News Column

UK WINNERS & LOSERS: Intertek Enjoys Second Day Atop Leader Board

August 5, 2014

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




Intertek, up 3.6%. The quality-testing company's shares have continued to rise, having ended the day as the biggest riser in the blue-chip index on Monday. Shares in the company closed up 6.8% Monday after it reported lower profit for the first half of the year as the strength of the pound hit revenue earned abroad, but predicted organic growth in the second half of the year and beyond. Furthermore, Numis Securities has upgraded Intertek to Add from Hold Tuesday, while JP Morgan Cazenove has lifted it to Overweight from Neutral. Societe Generale, however, has cut its price target on the company to 2,850 pence from 3,200p, while Citigroup has cut its target to 3,340p from 3,940p.

Aggreko, up 2.3%. The temporary power company is a big gainer, even though pretax profit fell 9% to GBP132 million for the six months ended June 30 from GBP146 million the previous year. The company said its revenues were up 1% to GBP768 million from GBP760 million due to strong growth in its Europe, Middle East and Africa and Americas operations, and the company saw an underlying revenue increase of 12%, which doesn't include currency movements and pass-through fuel costs. It added that it saw double digit growth in its Local business on an underlying level, with FIFA World Cup and Commonwealth Games contracts executed successfully. Additionally, Aggreko increased its interim dividend by 3.0% to 9.38 pence from 9.11 pence the previous year.

Standard Life, up 1.7%. The long-term savings and investment business reported a 12% rise in first half pretax operating profit, as fee-based income was buoyed by UK workers automatically enrolling into corporate pension schemes and an increase in third-party assets under administration in its investments arm. It said it made a GBP339.0 million pretax operating profit in the six months to end-June, compared with GBP304.0 million in the corresponding period last year. Standard Life's measure of profitability is pretax profit adjusted for a number of items, including market-driven short-term fluctuations in investment return and economic assumptions. Profit attributable to Standard Life equity holders increased to GBP275.0 million from GBP129.0 million. Standard Life increased its interim dividend to 5.60 pence per share from 5.22p.

Smith & Nephew, up 0.9%. The medical devices company has seen its shares rise following a positive price target revision by both Societe Generale and JP Morgan Cazenove. SocGen has raised its price target on the company to 700 pence from 655p, while JP Morgan has increased its target to 949p from 908p.




Meggitt, down 7.2%. The aerospace, defence and energy sector engineer reported lower profit and revenue for the first half of the year as it was hit by weaker demand for its military goods. It reported a pretax profit of GBP98.2 million for the six months to end-June, down from GBP122.4 million a year earlier, as revenue declined to GBP718.9 million from GBP810.1 million, and its operating margin was hit as it sold more less-profitable goods and said revenue would be weighted to the second half of the year. Still, the company said it was confident of strong organic revenue growth in the second half and a recovery in its margins as orders rose.

InterContinental Hotels Group, down 3.9%. The group has reported lower profit and revenue for the first half of the year due partly to the refurbishment of a Paris hotel and investments in Asia. It posted pretax profit of USD377 million for the six months to end-June, down from GBP462 million a year earlier, as revenue declined to USD908 million, from USD936 million. Nevertheless, the company reported growth in most of its portfolio thanks to the economic recovery in the US and UK and continued strong growth in some Asian markets.




Morgan Advanced Materials, up 1.9%. The company said it has signed a joint development agreement with the University of Manchester, through which the pair will work on scaling up a process for manufacturing graphene. Morgan Advanced Materials said the partnership would focus on understanding and optimising the relationship between the manufacturing process and material science of graphene, with the aim of improving the prospects of commercialising the material.

Rotork, up 1.6%. The manufacturing company reported a slight rise in revenue but a small drop in pretax profit in the first half of 2014, saying it saw an increased level of activity in most markets but that performance will be weighted toward the second half of the year, as it added itself to the slew of companies reporting a negative impact on its results from currency movements. Revenues for the company were up to GBP278.5 million in the six months ended June 30 against GBP276.1 million in the same period a year ago, as Rotork hit a record half-year order intake of nearly GBP303 million. However, profits were down to GBP61.5 million from GBP63.6 million in the first half of 2013, hit by a 9% adverse currency impact. Despite the fall in profits, the firm hiked its dividend 6.4% to 19.2 pence from 18.05 pence a year earlier. Looking ahead, "a greater second half weighting is expected given order book delivery, in line with expectations and we leave our forecasts unchanged," said Scott Cagehin, an analyst at Numis.




