News Column

UK WINNERS & LOSERS: Next Jumps After Further Profit Upgrade

July 29, 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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GKN, up 6.7%. The engineering company's shares have risen after it said its pretax profit rose 6% to GBP296 million in the half year to end-June, up from the GBP278 million a year earlier, as automakers used more GKN parts in their cars. Its recent restructuring paid off, as margins rose, helping offset a marginal decline in revenue for the period, down 1% to GBP3.83 billion from GBP3.87 billion, due to a GBP247 million currency hit that was mainly due to the strength of sterling. On an organic basis, revenue was up 6%, driven by its driveline unit.


Next, up 2.5%. The clothing and homeware retailer's shares have risen after it increased its profit and sales forecast for its current financial year for the second time after it reported strong sales growth in the first half of the year. Its total brand sales were up 11% in the second quarter and for the first half to July 26, driven by a combination of improving sales from its stores, new retail space, strong growth online and a flourishing international business. As a result, sales are currently ahead of the 5.5% to 9.5% full-year growth guidance Next gave in April. The company has raised and narrowed its guidance range for the year to 7% to 10%. The retailer also has raised its pretax profit guidance for the year ending in January 2015 by GBP25 million, and said it now expects to deliver a pretax profit in the region of GBP775 million and GBP815 million. It also lifted its guidance for earnings per share, as it now targets growth of between 12% and 18%, up from the 8% to 14% guidance previously given.


Mondi, up 2.5%. The packaging company said it expects underlying operating profit for its first-half to come in higher than the comparative period last year due to lower special charges. It said it expects its underlying operating profit to be above that of the EUR367 million recorded in the first-half of 2013. The company has also advised that basic earnings per share for the half-year are now expected to be between 46 to 51 euro cents, up on the EUR35.3 cents reported last year.

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FTSE 100 - LOSERS

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St James's Place, down 2.9%. The wealth management company posted a pretax profit of GBP110.4 million in the half year to end-June, down from GBP249.5 million in the previous year, as revenue declined to GBP1.76 billion from GBP3.87 billion, hampered by a reduction in investment return. However, it still posted an interim dividend of 8.93 pence, up 40% from 6.38 pence, and pledged further dividend growth for the full year, as it saw strong growth in its net inflow of funds under management.


Aberdeen Asset Management, down 1.6%. The asset manager's shares are once again among the heaviest fallers in the blue-chip index, having fallen 5.3% on Monday after it said its assets under management fell by 0.6% in its third quarter, hit by a GBP4.0 billion withdrawal by a single client. Following Monday's disappointing trading update and subsequent share price decline, Societe Generale has downgraded the company to Hold from Buy Tuesday, while Berenberg has cut its price target to 510 pence from 530p. JP Morgan Cazenove, however, has raised its price target to 520 pence from 509p.


BP, down 1.1%. BP has warned that further sanctions against Russian partner Rosneft OAO could 'adversely impact' the company, as the oil and gas major reported higher profit in its second quarter but a decline in profit for all of the first half. It said its first-half pretax profit more than halved to USD11.14 billion for the six months to end-June from USD24.62 billion in the previous year as revenues and other income fell 7.0% to USD188,82 billion from USD202.92 billion. It said revenues fell as production dropped 7.3% to 2,118 million barrels of oil equivalent per day, leading to a downstream drop in revenues to USD171.17 billion from USD175.13 billion. Meanwhile, the company said it could be hit by ongoing sanctions against Russia as part of the Ukraine crisis, since amongst those hit by the sanctions already announced earlier this year is Igor Sechin, chief executive of Rosneft OAO. EU ambassadors in Brussels have begun a meeting on Tuesday to discuss fresh sanctions against Russia, which are widely expected to include restrictions on Russian banks accessing European markets, an arms embargo and curbs on dealings with the energy sector, according to media reports. BP has a 19.75% holding in Rosneft.

