Tuesday's Stock Market Report from UK-Analyst: featuring Bunzl, HSBC and EnCore Oil
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From UK-Analyst.com: Tuesday 31st 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 winner of last week's UK-Analyst Stock Market Competition was Paul Laviers, who correctly identified the mystery stock as British American Tobacco. Watch out for another competiton this Friday. Lending to businesses fell for the eleventh month in a row in July, in a sign of how weak credit remains a threat to the recovery, according to Bank of England data. Meanwhile, tens of thousands of homeowners face at least four more years of negative equity, according to a leading property organisation, underlining how stretched household finances continue to be after the recession. Elsewhere, robust growth in the euro-zone in the second quarter failed to dent its near-record unemployment rate, which remained flat for a fourth consecutive month in July, although prospects are brighter for the revived German economy. At the London close the Dow Jones was up by 52.03 points at 10,061.76 and the Nasdaq was up by 3.13 points at 2,123.10. In London the FTSE 100 rose 23.66 points to 5,225.22; the FTSE 250 climbed 45.24 points to 9,825.14; the FTSE All-Share advanced 5.38 points to 2,689.79; and the FTSE AIM Index rose 2.28 points to 688.82. Brokers' Notes Arden Partners reiterated its "buy" recommendation for the project management and services company AMEC (AMEC) following recent interims. These results were ahead of consensus expectations with adjusted pre-tax profits at 116 million dollars (75 million pounds) and earnings at 25.5 cents (16.6 cents) per share. This performance was driven by stronger top line performance from all segments albeit accompanied by some lower margin delivery, specifically in Natural Resources, and has led the broker to revise its forecasts. If the group maintains the current trends for the second half of 2010, Arden believes that the company's margin would be approximately 8.6% for the full year, compared to the interim margin of 7.9%. The 20% increase in the interim dividend has also led the broker to increase its expectations. AMEC shares rose 17p to 917p. Arbuthnot maintained its "strong buy" recommendation for the oil exploration company Xcite Energy (XEL) while decreasing its target price from 123p to 114p. The group has successfully completed a supplemental fund raise of 5.8 million pounds to enhance its next appraisal well on the Bentley field. The new programme should provide greater certainty on the outcome of the horizontal well and subsequent flow test which is due to spud in September. A positive result from the flow test should yield sufficient data to move the asset from contingent resources into reserves and provide the basis of the first-stage production (FSP) programme, the broker said. Xcite shares climbed 3.5p to 70.75p. Free Seminar on making gains in flat markets with RBS Listed Products Flat or falling markets dont have to mean flat or falling profits. This seminar aims to take you through the range of Listed Products that could help you make money when markets stagnate. Join us for this seminar to hear more about investment products such as Autocalls, Synthetic Zeros and Put Warrants which are higher risk investments which can produce positive returns when markets are flat or falling. The event will be held from 5.30pm until 7.00pm on Tuesday 31st August 2010 at the RBS offices in Liverpool Street, 250 Bishopsgate. Click here to register for free. Evolution Securities issued a "buy" rating for the automotive focused electronic company TT Electronics (TTG) with an increased target price from 130p to 160p. The broker commented that the better than expected interims, which were underpinned by the strong balance sheet and the return of the dividend, signalled the firm's move from "recovery and rehabilitation" to "growth". Furthermore, the