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Friday, October 5, 2012

Friday's Stock Market Report from UK-Analyst: featuring G4S, Zetar and the Weekly Competition


From UK-Analyst.com: Friday 5th October
2012

Competition

The UK-Analyst Friday Competition is back! This week's prize is a pair of Anyday Tickets to the Ski & Snow Board Show, Earls Court, 31st October - 4th November 2012, courtesy of our friends at Yakult. To enter send your funniest caption for the picture below to richard.gill@t1ps.com by 9am on Monday morning.

This year's Ski and Snowboard Show is full of NEW attractions and returning favourites to create the ultimate day out for all wintersports fans. It's also all about "doing" this year; whether you're a die-hard skier or a first-time snowboarder there's plenty to keep you, your friends and family entertained including the Warren Smith skills slope, ice skating, curling, apres sessions and ice sculpting Yakult's friendly staff will be giving out free samples and chatting to visitors about the fascinating 75 year history behind the little bottle.

The Markets

In a surprise turn of events, the Department of Labor announced that the unemployment rate in the US fell to 7.8% in September, down 30 basis points from August and beating expectations of a rise to 8.2%. The news means that unemployment in the country is at its lowest since January 2009. Meanwhile, in Spain the economy minister Luis de Guindos declared that the country does not need a bailout, claiming that proposed austerity measures will be sufficient. However, many are doubtful of this, with speculation rising that Spain will request help by as early as this weekend.

At the London close the Dow Jones was up by 57.87 points at 13,633.23 and the Nasdaq was up by 1.99 points at 2,830.59.

In London the FTSE 100 rose by 43.24 points to 5,871.02; the FTSE 250 finished 106.93 points ahead at 12,061.35; the FTSE All-Share gained 21.40 points to 3,066.14; and the FTSE AIM Index climbed by 1.27 points to 706.53.

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Broker Notes

Daniel Stewart reiterated its "buy" recommendation for Lonrho (LONR) with a 20p target price. The broker feels that the separation of airline FastJet, nee Fly540, derisks the business, and will allow the firm to focus on its core agribusiness. Daniel Stewart forecasts double digit growth for the 2013 financial year, putting the shares on a prospective earnings multiple of 9.6 times. Additionally, the broker believes that Lonrho will begin generating free cash flows in 2013, which could lead to the introduction of a dividend in short order. The shares inched up by 0.02p to 9.92p.

Shore Capital upgraded its stance on Matchtech (MTEC) from "sell" to "buy" after the recruitment agency reported a 21.4% surge in net fee income for the year ended 31st July 2012, to 36.1 million pounds. The broker added that the firm's conversion rate improved to 24% for the year, and reached 27.7% in the second half, nearly equal to the group's medium-term target of 30%. On Shore's forecasts, the shares trade on a prospective earnings multiple of 7.7 times for 2013, while offering an attractive dividend yield of 7.1%. Matchtech shares rose by 2.5p to 221p.

N+1 Singer maintained its "buy" rating for Man Group (EMG) with an 85p target price, ahead of the fund manager's third quarter update due on 18th October. The broker believes that the firm's assets under management have rose by 7.1 billion dollars (4.4 billion pounds) to 59.6 billion dollars (36.4 billion pounds) over the three months to 30th September, largely benefiting from the acquisition of FRM. Singer also believes the firm while have achieved positive investment movement of 0.9 billion dollars (0.6 billion pounds) as well as foreign exchange gains of 0.6 billion dollars (0.4 billion pounds). The shares jumped by 4.5p to 90p.

Blue-Chips

G4S (GFS) has agreed to buy two Belgian safety personnel and equipment companies for a total consideration of 2.975 million pounds in cash, from ASC-Group. The security firm will integrate the new businesses into its existing Secure Solutions NV subsidiary, increasing it presence in the fire and health & safety market. The shares grew by 4.2p to 268.5p.

Mid-Caps

Oil and gas support services provider John Wood Group (WG.) said that trading conditions remain strong and that it expects to report full-year results in-line with consensus forecasts. The firm noted that its engineering division saw high activity in the upstream and subsea & pipelines markets, with a number of major contracts in the Gulf of Mexico. The company added that its downstream operations were more subdued due to lower levels of expenditure in US refining, but it believes that this will improve in the second half. The shares advanced by 22.5p to 833.5p.

