Thursday's Stock Market report from UK-Analyst: featuring Diageo, Segro and Tanfield
Print this Article|
From UK-Analyst.com: Thursday 26th August 2010
From Tom Winnifrith the founder of Red Hot Penny Shares
– a man who knows a hot share tip – plus
infamous short seller Evil Knievil – www.t1ps.com The number of people coming from abroad to work in the UK fell in 2009, but the numbers leaving the country dropped even more, driving up the net level of migration by 33,000 to 196,000. Meanwhile, a precipitous drop in sales of new homes and signs of weakening business investment reinforced rising anxiety about the US economy’s wavering recovery. Elsewhere, new claims for unemployment insurance stepped back from a nine-month high last week, offering some needed relief for the strained US labour market. At the London close the Dow Jones was down 12.42 points at 10,047.64 and the Nasdaq was down 2.32 points at 2,139.22. In London the FTSE 100 climbed 46.44 points to 5,155.84; the FTSE 250 rose 54.11 points to 9,677.67; the FTSE All-Share advanced 18.27 points to 2,656.39; and the FTSE AIM Index finished 3.44 points higher at 684.27. Brokers' Notes Panmure Gordon retained its "buy" recommendation for IT infrastructure services provider Computacenter (CCC) with a 398p target price. Even though the shares under-performed the FTSE All Share by 10.2% in the past quarter, the broker expects the forthcoming interims to show continued progress and put a smile back on the faces of shareholders. Panmure shared Microsoft CFO Peter Klein’s view that the "business PC refresh is the single biggest thing ongoing throughout this year" and that Computacenter, the UK’s largest corporate reseller, is the sure-footed way to gain exposure to the current hardware refresh cycle. Certainly there are valid concerns about the "appleisation" of business IT and that "virtualisation" may dent longer term hardware demand; however, so far these fears have come to nought. The shares rose 3.6p to 283.2p. Evolution Securities issued an "add" recommendation for business investor 3i (III) with a 375p target price. The broker thinks that HgCaptial Trust interims offer a good indication to how 3i may be trading in the first half of the year ending September. While equity market weakness will depress earnings multiples, exits and a recovery in earnings from last year’s lows could see the firm’s net asset value edge forward in the first half. Evolution remains cautions on the markets but nevertheless believes the business remains progressive, adding that the second half should see its pipeline coming to fruition. The shares finished 1.6p lower at 252.5p. Find out what the "psycho trader" thinks of today's markets Canaccord Genuity maintained its "hold" recommendation and 24p target price for the mobile banking platform provider Monetise (MONI). Despite the broker’s positive view on the mobile banking market and the firm’s marketing position, Monitise’s rising expense base leads it to be cautious on when positive returns to shareholders will take place. The company appears to be pursuing a "land grab" strategy that Canaccord believes could push group cash generation significantly beyond the end-2010 target date. The broker cautions that its estimates are sensitive to key assumptions but it believes they indicate that a positive return on investment is some years away. The shares advanced 0.75p to 21.75p. Arbuthnot reiterated its "buy" recommendation and 333p target price for H&T (HAT) following the release of the pawnbroker's interim results on Tuesday. The firm posted a 71% rise in first-half pre-tax profit helped by increased purchase of gold. Consequently, the broker increased its 2010 pre-tax profit forecast again to 23.7 million pounds from 19.3 million pounds as the business’s "supernormal" gold purchasing profits continue to beat expectations. The company's decision to use these supernormal profits to reward shareholders with a 1p special dividend and to reduce net debt from 42.3 million pounds at year end to 30.4 million pounds at end June, underlines the broker’s positive stance. H&T shares climbed 7.5p to 299.5p. Blue-Chips Diageo (DGE), the world's biggest spirits group, expects slightly higher profits growth in the remainder of 2010 driven by developing markets but a cautious outlook hit its shares. For the year to 30th June, turnover, including excise duties, rose by 5.7% to 13 billion pounds while pre-tax profit increased by 10% to 2.2 billion pounds. The London-based maker of Smirnoff vodka, Johnnie Walker whisky and Guinness beer saw strong growth in Latin America, Africa and Asia, which account for a third of group earnings, while demand in Europe and North America was still weak. In spite of this, the group admitted that the US market remained weak while demand for Smirnoff vodka was still falling in spite of a heavy marketing campaign in the region in the second half. Diageo shares slipped 16p to 1,050p. Kazakhmys (KAZ) shares rallied 57p to 1,130p after the mining company announced an 11% rise in first half profits. For the six months ended 30th June 2010, profit increased to 574 million dollars (372 million pounds) from the comparable period a year earlier as revenue climbed up by 36% to 1.52 billion dollars (0.99 billion pounds). This was driven by the increase in metal prices, with the average realised sales price of copper at 6,981 dollars (4,527 pounds) per tonne, compared to 4,024 dollars (2,610 pounds) per tonne in the period prior. "We retain our confidence in the long-term supply/demand fundamentals for copper and believe we are well placed to take advantage of the continued strength in the copper price," the firm added. Reflecting an increase in copper price estimates, Evolution Securities increased its target price from 1,185p to 1,295p while maintaining its "add" recommendation.
