Tuesday's Stock Market Report from UK-Analyst: featuring Cairn Energy, Persimmon and H&T
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From UK-Analyst.com: Tuesday 24th August 2010
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another on Thursday British school children are opting to take more science exams, but are cutting back on languages, GCSE results reveal. The proportion of these qualifications receiving a good grade rose for the 23rd consecutive year. Meanwhile, lending to British businesses outside the financial sector fell again in July, while the number of new loans to buy homes also eased, according to data published by the British Bankers' Association. Elsewhere, sterling dropped to a one-month low against the dollar after a Bank of England official issued a warning about the prospects for the UK economy. At the London close the Dow Jones was down by 84.16 points at 10,090.25 and the Nasdaq was down by 23.07 points at 2,136.56. In London the FTSE 100 dropped 78.89 points to 5,155.95; the FTSE 250 tumbled 125.24 points to 9,700.91; the FTSE All-Share slipped 39.49 points to 2,661.46; and the FTSE AIM Index dipped 6.36 points to 685.13. Brokers' Notes GE&CR issued a "buy" recommendation for the PLUS-quoted aircraft leasing group Avation* (PLUS: AVAP). The company has already delivered significant returns for shareholders so much so that the research house continues to see significant value in the shares at present levels. The company noted in its interim results for the six months ended 31st December 2009 that "maintenance reserve claims have increased during the period." As a result of this, along with greater current year revenue estimate, GE&CR now forecasts a pre-tax profit of 4.7 million pounds for the 2010 financial year. In regards to the proposed main market move, the research house commented that the realisation of a move would likely prove a significant catalyst for these shares as the story reaches a wider audience. Singer Capital Markets maintained its "buy" recommendation for Creston (CRE), with a target price of 114p, following the marketing services group's investor presentation yesterday. The company continues to be focused on cross-selling its services to its existing client list and growing its international business. Creston's record with respect to existing clients is already well proven, the broker believes, and therefore it expects continued progress particularly where the firm has moved ahead of its peers in terms of new innovative services. Singer is also confident in the business to deliver on larger services in its quest for international expansion. Given the group's financial position, strong relative performance through the downturn and focus on attractive expansion, the business looks significantly undervalued, the broker added. The shares finished 2p lower at 87p. Zak Mir's review of the major markets Panmure Gordon re-iterated its "buy" recommendation for the house builder Bovis Homes (BVS) with a target price of 535p. Although revenues were below the broker's forecasts at 115.6 million pounds, 12.9 million pounds of revenues had been stripped out in the first half as 215 units had been sold into a rental joint venture. Nevertheless, the group significantly stepped up its land investment during the period which bodes well for future returns and profitability as it maintains a net cash position. Despite downgrading its forecasts Panmure thinks that the underlying story for the company remains unchanged and believes the shares are trading on a 35% discount. Bovis shares eased back 4.8p to 338p. Seymour Pierce issued a "underperform" recommendation for the property investor Capital Shopping Centres (CSCG) reducing its target price to 305p. The broker has revised its forecasts to incorporate: the completion of the Equity One transaction for the US assets; the re-presentation of the financial information following the demerger; and updates following the interim results. The revisions are marginally positive for 2010. The price, at a 12.6% discount to consensus estimated net asset value, is at a premium to FTSE peers which Seymour believes is unjustified given the challenging expected environment for retail. Capital Shopping shares dropped 2.6p to 324.7p. Blue-Chips Wolseley (WOS), the distributor of heating and plumbing products, has agreed to dispose of Brandon Hire, its UK tool and equipment hire business, to Rutland Partners for 43 million pounds. Commenting on the disposal, Ian Meakins, Chief Executive, said: "We are disposing of the business in line with Wolseley's stated strategy of focusing on our growth businesses and those with synergies." Seymour Pierce retained its "hold" stance due to the lack of visibility going forward and "unexciting" valuation. The broker, however, decreased its target price from 1,550p to 1,350p. Wolseley shares tumbled 67p to 1,239p as fears over the US economic recovery took hold.
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home Chilean miner Antofagasta (ANTO) trimmed its annual production target after posting an expected near doubling in first-half earnings per share on increased production and a rebound in prices. Copper production from the three operating mines is expected to be approximately 530,000 tonnes, slightly below the forecast of 543,000 tonnes announced in March. The weaker production forecast is due to delays in launching a mine expansion at its biggest mine, Los Pelambres, following an earthquake in February and lower grades at El Tesoro. In spite of this, earnings per share for the first six months rose 92% compared to the same period a year ago to 46 cents (32 pence) on a 50% rise in turnover to 1.76 billion dollars (1.14 billion pounds). "Demand for commodities has remained strong so far this year and while prices could remain volatile, the medium term outlook remains positive," Chief Executive Marcelo Awad commented. Antofagasta shares finished 15p lower at 1,012p. Edinburgh-based oil and gas company Cairn Energy (CNE) announced that it may have found oil in the untapped waters off Greenland. The group said one of its two exploration wells in Baffin Bay has found "gas in thin sands" which "is indicative of an active hydrocarbon system." The well has not yet reached target depth. Separately, the firm reported a net loss of 12.6 million dollars (8.2 million pounds) for the first six months of the year compared with a 61.6 million dollars (40 million pounds) loss a year earlier. Revenue before exceptional items rose more than fourfold to 333 million dollars (216 million pounds) in the period as production rose to 32,866 barrels of oil equivalent a day from 11,573 in the first half of 2009. Cairn shares slipped 18.9p to 445.5p. Mid-Caps Hansteen Holdings (HSTN) announced that it has exchanged contracts to acquire a multi-sector portfolio of 12 freehold and leasehold assets in Scotland for 13.5 million pounds. "This portfolio contains a lot of small but interesting properties which we believe can produce good returns with focused and vigorous management," Morgan Jones, joint CEO of Hansteen commented. Additionally, the group expects to enter into an asset management agreement whereby the company will manage three substantial industrial properties in Merseyside and South Humberside in return for a management fee and incentive payment upon a successful sale. Shares in the property investor rose 1p to 65p.
