Thursday's Stock Market Report from UK-Analyst featuring Aviva, Randgold Resources and Ladbrokes
Print this Article|
From UK-Analyst.com: Thursday 5th August 2010
RBS Markets introduces to you to MARKETS Direct -
Free subscription This edition's hottest topics include: The election special, an interview with Ross Walker, Are Emerging Markets on the fast-track to recovery? Has gold hit its peak? Currency trends for 2010? Are interest rates set to rise globally? And much more.
Click here to
download a preview of the magazine Traders searching for direction remained highly sensitive to economic data, with risk appetite declining after a US labour market report showed jobless claims rising. Meanwhile, rates were held steady by the Bank of England and European Central Bank as expected. The UK's monetary policy committee also made no change to the quantitative easing program. The euro zone held rates steady, at 1%. In spite of a pick-up in activity, Jean-Claude Trichet, ECB president, said while the data had been better than expected, the European recovery would still be "moderate and uneven". He also said that temporary stimulus measures, such as programmes to buy sovereign debt, would remain. At the London close the Dow Jones was down 37.27 points at 10,643.16 and the Nasdaq was down by 12.97 points at 2,290.6. In London the FTSE 100 dropped 20.38 points to 5,365.78 the FTSE 250 rose 39.72 points to 10,166.13; the FTSE All-Share slipped 6.87 points to 2,771.21; and the FTSE AIM Index finished 6.94 points higher at 698.58. Brokers' Notes GE&CR issued a "buy" recommendation for Hambledon Mining* (HMB) with a 16.8p target price. The research house believes the mining company "is on a roll." An upbeat annual general management statement was followed by record quarterly production numbers. It thinks that output could increase from its current level of 21,000 ounces of gold equivalent to 100,000 ounces of gold equivalent per annum within three years, with cash costs falling during the period from 664 dollars (418 pounds) to 500 dollars (315 pounds) ounces. If this target is reached, the cost base at the 100% owned Sekisovskoye operation means that Hambledon could, at current gold prices, be generating pre-tax profits of up to 50 million pounds per annum. This is a vast difference to the 0.245 million pounds loss experienced in 2009. The shares rose 0.125p to 6.25p. Edison investment research reported on the biotech company Vernalis (VER). The research house believes that the group's investment case hinges on pipeline progress and expansion. So far in 2010, it has encountered a number of setbacks, with the failure of indantadol in diabetic neuropathic pain and Biogen Idec's decision to discontinue vipadenant development for the treatment of Parkinson's disease in favour of a, currently unnamed, back-up compound. However, with a stronger balance sheet following the March fund-raise, management focus has shifted towards delivering on the near-to-mid term strategic aims. These aims include: the progress of the existing clinical pipeline; pipeline expansion via in-licensing and M&A; and further investment in research. Vernalis shares finished flat at 37p. A truly hidden investment secret revealed Finn Cap maintained its "buy" recommendation for the microwave electronic subsystems manufacturer Filtronic (FTC) and 45p target price. The broker commented that full year results to 31st May reflected the slowdown within the Point-To-Point wireless infrastructure markets with surplus inventory depressing activity levels during the fourth quarter. However, revenue of 15.6 million pounds and adjusted losses before tax of 0.3 million pounds were largely in-line with revised market expectations as cash was preserved above 16 million pounds. Finn Cap believes that these results should largely be overlooked as the firm re-positions itself as a "leading player within the wireless infrastructure industry." This is expected to be achieved through market and customer diversification and the proposed strategic acquisition of Isotek, a power management company for hi-fi and home cinema use. Filtronic shares moved 0.25p ahead to 38.5p. Brewin Dolphin upgraded its recommendation for the automotive service group Inchcape (INCH) from "Add" to "Buy", increasing its target price from 290p to 365p. In its interims, the company said first half sales increased by 11.1%, in actual currency, to 3.1 billion pounds and operating profit increased by 45.2% reflecting progress made across most regions. The