News Column

UK WINNERS & LOSERS: Iraq Crisis Lifts Oil Prices, Oil Companies

June 18, 2014

James Kemp



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

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FTSE 100 - WINNERS

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Royal Dutch Shell, up 1.9%. The oil major and state-owned China National Offshore Oil Corporation said they'd signed a new strategic alliance agreement, which largely reaffirms a previous alliance deal the companies had but also commits them to exploring cooperation opportunities in areas from oil exploration to refining. In a joint statement, the companies said they'd committed to exploring potential cooperation opportunities in so-called upstream, midstream and downstream operations.



BG Group, up 1.2%. The oil and gas producer is being lifted by the higher oil price in response to the crisis in Iraq. Fighters of the radical Islamic State in Iraq and the Levant have taken control of the country's largest oil refinery, according to officials. The price of Brent oil has risen to USD113.45 a barrel.



Whitbread, up 1.2%. The Premier Inn hotels and Costa Coffee chain operator is a big riser again, having jumped 2.2% on Tuesday, following price target revisions from HSBC and SociÉtÉ GÉnÉrale. HSBC has raised Whitbread's price target to 4,700.00 pence, from 4,200.00p, while SocGen has increased its price target to 5,000.00p from 4,800.00p. On Tuesday, Whitbread's shares jumped after it reported strong sales growth for the first quarter of its new financial year.

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FTSE 100 - LOSERS

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United Utilities, down 3.5%, and Severn Trent, down 2.3%. The companies are among the leading fallers in the blue-chip index after going ex-dividend, meaning new buyers no longer qualify for the latest dividend payout.

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FTSE 250 - LOSERS

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3i Group, down 4.1%, and Scottish Investment Trust, down 0.9% are two more companies that have gone ex-dividend.



Xaar, down 3.5%. The digital inkjet printing technology company's shares are down again after UBS cut its price target on the stock to 550.00 pence, from 950.00p. "As the ceramics market nears a saturation point and the competition fights for market share, we are wary that near-term earnings revisions are more likely to be downwards than up," said UBS analyst Robbie Capp. Xaar fell 28% on Tuesday after it warned that its revenue would fall in 2014.



Berkeley Group, down 2.8%. The group's shares have dropped sharply despite the London-focused housebuilder reporting full-year results that were above consensus expectations. Pretax profit rose to GBP380.0 million in the year ended April 30, up from GBP270.7 million a year earlier, as revenue rose to GBP1.62 billion from GBP1.37 billion. The consensus expectation had been for pretax earnings of GBP362.0 million. "The consensus view on Berkeley at present is broadly cautious, with concerns about over-heating in the London market, mortgage market reforms, interest rates, and currency concerns pushing up the sterling cost for overseas buyers," said Clive Black, analyst at Shore Capital.



N Brown Group, down 2.6%. The internet and catalogue home shopping company is a big faller, even though it said it was on track for its plans for the current financial year. The group saw revenues rise 2.6% in the 15 weeks to June 14, boosted by growth at its Simply Be and Jacamo brands, with like-for-like growth up 2.5%. However, "numerically, it would perhaps be easy to see disappointment in the 2.5% first quarter like-for-likes," said Joe Spooner, an analyst at Jefferies. Bloomberg's survey of 12 analysts put the median expectation at 5.4%, with a range of 2% to 6.3%, while Jefferies had expected 5% growth, he said.

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AIM ALL-SHARE - WINNERS

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Amphion Innovations, up 7.8%. The company posted a narrowed pretax loss as administrative cost cutting more than offset a revenue decline in 2013. The company posted a pretax loss of USD6.4 million, narrowed slightly from USD6.9 million in 2012, even as revenue declined to USD1.0 million from USD1.4 million. Administrative expenses were USD3.6 million, down from USD7.8 million, helped by lower expenses at Amphion's subsidiary DataTern Inc, which is appealing a ruling in its legal battle with SAP AG and Microsoft Corp.



Connemara Mining Company, up 6.9%. The company said its loss widened in 2013 but said there will be gold drilling later this year. It also said it has considered expanding beyond Ireland, while noting interest from "unconnected parties" to invest in the company to "redirect strategy into new resource areas." It said it made a EUR348,199 pretax loss in 2013, compared with EUR322,988 in 2012. Administrative expenses increased to EUR348,697, from EUR324,083, while investment revenue fell by more than half to EUR498, from EUR1,095.



Corero Network Security, up 6.7%. The company has won its largest ever contract win for its product that protects networks and devices from so-called denial-of-service attacks. Corero said the order with an unnamed US financial services company is worth USD500,000. Its products will protect the client's internet-connected infrastructure and websites.



ReNeuron Group, up 6.3%. The company is a big riser, even though it posted a widened loss in the year to end-March. Its pretax loss widened to GBP7.8 million, from GBP7.1 million a year earlier, as it posted higher research and development costs. It expressed confidence in its future as it continued to develop its stem-cell therapies towards commercialisation. The company has received regulatory approval for two clinical trials, a Phase II trial in stroke and a Phase I trial in critical limb ischaemia, or blood clots in the leg. Its ReN003 treatment for retinal diseases is undergoing a final set of pre-clinical studies, ahead of a Investigation New Drug filing in the US, and an initial Phase I/II trial is targeted for early 2013. It also received a further GBP1.5 million grant during the year from the UK government's Technology Strategy Board to support its Phase II trial with ReN001 in strokes.

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AIM ALL-SHARE - LOSERS

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London Capital Group Holdings, off 15%. The company said after the UK equity market close on Tuesday that it plans to raise up to GBP17.5 million through a proposed refinancing as part of its plan to return to growth. The financing is conditional upon approval from shareholders at the company's general meeting July 3, as well as regulatory clearances and due diligence. The company said the funds will be used as part of its three-stage strategy to return to growth. It intends to focus its efforts on creating and promoting new products to attract new clients at a reduced cost and develop business channels in less mature markets.



Sound Oil, down 12%. The oil and gas company said it had completed the due diligence and signing of investment agreements in relation to GBP14 million of institutional funding it announced in April. The company had expected to complete this process in July. Continental Investment Partners SA signed agreements for a total investment of GBP14.0 million at an average price of approximately 9.2 pence per share. Metanto Capital SA, a subsidiary of Continental, has subscribed for GBP7 million new shares at 8 pence each, or a 21.07% interest in the company's enlarged share capital. Continental has also subscribed for GBP5.5 million in loan notes and 52.88 million warrants to subscribe for shares at 10.4 pence. Shares in Sound Oil are currently quoted at 10.50 pence.



Aurasian Minerals, down 6.7%. The gold exploration company said it will make a provision against the GBP500,000 carrying value of its investment in the Manus Island joint venture after partner Newcrest Mining Ltd decided to withdraw from the venture from July 16. Aurasian said the impact of the Newcrest decision, the transfer of the tenements, and "the mechanics of closure" will be discussed at a joint venture meeting to be held on July 31.



GW Pharmaceuticals, down 6.4%. The company has announced plans to sell 1.7 million American depositary shares in a public offering on NASDAQ. The price of the offering has not yet been decided. It also will grant the underwriters a 30-day option to purchase up to an additional 255,000 ADSs at the offer price, which has not yet been set.

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Source: Alliance News


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