Grainger (GRI) has sold the first phase of its Berewood site to housebuilder Bloor Homes. The residential landlord said that Bloor will begin construction in November, that the site has planning permission for 194 new homes and that the project has an anticipated gross development value of 35 million pounds. When completed, the Berewood scheme is expected to consist of 2,550 new homes, as well as supporting facilities, such as schools, retail space and offices, and is expected to be completed in 10 to 15 years. Grainger shares gained 2p to 110p.

Communication services firm KCOM Group (KCOM) claimed that it is on-track to meet full year targets, despite difficult market conditions and delays in contract awards, which it expects to continue for the rest of the financial year. The company noted that its net debt position at the end of the half year ended 30th September had risen due to increased capital expenditure and its share buyback scheme. The business also reaffirmed its commitment to increase its full year dividend by a minimum of 10%. The shares tumbled by 5.6p to 78.75p

In order to strengthen its position in the health and risk sectors, Jardine Lloyd Thompson Group (JLT) has acquired Alexander Forbes Consultants and Actuaries for a cash consideration of 17 million pounds. The target will be incorporated into the insurance broker's existing Employee Benefits division, adding new clients and increasing its presence in the UK. In the year ended 31st March, Alexander Forbes generated revenues of 27.8 million pounds. Shares in Jardine crept up by 6p to 766p.

Small Caps, AIM and PLUS

Shares in Blur Group (BLUR) commenced trading on AIM, the company raising 4 million pounds to improve its technology and increase the size of its sales team. The company provides online exchanges, allowing business to buy and sell services, such as marketing and technology. The firm said that it has over 20,000 users, operating from over 130 countries, using its platforms and that revenues for the six months ended 30th June rose 75% year-on-year to 0.98 million dollars (0.60 million pounds). The shares closed at 84.75p, capitalising the business at 20.81 million pounds.

Shortly after the markets closed chocolate maker Zetar (ZTR) revealed details of a recommended cash offer of 297p per share in cash from a newly set up subsidiary of German food business Zertus. The deal is a premium of 26% to yesterday's closing price and values the business at around 42.7 million pounds. Zetar shareholders will also get the previously announced 3p dividend, gving a total of 300p per share.

Jupiter Energy (JPRL) announced that its J-55 well in Kazakhstan discovered 60 metres of net oil pay, having drilled to a total depth of 3,400 metres. The hydrocarbons explorer noted that the results were similar to those achieved at its already proven Akkar East oilfield, but pointed out that it is part of a separate structure. It is estimated that the deposit may contain up to 10 million barrels of resources. The shares swelled by 4p to 40.75p.

Quantum dots developer Nanoco Group (NANO) has secured a joint development agreement to incorporate its technology into new LED lighting with "one of the world's largest lighting companies". The firm claims that the incorporation of its quantum dots in LED lights produces purer white light, thereby showing true colour. The company noted that the contract follows on from another deal with the same client, announced in August 2011. Shares in Nanoco leapt by 5p to 69p.

ATH Resources (ATH) sold around 1.6 million tonnes of coal in the year ended 30th September 2012, flat on 2011's performance, but average sales prices increased by 14% to 57 pounds per tonne. The miner also created cost savings of around 3 million pounds and lowered its net debt position by 9.5 million pounds to 22 million pounds. However, with coal prices down 30% since the start of the year, the group warned that it will incur significant non-cash write offs. The shares crashed by 0.625p to 2.875p.

Avarae Global Coins (AVR) expects to report revenues of around 0.45 million pounds for the year ended 30th September, down from 1.58 million pounds in 2011, with gross profit margins falling to 15%, from 44%. The group attributed the weaker performance to a strong comparable, which included sales at a Hong Kong auction in August 2011. However, it noted quality products continued to attract attention, such as the recent sale of a George V 1920 Sydney mint gold sovereign for 0.78 million pounds, three times the price of a similar coin sold in 2006. Avarae shares were unchanged at 10.625p.

Amerisur Resources (AMER) announced that its Platanillo-5 well, which encountered 79 feet of net pay as announced on 3rd October, has achieved natural flow rates of 2,472 barrels of oil per day. The group plans to begin commercial production at a rate of 1,500 bopd, bringing the its total production rate to 3,500 bopd. Amerisur added that it is confident of achieving a rate of 5,000 bopd by the end of the year. The shares slipped by 0.25p to 39.25p.

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