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From UK-Analyst.com: Thursday 29th November 2012
The Markets
The UK government is considering paying firms for cutting electricity use as part of its strategy on saving energy and reducing costs. It is thought that the government is thinking of paying firms for each kilowatt-hour saved through energy saving measures such as low-energy lighting. The government is also thought to be considering offering businesses financial incentives to encourage people to purchase more energy efficient equipment. In Europe, the European Commission has set out a schedule for Eurozone integration, including plans for a separate Eurozone budget and a joint issuance of debt. Chief of the commission, Manuel Barrosso wants a new fund inside the EU in order to speed up structural reforms in the Eurozone and said "We need a deep and genuine economic and monetary union in order to overcome the crisis of confidence that is hurting our economies and our citizens' livelihoods". Staying in Europe, figures released in Germany revealed that unemployment in the country has climbed for an eighth successive month as Europe's debt crisis put a halt on company investment. The Federal Labor Agency in Nuremberg revealed that the number of people without a job rose slightly, by 5,000 in November, to 2.94 million and many analysts suspect export demand may face a significant slowdown in the fourth quarter. Carsten Brzeski, an economist at ING Group in Brussels, said, “German unemployment looks set to increase further. This increase, however, should only be very mild, mainly located in the export industry.†At the London close the Dow Jones was up by 43.43 points at 13028.54 and the Nasdaq gained by 16.34 points to 2681.61. In London the FTSE 100 increased by 67.02 points to 5,870.30; the FTSE 250 finished 135.96 points up at 12,026.57; the FTSE All-Share gained 34.39 points to 3066.16; and the FTSE AIM Index crept up by 0.41 points to 687.64.  Broker Notes N+1 Singer has reiterated its "buy" stance on management consultancy firm WYG (WYG) with a target price of 75p. The broker is impressed with the firm's interim results and in particular the company's EBITDA of 0.3 million pounds, which was above its forecast of 0.1 million pounds. The broker does acknowledge that revenues did fall more than forecast after the disposal of its Southern Ireland business but was encouraged with how gross margins more than offset this fall. In summary, the research body believes that the interim statement is indicative of the firm's successful recovery plan and uses this as justification for its "buy" stance. The shares were up by 0.5p at 62p. Seymour Pierce has maintained a "buy" recommendation on Egdon Resources (EDR) with a target price of 16p. This comes after news that Egdon has resumed production on the Ceres Gas Field, where it holds a 10% interest, and confirmation that previous methanol injection system issues have been resolved. The broker is also impressed with the 200 barrels of oil equivalent per day estimate the company has put in place despite experiencing production problems. The shares gained 0.375p to 9.25p. 
Panmure Gordon maintained its "buy" recommendation on RPC Group (RPC), with a target price of 491p, on the back of the company's recently published interim results. The broker believes that the results show solid progress, despite ongoing macro pressure and the significant impact of FX given the size of European revenues. The broker is particularly impressed with the company's proposed efficiency plan to be launched next year, which should add 12 million pounds in steady state benefits to the bottom line by 2016. The shares fell by 35.9p to 390p. Cenkos Securities issued a "buy" recommendation on Avanti Communications (AVN) with a target price of 900p. The broker is impressed by the 11 million pounds-a-month rate the company is currently winning business at and forecasts that, at this rate, the communications company will be at capacity on all three of its satellites by 2016. Cenkos believes that this could see the company generate over 100p in EPS. The broker notes that the share price fell yesterday by 10% but is of the opinion that this is because the equity market is very "near-term focused" and this lack of perspective provides an opportunity to profit. The shares grew by 2.75p to 218p. Blue-Chips Europe's largest home-improvement retailer Kingfisher (KGF) posted a 5.9% drop in retail profits to 257 million pounds for the 13 weeks ended 27th October 2012. This slip in profits was driven by a decline in sales in its two biggest markets, the UK and France, where sales fell by 0.8% and 9.3% respectively. In the UK, sales in the B&Q business declined by 2.3% which the company attributed to a weak consumer backdrop and a particularly challenging environment in Ireland. The shares were down by 1.6p at 279p. 