execution of the January 2009 strategic review has been most impressive and adds to Evolution's confidence in the delivery on the medium term margin target which moves the group to 9% compared to 4% in the first half. Consequently, the broker increased its earnings per share forecast for 2010 by 27.7% to 8.3p. TT shares finished 0.5p lower at 130.25p. Panmure Gordon maintained its "buy" recommendation and 145p target price for the home improvement company Marshalls (MSLH) following the recent interim results. Although pre-tax profits for the first half of 2010 came in marginally below the broker's forecast, Panmure maintained its full year forecasts. It sees the group as a well invested business, with a strong balance sheet and a leading market position. The structure of the business and its cost base is such that it will no doubt enjoy the benefits of operational gearing on the upside as and when a real sustainable recovery occurs in the UK economy. At that stage, it should be able to produce at least 30% more revenue and at least double its current operating margin, the broker added. The shares rose 4.25p to 95p. Blue-Chips Bunzl (BNZL) shares climbed 9p to 711p as the outsourcing solutions group beat forecasts with an 8% rise in first-half profit. The company, which supplies carrier bags, take-away boxes and hard hats, reported pre-tax profit before amortisation was 125 million pounds in the six months to 30th June 2010. Revenue rose by 2% to 2,345 million pounds. Despite a downturn in western economies the business has benefited from companies' continued willingness to outsource the distribution of their products. "While the challenging economic environment will continue to impact our businesses, the opportunities for further development through acquisition look to be promising," chief executive Michael Roney commented. Seymour Pierce sees no reason to change its current full year forecasts given that the results were in line with its expectations. The broker therefore reiterated its "hold" recommendation and 750p target price. Weekly reports on IPOs of interest for just #19.99 a year Rio Tinto (RIO) shares rallied 76.5p to 3,300p after the mining company announced an investment of 1.6 billion dollars (1 billion pounds) to develop the Hope Downs 4 iron ore project in Western Australia and link with the group's existing rail, power and port infrastructure in the Pilbara. Rio Tinto and its joint venture participant, Hope Downs Iron Ore, will proceed with the development of the mine at an estimated capital cost of 1.2 billion dollars (0.8 billion pounds), to be shared equally by the joint venture partners. The new open-cut mine will have an annual capacity of 15 million tonnes of high-quality iron ore, with first production anticipated in 2013. HSBC (HSBA) completed the sale of its remaining US consumer finance auto loan run-off portfolio to Santander Consumer USA for approximately 3.56 billion dollars (2.3 billion pounds). Santander will also assume around 431 million dollars (280 million pounds) of debt. The carrying value of the loans at 30th June 2010 was 4.3 billion dollars (2.8 billion pounds). HSBC rose 6.7p to 643.7p. Mid-Caps Pharmaceutical firm BTG (BGC) announced the signing of an agreement with Nycomed, the drug distributer, concerning the accelerated transition of marketing rights for an expected payment of 14.5 million dollars (9.3 million pounds). The rights are for CroFab, an anti-venom, and DigiFab, a drug used for treating patients with life-threatening digoxin toxicity or overdose. Under the terms, the companies will cooperate to ensure an orderly transition of the sales, marketing, promotion and distribution functions to BTG and to ensure continued orderly product supply to end users. As a result of this agreement, BTG anticipates that product revenues for the current financial year will be greater than previously expected. BTG shares finished 4.6p lower at 201p.
