Friday's Stock Market report from UK-Analyst: featuring Barclay's, BP and the Weekly Competition
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From UK-Analyst.com: Friday 13th August 2010
New microcap tip just published on UKMicrocap.com Welcome back to the UK-Analyst Friday competition. This week's prize is a copy of How to Get Lucky by Max Gunther (RRP GBP9.99). From the author of The Luck Factor and Instant Millionaires this book gives you thirteen different techniques by which you can discover and take advantage of life's good breaks, while minimising the effects of its bad ones. For a chance to win simply identify the mystery company whose five year share price performance is represented in the chart below. To enter, email your entry to richard.gill@t1ps.com by 8am on Monday morning.
Sir Philip Green, the retail magnate, and Lord Levene, the veteran City financier, have been recruited to lead separate efficiency drives across Whitehall in a coalition attempt to buy in private sector cost-cutting experience. Meanwhile, Germany reasserted itself as the economic growth engine of the euro-zone, after gross domestic product expanded at a stellar 2.2% rate in the second quarter compared with the previous three months. The spurt underpinned GDP growth across the euro-zone of 1%, also boosted by a better-than-expected showing from France, which grew at 0.6%. Elsewhere, US consumers spent more on cars and petrol in July while steering away from discretionary items amid a sluggish economic recovery and an uncertain labour market. At the London close the Dow Jones was down by 14.15 points at 10,305.8 and the Nasdaq was down by 12.24 points at 2,178.03. In London the FTSE 100 rose 9.38 points to 5,275.44; the FTSE 250 dipped 6 points to 9,782.31; the FTSE All-Share rose 4.52 points to 2,717.48; and the FTSE AIM Index finished 0.17 points lower at 687.21. Brokers' Notes GE&CR upgraded its recommendation for Africa Aura Mining* (AAAM) from "speculative buy" to "buy", maintaining its target price at 202p. The research house is very much encouraged that exploration activity in Cameroon appears to have uncovered a third pillar to the company's portfolio, however, until a resource is defined, it will be unable to assign a value. Nevertheless, Cameroon does provide another string to the miner's already impressive bow. Nkout is the current focus of African Aura's Cameroon exploration with an airborne geophysical survey earlier this year backing up 55 grab samples. With a possible rail line set to run to the Cameroon sea port of Lolabe, through both the 489 square kilometre Djoum and 997 square kilometre Akonolinga licences, Nkout's positioning couldn't be better. The shares slipped 1p to 81p. Panmure Gordon reiterated its "buy" recommendation for the pharmaceutical company AstraZeneca (AZN) with a 3,600p target price. Press reports emerging overnight claim that the group has received enquiries from the US Department of Justice (DoJ) in relation to a wider industry corruption probe. The press report quotes unnamed DoJ staffers saying that the DoJ is interested in whether the companies ignored a systematic risk as well as obligations under anti-bribery laws. Looking at other examples, such investigations take years to complete and often result in fines or settlements that are designed to change behaviour rather than being obstructive to doing business. As such the broker recommends using any weakness in shares to buy the stock, which remains its top pick. AstraZeneca shares finished 0.5p lower at 3,295p.
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companies Singer Capital Markets issued a "fair value" rating for Henderson (HGG), with a 130p target price, ahead of the financial advisory group's interim results next week. In a brief pre-close statement on 7th July, the company guided that interim profits will be between 47 million pounds and 49 million pounds. Despite weak markets during the second quarter, interim profits have been strongly supported by performance and transaction fees which will have amounted to 41 million pounds in the first half of the year, up from 18.7 million pounds in the same period in 2009. As a consequence of these fees, full year profit expectations for 2010 financial year have remained largely unchanged. However, headline assets under management (AUM) progression is still inhibited by legacy outflows, the broker commented, with market weakness during the second quarter further lowering AUM to an estimated 56.0 billion pounds, down from 60.3 billion pounds at end March. Singer believes that management will look to bolster AUM through acquisitions. Henderson shares finished 0.1p lower at 130.1p. Evolution Securities maintained its "neutral" recommendation for the oil and gas exploration company Cairn Energy (CNE). The company is selling part of its stake in Cairn India, which the broker believes makes sense as it can monetise part of the value in India now and free up cash for the Greenland exploration, and perhaps a special dividend. However, retaining a stake in Cairn India would also enable the group to benefit from any further exploration upside and enhanced recovery of reserves from the existing development and the Barmer Hills formation. Evolution added that it is also worth bearing in mind that the Rajasthan fields have a long life (>20 years) and depend on Enhanced Oil Recovery (EOR) techniques to achieve their expected potential. So capturing some of this value now is prudent. The shares climbed 15.5p to 468.3p. Blue-Chips BP (BP.) will pay a record 50.6 million dollars (32.5 million pounds) fine for continued safety violations at its Texas City refinery five years after an explosion there killed 15 and injured 170. The fine is the latest blow dealt to the London-based energy giant still reeling from the biggest marine oil spill in U.S. history, where the company faces billions of dollars worth of fines and other penalties. The group will also spend 500 million dollars (321 million pounds) between 2010 and 2016 to improve safety at the third-largest U.S. refinery. The announcement comes after the Labour Department Occupational Safety and Health Administration slapped BP with 709 citations carrying a record 87.4 million dollars (56 million pounds) in fines at the U.S. refinery in October. The shares climbed 6.35p to 416.4p. Markets Move Fast. Keep up with GFT's Free Guide. Learn to Harness Market Volatility.
