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

From UK-Analyst.com: Friday 2nd November 2012 Competition The UK-Analyst Friday Competition is back! This week's prize is a copy of Management Matters by Philip Delves Broughton (RRP14.99). To enter, send your funniest caption for the picture below to richard.gill@t1ps.com by 9am on Monday morning. The Markets US consumer confidence rose to a five year high in October, driven by improvements in the jobs market, with the Conference Board's Consumer Index increasing from 68.4 to 72.2. 171,000 non-farm jobs were added in October, beating forecasts of 125,000, but total unemployment still rose by 10 basis points to 7.9%. Back home, the UK economy is expected to show modest growth in 2013 as the National Institute for Economic and Social Research (NIESR) downgraded its forecast to 1.1% from 1.3% with activities in the Eurozone posing the greatest risk. A NIESR economist said "Risks to the UK economy are dominated by the external environment." Meanwhile, the Greek stock market has slumped by 5% after fears that ongoing negotiations between Athens and its creditors are not going to plan. At the London close the Dow Jones was down by 25.45 points at 13,207.17 and the Nasdaq was down by 0.99 points at 2,686.53. In London the FTSE 100 rose by 6.63 points to 5,868.55; the FTSE 250 finished 29.00 points up at 12120.83; the FTSE All-Share gained 1.84 points to 703.70; and the FTSE AIM Index increased by 7.79 points to 3163.14. Broker Notes Canaccord Genuity reiterated its "buy" recommendation on Royal Dutch Shell (RDSB) with an unchanged target price of 2,650p. The broker believes that Shell offers the best risk to reward profile of all the big-cap oil firms and envisages the Pearl GTL project soon reaching its full potential. Furthermore, the broker predicts an "appetite for defensiveness" among investors and sees Shell as a beneficiary of this more cautious outlook. The shares crept up 5p to 2,246.5p. Seymour Pierce maintained a "buy" rating for SuperGroup (SGP) with a target price of 750p, claiming that management has "steadied the ship". The broker believes the company, which sells the ubiquitous Superdry brand, is well positioned to capitalise on potential in the denim and womenswear markets. Seymour Pierce is impressed by the new autumn/winter ranges, which it believes will bring the group a steady delivery of results, and expects the firm to report second quarter retail sales growth of 25%, with like-for-like growth of 4%. The shares slipped by 4.5p to 669.5p. Northland Capital kept its "buy" stance on Vane Minerals (VML) with a target price of 1.5p despite minor forecast downgrades to reflect the new profit sharing terms. The broker cites the non-inclusion of increased gold production for reasons to be more optimistic than these downgrades may suggest. Northland expects the group's joint-venture with Met-Sin in the La Rasta district to be in development in the fourth quarter of 2012 and production to commence in 2013. The shares dropped by 0.075p to 0.9p. Blue-Chips Car insurance company Admiral Group (ADM) reported an 8% increase in vehicle count to 3.55 million in the three months ended 30th September 2012. Group turnover for the 9 months to the end of the month increased 3% year-on-year to 1.74 billion pounds while third quarter turnover was down by 2% at 570 million pounds. The company attributed the slowdown to the cyclical nature of the UK car insurance market, in particular the third quarter often being the "softer" part of the cycle. The shares decreased 61p to 1081p. Royal Bank of Scotland (RBS) confirmed it made a pre-tax loss of 1.2 billion pounds in the three months ended 30th September 2012 after setting aside a further 400 million pounds for Payment Protection Insurance refunds, taking the total provision to 1.7 billion. However, operating profits from the bank's core business was 1.6 billion pounds, driven by a decrease in charges on bad debt coupled with a fall in restructuring costs. The shares fell by 5.9p to 281.3p. Heating and plumbing specialists, Wolseley (WOS) have agreed to acquire the property, stock and vehicle assets of 22 sites from Burdens Limited, a drainage equipment supplier, for a consideration of 30 million pounds. The target will be integrated into the firm's core UK business, and the acquisition is in-line with the group's strategy of expanding its presence in the utilities market. The shares