From UK-Analyst.com: Wednesday 8th 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
For hot share tips plus daily technical analysis from Zak Mir, click HERE 2 BRAND NEW T1PS OUT IN THE NEXT 7 DAYS

President Barack Obama will take Republicans to task over their economic “values” as he promotes a 180 billion dollars (117 billion pounds) package of proposals to stimulate the anaemic US economy and show the American public he is working to boost the recovery. Elsewhere, UK house prices rose for the second month in a row in August, after three months of declines, but prices have been largely static since the beginning of the year, according to a leading housing market indicator. Meanwhile, UK manufacturing grew at a steady pace in July maintaining its recovery from the deep decline it suffered during the recession, but there are fears that a slowdown is set to hit the sector. At the London close the Dow Jones was by up by 76.46 points at 10,418.15 and the Nasdaq was up by 22.8 points at 2,231.77.

In London the FTSE 100 rose 30.05 points to 5,437.87; the FTSE 250 climbed 38.35 points to 10,219.62; the FTSE All-Share gained 14.63 points to reach 2,805.35; and the FTSE AIM Index rose 1.13 points to 717.02.

Brokers' Notes

Singer Capital Markets issued a “fair value” rating for IG Group (IGG) with a 485p target price ahead of the spread betting firm’s first quarter interim management statement tomorrow. The broker expects the heightened levels of volatility in May to have provided some continued trading momentum into June and July that is likely to have tailed off in August, partly due to the usual seasonal factors. Since then, revenue is anticipated to have been impacted by the introduction of leverage limits on FX trades in Japan as the normal trading behaviours of customers will have been interrupted. Given the limited need to retain further cash, the broker added, the medium term potential for uplift in cash returns to shareholders is strong. IG shares dipped 3.5p to 500.5p.

Panmure Gordon re-iterated its “sell” rating for the commercial security printer and papermaker De La Rue (DLAR) with a reduced target price from 661p to 605p. The broker commented on the recent downbeat update from the firm that a number of staff have “deliberately falsified specification test certificates” and that the likely impact on pre-tax profits will be “at least” 35 million pounds. The good news here, Panmure added, is that at least we have some quantification of the impact of these issues, albeit at much higher levels than previously anticipated. De La Rue slipped 11.5p to 669.5p.

Meet the CEOs of three small cap stocks at a Free City Seminar
Wednesday 29th September from 6pm at 3 London Wall Buildings in the City

Featuring Alan Bonner of Pinnacle Telecom and Faisal John Rahmatallah of Plastics Capital
Plus, Rivington Street Holdings CEO and t1ps.com founder Tom Winnifrith
For more information and to sign up click here.

Arbuthnot initiated coverage for the business services group Rentokil (RTO) with a “buy” recommendation and 120p target price. The broker commented that, although it believes the pricing environment will remain tough for some time to come, management is well advanced on taking costs out of the business. It also estimates that there will be more than sufficient cash to restore a dividend of 3 pence per share in the 2011 financial year with enough left over to still pay down debt. Trading at a 20% discount to the Pan-European peer group, Arbuthnot sees the firm as value for money. Rentokil shares finished 0.6p ahead at 102.8p.

Seymour Pierce maintained its “buy” stance and 70p target price for Asian Citrus Holdings (ACHL). This follows the citrus producer entering into a Memorandum of Understanding with BPG Food & Beverages Holdings in relation to the proposed acquisition of Beihai Perfuming Garden Juice Company, the largest tropical fruit juice concentrate producer in China. The broker believes that the potential acquisition represents an excellent vertical integration opportunity for Asian Citrus. Importantly, the business is profitable and cash generative, Seymour added, with the synergies benefiting both parties. The shares rose 1.5p to 54p.

Shares in environmentally-friendly plastics firm Symphony Environmental* (SYM) jumped 1.75p to 13.75p after research house Growth Equities & Company Research initiated coverage with a 'buy' stance and a 30.4p target price. "We estimate that by the end of the 2011 financial year, the group will be strongly cash generative, such that the group will have net cash of GBP1.4 million, some of which could be used for either a maiden dividend payment or possibly a share buyback programme," commented GE&CR. The research house pointed to the growing list of countries specifically legislating in favour of biodegradable plastics, the introduction of new applications for d2w across the entire distribution channel, as well as from agreements like last May's agreement with Europe's third largest business hotel chain, NH Hoteles Group, as driving factors behind growth.

