| From UK-Analyst.com: Thursday 16th May 2013
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The Markets The Japanese economy grew at its fastest rate in a year in the three months to March, offering hope that the country may be demonstrating an economic recovery after emerging from recession last year. According to official figures, Japanese GDP rose by 0.9% in the first three months of the year, building on the 1% growth the economy exhibited in the previous three months. The figures were boosted by an increase in exports, as the yen lost value, as well as a hike in domestic spending. The data will provide some vindication for newly-appointed Prime Minister Shinzo Abe who has embarked on an aggressive monetary easing programme in an attempt to stimulate growth. Naoki Iizuka, an economist at Citigroup Inc. in Tokyo commented, "Japan is clearly back from stagnation last year. The key from here is whether Abe can unveil a strong growth strategy. If he succeeds, that will boost business investment to support growth." Inflation in the Eurozone fell to a three year low in April in a reflection of the steep fall in the oil price over the last two months, as well as weak demand for goods from within the Eurozone itself. The Eurozone inflation figure was down to 1.7%, falling from 1.8% in March. Within the region, Iceland exhibited the highest inflation rate at 4.5% while Greece oversaw a period of deflation with prices actually down on average by 0.2%. Global Insight Analyst Howard Archer warned, "Deflation is perhaps becoming more of a risk than inflation for the Eurozone, although it remains unlikely for now at least." Staying in Europe, exports from the region were up by 2.8% month-on-month in March as imports fell by 0.1%, widening the trade surplus to 18.7 billion euros (12.25 billion pounds), up from 12.7 billion euros (8.3 billion pounds) in February. Exports shrugged off strong euro exchange rates this time around but economists feel that any further strengthening of the currency would prolong the economic contraction. The figures come just days after it emerged that the Eurozone economy contracted by 0.2% in the first three months of 2013, extending its recession to a sixth successive quarter and increasing pressure on leaders to spur growth. Dominique Barbet, an economist at BNP Paribas commented "This shows foreign markets are the main source of demand, not to say the only one, for the euro-zone activity." At the London close the Dow Jones was up by 13.62 points at 15,289.31 and the Nasdaq grew by 9.62 points to 3,012.24. In London the FTSE 100 fell by 5.75 points to 6,687.80; the FTSE 250 finished 90.53 points higher at 14.566.54; the FTSE All-Share grew by 0.79 points to 3,527.33; and the FTSE AIM Index grew by 0.28 points to 725.22.  Broker Notes Canaccord Genuity retained its "buy" recommendation on marketing group Chime Communications (CHW) with a 295p target price. The broker feels that one of the key strengths of the sports marketing business is improved revenue visibility and feels the company is well set to achieve its target of flat annual profits as over 75% of FY13 Sports revenues have already been booked. Furthermore, with the accumulation of contracts for next year's Brazilian World Cup, Canaccord sees increasing upward pressure on FY14 forecasts and is raising its pre-tax profit forecast from 30.6 million pounds to 32.2 million pounds. The shares inched up by 1p to 261p. Cantor Fitzgerald retained its "buy" recommendation on oil exploration group Tethy's Petroleum (TPL) with a target price of 90p. The broker sees the current share price as representing good value ahead of key drilling in Kazakhstan this year. Cantor is particularly excited on the $60 million (39.3 million pounds) additional funding which is expected sometime in Q2 this year and has come about as a result of a transformational farm out transaction at the Bokhtar project in Tajikistan. The shares were down by 2p at 48p. Panmure Gordon retained its "buy" recommendation on construction materials distributor SIG (SIG) with a target price of 170p. The broker believes that the combination of SIG's clear strategy, with its five pillars of profit recovery and strong market positions, should help sentiment towards the shares continue to improve. Furthermore, Panmure is impressed that SIG has continued to outperform its markets in what remain challenging conditions and feels this is indicative of growth potential when markets do become more favourable. The shares dived by 3.6p, finishing the day at 169p. 
