| The Markets The UK economy has fallen deeper into recession official statistics confirmed on Wednesday, as the nation's output was shown to have contracted by 0.7% over the three months to June. The larger than expected contraction follows a 0.4% drop in GDP the final quarter of 2011 and a 0.3% fall in the first quarter of 2012, and was largely attributed to a slowdown in the construction sector. The extra June bank holiday and the poor whether would have had some negative effect on output the Office for National Statistics (ONS) reported, although at this stage it was too difficult to calculate the magnitude of these occurrences, it added. Chancellor George Osborne admitted the country faced 'big challenges' amid growing national debt and the Eurozone debt crisis, while shadow chancellor Ed Balls commented that the 'truly shocking' figures conveyed that the government's economic plan had failed. 
At the London close the Dow Jones was up by 43.44 points at 12,660.76 and the Nasdaq was down by 21.15 points at 2,546.31.
In London the FTSE 100 fell by 0.91 points to 5,498.32; the FTSE 250 finished 12.52 points behind at 10,873.42; the FTSE All-Share lost 1.58 points to 2,856.05; and the FTSE AIM Index rose by 0.03 points to 663.30. 
Broker Notes Panmure Gordon reiterated its "buy" rating for Unilever (ULVR) with a 2,300p target price. The broker expects the consumer goods conglomerate to report a slowdown in like-for-like sales growth from 8.4% in the first quarter to 4.4% in the second, reflecting the weakening economic environment. However, Panmure noted that the group's Hindustan subsidiary achieved an 18.7% rise in domestic sales for the June quarter, with operating margins rising 180 basis points to 14.5%. On the broker's forecasts, the shares trade on a prospective earnings multiple of 17.5 times for the 2012 financial year, which the broker said is a discount to the global peer group average of 19.1 times. Shares in Unilever inched down by 20p to 2,140p. Shore Capital initiated coverage of OPG Power Ventures (OPG) with a "buy" recommendation, claiming that the India focused electricity company is on the verge of an inflection point. The broker noted that the firm's revenues are starting to grow rapidly as it completes a number of projects, with plans to install 700 megawatts of capacity over the next two years. Shore added that the group is already profitable and using earnings to invest in additional capacity. The shares jumped by 2.75p to 40.25p. 
Singer Capital maintained its "sell" stance for Topps Tiles (TPT) with a 25p target price. The broker said that while the DIY company has seen growing popularity for its own brand, higher margin products, trading remained volatile in the third quarter. Singer added that performance was interrupted by the Jubilee celebrations and noted that the Olympics may also prove a hinderance. The broker also raised concern over growing competition from independent businesses as well as large firms such as B&Q. Despite the bearish note Topps Tiles shares crept up by 0.25p to 42.25p. Seymour Pierce initiated coverage of Tethys Petroleum (TPL) with a "buy" recommendation and 72p target price. The oil and gas explorer recently upgraded its oil reserve estimate in Tajikistan to 27.5 billion barrels which the broker said demonstrated the prolific nature of the Central Asian region. Additionally, Seymour Pierce noted that the firm is due to ramp up production at its Kazakhstan operations. Shares in Tethys gained 0.5p to 38p. Blue-Chips BT Group (BT.A) reported a 6% fall in revenues for its first quarter, ended 30th June, to 4.5 billion pounds, but an 8% increase in pre-tax profits to 578 million pounds as it implemented cost cutting measures. The fixed line telecoms company suffered a 124 million pound net cash outflow during the period and saw its net debt rise by 557 million pounds to 9.1 billion pounds. Equating to 14.2 billion dollars, this is more than the total external debt of the Democratic Republic of Congo, which stood at 13.5 billion dollars as at 31st December 2011 according to CIA statistics. The shares sank by 7.4p to 210p. 
Government support services firm Capita (CPI) achieved underlying pre-tax profit growth of 10% for the six months to 30th June, to 190.7 million pounds, while also securing a record 1.3 billion pounds worth of contract wins. The group continued to enhance its product offering through its acquisition strategy, making 10 purchases in 2012 so far for a total consideration of 129 million pounds. The company added that it has a bid pipeline of 4.1 billion pounds, targeting 33 projects with an average length of seven years. Shares in Capita advanced by 33.5p to 711p. ARM Holdings (ARM) enjoyed a strong second quarter, ended 30th June, signing 23 processor licenses for mobile computing technology and shipping 2 billion chips, 9% more than 2011's comparable period and significantly outperforming the market which declined by 4%. As a result, the microchip developer's total second quarter revenues rose by 15% to 135.5 million pounds, with pre-tax profits climbing 23% to 66.5 million pounds. To reflect the strong performance, the group announced that it will increase the interim dividend by 20% to 1.67p. The shares jumped by 41.7p to 526.5p. Mid-Caps Russian mining group Petropavlovsk (POG) produced 279.1 thousand ounces of gold in the six months ended 30th June, up 27% year-on-year, driven by a 74% increase in production at its Malomir site, to 66.1 thousand ounces. The company said that it was on track to deliver its production target of 700,000 ounces for the full year and noted that it had enjoyed a 13% rise in its average selling price to 1,639 dollars (1,059 pounds) per ounce. Petropavlovsk shares swelled by 19.9p to 400.8p. 