Blue-Chips

Vodafone (VOD) has agreed to sell its entire 3.2% interest in China Mobile for approximately 4.3 billion pounds. Since it made its original investment in China Mobile in 2000, both companies have enjoyed a strong relationship and cooperated closely in many areas of business and in the development of the mobile industry. Following the announcement, both companies will continue this cooperation in areas such as roaming, network roadmap development, multinational customers and green technology. Commenting on the transaction, chief executive Vittorio Colao, said: “Today's transaction achieves a near doubling of Vodafone's original investment in China Mobile and combines our stated portfolio strategy with ongoing cooperation with China's leading telecommunications company.” Vodafone shares eased back 0.1p to 159.8p.

Brand new FTSE service - recommended by John Piper
Get trading calls on the FTSE 100 from Mark Austin
With SMS and e-mail alerts - so you don't miss out on any big calls

"Your technical abilities are truly incredible (how do you do that??!!!)" says one subscriber.
To find out more or sign up now, click here.

BP (BP.) revealed the findings of an internal inquiry into the Deepwater Horizon disaster, giving its first full account of the causes of the oil rig explosion that killed 11 people and caused the largest offshore oil spill in history. The report concluded that decisions made by “multiple companies and work teams” contributed to the accident which it says arose from “a complex and interlinked series of mechanical failures, human judgment, engineering design, operational implementation and team interfaces.” While the oil giant said its team “incorrectly accepted” results of a negative pressure test aboard the rig, the internal report assigns much of the blame to Transocean, which owned and operated the Deepwater Horizon rig, and Halliburton, which was responsible for cementing the well to secure it. BP shares climbed 5.35p to 412.15p in response.

Vedanta Resources (VED) has begun tapping banks to raise debt funding for its planned 9.6 billion dollars (6.2 billion pounds) acquisition of a majority stake in Cairn India, even as New Delhi warned it would be weeks before it decides whether to let the sale go ahead. The mining group issued a term sheet seeking to raise 6.5 billion dollars (4.2 billion pounds) to 7 billion dollars (4.6 billion pounds) in short to medium debt of between one to five years, the largest amount it has ever sought to raise in debt for an acquisition. However, the deal could be sensitive for international banks, concerned about the perceived reputational risk of dealing with a company accused by Indian authorities of flouting the country’s environmental and social protection laws. Vedanta shares finished 8p lower at 1,972p.

Mid-Caps

Berkeley Group (BKG) said it continued to perform strongly as the value of land bank rose and forward sales remained above the 600 million pounds mark. In an interim management statement for the four months to 31st August 2010, the company reported that demand for properties in the period was resilient, particularly in London which it claims has a shortage of supply and specific demand from international purchases who are keen to invest in the Capital. Commenting on its performance, the firm said: “This provides the board with confidence that Berkeley can achieve its objective of growing earnings per share by 10% in the current financial year.” Berkeley shares finished 1p lower at 837p.

Do you have any gold exposure in your portfolio?
Scared of backing individual stocks?
The SF t1ps Smaller Companies Gold Fund gives you:
Exposure to 25-30 carefully picked AIM, ASX and TSX stocks
Chosen by Tom Winnifrith and Malcolm Burne
Visit www.t1psim.com

Barratt Developments (BDEV) shares slipped 4.45p to 99.85p despite the house-builder reporting on better than expected full year profits. For the full year ended 30th June 2010, the firm posted a reduced pre-tax loss of 162.9 million pounds, compared to a loss of 678.9 million pounds a year earlier, driven primarily by a significant drop in cost of sales. The company however said that, by historic standards, the market remained difficult and activity levels continued to be extremely low in terms of the number of house buyers and sellers. The key restriction on the industry, the firm added, remains the availability of mortgage finance. “Whilst the outlook for the UK housing market is still challenging, our priority remains optimising prices rather than volume and securing high quality land that will continue to drive our margin recovery,” the group concluded.

