From UK-Analyst.com: Thursday 21st February 2013
The Markets Interest income from the Bank of England was lower than expected in January, fuelling fears that the fiscal deficit will contract less than expected. Economists are now unsure as to whether Chancellor George Osborne will be able to meet his 2012/13 deficit reduction target by the time he announces his new forecasts on March 20th. The January report from the Office for National Statistics did show some improvement in public finances but not enough to offset heavy borrowing earlier in the tax year. James Knightly, Economist at ING said, "The underlying story isn't quite as good. Chancellor Osborne has little wiggle room when he presents his annual budget next month." Staying at home, British factory orders increased by more than expected according to the Confederation of British Industry (CBI). The order book balance in the CBI's survey increased to -14 from -20 in January, above expectations for a reading of -15. The positive trend will provide a source of hope that the country can avoid a triple dip recession as lower factory output was a major factor in the economic contraction in the last three months of 2012. Head of Economic Analysis at CBI, Anna Leach, said "The rebound in manufacturing orders and expectations for output growth provide some further signs of improvement in the outlook for the UK economy." Over in Europe, the gap between the two biggest economies in the Eurozone is at its largest since Purchasing Manager Index surveys (PMIs) began back in 1998. In January, German businesses exhibited a healthy rate of growth at 52.7 (with anything above 50 signalling growth), while activity at French services companies fell to its lowest level since the depths of the recession in 2009 at 42.7. Commenting on the demise of the French Economy was Peter Dixon, Global Equities economist at Commerzbank who said, "There are issues in the French economy which are being unmasked by the depth and severity of this crisis." 
At the London close the Dow Jones was down by 72.91 points at 13,854.63 and the Nasdaq was down by 26.39 points to 2,713.60. In London the FTSE 100 fell by 103.83 points to 6,291.54; the FTSE 250 finished 185.23 points down at 13,554.71; the FTSE All-Share fell by 53.05 points to 3,312.91; and the FTSE AIM Index slipped by 9.62 points to 743.90.  Broker Notes Panmure Gordon reiterated its "buy" recommendation on sportswear retailer Sports Direct (SPD) with a target price of 450p. The broker is impressed with the "excellent" sales growth figures reported in the firm's trading statement for the period to January 27th and believes that this growth will accelerate because of growing online penetration. Also of note to the broker is Sports Direct's increased push into international markets, with the group planning to expand into all 17 countries that have adopted the Euro, within 5 years. The shares climbed by 24p to 440p. Cantor Fitzgerald retained its "buy" recommendation on Victoria Carpets (VCP) with a target price of 250p. The broker notes that Axminster Carpets, a major competitor to Victoria Carpets, has filed for administration and feels that the subsequent reduction in capacity will be helpful to the rest of the industry. Cantor goes on to cite the fact that the shares are currently trading well below NAV as further reason for its "buy" stance. The shares were flat at 206p. Canaccord Genuity maintained its "buy" recommendation on investment firm Ashmore Group (ASHM) with a 399p target price. The broker is encouraged with the recent strong performance in funds which have performed over sector averages. Canaccord's "buy" stance, however, is underpinned by the premise the share price will mirror the intrinsic value of the group after underperforming the sector rally since last June. The shares slipped by 4.5p to 359.8p. 
Blue-Chips Homeware retailer Kingfisher (KGF) announced a fall of 3.4% in like-for-like sales over the 14 weeks ended 2nd February 2013 although total sales actually exhibited a slight increase. The company attributed the drop off in like-for-like sales to a poor performance from B&Q in the UK, in a reflection of the weak consumer backdrop. Broker Cantor Fitzgerald seems to have pre-empted these disappointing results and yesterday re-iterated its "sell" stance on the company with a target price of 240p. The shares ended the day 0.1p lower at 278.2p. Europe's largest defence contractor BAE Systems (BA.) announced a 7% slump in sales revenues to 17.8 billion pounds in 2012, while pre-tax profits slid by 6% to 1.411 billion pounds. The company cited unresolved discussions with the Saudi Arabian government over the pricing of a key contract as partly to blame for these falls. In its outlook the company warned that growth in its two key markets of Britain and the US would probably remain constrained this year. The shares gained 13.7p to 345.9p. Oil exploration firm Tullow Oil (TLW) revealed that recent flow tests at its Twiga South-1 well in Kenya have indicated a combined flow rate of 2,812 bopd. Tullow, which has a 50:50 split interest with Africa Oil in the block, feels that the well has the potential to yield around 5,200 bopd when fully operational. Separately, the group revealed that its Odnyek-1 well in Uganda did not encounter any oil after being drilled to a depth of 1,462 metres and has been plugged and abandoned as a result. The shares jumped by 13.7p to 345.9p.