lost 6p to 2730p. Mid-Caps Hotel operator Millennium and Copthorne Hotels (MLC) announced a 21.1% fall in total revenues to 191.2 million pounds for the three months ended 30th September 2012. In addition, pre-tax profits were down by 48.6% at 39 million pounds, due in part to the inclusion of 33.8 million pounds of profit from the sale of development land in 2011.. However, revenue per available room, a significant metric in the hotel business, was up by 2.6% to 71.23 pounds. This increase was primarily driven by higher demand in London during the summer Olympics. The shares were down 31.5p to 480p. Online gaming company bwin.party Digital Entertainment (BPTY) revealed a 5% slip in pro-forma revenues to 184.4 million euros (147.8 million pounds) for the three months ended 30th September 2012. The group attributed this fall in performance to an introduction of a 5% turnover tax on sports betting in Germany, compounded by an unfavourable run of sporting results in European football, all against a backdrop of weak economic conditions in Southern Europe. Nevertheless, bwin.party shares increased by 3.3p to 124.3p. Hikma Pharmaceutical (HIK) expects to report a loss of 15 million dollars (9.3 million pounds) on revenues of 105 million dollars (65.3 million pounds) for its Generics business for the current financial year, falling short of its break even target. 5 million dollars (3.1 million pounds) of this was attributed to non recurring costs related to remediation and restructuring. On a positive note, the company's branded business is expected to maintain a 20% growth rate after strong demand for its products in Algeria, Egypt and Libya. Shares in the company dropped by 15.5p to 738.5p. Small Caps, AIM and PLUS Clontarf Energy (CLON) announced the identification of three Gas-Condensate prospects alongside one oil prospect in blocks 183 and 188 in Peru. The blocks cover a total area of 992,635 hectares and are located 100 kilometres north-east of the already proven Camisea gas field. The group added that it is in discussions with a number of potential partners in relation to farming out its holdings in the two blocks. The shares increased by 0.375p to 2.5p. Magnolia Petroleum (MAGP) reported the acquisition of 6,700 net mineral acres in Montana for a cash consideration of 4 million dollars (2.5 million pounds). The deal relates to the Montana section of the Bakken/Three Forks Sanish formation and will consist of 2 million pounds in cash and a further 2 million drawn down from the Equity Finance Facility with Darwin Strategic. The company see this investment as "affordable access to liquids rich onshore US formations.". Shares in Magnolia rose by 0.2p to 5.03p. Energy storage company ITM Power (ITM) has signed an agreement with ABO Wind of Wiesbadenn to identify and develop wind to hydrogen projects in the UK, Ireland and Germany. ABO Wind has connected over 350 turbines with a total capacity of more than 600 Megawatts across UK, Europe and Latin America. The shares gained 1.25p to 32.625p. Faroe Petroleum (FPM) intends to cease operations on the P1161 licence, west of Shetland. The decision comes after the results of a study revealed poor oil quality, smaller than expected resource size and limited access to infrastructure on the Fulla prospect. No economically viable solution was reached and as a result the licence was relinquished. The shares were down by 13.75p at 150p. Investment group, LMS Capital (LMS), which focuses on small to medium sized companies, reported a 3% decline in net asset value to 232.8 million pounds for the three months ended 30th September 2012. The firm attributed this loss to unfavourable currency fluctuations. The company has also set out details of a tender offer to return up to 40 million pounds to shareholders. The shares were up by 1.5p at 66.5p. Supplier of biodegradable plastics, Biome Technologies (BIOM), reported that revenues had dropped by a third to 10.2 million pounds in the nine month period ended 30th September 2012. Group revenues for the three months to September 2012 were down by 0.2 million pounds at 2.7 million pounds, which the firm blamed on lower sales from its Biotec joint-venture. The firm noted that its Durapipe UK contract is performing in-line with expectations and it added that it recently secured a new order worth over 0.85 million pounds. The shares fell by 0.005p to 0.075p.

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