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download a preview of the magazine Housebuilder Persimmon (PSN) announced a surge in first-half profit, helping lift its shares 1.5p to 348.1p. Net income increased to 80.1 million pounds from 9.8 million pounds a year earlier while revenue climbed by 27% to 776.6 million pounds after 4,657 houses were sold, up by 16% on last year. The firm's average selling price rose by 8% to 168,936 pounds. Banks are being "increasingly supportive of new home purchasers," Chief Executive Officer Mike Farley said in an interview. "The market hasn't fundamentally changed, but it's moving in the right direction." Housing market sentiment may improve after the U.K. government announces details of its planned public spending cuts in October, bringing greater certainty, Farley added. Encouraged by this and ahead of expectations, Panmure Gordon reiterated its "buy" recommendation with an increased target price from 557p to 575p. Punch Taverns (PUB) shares jumped 7.2p to 82.4p following the pub operator and manager announcing that it expects full year earnings to be marginally ahead of its previous expectations, reflecting the benefit of pub refurbishments and good summer weather. The company, which has in excess of 7,100 pubs, reported sales at pubs it directly manages which have been open for more than a year rose by 2.6% in the 12 weeks to 21st August. It added that profit decline at the pubs it leases was expected to be broadly in line with the rate reported for the first half with an improvement in sales offset by lower margin on drinks sales and reduced rental income. Small Caps, AIM and PLUS Leed Petroleum (LDP), the oil and gas exploration and production company, announced it might start production at its Main Pass well in the US early in the fourth quarter and expected the field to add substantial oil reserves to the firm's portfolio. The group plans to drill the well to a depth of about 8,038 feet, and expects it to be completed for a total cost of 5.4 million dollars (3.5 million pounds). "The Main Pass 64 No. 1 sidetrack will continue to move the company forward in the diversification of our Gulf of Mexico production base," Chief Executive Howard Wilson said in a statement. Leed shares rallied 0.36p to 2.97p. Solomon Gold (SOLG) has kicked off an "aggressive" exploration campaign at its Guadalcanal joint venture on the Solomon Islands. The firm, along with partner Newmont Mining, will embark on a 3,000 metre drilling campaign on the copper gold porphyry targets at the Chikora and Levisivisi prospects. In addition, the duo also plan to carry out geological mapping on the Mbetilonga and Kuma projects during the ensuing months in an effort to define drill targets in the area. Work has also got underway at Solomon's wholly-owned Fauro Island project, with a focus on eight priority targets. Solomon shares rose 0.125p to 5.25p on the news. 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. H&T Group (HAT) shares rallied 20p to 293p after the UK pawnbroker posted a 71% rise in first-half pre-tax profit helped by increased purchase of gold. The company, which runs 45 ‘Gold Bar' retail mall units, reported pre-tax profit of 14.5 million pounds compared with 8.5 million pounds a year ago as revenue more than doubled to 71 million pounds. The group, which is planning to develop its online offerings, forecast strong retail sales trends continuing into the second half of the year. "We are very positive on the long-term investment case because, as and when H&T's store portfolio matures, there should be good upside potential for pre-tax profits and cash generation in 2012 and beyond," Arbuthnot commented. The broker, thereby, retained its "buy" recommendation and 333p target price. Redstone (RED), the integrated ICT and communications Solutions provider, announced a fundraising of 8.5 million pounds to strengthen the company's balance sheet and to fund the future development of the business. The fundraising has been arranged in conjunction with a restructuring of the firm's debt obligations including extended banking facilities and a settlement of the liability of 2.9 million pounds outstanding in relation to the Eckoh Loan for 1.5 million pounds. "We are confident that we now have the platform in place to capitalise on opportunities in the UK ICT sector and deliver tangible value to shareholders," the firm commented. The shares dived 0.95p to 0.93p.
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Prospect PLUS-quoted company One Media Publishing** (PLUS: OMHO), provider of music and video rights to the music industry, has signed a new music catalogue deal for 25,000 dollars (16,218 pounds) plus an onward royalty to Gulf Coast. The company has acquired the rights on a royalty sharing basis for the worldwide distribution of more than 6,000 tracks of country, blues and mid-American rock music performed by in excess of 250 various artists, for a term of twenty five years. "This music will perform well within the US, especially as many of the tracks have never been made available digitally before," chief executive Michael Infante commented. Another PLUS-quoted company reporting is Daily Internet (PLUS: DAIP). The internet hosting solutions provider made excellent progress in the year ended 31st March 2010, showing good growth in both revenues and gross profit and making further reductions in operating loss. The main achievements during the year were the development of a brand new website, extending the firm's commercial shared hosting product set by introducing Windows technology, together with its launch into the next level of hosting by developing Virtual Private Servers. By the end of the year, active domains, hosting and email accounts reached in excess of 125,000 units, representing a year on year increase of 36%. The management team now aims to diversify its product offerings to leverage greater unit revenues on top of its existing customer base. * The company is a corporate client of Rivington Street Holdings, the ultimate owner of this website. ** Worship Street Investments - a PLUS-listed investment vehicle which is advised by T1ps Investment Management, a subsidiary of Rivington Street Holdings, the ultimate owner of this website - owns shares in One Media.
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