News Column

UK WINNERS & LOSERS: Xaar Plummets After Guidance Cut

June 17, 2014

James Kemp



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

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FTSE 100 - WINNERS

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Whitbread, up 3.1%. The Premier Inn hotels and Costa Coffee chain operator reported strong sales growth for the first quarter of its new financial year, as it said both businesses continued on their rapid growth trajectory. The hotel, restaurant and coffee chain operator has continued to invest heavily in all of its businesses, with expansion helping further market share gains. Sales from both businesses were up 13% in the 13 weeks to May 29, driven by a 6.9% increase in like-for-like sales.



Shire, up 2.8%. Shares in the pharmaceutical company are up after Reuters reported late on Monday that the company has hired Citigroup as an advisor in anticipation of receiving a takeover offer following a wave of deals in the sector.



Rolls-Royce, up 1.3%, and GKN, up 1%. Berenberg has initiated coverage on nine companies, including GKN and Rolls-Royce. The bank has initiated GKN with a Buy recommendation and 440.00 pence price target, saying that it is positive about the fundamentals of the business, which is benefiting from positive cyclical and structural tends in the global aerospace and automotive markets. Merger and acquisition potential also should be viewed as an upside, Berenberg says. It has initiated Rolls-Royce with a Buy recommendation and 1,216.00 pence price target, saying it believes that long-term reasons for owning the shares, such as significant growth potential and improving cash profile, continue to hold, and that recent share price weakness should be seen as a buying opportunity.

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FTSE 100 - LOSERS

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Ashtead Group, down 6.3%. The equipment rental company's shares have fallen even though it reported higher profit and revenue for the fourth quarter of its last financial year and for the year as a whole, as it invested in expanding its fleet for hire and in acquisitions. The company reported a pretax profit of GBP70.8 million for the three months to April 30, up from GBP50.0 million a year earlier, as revenue rose to GBP355.7 million, up from GBP306.8 million. For the year to end-April, pretax profit rose to GBP365.5 million, from GBP214,2 million, as revenue rose to GBP1.48 billion, from GBP1.21 billion. It said it will pay a final dividend of 9.25 pence a share, up from the 6.0p final dividend it paid for fiscal 2013, meaning the total dividend for the year will rise to 11.5p, from 7.5p. Investec analyst Andrew Gibb believes that there has been such upgrade momentum in the stock over the last couple of years that some may be disappointed that there is no real consensus shift this morning.



Standard Chartered, down 0.8%. The emerging markets-focused bank has agreed to sell two businesses in South Korea as it looks to scale back and improve returns in the region, where it has suffered from a downturn in performance. It said it has agreed to sell Standard Chartered Savings Bank and Standard Chartered Capital Korea to Tokyo Stock Exchange-listed financial services group J Trust for KRW151 billion, or approximately USD148 million, in cash. The deals are expected to complete by the end of 2014.

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FTSE 250 - WINNERS

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Crest Nicholson Holdings, up 3.8%. The residential property developer said it will pay an interim dividend as profit and revenue rose in its first half, underpinned by strong buyer demand and improved mortgage access. It saw pretax profit jump 37% to GBP38.4 million for the six months to end-April from GBP22.2 million a year earlier, as revenue rose 26% to GBP241.1 million from GBP192.0 million, reflecting an increase in sales and housing completions. On the back of its strong performance the company declared a interim dividend of 4.1 pence per share.



JD Sports Fashion, up 2.8%. The sportswear, outdoor clothing and fashion retailer said it has seen a pleasing start to the new year, as its core sportswear business saw trading in the first 18 weeks of its new financial year boosted by the build up to the football World Cup. The company did not give sales numbers, as it usually does in its interim management statement, saying that, as the World Cup build up has enhanced its Sports division's performance, it would be "potentially misleading" at this stage to report precise like-for-like figures. However, it said it is "certainly pleased" with the underlying performance of the division to date. "Based on the trading performance to date we anticipate a satisfactory increase in first half profitability in line with our expectations," the company said in a statement covering the 18-week period ended June 7.



