News Column

UK WINNERS & LOSERS: Go-Ahead Takes Fast Track To Top Of FTSE 250

May 23, 2014

James Kemp



LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices midday Friday.

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FTSE 100 - WINNERS

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Anglo American, up 0.9%. Anglo American Platinum, a subsidiary, in partnership with South African platinum miner Impala Platinum Holdings and FTSE 250-listed Lonmin said talks with the Association of Mineworkers and Construction Union are continuing over major strikes which have crippled the platinum sector in the country. The parties said that the three-day talks, which began on Wednesday, are continuing under the auspices of the South African Labour Court in order to mediate a resolution to the ongoing wage strike, which has now continued for four months. They said that all of the parties involved have embraced the new talks and they share a common goal to help resolve the dispute.

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FTSE 100 - LOSERS

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Tullow Oil, down 1.9%. The oil and gas exploration company said a well it was drilling in a potential oil field in Ethiopia had hit water bearing reservoirs with few on traces of gas. The company said it would now move the rig to drill a new exploration well in a completely separate sub-basin at the South Omo block in Ethiopia. It will drill the Gardim-1 wildcat exploration well in the south-eastern corner of the Chew Bahir basin.



Smiths Group, down 0.8%. The engineering company has warned that its underlying revenue in the nine months to May 3 had been slightly weaker than in the year-earlier period as growth in its John Crane and Flex-Tek units was more than offset by weakness in Detection, Medical and Interconnect. It said that the full year outlook for its headline operating profit is in line with expectations for all businesses except Smiths Detection, where profit is now expected to be GBP25 million lower due to a combination of working capital adjustments, reduced volumes and a higher proportion of lower margin contracts, as well as additional programme delivery costs. It also reiterated that it expects exchange rate movements to knock about 5% off its full-year earnings.

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FTSE 250 - WINNERS

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Go-Ahead Group, up 8.8%. The UK government has awarded a giant new rail franchise covering a swathe of southeast England to the Govia joint venture majority owned by Go-Ahead Group. The new franchise combines the current Southern franchise, which runs routes between London and the south coast, with the Great Northern Franchise to the north of London, connecting them with the Thameslink franchise that runs north to south across London. The Thameslink route is currently going through a GBP6.5 billion upgrade. The Department for Transport said the new seven-year deal for the combined franchise will start in September. Govia, which is 65% owned by Go-Ahead, and 35% by Keolis, which itself is a joint venture majority owned by French state rail operator SNCF, said it expects to make revenue of about GBP350 million from the franchise between September of this year and June 2015. The franchise win is "great" for Go-Ahead, says Joe Spooner, an analyst at Jefferies. The deal offers strong earnings per share accretion potential and opens up new dividend opportunities, the analyst says.



BTG, up 3.9%. The healthcare company said that the US Food and Drug Administration had cleared the use of its EkoSonic endovascular system for the treatment of pulmonary embolism. It said the clearance for the use of the system for the ultrasound facilitated, controlled and selective infusion of physician-specified fluids, including thrombolytics, into the vasculature for the treatment of pulmonary embolism was an expanded indication for the system. The EkoSonic system is made by EKOS Corp, which BTG bought in July last year.



Lonmin, up 2.7%. Shares in the company have risen after it announced, alongside Impala Platinum and Anglo American Platinum, that discussions with the Association of Mineworkers and Construction Union are continuing with a more positive tone.



Balfour Beatty, up 1.3%. The construction company has been awarded a GBP78 million contract by the city of Charlotte, North Carolina to build the track and systems components for the new Charlotte Area Transit System Lynx Blue Line Extension. This contract is in addition to the GBP63 million civil contract won in February for the Blue Line Capacity Expansion Project.