broker commented that the results were "well ahead of expectations" and has prompted it to upgrade its forecasts for the next three years by between 13% and 15%. It added that most of Inchcape's markets are recovering more quickly than it had anticipated and the threat of disruption from Toyota and Greece looks overplayed. The shares finished 0.3p lower at 299.1p. Blue-Chips Randgold Resources (RRS) shares tumbled 320p to 5,395p after the miner cut its output target for its flagship Loulo mine in Mali by 5%. The company said that, in spite of the dip, the group's production guidance for the year remained within 5% of the 477,000 ounces target. Separately, profit for the second quarter rose from 18.9 million dollars (11.9 million pounds) to 36.4 million dollars (22.9 million pounds) as higher gold prices outweighed lower production. It was also lifted by the sale of shares in Volta Resources. Furthermore, the firm announced plans to bring the start of construction at the Kibali project in the Democratic Republic of Congo forward by six months to the middle of 2011. According to Evolution Securities, "Randgold is good at finding gold but its extraction performance remains problematic." The broker believes that the firm's current relative rating is "too high" and, thereby, issued a "sell" recommendation with a 3,890p target price. RSA Insurance (RSA) shares climbed 5p to 133.5p as the non-life insurer delivered a strong top line performance and a resilient underwriting result. The group said first half new written premiums rose by 9% to 3.8 billion pounds but that its underwriting result fell by 26% to 136 million pounds as a result of the earthquake in Chile and weather-related losses. Adjusted pre-tax profit was 302 million pounds, little changed on the 301 million pounds reported a year ago. Commenting on this, the company said that it expects to "maintain top-line momentum in the second half," adding that "this positive outlook is reflected in the 7% increase in the interim dividend." Markets Move Fast. Keep up with GFT's Free Guide. Learn to Harness Market Volatility.
Determine if a market is in trend or range (and what that
means) Click here to download your Guide. Aviva (AV.) shares jumped 26.4p to 394.3p subsequent to the British insurer reporting a better-than-expected 21% rise in its half-year profit. The group had an International Financial Reporting Standards (IFRS) operating profit for the first six months of 1.27 billion pounds, up by 17% a year ago. This improvement reflected a 4% reduction in costs, a renewed focus on selling more profitable products, and strong results from Aviva Investors, the company's fund management arm."While we remain alert to the macroeconomic environment and risks in financial markets, we are confident about the future," Aviva Chief Executive Andrew Moss said in a statement. Encouraged by these results, Shore Capital reiterated its "buy" recommendation in spite of a "disappointing" 6% increase in the interim dividend. Mid-Caps Ladbrokes (LAD) shares climbed 6.8p to 145.5p as the bookmaker reported a 5.1% increase in first half operating profit. The group, which owns over 2,700 betting shops, made an underlying operating profit of 103.6 million pounds in the half year to 30th June, excluding bets from high rollers. Group net revenue fell by 2.4% to 492.1 million pounds as the benefits of the football World Cup were offset by punter friendly horse racing results, particularly at Royal Ascot. Ladbrokes said it would reinitiate dividends at 3.85 pence per share after scrapping it at the interim stage last year ahead of an equity fundraising. Ferrexpo (FXPO) announced a "substantially improved" financial performance in the first half of 2010 compared with the first half of 2009. Sales volumes increased by 13% to 4.7 million tonnes while revenues increased by 74% to 526 million dollars (330 million pounds) following the significant price increases for iron ore and iron ore pellets. This was on the back of the cessation of annual benchmark pricing. Underlying profit before tax increased from 37 million dollars (23 million pounds) to 183 million dollars (115 million pounds). Commenting on this, the group said it anticipates a "strong financial performance for the rest of the year." Evolution Securities believes that these figures are "very strong and further underscore the group's potential." Consequently, the broker reiterated its "buy" recommendation and 450p target price. Ferrexpo shares finished 0.1p higher at 300p.
