News Column

UK WINNERS & LOSERS: Mining Companies Cheered By China PMI Data

June 23, 2014

James Kemp

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




ARM Holdings, up 3.1%. Shares in the company have jumped after Morgan Stanley said that momentum could be turning for the micro-chip maker, following sector underperformance so far this year. ARM makes chips for Apple products, and Morgan Stanley said that due to a strong Apple product cycle in the second half of the year, ARM's royalty growth could be about to accelerate. However, analysts at Morgan Stanley left their rating at Equal Weight, saying it is not yet time for an upgrade.

Rio Tinto, up 2.8%, BHP Billiton, up 2%, Anglo American, up 1.8%, Antofagasta, up 1.4%, and Glencore, up 0.4%. The mining companies all are among the biggest gainers in the blue-chip index on the back of some better-than-expected Chinese manufacturing purchasing managers' index data released overnight. Preliminary data from Markit Economics revealed that the Chinese manufacturing sector expanded for the first time in six months in June driven by domestic and foreign orders. The HSBC flash manufacturing purchasing managers' index rose into expansionary territory at 50.8 in June, a seven-month high, from 49.4 in May. Economists had expected the index to come in at 49.7. China is a major market for the mining companies.




Barratt Developments, down 2.4%, and Persimmon, down 2%. The housebuilders are the biggest losers in the blue-chip index after a Bank of England rate-setter indicated at the weekend that he is likely to vote for an interest rate rise by next May. Writing in the Sunday Telegraph, David Miles, said the strength of the UK economic recovery meant that he was increasingly likely to vote for a hike before he steps down from the Monetary Policy Committee in May next year.

Shire, down 1.1%. The pharmaceutical company's shares have pared some of the gains posted at the end of last week. Shire's shares jumped 17% on Friday after US pharmaceutical research and development company AbbVie Inc confirmed that it had made three indicative takeover approaches, all of which have been rejected by Shire, and that talks between the two companies have now ended. Shire said it rejected the approaches because it thinks the offers undervalued the company, and it can deliver better value to its shareholders by staying independent. Shire is expected to make a further announcement at 1200 BST Monday.

International Consolidated Airlines Group, down 1%. British Airways, one of the airlines owned by IAG, is facing the threat of renewed strikes after cabin crew said they were prepared to take industrial action because their pay claims were rebuffed, The Guardian reported Monday without citing any sources. In a consultative ballot last week among members of the mixed fleet, 95% of crew who voted said they would go on strike, the paper says, adding that about a third of the eligible crew voted in the ballot, taken to gauge feeling in a fleet which unionised rapidly under Unite in 2012.




Ferrexpo, up 2.6%. The iron ore producer is up on the back of the better-than-expected Chinese manufacturing PMI data released overnight.




Foxtons Group, down 3.5%. The estate agency is among the biggest fallers in the mid-cap index amid ongoing UK interest rate rise speculation. Goldman Sachs has initiated the group with a Neutral rating and 370 pence price target.




Conroy Gold & Natural Resources, up 22%. The mining company said it has discovered a number of gold zones at the surface on its Slieve Glah gold target in Ireland, after rock chip grab sampling tests. It said the zones occur over a 3 kilometre space and grab samples included a high result of 1.7 grams per tonne of gold along with regions of 0.38 grams per tonne, 0.35 grams per tonne and 0.28 grams per tonne of gold in black carbonaceous pyrite shale rocks at the site.

Victoria, up 20%. The floor coverings company said it would pay a special dividend of GBP2.92 a share as part of a proposed deal that will see Camden Holdings Ltd take a 50% stake in the company. In February, Victoria took out a contract for difference with Camden Holdings. The payment of the special dividend will entitle Camden to terminate the contract, meaning that Victoria would be obliged to pay out in cash. However, Camden has agreed to re-invest the whole amount back into Victoria, it said, without detailing the amount. The UK Takeover Panel has agreed to waive the normal rule that Camden would have to make a takeover offer for the whole of Victoria for taking a 50% stake in the business, Victoria said.

Castleton Technology, up 18%. The company has acquired specialist outsourced IT managed services business Montal Holdings Ltd for GBP3.8 million. Castleton will pay GBP3.04 million in cash and GBP0.79 million in loan notes. The loan notes are repayable in 12 months and carry a coupon of 8% per year, it said. MXC Capital Ltd, which owns 18% of Montal, will receive its share of the consideration in loan notes. Montal posted earnings before interest, tax, depreciation and amortisation of GBP481,000, on revenue of GBP3.2 million in the half year to end-March. It saw a pretax profit of GBP395,000 on revenue of GBP5.7 million in the year ended September 30, 2013.