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FTSE 250 - WINNERS

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Elementis, up 5.3%. The chemicals company said its pretax profit increased in its first half due to sales improvements in its specialty products division. It said its pretax profit increased 7.2% to USD72.4 million for the six months to end-June, from USD67.5 million in the previous year, as revenue increased 3.0% to USD400.0 million, from USD388.2 million. The company said revenue was supported by a 4% increase in specialty products' sales, with personal care products sales volumes increasing 21% and growth in both North American and Asia Pacific coatings operations.


Tullett Prebon, up 3.6%. The interdealer broker's shares are among the biggest risers in the mid-cap index, even though it said that revenue declined in its first-half amid challenging market conditions as the overall level of activity in the financial markets remained subdued. It said revenue fell 15% to GBP360.3 million in the six months to end-June, compared with the GBP439.8 million posted in the first half of the previous year. However, "aggressive action on costs has seen the impact on margins and profitability partly mitigated," says Gary Greenwood, an analyst at Shore Capital. Underlying operating margin fell 220 basis points to 14.0%, resulting in operating profit of GBP50.3 million. This was down from he GBP71.4 million posted in the first half of the previous year, but came in ahead of Shore Capital'sGBP49 million estimate. "Overall, we expect our full year revenue estimates for the group to fall but see the impact of this offset at the earnings level by lower costs," Greenwood says.


PZ Cussons, up 3.3%. The consumer products company has posted higher profits for its last financial year, despite a slight dip in revenue, boosted by the sale of its Polish home care brands during the year and growth from recent acquisitions and joint ventures. It reported a pretax profit of GBP123.7 million for the financial year to end-May, up from GBP94.8 million the prior year. However, it posted a small decline in revenue to GBP861.4 million, from GBP883.2 million, on the back of lower sales from Europe after having sold its Polish home care brands, and on a small reduction in revenue from Africa due to increased levels of disruption in northern Nigeria, due to the Boko Haram insurgency.

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FTSE 250 - LOSERS

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Petra Diamonds, down 11%. The diamond miner saw its shares rise almost 3% on Monday when it said its revenue rose by 17% to USD472.6 million in the year. However, with shares reaching an all-time high after the results, the moment has been chosen for a block sale of 21 million shares Tuesday, sending the shares sharply lower. The placing has been handled by RBC Capital, who have been restricted from commenting Tuesday.


Jardine Lloyd Thompson Group, down 2.5%. The insurer has hiked its dividend on the back of improved revenue and pretax profit in the first half, but also warned about the weak insurance and reinsurance rating environment, as well as adverse foreign exchange fluctuations. It said it would increase its interim dividend to 10.6 pence per share, up from 10.1 pence per share. The company's total revenue rose 15% to GBP559.6 million in the half year to end-June, while underlying pretax profit rose 15% to GBP107.4 million from GBP93.1 million a year ago. However, while Jardine said it was was confident of delivering year-on-year financial progress, it said it was cautious on the outlook for the remainder of the year owing to the "marked decline" seen in the insurance and reinsurance rating environment in the second quarter, along with the continued strength of sterling.


Informa, down 1.4%. The business media and events company released first-half results ahead of expectations, with pretax profit of GBP100.2 million, up from GBP74.6 million, as revenue rose to GBP569.6 million, from GBP564.0 million. However, the group also announced a new investment of between GBP60-90 million as part of a three year growth programme. Moreover, Informa said that its Business Intelligence division will not return to revenue growth until the end of 2016, which is much later than previously expected. Liberum Capital says it expects consensus downgrades in the mid- to high-single-digits as a result of the update.

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AIM ALL-SHARE - WINNERS

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Antrim Energy's shares have more than doubled after it said results from a prospective resources report over its FEL 1/13 licence, which includes its 25%-owned Skellig block offshore Ireland, shows a potential 1.1 billion barrels of oil equivalent. The oil and gas exploration company said the study, which was carried out by McDaniel & Associates Consultants Ltd, shows a best estimate of 1.1 billion barrels across 17 primary leads, with a best estimate of 482 million barrels from two of those leads. The company said that results from its recently-acquired 3D seismic programme at the sites strongly show the presence of Lower Cretaceous and channel deposits. The company said that based on the mean estimates, its cumulative holding at the site provides it with 61.8 million barrels of oil equivalent.


