Monday's Stock Market Report from UK-Analyst: featuring Severn Trent, Booker Group and DQ Entertainment

From UK-Analyst.com: Wednesday 30th May 2012 The Markets Spain's financial woes continued to dominate the headlines on Wednesday, rattling Europe's equity markets and sending the Spanish 10-year bond yield to a 2012 high of 6.7%. The European Commission did however say that the nation could be given extra time to meet its agreed budget deficit target. Under the current arrangements, Spain needs to reduce its fiscal deficit from 8.9% to 3% by 2013, although with economic output expected to drop by 1.8% this year and 0.3% in 2013, leaders are beginning to dispute the likelihood of this being achieved. In the UK, credit card lending in April was reported by the Bank of England to show its biggest monthly contraction since August 2006, with repayments towering 118 million pounds above new borrowing. Despite the statistic suggesting households are being more sensible with their credit options, the news can be viewed as a double-edged sword, as cautious consumer spending does the opposite of encourage economic growth. At the London close the Dow Jones was down by 148.38 points at 12,432.31 and the Nasdaq was 36.33 points lower at 2,834.66. In London the FTSE 100 fell 93.86 points to 5,297.28; the FTSE 250 finished 163.05 points lower at 10,494.82; the FTSE All-Share lost 47 points to 2,754.91; and the FTSE AIM Index slipped 9.68 points 691.37. Canaccord Genuity initiated coverage on Balfour Beatty (BBY) with a "buy" recommendation and 413p price target, noting infrastructure spending is moving up the political agenda in both the UK and US. The broker recognised that shares in Britain's top infrastructure group have fallen by 23% since their 2011 peak due to fears over a collapse in government spending, however the firm's balance sheet strength and first-rate public-private partnerships represent a compelling case for long term growth. Balfour shares slipped 3.8p to 275.8p. WH Ireland re-iterated its "buy" stance and 115p on Tribal Group (TRB), believing collaborations with a potential US partner could open a number of new doors for the public sector-focused technology provider. The broker notes the group is acting knowledgably around maximising new routes to additional clients, with recent initiatives suggesting that it has the potential to grow its existing business in Tennessee across the US. WH Ireland concluded by pointing out the business continues to trade at a significant discount to the other companies in the sector, further bolstering the argument that the shares offer significant upside potential. ADVERTISEMENT Latest small cap tip out now on WatsHot.com Get two new meticulously-researched small cap tips each month Plus frequent updates and a daily column from editor James Faulkner Just GBP73 for a year's membership by direct debit (GBP87.60 by card/cheque/Paypal) Click here to join WatsHot.com now Northland Capital Partners continues to rate Tower Resources (TRP) as a "buy", and views next month's start of Graeme Thomson as chief executive of the oil and gas company as 'encouraging'. Thomson has over 30 years public company experience in a number of senior positions in the industry, and was the co-founder of 80 million pound market cap Sterling Energy (SEY). In addition, he currently holds non-executive positions at Desire Petroleum and Frontier Resources International. Tower Resources shares slid 0.05p to 2.9875p. Blue-Chips Engineering and project management company AMEC (AMEC) has acquired Brisbane-based consultant Unidel for a consideration of up to 41 million Australian dollars. The target, which employs 260 professionals has a particular focus on consultancy within Australia's rapidly growing energy, resources and infrastructure sectors, and its purchase plays in line with the AMEC's 'Vision 2015' strategy to increase its presence within the country. AMEC shares dropped 40p to 975p. Capita (CPI) was another FTSE 100 company to announce the completion of an acquisition, the business process outsourcing group confirming the purchase of Clinical Solution Holdings for 20 million pounds. The acquiree is a provider of decision support to healthcare professions and adds further depth and breadth of expertise to Capita's existing services for the NHS. In the year to December 2011, the Basingstoke-based firm generated an operating profit of 6.5 million pounds on turnover of 24.2 million pounds. Capita shares slipped 10p to 620p. Exceptional charges in excess of 50 million pounds in the year to March led Severn Trent (SVT) to report a 38% reduction in pre-tax profits to 156.7 million pounds despite revenue climbing 3.5% to 1.77 billion pounds at the water utility company. Most notably, the firm was forced to realise a charge of 11.5 million pounds arising from its restructuring as well as 22.9 million pound impairment on goodwill. Operationally, the firm noted it had reduced leakage by 7% year on year to a record low, and below the Ofwat target. Severn Trent shares climbed 42p to 1,706p. Mid-Caps RIT Capital Partners (RCP) has created a strategic partnership with Rockefeller Financial Services to further develop their investment management and wealth advisory businesses. By acquiring the 39% equity interest in Rockefeller previously held by French bank Société Générale, investment trust RIT will become a significant shareholder in the company, and with the collaboration of investment products and other areas of expertise, the firm said it will be in the position to better serve the needs of its clients and investors. RIT shares fell 7p to 1,124p. UK food wholesaler Booker Group (BOK) is take hold of Makro UK, the British arm of German retail and wholesaler Metro Group AG in exchange for 123.9 million pounds of new Booker shares and 15.8 million pounds in cash. The deal will see Metro Group hold just under 10% of Booker's shares, which it is has in effect paid 79.1p a share for. Through the proposed transaction, Booker will become the UK leading wholesaler to caterers, retailers and small and medium businesses, gaining 30 purpose built wholesales sites and adding a further one million customers. Booker shares jumped 7.9p to 87p. Small Caps, AIM and PLUS News of further wide iron bearing intersection of up to 29.7 metres at Sable Mining Africa's (SBLM) Nimba iron ore project sent shares in the resource company 0.875p higher to 11.875p. These results, in addition to the first set released earlier this month which reported intervals of 31.7 metres, underpin the potential of the prospect. The findings mean the company remains in line to generate a JORC compliant resource estimate of several million tonnes. Environmental support services group Silverdell (SID) has agreed to the takeover of EDS Group Holdings, a provider of decommissioning services to the power generation, chemical and oil and gas industries, for 15 million pounds. The board recognises the purchase as a 'transformation' acquisition, which is expected to be immediately earnings enhancing, creating an environmental support services group with a global reach and accelerated global expansion into Canada and Australia. Silverdell shares climbed 1p to 11.125p. US broadcasting station DIsney DX has acquired the 3D animated series of The Jungle Book, a programme co-produced by entertainment firm DQ Entertainment (DQE). The programme will premier on 11th June 2012 on a channel available to over 78 million US households. The deals adds to earlier agreement with SMC Entertainment, who has the home video and merchandising rights in North America for the The Jungle Book. DQ Entertainment shares rose 2p to 40p. Shares in Itacaré Capital Investments (ITA) surged 0.075p to 0.45p as the real estate investor confirmed the successful placing of 2.1 million pounds in new ordinary shares at 50p, a premium of 35% to the pre-announcement share price. Purchasers of the stock include existing investors, directors and management, implying the group's shares are in hot demand. The funding enables the firm to develop its residential projects in Brazil in a timely manner. PLUS-quoted Woodspeen Training Group (WSTP) saw revenues slip by 11% to 2.7 million pounds in the six months to March, and operating profit of 474,000 pounds transform into a 97,000 pound loss following the "extremely disappointing" performance of is skills training business. The trading result of the company was affected by the cessation of the government's profitable 'New Deal' programme, with service LearnDirect in particular being hit by a larger than expected reduction in funding rates. Woodspeen shares plummeted 5p to 12.5p.

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