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means) Click here to download your Guide. The head of Barclays' (BARC) small business division has firmly refused to sign up to UK lending targets in a move that could fuel government criticism of the industry's willingness to ease credit constraints in the economy. Speaking to the Financial Times after Barclays broadened the remit of its business bank to include companies with turnover of up to 5 million pounds rather than 1 million pounds, Steve Cooper hit out at the prospect of government-set targets, which he believed could encourage irresponsible lending. Mr Cooper, who now oversees lending to 750,000 small and medium-sized companies, also defended charging more for corporate loans. He said banks were facing the double hit of increased funding costs and tougher capital requirements at the same time as pricing more carefully for risk. The shares moved 7.45p higher to 317p. Mid-Caps Monks Investment Trust (MNKS) announced a fall in net asset value (NAV) for the three months to 31st July 2010. In a brief interim management statement, the group reported NAV decreased by 6.4% compared to the quarter earlier. During the period the company's holding in the Baillie Gifford Pacific Fund was sold and the proceeds were reinvested in a selection of direct holdings, mainly in Chinese equities, the firm said. In addition, a further investment of 10.6 million pounds was made in the mining company Eldorado Gold. Shares in the investment trust finished 0.7p ahead at 292p.
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download a preview of the magazine ITV (ITV) chief executive Adam Crozier admitted that the broadcasting company had failed to keep up with the changes in the "media landscape" as he warned a lot needed fixing at the "dysfunctional organisation." In an interview on BBC Radio 4, he said the group needed to move more into pay-per-view broadcasting and the internet but also commented that he "can't envisage a situation" where viewers would have to pay to watch its main ITV1 channel. Mr Crozier, who took up the top job at the firm in April after leaving Royal Mail, added "ITV has great programmes and a great brand, the key is rebalancing the business to be much less reliant upon free-to-air advertising." The shares added 0.21p to reach 50p. Small Caps, AIM and PLUS Caza Oil and Gas (CAZA) shares surged 14p to 24.75p after announcing a potentially significant discovery of natural gas and condensate at a well in Texas. The group reported that it found hydrocarbon-bearing sands in the Eocene, Cook Mountain sand formation between 12,400-12,900 feet of the OB Ranch No 1 well. The well encountered more than 100 feet of net potential pay, the portion of an oil reservoir that contains economically producible oil, a log analysis of the site revealed. However, the company added that the Wilcox section of the well was unlikely to be productive at commercial rates, as the log analysis indicated extremely low permeability at the section. "Although the Wilcox sands are not commercial in this location, the discovery of over 100 feet of net potential pay...exceeds all pre-drill expectations," WestHouse Securities commented. As such, the broker maintained its "buy" recommendation, with a view to reviewing its target price in due course, when further information becomes available. IPPLUS (IPP) shares jumped 0.875p to 7p subsequent to the telephony service company announcing an improved performance compared with the difficult economic conditions of the previous year. For the full year ended 30th June 2010, the group reported increased pre-tax profit from 10,846 pounds to 102,613 pounds year-on year, on a 16% rise in revenue to 4.6 million pounds. Commenting on this, chief executive Philip Dayer said: "whilst the outlook remains challenging, the directors are confident about the future prospects for the group."