Fitbug Holdings, up 26%. The online and personal health and well-being services provider said it has secured a GBP1.75 million loan from NW1 Investments Ltd and Kifin Ltd. The loan will be repayable by July 31, 2015 and will accrue interest at 5% per year, payable quarterly. In addition, the company said the US District Court of Northern California had set a trial date of February 9, 2015 to hear the company's legal actions against Fitbit, the US wearable data devices manufacturer.


MoPowered Group, up 13%. The mobile commerce company said it has launched a new product that will help it to achieve its revenue targets in 2014 and beyond, and said it had already signed a two-year initial contract for the product. It launched MoPowered 3DS, which is the commercialisation of a technology it has been using as a component in its software-as-a-service platform. MoPowered 3DS will allow online payments to be made more easily on mobile and tablet devices. The company has signed a two-year initial contract with an international remittance business for the product. The contract provides for the payment of a modest monthly retainer, MoPowered said, with the majority of revenue to come from fees levied on a per authentication basis between 10 pence to 25 pence depending on volume.


West African Minerals Corporation, up 9.8%. The iron ore mining and exploration company said it has found two zones of iron mineralisation in coastal regions of Cameroon and Sierra Leon following data gathering and trenching tests. It said that data gathering on the Sanaga lease on the coast of Cameroon has shown several areas of surface level magnetite-bearing rocks with grades ranging from 29.1% iron to 66.3% iron. West African said that as a result of the findings, a reconnaissance drilling programme consisting of 1,500 metres of drilling and preliminary metallurgical test work at the Sanaga site started on July 17 and is scheduled for completion in the third quarter of 2014. The company said that trenching tests at its Madina lease in Sierra Leone has helped to delineate an exploration target with over 1.5 kilometres of strike length and an average width at surface of roughly 220 metres. West African said that preliminary assay results from the trenching has shown the presence of a robust region between 40 and 210 metres depth at grades between 38.5% iron and 41.4% iron.


Hydrodec Group, up 9.2%. The cleantech oil re-refining group said its pretax loss narrowed in its first-half as revenues almost doubled on higher sales volumes brought about by its acquisition of OSS Group last year. It said its pretax loss narrowed to USD3.2 million for the six months ended June 30, from USD7.1 million in the previous year. The company said revenue increased 83% to USD25.4 million, from USD13.9 million, as new sales brought about from its recent acquisition of OSS Group Ltd outweighed reduced income from its Canton re-refinery operations. It said its total sales volumes for the period more than doubled to 25.5 million litres, from 12.4 million litres, while its finance costs fell during the period to USD95,000, from USD3.1 million, due to unsecured loan stock in the first-half 2013.


Kibo Mining, up 7.7%. The company said it has hired Minxcon Projects to carry out a Definitive Mining Feasibility Study on the Rukwa Coal to Power Project in Tanzania. The integrated feasibility study will cover the development of both the coal mine and the co-located thermal power plant at the site, the miner said. Stage 1 of the study, which will start immediately, is expected to be completed by November. Kibo also said it reached terms on a joint development partnership for Rukwa over the past month, but will delay signing of the agreement until the Stage 1 is completed.


Camkids Group, up 7.4%. The Chinese designer and manufacturer of kids and teenage outdoor clothing said it continues to trade in line with market expectations, supported by retail store expansion and its fledgling e-commerce business. It said it has made good progress in the first-half of the year and its e-commerce business is building momentum.

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AIM ALL-SHARE - LOSERS

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Intandem Films, down 9.1%. The film company has revealed that whilst its financial position "remains difficult," it achieved positive results at the recent Cannes Film Festival. It saw film sales of USD2.0 million following the festival, which has generated commission revenue of USD272,725, which it expects to receive by the end of 2014. Additionally, the company has begun international sales for the documentary 'America' which has taken over USD13 million at the US Box Office so far, it said. The company has entered into a strategic relationship with three film executives Mick Southworth, Martin McCabe and Nick MacCahearty. The three will introduce new distribution companies and projects to Intandem for a share of commission earned, it said.

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Source: Alliance News


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