Kazakhmys, up 1.8%. The miner said that the government of Kazakhstan has agreed to reduce mineral extraction tax rates at some of the company's mature assets, in a move worth about USD40 million a year at current metals prices. Kazakhmys said the lower tax rate will apply to its deposits in the Zhezkazgan region of Kazakhstan, excluding its Zhomart mine, and at the Konyrat mine in the central region. The company said the new rates are effective retrospectively from January 1, 2014 and are applicable for a year, at which point a new application can be made. In a separate statement, Kazakhmys said it has completed the acquisition of the Koksay mine, which it had first announced in February, for USD260 million in cash including a deferred payment of USD65 million. Koksay has an estimated mine life of over 20 years with average annual production of around 80,000 tonnes of copper cathode equivalent, 60,000 ounces of gold, 400,000 ounces of silver and 1,000 tonnes of molybdenum in concentrate.



Balfour Beatty, up 1.2%. The construction company said its joint venture has been named "selected bidder" for two new acute care hospitals in Vancouver, British Columbia, continuing its move into the Canadian healthcare market. It said that the 30-year public-private partnership on behalf of the Vancouver Island Health Authority will cover the financing, design, construction, and facilities management for the Campbell River Hospital and Comox Valley Hospital. Balfour Beatty said it is expected to invest CAD17.2 million into the project, representing half of the equity required. Its joint venture partner Graham Group Ltd will undertake the construction, and Balfour Beatty will be responsible for the delivery of soft facilities management services.

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FTSE 250 - LOSERS

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Xaar, down 23%. The digital inkjet printing technology company has warned that revenue will fall slightly in 2014 as it struggles to quickly expand the takeup of its technology outside ceramic tiles markets, and gross margins are expected to decline as it faces increased competition. It warned that it now expects revenue in 2014 to be about GBP130 million, down from the GBP134.1 million of revenue it reported in 2013.

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AIM ALL-SHARE - WINNERS

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Cyan Holdings, up 30%. Shares in the company have risen after it said the Brazilian pilot for its smart utility metering product had been successful and the first orders are expected later this year, and as it got its first order in India for a retrofit metering infrastructure system. Cyan said the first pilot had been successful and its Brazilian partner, Nobre de la Torre, had been able to confirm that Cyan's technology can be successful in Brazil under local telecommunication law restrictions. A second pilot using the retrofit unit has been requested to demonstrate that the consumer's power supply can be remotely connected and disconnected without having to send utility staff on site, in the event of non-payment and to also prevent fraud, Cyan said. Separately, Cyan said that a consortium led by Aquameas Instrument Pvt. Ltd has been selected by Essel Utilities for the first deployment of Cyan's retrofit CyLec advanced metering infrastructure product in India.



Avesco Group, up 14%. The group, which provides services for live events, has seen its shares rise despite saying it swung to loss in the first half of the year with broadly flat revenues, as it said that its full year results are likely to exceed its expectations. It posted a pretax loss of GBP1.1 million for the six months to end-March, compared with a pretax profit of GBP1.9 million the prior year, largely due to hefty restructuring costs amounting to GBP5.0 million, relating to the restructuring of its struggling creative technology business in Germany. Revenues in the period were marginally lower at GBP65.4 million, compared with GBP65.9 million a year earlier, due the the lack of a major event. However, Avesco said that trading is currently ahead of plan and is confident of its outlook for the remainder of the year. Underpinning its confidence, the company raised its interim dividend to 1.5 pence, up from 1.0 pence for the prior six month period.



Coral Products, up 8.5%. The plastics manufacturer said it has finally signed the multi-million pound contract, for which it has been in talks since December, for a 10-year supply deal with a national online retailer. It said that its customer has indicated that its orders could generate GBP8 million in revenue inside the first two years of the contract. The company had said in April that was in advanced talks for the contract, which it had first flagged in December. Under the agreement, Coral Products said its will supply a range of tote boxes that would support the online retailer's growing presence. It said initial deliveries will be from June onwards.