Environmental Recycling Technologies, up 13%. The company's shares have risen after it reported a narrowed loss for 2013 and as its US licensee won a first big order for barge covers made using the company's technology. The company holds worldwide intellectual property rights to the powder impression moulding process, a technology enabling companies to make plastic products that can be recycled at the end of their life. One such product is plastic covers for barges that transport commodities such as grain. It said North American licencee Brown Water Plastics, which is a subsidiary of James Marine Inc, has secured a first order for its barge covers made using the powder impression moulding technology. The order is worth significantly more than GBP1million to Brown Water Plastics, it said. Separately, Environmental Recycling reported a GBP3.5 million pretax loss for 2013, narrower than the GBP3.7 million loss it reported in 2012, as revenue rose to GBP119,000, up from GBP40,000, and administrative and finance costs fell.

Cenkos Securities, up 9.9%. In a short trading statement, the specialist securities company said it expects its first-half revenue and pretax profit to be significantly higher than market expectations and above the year-earlier results, because recent trading has been stronger than the company expected.

Sula Iron & Gold, up 9.4%. The metals exploration and development company said new results from drill testing at its flagship Ferensola project in Sierra Leone have continued to show its potential for high-grade direct shipping iron ore. It said the most recent tests, using batch 3 and 4 samples, showed a 12 metre space at 60.35% iron in its BHDD129 hole and a large 96 metre space grading 45.9% iron in its BHDD128 hole. It said that by June 17, a total of 5,476.45 metres of drilling had been completed and it continues in order to target open areas of further potential direct shipping ore resources.

Tracsis, up 8.4%. The company, which provides software and technology for the transportation industry, said it expects to see revenue and profit "significantly" ahead of market expectations for the year to end-July, buoyed by high levels of investment in UK rail services. It expects to post full-year revenue of over GBP20 million.

SolGold, up 7.9%. The gold exploration company has extended a visible copper mineralisation region at Hole 7 of its Cascabel copper-gold porphyry project in Ecuador, ahead of its first assay results from drilling at the hole. It announced the original find on June 13, saying at the time that the hole found visual mineralisation from 540.7 to 960 metres and is continuing to find copper sulphide mineralisation as it drilled deeper. On Monday, it said the hole has now found mineralisation over a 710.60 metre down-hole area from 540.7 to 1251.3 metres, with visible mineralisation continuing to increase.

Cyan Holdings, up 7.5%. The company has teamed up with FTSE 100-listed Vodafone's machine-to-machine team to create joint propositions, opportunities and customer proposals for the smart metering market in India. Cyan has created technology allowing static electricity meters to become "smart" meters, connecting them wirelessly through a small self-contained box that connects via an existing communications interface on the meter. That saves utilities money, meaning they don't have to upgrade the whole meter, but can do things such as reading metres remotely. Teaming up with Vodafone, a big wireless player in India, offers both companies advantages. Cyan's wireless mesh networking platform offers a cost-effective extension to Vodafone's network reach for high-volume, low-value 'last mile' data communications to utility customers. Vodafone's M2M global data services platform and managed hosting provide secure data communication and storage beyond the networked devices.




Verona Pharma, off 43%. The company said its VRP700 novel treatment for chronic severe cough in patients with idiopathic pulmonary fibrosis had failed to meet the primary endpoint in a phase IIa clinical trial, and it will now end further development of the drug on its own. It said the trial to evaluate the efficacy of a single dose of VRP700 did not meet the primary endpoint of a statistically significant reduction in cough frequency when compared to placebo.

Beacon Hill Resources, down 41%. The steel and coal production company's shares have fallen as it announced a share placing to raise GBP1.5 million, in order to settle outstanding payments. The company said it has entered conditional agreements to place up to 600 million shares in the company at a discounted price of 0.25 pence per share to raise roughly GBP1.5 million with institutional investors. The company also said that it continues to expects funding for the expansion of its Minas Moatize Coking Coal project to be in place by the end of the third quarter. Beacon Hill's shares are currently quoted at 0.413 pence.

Omega Diagnostics, down 13%. The medical diagnostics company posted a rise in pretax profit for the year to end-March, boosted by strong growth in its food-intolerance products, as it ramps up for commercialisation of its Visitect CD4 tests for infectious diseases. It reported a pretax profit of GBP543,041, up from GBP276,224 in the previous year, as revenue rose to GBP11.6 million from GBP11.3 million.


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Source: Alliance News

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