Afren, down 6.7%. The oil and gas explorer and producer has seen its shares drop more than 30% since Wednesday's close, after it said last Thursday that it had suspended its chief executive and chief operating officer pending an investigation into alleged evidence of unauthorised payments that were potentially for the benefit of the two executives.

IP Group, down 2.5%. The company has committed up to GBP4.1 million of a GBP6.0 million fundraising round by one of its portfolio companies. According to IP Group, Diurnal Ltd, a spin-out company from the University of Sheffield developing products for the treatment of hormone deficiency, is raising the funds in order to complete the Phase 3 programme for Chronocort, its treatment with the potential to treat certain diseases caused by a deficiency in cortisol, an essential hormone in regulating metabolism and the response to stress. The maximum GBP4.1 million investment by IP Group would give it a 51.7% stake in Diurnal.

BBA Aviation, down 2.4%. The company is among the biggest fallers in the mid-cap index, even though it reported a big jump in pretax profit and expressed its confidence for the coming year amid a continuing recovery in the US market. It said pretax profit jumped 46% to USD92.0 million in the six months to end-June, compared with USD63.2 million in 2013. Revenue was up 3.6% to USD1.15 billion from USD1.11 billion a year ago. Operating profit was flat at USD78.1 million, compared with USD78.8 million a year earlier. "BBA Aviation's interim results were not as weak as we had feared," said Gerald Khoo, an analyst at Liberum Capital. "Management remains optimistic that the recovery in the business & general aviation market will continue, with the group expected to make further progress in H2," he adds.

Inmarsat, down 1.9%. The satellite company has reported a pretax profit of USD168.3 million for the six months to end-June, down from USD185.5 million a year earlier, mainly due to higher depreciation costs as new satellites entered service and started to depreciate and due to an adjustment for the Stratos business it previously sold. It also warned that it would be hit by the recent failure of a rocket launch vehicle, which will delay the launch of the second and third of its Inmarsat-5 satellites and hence the launch of its new Global Xpress services on a global basis. However, revenue and operating profits rose in the half year, driven by demand from the maritime and aviation sectors.




ProPhotonix, up 37%. The company has seen its shares rise after it welcomed AIM All-Share-listed 600 Group as a major shareholder and said it was looking forward to collaborating with it, and said its shares had been bought at over double their recent trading price. 600 Group said Monday it had bought a 26.3% stake in ProPhotonix from other shareholders in return for 600 Group shares, a deal that will make it the US-based laser diodes and LED lighting distributor's biggest shareholder. 600 Group's shares are quoted down 2.4%

Solid State, up 24%. The electronics industry supplier and manufacturer's shares have jumped after its Steatite subisdiary has finalised contract terms with the UK Ministry Of Justice to supply monitoring hardware for the GPS offender tagging programme, the company's largest contract to date. The contract is expected to generate approximately GBP34.0 million for Solid State over the minimum three-year period. Solid State said it expects Steatite, its biggest division, will start supplying products to the MoJ by the end of 2014.

WANdisco, up 8.1%. The company said it has agreed a revolving credit facility with HSBC Bank worth USD10 million, funds that will be used to support its expansion into the so-called Big Data market. The funds available through the facility, which will be available to the firm until March 31, 2017, will be used to back its expansion into the big data segment, including product development and go-to-market activities.

DQ Entertainment, up 7.4%. The company has seen its shares rise after it said that an animated television series it co-produced, Lanfeust Quest, had been bought by several broadcasters for showing in several regions. It didn't give any financial details of the deals, but said Disney XD had bought the series for 50 countries including Turkey, Spain, Benelux, German-speaking Europe, Italy and Central & Eastern Europe, Middle East & Africa, while it had also been bought by TVE in Spain, ABC3 in Australia and by pay-TV networks and Biggs Channel for Portugal.




Rose Petroleum, off 9%. The company is a heavy faller, even though it said it has successfully carried out a mechanical integrity test of the casing at one of its wells and it is finalising bids for a 3D seismic survey. It said it has now completed a mechanical integrity test of the casing in the 16-42 Paradox well located in Grand County, Utah. Rose Petroleum also said it is finalising bids for its Gunnison Valley unit's 3D seismic survey and will begin the regulatory and permitting process imminently. It said the goal is to begin acquiring the data at the end of the third quarter or early in its fourth quarter.


By James Kemp and Neil Thakrar;; @jamespkemp

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Source: Alliance News

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