Wednesday's Stock Market Report from UK-Analyst: featuring ICAP, BP and Accident Exchange
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From UK-Analyst.com: Wednesday 1st September 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 Tony Blair claims Gordon Brown lost the last election because he abandoned New Labour and lost the "crucial" support of business, in memoirs that give an implicit endorsement of David Miliband as the party’s future leader. Meanwhile, UK manufacturing suffered a sharp slowdown last month amid uncertainty about the nature and extent of public spending cuts, adding to fears that the economy is weakening. Elsewhere, fears that the Chinese economy is running out of steam eased after surveys showed that factory activity accelerated in August, while manufacturing in India was also strong. At the London close the Dow Jones was up by 239.46 points at 10,254.18 and the Nasdaq was up by 59.88 points at 2,173.91. In London the FTSE 100 soared 141.19 points to 5,366.41; the FTSE 250 surged 235.75 points to 10,060.89; the FTSE All-Share leapt 70.75 points to 2,767.47; and the FTSE AIM Index climbed 6.59 points to 696.97. Brokers' Notes Brewin Dolphin maintained its "buy" recommendation for the glasses-free 3D displays provider DDD Group (DDD). The company recently licensed its TriDef 2D to 3D conversion technology to a "tier-1 semiconductor company" for use in digital TV and Blue-ray system-on-chip (SoC) solutions. This arrangement means that TriDef will be integrated into chips initially for the TV market and, should any of the licensee’s customers wish to offer TriDef functionality as a feature in their products, a royalty arrangement fee will be received. The broker commented that the firm has a strong track record of winning major strategic customers. Whilst DDD is continually building on past successes in accessing the TV market directly (most notably via Samsung), this new license agreement broadens the company’s opportunities to grow its share through indirect distribution, Brewin added. The shares finished flat at 19p. Arbuthnot initiated coverage for the aviation charter company Air Partner (AIP) with a "buy" recommendation and 435p target price. The broker views the firm as an attractive play on an economic recovery and a normalisation of corporate travel spending. The group has an impressive track record of profitability and cash generation, despite operating in the notoriously volatile aviation industry. The group’s asset-free business model, strong balance sheet and its product, client and geographic diversity have allowed it to weather the current aviation industry storm, leaving it well-positioned to exploit the recovery, Arbuthnot added. Air Partner shares ascended 12.5p to 347.5p.
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download a preview of the magazine Panmure Gordon maintained its "buy" rating and 480p target price for the interdealer broker ICAP (IAP) following the launch of the electronic platform for Euro interest rate swaps (IRS). Barclays Capital, Deutsche Bank and J.P. Morgan, amongst other major players in the Euro IRS market, have agreed to provide market maker support to this initiative by streaming prices. The transition away from voice-brokered trading and towards electronic in the Euro IRS market is expected to bring greater automation, increased transparency and lower transaction costs. The broker expects the group’s diversity to weather the operational dislocations of Over the Counter (OTC) reforms and anticipates that renewed bouts of volatility will support trading volumes in the near-term. ICAP shares rose 14.2p to 424.2p. Evolution Securities initiated coverage for the powered access equipment rental firm Lavendon (LVD) with a "buy" recommendation and 55p target price. The broker commented that the shares are trading on a steep discount to its net tangible asset value of 61p per share which it believes is unjustified. Even without a dramatic recovery in its end markets, Evolution added, the business will reduce its debt substantially in 2010 financial year, and the subsequent fall in its interest payments should generate a jump in earnings and double-digit growth in tangible net assets in the 2011 financial year. Investors may have been spooked by the recent profit warning, but the shares were already discounting worse, the broker concluded. Lavendon shares rallied 2.75p to 48.25p. Blue-Chips BP (BP.), seeking cash to help pay for the worst US oil spill, agreed to sell its Malaysian chemical assets to Petronas, the national oil company of Malaysia, to focus on projects in China and India. The oil giant will sell its 15% stake in Ethylene Malaysia and 60% interest in Polyethylene Malaysia for 363 million dollars (236 million pounds). It will also be eligible for a possible 48 million dollars (31 million pounds) dividend from the ethylene unit. "BP will continue to focus on the development and expansion of our olefins and derivatives business in China, and other large rapidly growing markets, and pursue opportunities in China and India," Sue Rataj, President of BP’s Global Petrochemicals Business, commented. The shares slipped 19.5p to 361.1p. This week's tips highlights from David Linton Mid-Caps RPS Group (RPS) shares climbed 6.5p to 176.6p as the consultancy expanded into Canada with the acquisition of Boyd for 13.87 million Canadian dollars (8.46 million pounds). In the year ended 31 March 2010 Boyd had revenues of 12.6 million Canadian dollars (7.7 million pounds) and profit before tax of 2.88 million Canadian dollars (1.76 million pounds), after adjustment for non-recurring items. The recent acquisition is expected to support the firm’s oil and gas consultancy activities and develop the business into the mining sector. "We are continuing to look for further opportunities to increase the scale of our activities in this growing sector," Alan Hearne, chief executive of RPS, commented. Encouraged by this, Brewin Dolphin upgraded its recommendation from "add" to "buy" with a 223p target price. United Business Media (UBM) shares rose 18.5p to 570.5p on news the business information services company has acquired Astound, a privately-owned US virtual career fairs business, for 120,000 dollars (78,120 pounds). A further 3 million dollars (2 million pounds) may be paid over the next three years dependent on performance. Commenting on this, senior vice president and managing director of UBM studios said, "The acquisition of Astound fits perfectly into our strategy of building on the strengths of our existing products and services to expand into adjacent markets."