Cookson Group (CKSN) reported an 22% fall in basic pre-tax profits to 93.5 million pounds for the first half of the 2012 financial year, impacted by a 5 million pounds loss from its Fused Silica business as well as adverse currency exchange movement. The materials science company noted improved performances from its performance materials and precious metals processing divisions and completed the bolt-on acquisition of continuous casting business Metallurgica. The shares tumbled by 47.5p to 548.5p. Shares in Drax Group (DRX) crashed by 76.5p to 442p after the government announced that subsidies for fossil fuel power plants that switched to electricity generation from biomass would be done on a unit by unit basis, rather than on a power station wide basis. The power company said that it will initially convert three of its six units, with the goal of being predominantly biomass powered by 2015. The firm added that the cost of purchasing fuel for trial runs of the new systems cost 20 million pounds more than originally expected. Small Caps, AIM and PLUS Shares in Botswana Diamonds (BOD) climbed 0.125p to 2.375p on news that it had recovered its first diamond from the Libongo prospect in Cameroon, a 2 carat specimen. Despite the diamond being low value, near gem quality, management hopes this find marks the first step of uncovering the diamondiferous potential of the deposit. Heavy rain and equipment breakdowns at Libongo, a remote site in dense Cameroonian rainforest, has delayed the processing of a 300 tonne bulk sample, however the company can now confirm that the full results of its exploration programme are expected to be known by the end of September 2012. Firestone Diamonds (FDI) meanwhile provided an update on diamond sales from its Liqhobong mine in Lesotho, southern Africa, announcing the sale of 45,773 carats for 4.14 million dollars earlier this month. This works out as 91 dollars per carat and beats the 71 dollar per carat price achieved in May. Firestone also noted that in the second quarter of the year it processing 152,422 tonnes of raw material through its processing plant, a figure 9% above its forecast, although the grade of the 49,240 carats recovered was 16.3% below its forecast at 32.2 carats per tonne. Firestone shares closed 0.375p higher at 5.25p. News that biomass fuel provider Active Energy Group (AEG) has completed its first seaborne shipment of wood chip to Turkey sent shares in the company 0.25p higher to 2.5p. The initial shipment of 4,000 tonnes of wood chip from Nikolayev port, Ukraine, on the Black Sea, was performed in conjunction with two of its main trading partners, Ukrwood Export and Nikofeso Holdings. Management commented that the development represents a significant step in Active's plans to substantially increase its export volumes and open new routes to market for ever larger quantities. 
Rare Earth Minerals (REM) has been awarded three exploration licenses in southern Greenland, two of which border the world class Kvanefjeld, Sorenson and Steenstrupfjeld rare earth element (REE) deposits. The company has now commissioned an exploration services company to commence a programme to assess the mineral potential of the site, which is also believed to hold zones of gold, niobium, tantalum and zirconium. With Rare Earth Minerals having worked on securing the licences for more than a year, the markets were relieved to hear this news, the firm's shares rising by 0.0125p to 0.1375p. Chinese orange plantation owner Asian Citrus Holdings (ACHL) saw its shares slip by 1.625p to 30.625p after unveiling a full-year to June trading update which fell short of investors' expectations. The firm conceded that, due to the more mature nature of its orange plantations, the net gain on the change in fair value of its biological assets will be significantly lower than in the prior year. In addition, a short-term over supply of oranges to the market contributed to a small reduction in the company's summer crop selling prices to supermarkets and wholesalers of 1.2% and 1.9% respectively. On top of this a higher volume of fertilisers and pesticides were consumed during the year thanks to heavy rainfall in the second quarter of 2012. Accordingly, net profit for the year is expected to be lower than the comparative figure for the prior year of 1.1 billion Chinese yuan (111.7 million pounds). Semiconducter wafer manufacturer IQE (IQE) expects revenue and EBITDA for the six months to June to come in at 34 million pounds and 4 million pounds respectively, figures in line with its expectations. For the year as a whole, IQE remains confident of meeting its targets, noting the exclusive supply contract and strategic investment in Solar Junction Corporation and the acquisition of RF Micro Devices in-house epitaxial business, will drive the business forward. IQE shares ended the session unchanged at 25.75p. | 
No comments:
Post a Comment