Mid Caps Bookmaker Ladbrokes (LAD) posted a 7.4% increase in revenues for 2012, with operating profits up by 8% to 206.2 million pounds. The results were boosted by a strong retail performance across the year helped by "favourable sporting results" that have kept punters frustrated. Machine revenue growth of 13% also boosted the numbers and the company intends to roll out a new "next generation" gaming terminal by the end of the year. Furthermore, the bookie intends to roll out is sportsbook website next month, an expected initiative which has helped the shares to rise by over 50% over the last year. Today they did not perform quite so well however, falling by 7.2p to 223.8p. Filtrona (FLTR), the supplier of specialist plastics, has acquired a 100% share of Ulinico Components AB, a Sweden-based distributor of plastic protection and finishing products, in a transaction which will be funded from the group's current resources. Filtrona said that the acquisition would expand its current product range as well as enhance its presence in Scandinavia. In 2012 Ulinico Components generated around 5 million pounds in revenue and, according to Filtrona, the acquisition will be immediately earnings enhancing. The shares were down by 6.5p at 589.5p. Wireless technology group CSR (CSR) reported a 17.5% increase in revenues to a record $1.25 billion (819 million pounds) for 2012, while operating profit was up by 33% at $74 million (48.5 million pounds). The main highlight of the period was the sale of the firm's handset connectivity operations to Samsung for $310 million (203.15 million pounds) in cash which was completed in October. This helped net cash to rise to $333.3 million by the period end, despite a $285 million return of value via a tender offer being completed. CSR now intends to return a further $50 million to shareholders via a share buyback and also increased its full year dividend by 15%. The shares soared by 47.3p to 432.7p.
Small Caps, AIM & ISDX Security product manufacturer Pentagon Protection (PPR) has won a major contract for the supply of portable x-ray equipment worth 1.9 million pounds. Due to confidentially purposes the firm was not able to declare many details but did reveal that the contract had been awarded by a long-term existing client. The company insisted that the magnitude of this contract would, in turn, make it easier to attract more deals of a similar nature in the future. The shares rocketed by 4.375p to 10.75p. Shares in Fulham Shore (FS.P) surged by 1p to 4.5p after yesterday's listing on the ISDX market. The company has been founded by ex-Pizza Express CEO David Page to invest in London-based casual dining restaurants aimed at businessmen and office workers. To read a full analysis of the IPO, published yesterday, sign up for t1ps.com now Financial services group Jarvis Securities (JIM) announced a 22% increase in pre-tax profits to 2.3 million pounds for 2012 as revenue was up by 85% at 6.1 million pounds. These results come as the company has continued to grow its market share over the period and, although trade volumes were down in the UK, it still managed to attract enough business to service profit growth as costs have remained stable and funds under management have increased to record levels. The shares climbed by 20p to 206p. AnimalCare Group (ANCR) posted a 13% increase in revenues to 6.1 million pounds for the 6 months ended 31st December 2012 and a 21.5% increase in pre-tax profits to 1.48 million pounds. Revenue growth was almost entirely attributed to the growth of the medicines business, with sales of generic medicines such as its Vitofyllin and Buprecare medications. As a result of the solid first half management stated its belief that results will be in line with expectations for the full year ended 30th June 2013. The shares inched up by 1p to 141p.
German retail property investor Treveria (TRV) announced that it will return 3.25 euros per share to every shareholder on the register on 1st March 2013. The distribution will be funded from the distributable reserve created by the cancellation in 2007 of the share premium account which had arisen on the placing of shares on AIM at the company's launch. The news comes just days after the company announced that it is to dispose of its Silo D property portfolio. The shares increased by 1.53 euros to 6.62 euros. Energy researcher Ilika (IKA) has renewed and extended the scope of an existing contract with a current client for the development of its battery technology. The renewal of the contract will generate 160,000 pounds in revenues for a two month programme of work with the possibility of a follow on phase. Numis Securities has been the only broker to give a stance this year, reiterating its "buy" recommendation with a target price of 50p. The shares slipped by 2.5p to 37p. Outsourcing firm Quindell Portfolio* (QPP) revealed that it has had a strong start to 2013 and has had a 100% success rate in converting all of its outsourcing pilots into ongoing long term contracts. As a result of the increased visibility, the group is now confident enough already that it will meet market expectations for 2013. Equity research body GECR seems to have captured the general sentiment surrounding the stock, reiterating its "buy" recommendation with a 32p target price back in January. The shares were up by 0.875p to 14.375p. * Quindell Portfolio is a corporate client of Rivington Street Holdings, the ultimate owner of UK-Analyst. | 
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