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FTSE 250 - LOSERS

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Polymetal International, down 3.2%. UBS has downgraded the company to Neutral from Buy, and lowered its price target to 550.00 pence from 700.00p, saying that the acquisition of the Kyzyl gold project announced on Thursday favours the seller and increases Polymetal's risk profile. UBS believes that the deal makes sense and the initial USD619 valuation looks "full but fair", but warns that the structure of the deal - which includes a deferred consideration and put option - favours the seller.



FirstGroup, 0.2% higher after falling 6% at the open. The bus and rail operator was sold off at the open on the back of Go Ahead Group's new UK rail franchise win but has since recovered. The deal means FirstGroup has lost the First Capital Connect franchise - which comprises the Thameslink and Great Northern sections of the new franchise - it has operated since 2006. Furthermore, Jefferies analyst Spooner believes that approximately 4.00 pence "of hope" may have been priced into FirstGroup's shares for a franchise win, which should now be unwound.

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AIM ALL-SHARE - WINNERS

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Rose Petroleum's shares have more than doubled after it said it had received positive economic analysis and reserve reports for its Mancos and Paradox oil and gas projects in Utah in the US. It said the reserve report produced by Ryder Scott Company showed that the unrisked prospective recoverable hydrocarbon resources on a best case basis are 1.45 billion barrels of oil and 4.79 trillion cubic feet of gas over the total Mancos shale and Paradox formation combined. It said the total best case in the Paradox formation is 966 million barrels of oil and 1.88 trillion cubic feet of gas, while the best case for the Mancos shale site is 486 million barrels of oil and 2.90 trillion cubic feet of gas. Separately, the company said an economic analysis of the same assets by Christie Ward Schultz had given Cane Creek in the Paradox basin a gross life of field net present value of USD1.47 billion and Mancos a net present value of USD941 million. The rate of return for Cane Creek is 125% and 96.31% for Mancos, the study said.



Mediterranean Oil & Gas, up 17%. AIM-listed Rockhopper Exploration has agreed to acquire Mediterranean Oil & Gas in a deal that values Mediterranean Oil & Gas at GBP29.3 million and will create an oil and gas company with a market value of GBP294.5 million. Under the terms of the deal, Mediterranean Oil & Gas shareholders will receive 6.5 pence per share in cash and Rockhopper shares, for each Mediterranean Oil & Gas share held. Mediterranean Oil & Gas shareholders will also receive a contingent consideration offer of up to a maximum amount of 3.550 pence in cash for each share held in the company.

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AIM ALL-SHARE - LOSERS

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Blur Group, off 24%. The company said it has conditionally raised USD20.0 million through the issue of 15.9 million shares by way of a placing at 75 pence per share and up to a further USD2.0 million through the issue of up to 1.9 million shares by way of an open offer at the same price. The company said it will use the proceeds of the placing to accelerate growth through investment in sales, technology and marketing, as well as to strengthen its balance sheet. The placing price represents a discount of 29% to the closing price of 105.45 pence on Thursday. Blur shares are currently quoted at 80.00 pence. The placing comes as the company reported pretax losses of USD6.5 million for 2013, compared with a GBP1.9 million loss in 2012, as administrative costs rose to USD7.7 million from USD2.6 million, reflecting increased investment in people and technology to support the growth of of its exchange business.



Thor Mining, down 17%. The gold focused developer said it has raised AUD100,000 in a share placing with investors, which it will use to fund working capital requirements and boost its gold projects in Australia, including the Molyhil tungsten project. It said it placed 25 million new shares on the market, at AUD0.4 cents per share, or approximately 0.22 pence.



Verdes Management, down 14%. The company has reported a wider first-half pretax loss due to an increase in administrative expenses and the costs of a failed project to develop as a strategic investment company. It reported a GBP324,280 pretax loss in the six months ended March 31, compared with a GBP162,546 pretax loss a year earlier, as administrative expenses increased to GBP324,316, from GBP162,968, and finance costs increased to GBP283,000, from nothing. It recorded no revenue in either period.

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Source: Alliance News


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