Gold set to head higher - will it be $1,500 or
$3,000
Increased prices outweighed lower production in the first
half for Africa-focused oil group Afren (AFR)
as it moved strongly into profit. The group posted net
income of 50.7 million dollars (32.9 million pounds)
compared with a loss of 38.5 million dollars (25 million
pounds) as revenues rose to 215 million dollars (140
million pounds) from 155 million dollars (101 million
pounds). Daily production fell by 11% to about 20,400
barrels of oil per day (bopd) from 23,000 bopd, though a
55% increase in the prices it received for its oil helped
the turnaround. "The outlook for the remainder of 2010
and beyond is positive for Afren. Production performance
has been in line with expectations for the period and is
expected to rise sharply into the foreseeable future,"
said chief executive Osman Shahenshah. The shares climbed
1.8p to 102.8p. Small Caps, AIM and PLUS Jupiter Mines, which is partly owned by Red Rock Resources* (RRR), announced it will fast track the development of the Mt Ida Magnetite project in Western Australia. The immediate objective is to generate a maiden joint ore reserves committee (JORC) compliant inferred magnetite resource by the end of the year. Furthermore, in order to achieve this, the board increased its budget to 3 million Australian dollars (1.7 million pounds) to add a second drill rig to expedite the program. Red Rock Resources shares moved 0.125p higher to 2.525p. The Weather Lottery (TWL) shares jumped 0.25p to 1.25p on news the lottery management and online gaming specialist has signed a partnership contract with Rangers Football Club to become its online betting and online lottery partner. Under the terms of the contract, the firm will provide a full package of online betting and online lottery products to the Club. The Rangers Online Lottery will be run under its newly launched "www.fclotto.co.uk" brand, which has been specially designed for the football market. Markets Move Fast. Keep up with GFTs 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. Encore Oil (EO.) shares rallied 11.75p to 78p after the UK based oil and gas exploration and production company announced another major oil discovery off the Shetland Islands in its latest North Sea drilling efforts. The Cladham appraisal well, which was drilled to a total depth of 11,215 feet as a side-track into the Upper Jurassic channel sands, encountered excellent quality oil bearing sandstones. This resulted in a gross hydrocarbon column of 159 feet with 102 feet of net hydrocarbon pay. Drill stem testing will now be performed after which the next phase of the appraisal programme will be to drill a second side-track down dip of the original discovery well in order to confirm the extent of the reservoir and seek to establish the oil water contact. Top tipster Tom Winnifrith of small cap website T1ps.com advised readers to take a 518% overall profit on his December 2008 tip earlier today. To find out more about this fantastic website, click HERE. Petro Matad (MATD), the oil exploration company, announced that the Davsan Tolgoi-2 exploration well has been spudded. The well is being drilled vertically to an estimated target depth of approximately 1,300 metres with drilling operations expected to take approximately 25 days. It is the second exploration well to be spudded as part of the group's three well drilling programme for 2010 on its Production Sharing Contract on Block XX in Eastern Mongolia. Production tests will be carried out on one of three wells being drilled and a decision on which well to test will be made later in the programme. Petro shares slipped 10p to 147.5p. UTV Media (UTV) shares climbed 7.5p to 113.5p as the improving economic environment and the stimulus of the World Cup underpinned a better trading performance in the six months ended 30th June 2010. Consequently, profit before tax increased by 17% to 9.4 million pounds which, coupled with strong cash management, drove net debt down to 77.3 million pounds, some 18.4 million pounds less than the same period a year earlier. Turnover from continuing operations increased by 9% to 59.1 million pounds, driven primarily by a strong performance in the radio divisions during the World Cup. Commenting on this, chairman Anthony Silverman said, "The improvement in trading this year is evident and this is continuing into the third quarter of 2010."
Get free annual reports on a wide range of
companies PLUS-quoted company Storyboard Assets (STYP) continued to make a loss despite making further progress in both portfolio acquisitions and in profiling its collection at various venues in England. For the six months ended 31st May 2010, the artwork investor reported an improved loss of 42,842 pounds, up by 14% in the comparable period a year earlier. Lease income was 8,000 pounds and there were no artwork sales during the period. Commenting on this, the board remains confident that its long-term approach will yield significant profits from its principal pieces. Storyboard shares finished trading at 25p.
Another PLUS-quoted company reporting is Lisungwe
(LIS).
The mining group apologised for making a pre-tax loss of
764,870 pounds, double that from a year earlier, after
failing to raise funding to facilitate the completion of
the Malingunde Hill
sulphuric acid prospect. In its un-audited final
results for the year ended 31st March 2010, the firm
added that aside from a
small number of Malawian employees who are engaged in
essential site restoration and maintenance for a limited
period, the contracts of all employees have been
terminated. The shares finished at 0.175p.
* The T1ps Smaller Companies Growth Fund - which is advised by T1ps Investment Management, a subsidiary of Rivington Street Holdings, the ultimate owner of this website - owns shares in Red Rock Resources.
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