Gold set to head higher - will it be $1,500 or
$3,000 Ceramic Fuel Cells (CFU), the developer of low emission electricity generation units, announced it will install a BlueGen gas-to-electricity unit with Japan's largest gas utility, Tokyo Gas. About the size of a dishwasher, BlueGen is the latest breakthrough in small scale electricity generation. Each BlueGen unit can produce enough electricity and heat to meet the annual requirements for power and hot water of the average Japanese home. The order from Tokyo Gas follows orders for two BlueGen units from Japan's second largest gas utility, Osaka Gas. Combined, Tokyo Gas and Osaka Gas serve more than 17 million customers, and more than 69% of all gas sales in Japan. Ceramic shares climbed 1p to 12p on the good news. Mediterranean Oil and Gas (MOG) shares tumbled 3.5p to 20.5p on news the explorer was still unclear whether offshore drilling restrictions in Italy would prevent it from developing its main asset. The company announced it will ask the Italian authorities for clarification of the decree, which prohibits oil exploration and production within five miles of the Italian coast, in relation to its Ombrina Mare field. Italy's environment ministry brought in the ban in June in reaction to the oil spill disaster in the Gulf of Mexico. The next step of the development of Ombrina Mare will be started, the group added, and should the decree affect it, the company will consider possible action to challenge the Italian ruling. ILX** (ILX), the provider of e-learning software and business training, announced that it is in discussions with its lending bank with regard to the provision of revised banking facilities. These facilities, which are expected to be in place by the end of September, will provide the group with the additional working capital and more appropriate structure required to capitalise on the increasing opportunities within the firm for growth, the company said. The company also announced that, whilst current trading remains strong and substantially ahead of last year, the board have decided to cancel the proposed dividend payment in order to fund the international growth of the business. ILX shares fell 1.5p to 25p on the news. Berkeley Mineral Resources (BMR) shares dropped 0.15p to 1.85p after the mineral processing company raised funds to secure the rights to process the remaining tailings dumps at the Kabwe Mine in Zambia. The company announced that it has conditional raised 2.05 million pounds by way of placing around 137 million shares. Commenting on this, the group said that the rights to process the further stockpiles of zinc and lead tailings will strengthen the economics of the project. There are an estimated 7 million tons of high-grade lead and zinc tailings with associated minerals and it is expected that sales of lead and zinc will commence in the fourth quarter of 2010.
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companies Billing Services (BILL), which provides payment and financial risk management services to the telecommunications industry, announced a fall in earnings in the six months ended 30th June 2010. In its unaudited results, the group reported increased revenue by 5% to 75.5 million dollars (48.4 million pounds), as opposed to the corresponding period in 2009, due in part to gains in the Bill2Phone service offering. In spite of this, EBITDA fell by 3% to 18.6 million dollars (11.9 million pounds) as the firm reduced long-term debt by 5.6 million dollars (3.6 million pounds) and increased its cash position by 4.3 million dollars (2.8 million pounds). Commenting on this, chief executive Greg Carter said: "we expect the second half of the year to show modestly lower revenues and earnings as the volume of billable customer service transactions declines." Evolution Securities is concerned about the longevity of its core business. Nevertheless, it thinks the group shares are cheap and thereby issued a "buy" recommendation and 25p target price. Billing shares finished 2p lower at 17.75p. Baltic Oil Terminals (BTC), the oil investor, announced that in accordance with expanding the company's operations at the port of Baltysk in Kaliningrad, bids have now been solicited to carry out a pre-engineering and full feasibility study for the construction of a grain terminal in Baltysk. A preferred bidder has been selected and it is expected that a contract will be issued on 16th August 2010. The company added that the recently announced ban on grain exports from Russia has no impact on the group. The shares rose 0.75p to 22.75p. The Week AheadAmongst the mid-caps next week asset manager Gartmore (GRT) and oil producer Melrose Resources (MRS) are due to provide the market on interims on Tuesday with oil and gas pipeline producer Wellstream (WSM) due to report on Thursday. Later on in the week investors will be looking for a positive update from recruitment agency Michael Page (MPI), which is expected to follow in the footsteps of its competitor Hays and show improved results. Amongst the small-caps, cinema operator Cineworld (CINE) will be providing interim results on Thursday, with share expected to continue improving. This is on the back of a strong box office in the first quarter resulting from successes such as ‘Avatar' and ‘Alice in Wonderland.' What investors will be looking for however is how the steps to cut government borrowing, such as higher taxes and public spending cuts, will hit consumer demand at motor retailer Lookers (LOOK). Another small-cap firm reporting next week is real estate investor Atlas Estates (ATLS), shares in which have levelled out at 90.25p since jumping more than 30p back in March when it released its annual financial report. * The company is a corporate client of Rivington Street Holdings, the ultimate owner of this website. ** The Smaller Companies Growth Fund - which is advised by T1ps Investment Management, a subsidiary of RSH, the ultimate owner of this website - owns shares in ILX.
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