PLUS RETAIL ROADSHOW 2010 Victrex (VCT), the high performance materials manufacturer, announced that sales have remained strong in the second half of the financial year with sales volume for the four months to the end of July amounting to approximately 940 tonnes. In a trading statement, the group said that Invibio, its biomaterial solutions division, has continued to trade in line with expectations, reinforcing the company's view that second half Invibio revenues will be broadly in line with the first half. The board added that the business remains in a strong financial position with a healthy balance sheet and good cash generation. Brewin Dolphin moved its recommendation from "add" to "hold", retaining its 1,300p target price, after an "extremely strong year to date for the share price." The shares dropped 51p to 1,197p. Small Caps, AIM and PLUS Enfis Group (ENF) shares rocketed 14p to 24.5p on news the Light Emitting Diode (LED) manufacturer secured the contract to supply LED arrays and drivers to the NBA Stadium in Guangzhou, China for this November's Asian games. This contract represents the group's largest individual order for architectural lighting since the Yas Hotel contract in the second half of 2008. Shed Media (SHDP) shares rallied 30p to 113.5p after the British television production company agreed to be sold to Warner Brothers. Under the terms of the acquisition, shareholders will receive 115 pence per share, valuing the company at approximately 99.9 million pounds. Commenting on this, Shed said the deal would enable it to "grow further, with the backing of a large international group."
The SF t1ps Smaller Companies Gold Fundis Supercart (SC.) shares rose 0.5p to 4.25p subsequent to the all-plastic shopping trolley company announcing "encouraging" results with sales levels in each of its "important markets" showing "good increases over similar periods of recent years." In its half year report ended 30th June 2010, the group reported increased turnover to 2.81 million pounds, up from 0.95 million pounds in the comparable period in 2009, due primarily to a strong performance in North America. As a result, the operating loss for the period was reduced to 0.51 million pounds from 0.99 million pounds in 2009. Commenting on this, the board expects 2010 to be a much "better year." Lombard Medical Technology (LMT) shares climbed 0.09p to 0.97p following the medical devices company announcing that the U.S. Food and Drug Administration (FDA) has approved the third of six modules of the company's Pre-market Approval (PMA) filing plan. The third PMA module includes information pertaining to sterilisation, packaging and shelf-life of the Aorfix stent graft, and is one of five modules covering FDA-required preclinical testing for the device. The company also reported that it continues to make solid progress on the strategy outlined in February of this year when it successfully raised 12.1 million pounds.
Get free annual reports on a wide range of
companies PLUS-quoted company Quercus Publishing (QUPP) announced that sales across all sectors have continued to be "well ahead of management forecasts" and, as a result, the company's performance for the year ending 31st December 2010 is now expected to "significantly exceed market expectations." In a trading update, the publishing company reported increased revenue to 15 million pounds in the six months ended 30th June, up from 5.55 million pounds in the same period a year earlier. Operating profit also rose to 3.4 million pounds compared to a loss of 0.1 million pounds in the comparable period in 2009. Mark Smith, Chief Executive of Quercus said: "Our results continue to be driven by double-digit growth across the business and, most significantly, by the continued success of Stieg Larsson's Millennium Trilogy, for which we own the global English language rights." Magnolia Petroleum (MAGP), the PLUS-quoted onshore US oil and gas exploration company, announced that all five middle Bakken wells located in Dunn County, North Dakota have successfully been drilled and completed by Marathon. Magnolia added that it was not required to make any contribution towards the cost of drilling and completing the wells, but will receive 25% of the working interest revenue once the cost of drilling and completing has been recovered. Based on the levels of initial production achieved, it is estimated that payout will be achieved within nine to twelve months. * The company is a corporate client of Rivington Street Holdings, the ultimate owner of this website; the T1ps Smaller Companies Gold Fund, which is advised by T1ps Investment Management, a subsidiary of RSH, owns shares in Hambledon Mining.
|