Serica Energy, up 6.7%. The company said it is to acquire an 18% stake in the Erskine Field, located in the UK central North Sea, from BP in exchange for USD11.1 million cash and up to 27 million new Serica shares, in a move that Serica said will give it a cash flow boost, increase its proven and probable reserves, and compliment its efforts to bring the nearby Columbus field into production. According to Serica's estimates, the deal increases its proven and probable reserves to 8.8 million barrels of oil equivalent, from an estimated 5.2 million previously. Serica said the deal is tax efficient as it will speed up the recovery of both past and future tax losses in the UK. The deal is conditional on the consent of other participants in the Erskine Field, which is operated by the US's Chevron Corp, as well as approval by the UK Department of Energy and Climate Change.

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AIM ALL-SHARE - LOSERS

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Independent Resources, off 13%. The company said a mere 14.35% of its open offer shares were taken up, funding it said it was relying on to meet all of its licence commitments and support operations over the next 12 months. Last month the company announced a placing and open offer to raise up to GBP2.75 million of additional funds key to its survival, with the issue up to 91.9 million new shares at 3 pence each, of which 41.7 million shares were as part of the open offer and the rest via a firm placing. However, Independent Resources said Tuesday that just under 6.0 million shares of the open offer shares offered were taken up. Independent Resources' shares are quoted at 2.5273 pence.



Nostra Terra Oil And Gas, down 12%. The oil and gas producer has reported mixed results from its two horizontal wells in the Chisholm Trail Prospect in Oklahoma. It said that the most recent 10 days of production at its CT15 well, in which it holds an 11.62% working interest, averaged 232 barrels of oil equivalent per day. It said production rates at the well, its third largest in its Chisholm Trail portfolio, exceeded management expectations. At the CT11 well, however, it said production in the 10 day period averaged just 110 barrel of oil equivalents per day.



Software Radio Technology, down 11%. The company said it swung to a pretax loss in its last financial year, as revenue fell by more than a third due to delays to two significant contracts that forced it to carry more stock than hoped and to draw down bank facilities. Software Radio, which makes ship location technology, reported a pretax loss of GBP1.5 million in the year to end-March, compared with the GBP1.2 million pretax profit it posted a year earlier, as revenue slid to GBP6.1 million, from GBP10.0 million. It had warned back in January that two significant projects had been delayed. It said Tuesday the projects have now reached implementation phase.



AfriAg, down 9.1%. The agricultural logistics business said it intends to establish a new food marketing, sales and distribution division in South Africa which will source and then market fresh and frozen African produce within the Southern African region as well as from Southern Africa to global markets. The move marks an expansion of the company's business from logistics, and seemingly away from its stated strategy. In a statement on its website, AfriAg said its vision for the future is to build a series of partnerships and alliances with specialist companies operating in agri-logistics throughout Africa to create the first truly pan-African agri-logistics conglomerate with offices and representative offices in all 55 countries across Africa.



Red24, down 8.3%. The risk management provider has reported a 9.4% increase in pretax profit in its last financial year, boosted by revenue growth in its security assistance and business support divisions. However, it also unveiled plans to sell its 25% stake in Linx International Ltd to Linx and its main shareholder, David Gill, who is also a director of Red24. The decision comes after the combination of Red24's former subsidiary, Arc Training International Ltd, with Linx in July 2013. That deal gave Red24 its stake in Linx. But Chief Executive Maldwyn Worsley-Tonks said that the move has failed to live up to expectations due to "certain cultural differences" between Red24 and Linx, even though the merging proceeded smoothly. The move came as Red24 reported a GBP854,905 pretax profit in the year to end-March, compared with GBP781,177 a year earlier. Revenue increased to GBP5.9 million, from GBP5.4 million, while administrative expenses rose to GBP3.7 million from GBP3.5 million.

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Source: Alliance News


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