News Column

Daily Mail, London, market report column

June 6, 2014

By Geoff Foster, Daily Mail, London

June 06--SOME very nosey buyers have been switching on to Centrica in recent days amid growing speculation that a cash-rich international buyer is looking to buy a sizeable stake, prior to launching a full-scale cash bid.

It would certainly be a good time to pounce on the owner of British Gas as it appears to be in total disarray, with top management running for the exit in recent weeks.

The shares retrieved an early fall to finish 0.8p better at 330.5p on gossip that the Qataris have approached Centrica's shareholders with an offer to buy big lines of stock at up to pounds sterling 4-plus a share.

Last November Centrica signed a four-and-a-half year deal to bring Qatari gas to the UK. From this month Centrica will buy up to 3m tons of liquefied natural gas (LNG) per year, when an existing import deal with the Gulf state expires. Qatar supplies about 15pc of UK gas and was the source of 98pc of Britain's LNG cargoes last year.

Centrica'spounds sterling 2m-plus a year chief executive Sam Laidlaw is looking to jump ship before too long, while Chris Weston, head of British Gas, has left to become the new boss of power producer Aggreko, 13p cheaper at 1656p.

Recently excited by an unsuccessful bid approach from US group Stryker, replacement hip and knee company Smith & Nephew climbed 24p to 1088p on reports that Medtronic, the giant medical device manufacturer, is evaluating a bid for the company. Dealers heard that the US group could utilise its pounds sterling 8bn-plus cash pile, most of which resides outside the US.

The German DAX index may have jumped to a record level on the news but the UK market appeared underwhelmed by the European Central Bank's decision to lower its benchmark interest rate to 0.15pc from 0.25pc and the deposit facility rate to minus 0.1pc from zero. The ECB also said that 'rates will stay at present levels for an extended time'. The Footsie eased 5.14 points to 6,813.49.

As expected, the Bank of England kept UK interest rates on hold at 0.5pc and the quantitative easing total at pounds sterling 375bn.

Sellers were all over Royal Mail like a rash, 16.5p down at 498p, after Royal Bank of Canada slashed its target price to 600p from 650p.

Online fashion group ASOS provided the biggest shock of the day, crashing 40pc at one stage on another dire profits warning before closing 1403p, or 31pc, lower at 3120p. The company admitted that annual profits would be nearly a third lower, blaming heavy discounting on its international websites. ASOS's woes hit Boohoo.com. It had enjoyed a spectacular debut and touched 85p following its flotation at 50p, but yesterday retreated a further 4.5p to 45p. Other stores gave ground with N Brown 14.5p off at 454.7p and Debenhams 1.65p to 72.85p.

Housebuilder Bellway rang up a gain of 31p to 1436p following a strong trading update. For February until the end of May, the group enjoyed strong sales, with weekly reservations up 11pc to 177 per week. The forward order book is now 'significantly ahead' of last year at pounds sterling 670m, up from pounds sterling 380m.

Better than expected annual results helped UK and Ireland logistics group Wincanton accelerate 12p to 131p. It posted a 20pc leap in pre-tax profits as it won new contracts and saw a significant number of renewals across its divisions. Year-end debt was pounds sterling 65m, down from pounds sterling 108m a year ago. Numis has a target price of 185p.

Cambridge-based mobile payments company Bango buzzed 9.5p higher to 120.5p after announcing a strategic partnership with the telecoms giant Etisalat. The Etisalat group, which operates across Asia, the Middle East and Africa, will be integrated into the Bango payments platform.

Shares of Audioboom Group, which owns a social media platform called Audioboo.fm dedicated to the spoken word, jumped 13pc to 5.12p. CBS Radio and Sky Sports have agreed to become major content partners.

Currently on a New York investor roadshow, Skyepharma climbed 9.75p to 260p. Buyers have also taken more notice on hearing that the stock will be included in the FTSE SmallCap and FTSE All-Share indices with effect from the market close on June 20.

Scrappy selling left Flybe 1.75p cheaper at 139p. Europe's largest regional airline yesterday started three of its six new European routes from London Southend Airport operated by its franchise partner, Stobart Air. Passengers flew to Rennes in France, Munster Osnabruck in Germany, and Groningen in the Netherlands.

Sportech edged up 0.5p to 78p after receiving approval to develop a new flagship property in Stamford, Connecticut, its 16th location. The site will include a sports bar, restaurant and betting venue. Peel Hunt has a target price of 113p.

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ENERGY procurement and management company Inspired Energy improved 0.38p to 12.25p following an upbeat trading statement. It has enjoyed a strong start to the year with corporate division order book sales ahead 43pc year-on-year. KWH Consulting and Simply Business Energy, two companies acquired in March, have been integrated and broker Charles Stanley now expects a re-rating. Its target price is 17.9p.

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Source: Daily Mail (London, England)