Dana Petroleum (DNX) issued a renewed call for its investors to reject Korea National Oil Corps 1.87 billion pounds hostile takeover, citing an independent consultant report arguing the company could be worth as much as a third more. In a strongly worded defence document, the Aberdeen-based company said it was worth between 21.10 pounds and 24.65 pounds per share, well above what it said was an “opportunistic and inadequate” 18 pounds per share bid from KNOC. Dana shares put on 1p to reach 1,809p.

Small Caps, AIM and PLUS

HMV (HMV) was one of the biggest market movers as the music and video retailer shares rallied 5p to 66.5p ahead of its annual general meeting update tomorrow. Despite consensus views that the group will not exist in a few years time as digital downloading is anticipated to dominate the market, Arden Partners believes management has what it takes to grow its own digital business and turn it into an entertainment super-brand. It is also diversifying rapidly into live music, which is now bigger than recorded music, and exploiting the synergies from ticketing sales and increased customer loyalty. The broker, thereby, believes the risk reward ratio of HMV is highly favourable, especially ahead of the Christmas period where the firm is expected to see further improvements.

JSJS Designs (JSJS) shares surged 0.5p to 1.25p subsequent to the home automation systems designer completing a placing of 15 million shares to raise approximately 300,000 pounds for working capital purposes. Commenting on this, chief executive John Shermer said, "I am pleased to report this timely injection of capital that will help us as we continue to move our new products towards commercial roll-out.” 

Crawshaw Group (CRAW) shares jumped 2p to 12p on news the meat-focused retailer is presently generating like-for-like sales in excess of 3% of the prior financial year ended 31st January 2010. In a trading update, the firm also reported that consistent improvements have been made in its gross margin. This, together with improving sales, has resulted in a better than budgeted first half performance, with profits and cash generation well ahead of the same period last year.

AGI Therapeutics (AGI) shares rallied 0.5p to 3.75p as the pharmaceutical company posted narrowed half-year pre-tax losses following extensive cost reduction measures. For the half-year ended 30th June 2010, the company reported a pre-tax loss of 3 million dollars (2 million pounds) compared to a loss of 9.3 million dollars (6.05 million pounds) in the same period a year earlier. This was primarily driven by a fall in research and development spend from 7.8 million dollars (5.1 million pounds) to a mere 0.9 million dollars (0.6 million pounds). Commenting on this, chief executive John Devane said; “We are now focusing our efforts on identifying external opportunities which will serve as the future foundation for our business.”

Construction management firm Interior Services Group (ISG) posted a 10% drop in full-year adjusted pre-tax profits, hurt by project delays in the overseas markets. For the year ended 30th June 2010, adjusted pre-tax profit stood at 12 million pounds on revenue of 972 million pounds, down by 7% on the previous year. In spite of this, the company said it could see signs of a recovery in all its markets, except UK construction. Furthermore, and most importantly, it is seeing a recovery in the spending programme of its private sector customers, which accounts for 70% of the firm’s turnover. Interior Services shares bounced 14p higher to 154p.

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)
Identify potential trades using common trading patterns

Click here to download your Guide.

Zenergy Power (ZEN) shares tumbled 7.25p to 41p after the super-conductor energy technology company announced lower than anticipated revenues as a result of slow order intake and delayed Fault Current Limiters (FCL) work. For the six months ended 30th June 2010, the company also reported that margins were adversely affected by materials cost increases and specification changes on a Magnetic Billet Heater (MBH) contract due for delivery in the second half. Commenting on its outlook, the firm said, “Second half trading, based on orders planned for delivery in the period, including three MBH units, will show an improvement over the first half of the year.”

PLUS-quoted company General Medical Clinics (GMCP) swung to a pre-tax loss on increased administrative expenses. For the year ended 31st May 2010, the primary medical care provider posted a pre-tax loss of 296,542 pounds compared to a profit of 120,887 pounds a year earlier as administrative expenses rose by 14% to 3.7 million pounds. However, with no debt and a cash war chest of 1.6 million pounds, the group remains well positioned to take advantage of any opportunities that arise out of the current changes within the NHS or from attractive mergers and acquisitions. General Medical shares finished at 27.125p.

* Symphony Environmental is a corporate client of Rivington Street Holdings, the ultimate owner of this website; the T1ps Smaller Companies Growth Fund, which is managed by a subsidiary of RSH, owns shares in Symphony.