From UK-Analyst.com: Friday 25th January 2013
The Markets The latest UK GDP figures showed a 0.3% contraction in the economy in the last three months of 2012, adding to fears that the UK could slide back into recession. According to the Office For National Statistics the fall in output was largely driven by a decline in mining & quarrying and as a result of multiple maintenance set-backs in the UK's North Sea oil field. Labour's shadow chancellor Ed Balls was critical of the results and commented, "This government's failing plan has now seen our economy stagnate for over two years and borrowing is now rising as a result." In Asia, the Chinese government has announced details of its five year energy program, outlining resumptions of approvals for a number of new nuclear projects, re-affirming the country's status as the largest power generation market in the world. The forecast target for operational capacity in 2015 is now 40GW, with a further 13GW under construction. This is a marked increased from the 2012 installed base of 13GW. Analysts believe that this could have a positive impact on Sandvik and Invensys, amongst other firms, as a result of higher activity in steam generator sales and automation. Mario Draghi, President of the European Central Bank (ECB), expects the Eurozone economy to begin to recover in the second half of 2013 as governments across the block continue to stabilise their individual economies. This comes a week after the ECB said the economy would either contract or expand between -0.9% and +0.4% in 2013. Draghi said, "The level of economic activity is in the process of stabilising at very low levels, We foresee a recovery in the second half of the year."
At the London close the Dow Jones was up by 40.95 points at 13,866.28 and the Nasdaq grew by 3.94 points to 1,498.76. In London the FTSE 100 increased by 19.54 points to 6,284.45; the FTSE 250 finished 69.66 points up at 13,136.10; the FTSE All-Share gained 5.50 points to 3,288.60; and the FTSE AIM Index slipped by 0.95 points to 739.34.  Broker Notes Panmure Gordon reiterated its "sell" recommendation on pub and restaurant operator Mitchells & Butlers (MAB) with a target price of 225p. After positive updates from its peers, combined with two weekends of snow, the broker has reduced its like for like YTD sales assumptions from +1% to -1%. Furthermore, Panmure Gordon noted that the shares are currently trading on a EV/EBITDAR of 7.5x, an unjustified premium to rival Wetherspoons in the eyes of the broker. The shares slipped by 0.2p to 310p. N+1 Singer maintained its "buy" recommendation on retailer Debenhams (DEB) with a target price of 135p after being impressed with the firm's recent capital markets day. The broker notes Debenhams' increasing focus on accessories, home and beauty and believes its forecast of a 3-year, 150 million pound growth in sales could be a little on the low side as a result of a lack of weighting towards these factors. Additionally, Debenhams' recent management team re-shuffle excites the broker, which believes the future sales potential could be bigger than originally anticipated. The inched up by 0.8p to 105.3p. Canaccord Genuity retained its "buy" recommendation on Avocet Mining (AVM) with a target price of 90p. The broker notes that Avocet has posted production and cost levels in line with its forecasts but does concede that the firm had a poor end to 2012. Despite backing the share price to increase the broker believes the group must demonstrate that it can lower costs this year if it is to attract significant investor interest. The shares lost 5.75p to 59p. 
Blue-Chips Mining giant Anglo American (AAL) announced a 13% increase in metallurgical coal production to 4.6 million tonnes and a 2% increase in total copper production for the three months ended 31st December 2012. The increase in copper production was driven by a 31% hike in copper produced from the group's Los Bronces project in Chile, albeit yielding slightly lower grades. However, the world's largest platinum producer declared that its platinum output had dropped by 8% to 2.219 million ounces due to illegal strike action at its Rustenberg mine in South Africa. The shares were down by 8.5p at 1,886p. Engineer Rolls-Royce (RR.) has completed the installation of the first MT30 gas turbine into the Royal Navy's new aircraft HMS Queen Elizabeth. The turbine in question has a horsepower of approximately 50,000 and is the world's most powerful marine gas turbine, providing enough energy to power Swindon. This agreement is the latest in a sequence of deals between the Royal Navy and Rolls Royce and comes a week after Citigroup reiterated its "buy" recommendation on the shares, with a target price of 1,070p. The shares gained 14.5p to 944p. Elsewhere in the mining sector Xstrata (XTA) announced that its Las Bambas copper project in Peru would cost $5.2 billion (3.3 billion pounds), an amount in line with its 2012 estimates. The miner increased projected costs by 20% last year after delays held back construction but stuck to its modified estimates after speculation amongst analysts that costs would increase further. The shares were up by 11.5p at 1,183p.
Mid Caps Oil and gas production company RusPetro (RPO) revealed that current condensate production levels of 1,400 bopd at its Kransoleninsky oil field will increase to 4,000 bopd as a result of a heat exchange system which is due to come on line. This development has resulted in the group updating its business plan to reflect the increases in production. The company now expects to produce crude and condensate at a rate of 10,000 bopd in 2013, increasing to 31,000 in 2015. The shares increased by 2.625p to 49.5p. 
Small Caps & AIM Toy maker Casdon (CDY) announced a 33.6% uplift in revenues to 4.46 million pounds for the 6 months ended 31st October 2012 as sales increased across its whole product range. The upturn in profitability is partly due to online traders' websites which purchase goods from Cadson at trade quantities. During 2013 the company intends to invest significantly in product development and has also began working on custom designs for a number of overseas customers. The shares shot up by 16p to 58.5p. Wealth management group Brooks Macdonald (BRK) announced that results for the 6 months ended 31st December were in line with its expectations. Discretionary funds in the last 3 months of 2012 grew 23.2% to 4.62 billion pounds primarily due to the impact of the acquisition of Spearpoint, a Guernsey based discretionary fund management group acquired in November. Without the impact of this acquisition funds grew 5% which was still above the benchmark Association of Private Client Investment Management and Stockbrokers index which demonstrated 4.1% growth over the period. The shares dropped by 25.5p to 1,324.5p. China based petrochemical firm Haike Chemical Group (HAIK) revealed that the group will report a loss for the year ended 31st December 2012 due to a significant deterioration in market conditions at the end of the year. As a result of weakened demand for domestic refineries across China the company's 2012 gross margin was half that of 2011, a problem which was compounded further by a surge in administrative costs as a result of increased marketing spend. The shares lost 0.05p to 0.18p. 
Insurance broker Brightside Group (BRT) announced a 5% increase in policy sales to 465,700 in the 12 months ended 31st December and expects to report full year results in line with expectations when it releases its audited full year results in March. Brightside's online car insurance offering, eCar, performed particularly well, delivering a 13% hike in annual policy sales in 2012. The shares were up by 0.125p at 22.25p. A subsidiary of Mission Marketing Group (TMMG), Big Ltd, has announced plans to expand its marketing operations by opening a new office in Birmingham. The office will house a new account team which will be dedicated to supporting a new contract with motorcycle brand Harley Davidson. The shares gained 2p to 33p. Geong International (GNG), the software group based in China, revealed that it is working with creditor Hanafin Investments to reach an agreement on a loan repayment. Geong missed an interest payment which had been due on 31st December last year due to unexpected delays in state approval of the transfer of funds. Hanafin was paid on 15th January. The shares plummeted by 2p to 4.8p. | 
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