M&A rumour mill cranks up
Market Movers
techMARK 2,136.13 +0.17%
FTSE 100 5,888.48 +0.35%
FTSE 250 11,974.19 +0.34%
After
trading in positive territory for most of the day Footsie dipped into
the red after US markets opened lower, but bounced back into the black
in the final 90 minutes of trading.
The day started well with
the Japanese central bank unexpectedly opting to beef up its
quantitative easing programme, a move which prompted a mini-stampede
into mining stocks.
The minutes from the Bank of England's
Monetary Policy Committee meeting earlier this month were, as usual,
pored over by the tea-leaf and rune readers.
Opinions remain
divided on whether an interest rate cut is in the pipeline, but most
pundits agree that it won't be long - November, probably - before the
Old Lady of Threadneedle Street is following the Bank of Japan and the
US Federal Reserve, and turning on the quantitative easing taps again.
M&A market showing signs of life
Aside
from the long-running Glencore/Xstrata saga, the summer has not been a
great one for mergers & acquisitions (M&A) but there are signs
that activity could be picking up.
United Utilities
rose sharply on the back of renewed speculation over a potential
takeover. Usually it is the Germans or French hoovering up industries
vital to Britain's everyday life, but this time the rumours point to a
consortium of funds including some from the Middle East as the likely
buyers, with BofA Merrill Lynch speculating that the take-out price
could be around 900p.
Accountancy software firm Sage
was also put through the rumour mill. The group has often been touted as
a likely acquisition by a bigger software rival, but today's rumours
focused on a potential sale of the group's US business.
George
O'Connor, an analyst at Panmure Gordon, gave the rumours short shrift,
describing the suggestion as "tosh". O'Connor did speculate, however,
that Sage could be touting one of its under-performing operating units
to see whether anyone is interested.
"As this fresh rumour seeps into the market the price is likely to tick upwards thereby presenting investors with another opportunity to bag some profit." Sell, is O'Connor's advice.
William Hill and GVC Holdings, meanwhile, are in the early stages of putting together a joint bid for online gaming group Sportingbet.
The two firms said they envisaged an offer that would leave William
Hill with Sportingbet's core Australian market and certain other locally
licensed businesses, with GVC acquiring the remaining parts.
Africa focus
Platinum miner Lonmin
initially shot up on the news that striking workers at its Marikana
operations are to return to work on Thursday after a settlement was
reached late on Tuesday night. By the close, gains were much more
modest.
Imperial Leather soap maker PZ Cussons was
wanted after a well-received trading update. The group said it is
confident of a return to profitable growth this financial year, though
conditions remain difficult in its core market of Nigeria and
challenging elsewhere.
Shopper round
Online fashion and beauty store ASOS
continued its recent barnstorming performance, boosting revenues by a
third in the last quarter. Retail sales were up 31% year-on-year, with a
15% rise in the UK and a 42% jump in international trading.
It was a different story at French Connection,
where the shares took a hammering after the group reported a first half
loss. The fashion group, which issued a profit warning in May, posted a
pre-tax loss of £6.3m in the six-month period ended July 31st 2012
compared to a profit of £0.7m in 2011. Revenue during the period fell to
£96m compared to £102.8m a year earlier.
Technology company Smiths Group
saw top line growth across all of its divisions last year, as revenue
broke through the £3bn barrier. Headline profit before tax rose 7% to
£554m from £517m the year before. The median forecast from the group of
analysts following the stock was £451m. Statutory profit before tax
dipped to £366m from £398m as a result of laundry list of exceptional
items.
Commercial vehicle hire company Northgate said
despite economic headwinds affecting both its UK and Spanish businesses,
it continues to trade in line with company expectations.
Other markets
Gilts
had a good day with the yield on the 10-year benchmark gilt dipping to
1.84% from 1.88% overnight. Yields move inversely to prices.
The most active contract for Brent crude ended the London trading
session $3.36 lower at $108.67 a barrel, after the Energy Information
Administration said crude inventories rose by 8.5m barrels in the week
ended Sept. 14th.
