sank by 2p to 11.5p.

Shares in pharmaceuticals firm ValiRX (VAL) soared 0.43p to 1.48p as it announced that it is entering into partnership with the Laboratory of Government Chemistry and drug developer Horizon Discovery. The agreement will provide funding for the development into gene activity based diagnostics and screening products. No financial details were revealed. ValiRX will retain the commercialisation rights for future products developed under the agreement.

Chaarat Gold* (CGH) increased the JORC-compliant estimate for its Chaarat complex in Kyrgyzstan by 670,000 ounces to just over 4 million ounces. 25 drill holes were examined, and future drilling will be carried out with the aim of increasing the resource over the coming year. The proposed mine is likely to be a mixture of open pit and underground operations. The shares raced ahead by 11.75p to 57.75p.

Victoria Oil & Gas (VOG) reported that its La-105 well at Douala in Cameroon has produced rates in excess of 10,000 barrels of oil equivalent per day. The firm said that these results are well in excess of expectations. Fox-Davies Capital said that the next step for the company would be to investigate the potential of the whole block. The shares gushed ahead by 0.56p to 4.125p.

First half pre-tax profit to 31st December at construction management firm Interior Services Group (ISG) fell by 61% to 2.4 million pounds, while revenue dropped by 14% to 484 million pounds. Adjusted basic earnings per share were down 33% at 11.7p, but the dividend was increased by 5% to 4.2p. The firm blamed a fall in orders, and the order book at the end of December was 780 million pounds, down 18% from a year ago. It said that it would continue to pursue acquisition opportunities. Panmure Gordon commented that the increased dividend is a sign of management's confidence in the future. It retained its 'buy' stance and 180p price target. ISG fell shares by 0.5p to 164p.

BrainJuicer (BJU), the delightfully-named online marketing research firm, announced that pre-tax profit in 2009 was up by 21% to 1.658 million pounds, while diluted earnings per share were up 22% to 9p. Revenue increased by 27% to 11.814 million pounds and the dividend was raised by 26% to 1.9p. For the first time, more revenue was derived from the international business than from the UK business, and the firm is now working with 11 out of the largest 20 buyers of market research, including Unilever and Nike. A new office will be opened in Shanghai during the year, and a move into Brazil is also planned. Canaccord Adams said that the results were "encouraging", and it re-stated its 'buy' and 189p target. The shares oozed 11p ahead to 156p.

* The T1ps Smaller Companies Gold Fund owns shares in Chaarat Gold. For details about this fund email goldfund@t1ps.com