News Column

UK WINNERS & LOSERS: ITV Jumps As Merger Talk Drives Stock Movers

July 17, 2014

Jon Darby



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

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FTSE 100 WINNERS

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ITV, up 8.1%. The broadcaster jumped to the top of the FTSE 100 after British Sky Broadcasting said it has sold its 6.4% interest in ITV to John Malone'sLiberty Global PLC. The sale has been made at 185 pence per share, a small premium to ITV's closing price Wednesday of 182.95p. It is currently trading at 198.90p. The news has brought increased focus on ITV as a potential takeover target, especially given the increased activity in the media sector recently, with news on Wednesday of an offer for US media group Time Warner by Rupert Murdoch's 21st Century Fox. BSkyB shares are up 0.8%.



Imperial Tobacco, up 2.3%. The tobacco sector has been volatile in recent days, also due to increased merger and acquisition activity. On Tuesday, Imperial Tobacco agreed to buy a portfolio of assets from US tobacco giants Reynolds American Inc and Lorillard Inc as the two companies offload assets in an attempt to pass their merger through regulators. Investors have questioned Imperial's strategy, which involves buying e-cigarette brand Blu, but the stock got the backing of Merrill Lynch Thursday, which raised its rating to Buy from Neutral.



British American Tobacco, up 0.7%. BAT, which will maintain its 42% holding in Reynolds, is also seeing a benefit from the improved sector sentiment.

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FTSE 100 LOSERS

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Sports Direct International, down 2.5%. The retailer reported strong full-year earnings, broadly in line with expectations, but with a higher level of debt than expected. Management said group revenue rose 24% to GBP2.71 billion from GBP2.19 billion last year, while pretax profit for the year rose 16% to GBP239.5 million from GBP207.2 million in 2013. However, at GBP212 million, year-end net debt was significantly higher than expected. Liberum Capital, that had forecast a debt level of GBP41.4 million, says the unexpected jump is due to significantly higher working capital outflow and acquisitions.



Rexam, down 2.5%. The drinks can maker has its rating cut to Hold from Buy by Deutsche Bank Thursday, along with a price target downgrade from the bank to 550 pence from 570 pence.



Anglo American, down 1.8%. The mining group said its platinum production fell 40% to 358,000 ounces for the three months ended June 30 from 594,000 during the same period the previous year as workers from the Association of Mineworkers and Construction Union only returned to work at the end of June. The five-month action over wages and conditions cost the major platinum miners in South Africa over ZAR24 billion, according to the companies and significantly reduced operations and output. The miner said the majority of its other operations saw production increases during the period.



SSE, down 1.3%. The major UK energy supplier is holding its AGM in Perth, Scotland on Thursday. It said that, in spite of challenging market conditions, it continues to expect that its adjusted earnings per share for 2014/15 will be around or slightly greater than the 123.4 pence achieved in the previous year. The group lost 110,000 retail customers in the first quarter, which Liberum Capital says will be a concern if it continues through the summer period. The brokerage highlights that the stock yields 5.8%, which has provided good share price support.

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FTSE 250 WINNERS

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Big Yellow, up 3.6%. The self-storage business saw its shares rise on Wednesday after providing a positive quarterly update, with like-for-like move-ins up 6% in its wholly owned stores. Following the strong update, Morgan Stanley has boosted its rating to Overweight from Equal-weight.

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FTSE 250 LOSERS

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AO World, down 2.1%. The online electrical goods retailer said that trading in the three months to June 30 was in line with board expectations as like-for-like sales jumped 30% on the previous year. The company is holding its annual general meeting Thursday, and despite a positive tone from management, the shares continue to struggle amid concern over valuations. "We can safely say the market has been challenging this year for UK Media & Internet stocks," says Jefferies analyst David Reynolds.

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AIM All-Share WINNERS

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Petrel Resources, up 12%. The oil and gas exploration and development company, in tandem with Clontarf Energy, said it has reached an agreement with the Ghanaian authorities during legal proceedings related to the Tano 2A exploration licence in the country. Petel, which is yet to make any revenue, is seeing a particular boost from the good news, having recently warned that it was facing problems at all of its operations in Iraq, Ghana, and Ireland. Clontarf, however, is down 14%. Petrel has a 30% interest in the block, while Clontarf Energy has a 60% stake.



Starcom, up 10%. The wireless services provider said it has signed a supply and support agreement with a major new distributor operating across Colombia, Ecuador, Mexico and Central America. The agreement with an unnamed partner sets out indicative order volumes and prices across Starcom's range, including Watchlock, Triton, Kylos, Helios Advance and Helios TT, over a three-year period which are potentially significant relative to Starcom's existing sales.



AFC Energy, up 9.8%. The industrial fuel-cell power company said it has entered into a breakthrough deal with Daniel Inc, a fuel cell-focused power plant owner and development company in South Korea, to sell fuel cell systems to Daniel for a potential sales value of roughly USD15 million. AFC Energy said it believes the deal represents the largest sale in revenue terms by any British fuel cell manufacturer in South Korea for a stationary system in an industrial setting. It is also the biggest deal AFC has ever won.



Finsbury Food Group, up 9.7%. The group said it expects to report full-year profit head of market expectations and ahead of last year's figures, due to its actions to stimulate sales and reduce costs. In an update for the financial year ended June 28, the group said that second-half growth in its core UK Bakery business reversed the first half decline, adding that sales for the year were broadly flat at GBP153.7 million. Sales in Lightbody Europe, the group's 50% owned European business, declined by 1.2% for the full year to GBP22.0 million, it said, but added that the decline was more than offset by a shift to higher-margin business, for a "favourable profit dynamic".

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AIM All-Share LOSERS

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Judges Scientific, down 18%. The scientific instruments company saw its shares fall as it said its trading performance for the first half of the 2014 had "proved challenging". The company expects to see revenue growth of 43% compared to the previous year, although this includes first time results from Scientifica Ltd, which it acquired in June 2013. Without Scientifica it saw organic growth of 3.2%. While the results were reassuring, WH Ireland notes that the shares have performed strongly recently and says they are now "fully valued". The brokerage has therefore cut its rating on the stock to Market Perform from Outperform.



Nighthawk Energy, down 9.4%. The US-focused oil development and production company said its total and average production rates have soared in the last year, but it has received disappointing initial logs from the Snow King 12-33 well in Colorado. The Snow King 12-33 was drilled to appraise the Mississippian potential to the north of its original Snow King discovery, and the company said initial analysis of the logs indicates significantly lower structures, possibly through faulting, with limited potential for additional production.



London Capital Group Holdings, down 8.7%. The financial service group said it expects to report a swing to a half-year adjusted pretax loss, hit by its concentration on the competitive UK market and by reduced market volatility. The group expects to report an adjusted loss before tax in the region of GBP900,000 for the six months ended June 30, compared with the GBP2.8 million profit from continuing operations for the same period last year and a GBP600,000 loss for the second-half of last year.

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Source: Alliance News


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