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Prospect Investment adviser Hargreaves Landsdown (HL.) will pay a second special dividend this year as rising stock markets and new clients helped push up profits almost 20% from 2009. The group announced a further special dividend, of 1.7p, on top of regular dividend payments for the year of 8.58p. The group benefited this year from a sharp rise in customers seeking higher returns than could be achieved through savings accounts in a low interest-rate environment. Assets under administration at the company rose to 17.5 billion pounds from 11.9 billion pounds at the end of last year’s reporting period as pre-tax profits rose to 86.3 million pounds. Outgoing chief executive Peter Hargreaves said: "Although these measures have been helped by a rise in stock markets across the year, the more significant contribution has been from record organic growth." However, he warned that income would continue to be dragged down in the coming year by low interest rates. SOCO International (SIA) shares jumped 13.8p to 484.2p subsequent to the oil and gas producer announcing that the Te Giac Den appraisal well near its key oil field off the coast of Vietnam encountered hydrocarbons. The company, which owns a 30.5% stake in the block alongside Vietnam's state oil group Petrovietnam and Thailand's state-run PTT Exploration and Production, said initial results indicated two main reservoir sand intervals. The well was drilled to a total depth of 4,669 metres before penetrating the target hydrocarbon zone. Small Caps, AIM and PLUS British laundry firm Johnson Service Group (JSG) reported a 17% increase in first half pre-tax profit benefiting from a strong performance from its work wear rental business. The company made an adjusted pre-tax profit of 6.2 million pounds in the six months to 30th June, up from 5.3 million in the same period last year. In spite of this revenue fell by 3.5% to 113 million pounds as its dry-cleaning division was severely impacted by the bad weather at the start of the year. The textile rental division performed "very well" and has benefited from a reduced cost base, the firm added. "Overall we are confident that the group will perform well in the second half," executive chairman John Talbot commented. Johnson shares surged 2.75p to 19p. 2 Ergo (RGO) shares rallied 5.5p to 63p following the provider of mobile enabling technology announcing that trading was in line with management expectations and that it anticipated strong returns in the coming financial year. In a trading update for the year ended 31st August 2010, the company added that the quality of the group’s order book and pipeline has continued to grow across all territories since its interim statement. 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. Emblaze (BLZ) shares fired up 7.5p to 49p on news the telecom operator solutions provider is in advanced negotiations for the sale of its holdings in Formula Systems (1985). The Nasdaq-listed company was purchased in November 2006 and is principally engaged, through its subsidiaries, in providing software consulting services, developing proprietary software products and providing computer-based business solutions. Accident Exchange Group's (ACE) existing shareholders are expected to face significant dilution as the vehicle replacement firm nears a deal with its principle lender to amend the terms and extend the repayment date of its 40 million pounds credit facility. The company is in talks with Morgan Stanley to restructure its convertible notes. It is expected that the conversion will be on significantly amended terms to the current conversion price of 75.4 pence, which would dilute the existing shareholders. A conversion of the notes would remove any obligation to repay the 63.3 million pounds otherwise due in January 2013. The shares plunged 6.87p to 3.38p on the news. Mouchel (MCHL) shares rallied 8.5p to 125p following the British outsourcer announcing that the outlook for its businesses was improving as the UK government starts to farm out work to cut costs. In a trading update, the company said, "The medium and longer term outlook is becoming increasingly positive as the new government's policies are implemented by organisations across central and local government." The firm, which maintains Britain's highways, added that it had won new work in Australia and Abu Dhabi and that it expects to save 25 million pounds of costs in the full-year.
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companies Cambria Automobiles (CAMB) shares slipped 1.5p to 36.5p after the motor retailer reported on a resilient trading period for the second half of the financial year. In a pre-close statement, the company announced that it expects full year results for the period to 31st August 2010 to be slightly ahead of market expectations. Furthermore, the board anticipates that this will be the third year in succession that the group has doubled underlying pre-tax profits. PLUS-quoted company Analyst Investment Management (AIM) reported on a poor performing period. For the six months ended 31st May 2010, the fund manager made a loss of 33,884 pounds which compares to a profit of 11,697 pounds in the same period last year. Fee income fell from 77,358 pounds to 20,496 pounds reflecting the termination of the investment management agreement with Capital for the CF Analyst UK Fund, consisting of approximately 4 million pounds funds under management. Total funds under management for the period stood at 8.75 million pounds, up from 3.93 million pounds a year earlier. No performance-related fees were earned during the interim. Analyst shares finished flat at 7.5p.
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