Blue-Chips Insurance group Aviva (AV.) revealed that the pro-forma value of new business, a key growth measure, was up by 18% in the first quarter at 191 million pounds. The group attributed this increase in growth to good trading within its Asian businesses and improved profitability levels from its UK life insurance operations. The group, which shocked the market with an unexpected cut in dividends earlier in the year, stressed that it is on track in delivering its turnaround strategy and that it remains focused on generating cash flow and growth. The shares climbed by 23.4p to 346.5p. Gas and electricity company National Grid (NG.) announced a 4% increase in revenues to 14.36 billion pounds for the year ended 31st March, while pre-tax profits grew by 12% to 2.9 billion pounds. The improvement was largely driven by the group's UK operations as efficiency initiatives and investment in essential infrastructure took effect. Meanwhile in the US, the group also claimed to be making progress, building on its customer service offering and recently securing several significant rate agreements. The shares were down by 9.5p at 835p. Oil giant Petrofac (PFC) announced that some revenue originally expected to be recorded in 2013 will now be deferred into 2014 after delays at the Salah southern field in Algeria following a terrorist attack in January. The group now expects to deliver "modest" profit growth in 2013 but remained adamant that it is on target to increase 2010 group earnings by more than 100% by 2015. In recent weeks both JP Morgan and Exane BNP Paribas have allocated "overweight" and "outperform" recommendations on the group. The shares fell by 37p to 1,325p. 
Mid Caps Electronics retailer Dixons (DXNS) expects underlying pre-tax profits to be at the top end of market expectations of between 75 million pounds and 85 million pounds for the year ended 31st April, a prediction supported by a 7% increase in like-for-like sales over the period. The group, home to Currys and PC World, benefitted from increased market share, following the demise of competitors such as Comet, and also saw an increase in demand for tablets boost sales over the year. The shares crept upwards by 3.49p to 40p. Chemicals group Synthomer (SYNT) declared that demand in Europe for its services fell during March and April and it therefore expects volumes and profits for the year so far to be lower than last year's figures. The company, whose chemicals are used in the adhesive, textile and pharmaceutical businesses, generates more than half of its revenue from Western Europe so this decline in demand is particularly significant. Despite the warning broker N+1 Singer retained its "hold" recommendation on the shares, which tumbled by 17p to 208p. Package holiday operator Thomas Cook (TCG) revealed a 2.6% drop in revenues to 3.224 billion pounds over the six months ended 31st March 2013 despite what management described as "encouraging current trading with strong bookings and gross margins". Separately, the company confirmed that it is to restructure its liabilities, which will see the average maturity of its debt increase while its overall leverage will decrease. The shares increased by 19.4p to 164.1p. Small Caps Agricultural business NWF Group (NWF) claimed that trading in the winter and early spring months has been strong and confirmed that it now expects the outcome for the financial year to be significantly ahead of current market expectations. The feeds division has traded particularly well, benefitting from increased demand for sheep feed due to a widespread late turn out of dairy herd. The group, however, did concede that trading conditions for its food arm remain difficult but stressed that it is doing everything in its power to mitigate the unfavourable trading backdrop. The shares were up by 6.5p at 125p. Invu (INVU), providers of document management software, announced a swing into profit for the year ended 31st January 2013 despite unchanged revenues. The Northampton based firm posted a pre-tax profit of 0.3 million pounds, in a turnaround from a 0.3 million pounds loss in the previous year. The uplift came as a result of improvement in the gross margin from 81.9% to 84.7% and a 13% fall in administrative expenses. The shares soared by 0.25p to 0.44p. Medal maker Toye & Company (TOYE) posted pre-tax profits of 450,000 pounds for 2012 in a swing from a loss of 440,000 pounds a year earlier. The Birmingham based company was able to boost turnover as a result of a large contract win during the year. However, international revenues actually fell from 1.9 million pounds to 1.7 million pounds as exports to some of the group's traditional markets suffered. Profitability also increased due to a reduction in administrative costs, with a string of redundancies made throughout the year. The shares climbed by 5p to 62.5p. Engineering firm Corac Group (CRA) declared that trading so far this year has been in line with expectations, with the group making "notable progress" with R&D work in the upstream and renewable energy markets. Looking ahead, the group is encouraged on existing submarine programmes as well as increasing international activity in protection of coastal waters. The shares jumped by 0.625p to 12.875p. Manufacture of wireless security systems Starcom (STAR) announced a 44% increase in revenues to $8.1 million (5.3 million pounds) for 2012, while pre-tax profits doubled to $1.6 million (1 million pounds). The group also stressed that it has made strides in improving its balance sheet since its February IPO, repaying an outstanding 1 million pounds loan and retaining 2.2 million pounds. The groups short-medium term objective is now to increase the amount of revenues which are generated via high margin monthly subscriptions as it attempts to generate an increasingly recurring base of income. The shares were down by 1.75p at 16.75p. Coal miner ATH Resources (ATH) confirmed that it will wind up the business after exploring all other options available to it. The Scottish miner has appointed KPMG as liquidators and concludes a process which began when the company announced that it was going into administration back in December amid a collapse in the coal price. Hargreaves Surface Mining has now acquired some of the group's assets and have kept all 237 staff in employment. The shares increased by 0.03p to 0.35p. | 
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