Brand new FTSE service - recommended by John
Piper
"Your technical abilities are truly incredible (how do
you do that??!!!)" says one subscriber. Segro (SGRO), the industrial property landlord, posted a 1.1% rise in the value of its assets, and is eyeing new developments amid growing interest from potential tenants. Adjusted net asset value per share edged up to 366 pence at end-June 2010, from 362 pence at end-December 2009, while net rental income rose 11.3% to 144.3 million pounds from a year ago. Adjusted profit before tax increased by 31% to 64.3 million pounds from the comparable period a year earlier. "We have recently seen an encouraging increase in the levels of enquiries and growing interest in pre-let developments which we will seek to capitalise on in the second half," Segro Chief Executive Ian Coull said in a statement. The shares slipped 10.4p to 264.6p. AMEC (AMEC) shares jumped 43p to 891.5p subsequent to the engineering and support services company reporting a 28% rise in first-half pre-tax profit driven by improvements in all three of its divisions. For the six months ended 30th June, pre-tax profit rose to 113.5 million pounds from the same period a year earlier as revenue increased to 1.43 billion pounds, up 13%. The overall market for the firm’s services continues to improve and customer spending in most areas is returning, as evidenced by the growth in the order book and project pipeline, the firm said. Its order book grew by 8% in the comparable period a year earlier to 3.5 billion pounds and the group expects the second half of the year to be stronger than the first half. Shore Capital maintained its "buy" recommendation on the shares, believing that the company has excellent medium term growth prospects. Mid-Caps British plastic and fibre products supplier Filtrona (FLTR) announced a 37% rise in its first-half adjusted pre-tax profit, helped by a revenue rise in its higher margin divisions. The company, which develops and manufactures products for use in consumer, medical and industrial markets, reported adjusted pre-tax profit at 34.6 million pounds for the six months ended 30th June 2010, up 37% compared with a year ago. Revenue for the half-year was up by 8.7% at 247.6 million pounds. Commenting on the results, Mark Harper, Chief Executive of Filtrona, said, despite uncertainty with regard to general economic conditions, the board "expects that the company will grow strongly in the second half of the year." The shares finished 0.8p ahead at 232.5p.