Pennon Group (PNN), the water and waste management company, announced a 3.4% increase in pre-tax profits to 111.1 million pounds for the 6 months ended 30th September despite a 1.4% drop in revenue to 633.7 million pounds. This improvement in profits was driven by a robust performance in the South West Water business where, although customer demand was hit by the wettest summer in 100 years, pre-tax profits were able to rise because of rigorous cost control and lower interest costs. The shares climbed by 26p to 624.5p. Mid Caps Pub operator Marston's (MARS) reported a 5.5% hike in group revenues to 719.7 million pounds and a 9.2% increase in pre-tax profits before exceptional items to 87.8 million pounds for the year ended 30th September. This was partly driven by a 2.4% increase in food sales, which now represent 44% of total sales for the group. However, the firm, which operates 2,150 pubs in the UK, reported a loss of 135 million pounds after tax which was driven by a 215 million pound downward valuation of its property portfolio. The shares inched up by 0.9p to 125.2p. Electrical retailer Dixons (DXNS) reported a 4% increase in total group sales to 3.29 billion pounds for the 24 weeks to October 13th and a 12% reduction in pre-tax losses to 25.3 million pounds. This reduction in losses was driven by a 3% increase in like-for-like sales in the UK as the "summer of sport" gave the retail group a boost. The company remains confident that it can benefit as a result of rival Comet entering administration. Dixons also intends to cut its cost base by 90 million pounds in the next two years in an attempt to exploit a market recovery further down the road. The shares slipped down by 0.29p to 25.76p. 
Electronic payments business Paypoint (PAY) revealed a 6% increase in revenues to 101.7 million pounds and a 15.5% rise in pre-tax profits for the 27 weeks ended 30th September. Growth was driven by a 17% increase in network transactions, with a particularly high growth rate of 24% in the retail sector. Geographically, Romania exhibited the most significant growth for the company as payment transactions were up by 38% at 11.6 million. The shares decreased by 12p to 843p.
Small Caps & AIM Advanced Power Components (APC), the distributor of electrical components, revealed a 5.4% slip in revenues to 13.6 million pounds, as well as a 92.7% reduction in pre-tax profits to 29,000 pounds for the year ended 31st August. This contraction in business was driven by a decrease in orders from the company's traditional market as difficulties experienced in the wider economy curtailed profitability achieved by the group in previous years. APC said that this year has started promisingly, with a contract win to supply and install LED lighting at a major UK retailer. The shares were down by 2.375p to 13.75p. Prosperity Minerals (PMHL) reported a 61% drop in revenues to 198 million dollars (123.6 million pounds) for the six months ended 30th September as losses soared from 2.3 million dollars (1.4 million pounds) to 17.5 million dollars (10.9 million pounds). The China based iron-ore trading business attributed part of this loss to a customer reneging on a contract to accept 200,000 tonnes of iron-ore, forcing the company to look for other buyers in the market, which resulted in a loss of 5 million dollars. However, the main driver of the results was a very difficult market for iron-ore. The shares were down by 2p at 59.5p. Manufacturer of specialist packaging materials API Group (API) posted a 0.55% increase in revenues to 58.8 million pounds for the six months ended 30th September. More significantly, pre-tax profits were up by 29% to 3.7 million pounds. The firm's laminates business performed particularly strongly, with profits ahead by 1.3 million pounds on last year despite delays in the start up of a major new supply contract. Furthermore, the company was able to almost halve net debt, it falling from 10 million pounds to 5.2 million pounds. The shares fell by 0.25p to 69p. 
Conygar Investment Company* (CIC) announced growth in pre-tax profits from 1.76 million pounds to 7.46 million pounds as net asset value per share increased by 7% to 165.9p. The improvement in net asset value per share was primarily driven by an upwards appreciation in value of the company's property portfolio, with the value increasing by 26.4% to 176 million pounds since 2011. As a result of this growth, the company has increased its final dividend by 14% to 1.25p per share. Shares in Conygar grew by 0.875p to 89.50p. Fastjet (FJET), Africa's first low-cost airline, today commenced its commercial flight operations, with the first aircraft flying from Dar es Salaam to Mwanza in Tanzania. The company currently has two operational routes, one being the aforementioned Dar es Salaam to Mwanza route and the other being Dar es Salaam to Kilimanjaro. Initial ticket bookings have been robust since sales started just over two weeks ago, with seats being secured well in advance. The shares were up by 0.125p to 3.675p. Online betting operator 32red (TTR) has commenced trading under its Italian gaming licence which was issued earlier in the year. 32red currently allows Italian customers to play traditional casino table games but from 3rd December customers will be able to play the newly approved online slot machine games. Furthermore, although the company acknowledge that there is regulatory uncertainty across Europe, it is exploring the possibilities of expanding into other European territories. The shares lost 0.375p to 41.875p. * Conygar Investment Company is a corporate client of Rivington Street Holdings, the ultimate owner of UK-Analyst.
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