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 Carillion (CLLN), the building and support services firm, announced that underlying pre-tax profit rose by 7% to 65.7 million pounds during the six months ended 30th June 2010. However, in spite of this, revenue was down by 11% on last year to 2.5 billion pounds. This was as a result of the company disposing of its public private partnership investments; still, it remains poised to make gains from an increased demand for outsourcers from the government as it seeks to make efficiencies. "Looking further forward, we continue to believe that the outlook for the medium term also remains positive," the company added. Carillion shares slipped 2.2p to 296p. Engineering firm IMI (IMI) posted a 58% rise in first-half adjusted pre-tax profit on higher margins. The company reported an adjusted pre-tax profit of 136.4 million pounds for the six months ended 30th June as revenue rose just less than 3% to 925 million pounds. Operating margins were 15.7%, up from 10.9% a year ago. "Whilst the general macro-economic environment remains uncertain, we are optimistic that the momentum seen in the first half will continue for the remainder of the year," Chairman Norman Askew said in a statement. IMI shares eased back 7p to 657.5p. Small Caps, AIM and PLUS Sirius Exploration* (SXX) shares jumped 0.875p to 4.125p on news the potash mining group has entered into a Memorandum of Understanding with Sino-Agri Mining Industry Corporation, a division of China's second largest fertiliser distributor, to develop Sirius's property overlying the Adavale Basin in Queensland, Australia. Under the terms of agreement, the parties will explore whether to enter into further agreements to establish: firstly, the feasibility of commercial potash production on these properties; and secondly, commercially reasonable and profitable terms for the scope of services to be provided by Sino-Agri on an exclusive basis for the Adavale project. Small cap website WatsHot.com was quick off the mark to realise the appeal of Sirius following BHP's PotashCorp bid, highlighting the shares to readers last Wednesday. To make sure you've got your ear to the ground when it comes to fast-moving small caps, click HERE to read editor James Faulkner's daily column. Film producer Metrodome Group (MRM) experienced a difficult six months of trading to 30 June, with more or less flat revenues of 4.5 million pounds as operating profit held steady at 162,000 pounds. The company mitigated the decline in the DVD sell-through market with important cost savings as it strengthened future growth prospects through the acquisition of Target in the close period. Mark Webster, CEO of Metrodome, commented: "We continue to seek other suitable opportunities to strengthen our current operations and broaden our range of activities." Metrodome shares rose 0.125p to 1.625p. 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. Archial (ARL) shares plunged 2.25p to 2.125p as the architects and design business anticipates reporting revenue and profit figures for the year ended 31st December 2010 that are "significantly below market expectations". The continuing economic slowdown and significant reduction in Government spending together with the well publicised uncertainty in the construction industry, has led to several of the group's projects being cancelled and many being postponed or delayed. The Group is also in negotiations with HMRC with regards to amounts due in respect of prior tax years. In the light of this and current trading conditions, discussions are being held with regard to financial support necessary to conclude these negotiations. Tanfield (TAN) shares dived 11.25p to 17.75p on news that the metal fabricator and engineering group is currently in negotiations to finalise a possible equity fundraising to support it continuing cash outflow. The fundraising is expected to be structured on a pre-emptive basis as an open offer to all shareholders and partially underwritten by certain of its directors, at a substantial discount to the current share price. The company also stressed the importance of receiving new funding if it is to complete the consolidation of its Electric Vehicle businesses currently under negotiation.
For more details on a Unit Trust established to
gain from higher gold prices Skywest Airlines** (SKYW) shares descended 1.5p to 17.75p after the airliner announced financial results that came in below expectations driven by the "extremely volatile operating environment." For the year ended 30th June 2010, pre-tax profits rose from 5.4 million pounds to 14.3 million pounds as revenue increased by 19% to 215 million pounds. Customer attitude was affected by massive changes in the activities of the resources companies and the airline noted fluctuations in its charter business due to the response of these companies to changes in the Australian taxation regime. Commenting on this, executive chairman Jeff Chatfield said: "The board is unable to provide shareholders with any exact guidance about future profit expectations in light of the unstable global economic outlook." PLUS-quoted company National Milk Records reported a strong performance for the year ended 31st March 2010 with all three divisions increasing their revenues. Pre-tax profits was up by 32% pounds in the comparable period a year earlier to 0.5 million on increased turnover of 15.9 million pounds, up by 3% on last year. "I believe, going forward, that our capacity to develop data management systems and create technological solutions for farmers, will aid us in extending the geographic reach of our company," chairman Philip Kirkham commented. The shares finished flat at 29.5p. * The company is a corporate client of Rivington Street Holdings (RSH), the ultimate owner of this website; ** Skywest is a corporate client of RSH and the T1ps Smaller Companies Growth Fund (managed by T1ps Investment Management, a subsidiary of RSH) owns shares in Skywest.
|