FTSE 100 - Risers
Weir Group (WEIR) 1,824.00p +2.82%
United Utilities Group (UU.) 727.00p +2.76%
Rexam (REX) 434.60p +2.36%
Fresnillo (FRES) 1,868.00p +2.13%
SSE (SSE) 1,400.00p +1.89%
AstraZeneca (AZN) 2,959.00p +1.88%
ICAP (IAP) 344.00p +1.75%
HSBC Holdings (HSBA) 587.80p +1.71%
Lloyds Banking Group (LLOY) 39.50p +1.66%
ITV (ITV) 89.50p +1.65%
FTSE 100 - Fallers
Aviva (AV.) 333.40p -3.33%
Admiral Group (ADM) 1,090.00p -1.54%
Petrofac Ltd. (PFC) 1,622.00p -1.28%
Tullow Oil (TLW) 1,393.00p -1.28%
Imperial Tobacco Group (IMT) 2,336.00p -1.10%
Rio Tinto (RIO) 3,161.50p -1.00%
Aggreko (AGK) 2,373.00p -0.84%
Meggitt (MGGT) 407.50p -0.80%
Shire Plc (SHP) 1,877.00p -0.79%
Land Securities Group (LAND) 786.50p -0.76%
FTSE 250 - Risers
Centamin (DI) (CEY) 95.00p +4.80%
PZ Cussons (PZC) 318.10p +3.51%
Debenhams (DEB) 102.90p +3.47%
Chemring Group (CHG) 360.60p +3.32%
Mondi (MNDI) 627.00p +3.12%
Bank of Georgia Holdings (BGEO) 1,330.00p +3.10%
Talvivaara Mining Company (TALV) 175.70p +2.81%
St James's Place (STJ) 369.40p +2.73%
Telecom Plus (TEP) 859.50p +2.63%
Brewin Dolphin Holdings (BRW) 166.90p +2.52%
FTSE 250 - Fallers
Aquarius Platinum Ltd. (AQP) 46.75p -8.15%
IG Group Holdings (IGG) 449.50p -4.20%
Ocado Group (OCDO) 67.20p -3.59%
TR Property Inv Trust Sigma Shares (TRYS) 70.75p -2.41%
International Personal Finance (IPF) 310.00p -2.36%
COLT Group SA (COLT) 119.60p -2.29%
Premier Farnell (PFL) 181.10p -2.11%
Electra Private Equity (ELTA) 1,705.00p -2.01%
ITE Group (ITE) 206.00p -1.95%
William Hill (WMH) 312.60p -1.91%
FTSE TechMARK - Risers
Oxford Biomedica (OXB) 2.50p +13.64%
CML Microsystems (CML) 315.00p +4.65%
Promethean World (PRW) 24.00p +4.35%
Emblaze Ltd. (BLZ) 48.00p +4.35%
Phytopharm (PYM) 12.62p +3.06%
FTSE TechMARK - Fallers
AEA Technology Group (AAT) 0.060p -33.33%
Filtronic (FTC) 42.62p -9.79%
Optos (OPTS) 167.00p -5.65%
Vislink (VLK) 32.00p -3.76%
E2V Technologies (E2V) 130.50p -3.33%
Skyepharma (SKP) 97.50p -2.50%
| Europe Market Report |
 |
| FTSE 100 | Euronext | Dax perf | CAC 40 |
 |  |  |  |
|
Most European Markets Finished With Modest Gains Wednesday
The majority of the European markets
finished in positive territory Wednesday, following the weakness of the
previous two sessions. One of the major catalysts today came from new
stimulus measures announced by the Bank of Japan. The markets received
further support in the afternoon, after the U.S. reported some solid
housing data.
The Bank of Japan on Wednesday announced a
fresh round of stimulus to revive the economy by expanding the asset
purchase by another JPY 10 trillion. The central bank also cut its
assessment of the economy, saying the recovery is "pausing."
In
addition, the central bank extended the intended timescale for
completing the asset purchases till the end of December 2013 compared to
its previous deadline of end of June 2013.
Bank of England
policymakers unanimously decided to maintain quantitative easing at GBP
375 billion and the interest rate unchanged at 0.50 percent, the
minutes of the meeting held on September 5 and 6 showed Wednesday.
The
nine-member Monetary Policy Committee discussed whether it was
appropriate to modify or continue with the programme of asset purchases
it had agreed at its July meeting.
Germany's two-year note
fetched positive yield for the first time since June at an auction on
Wednesday. The country raised EUR 4.084 billion from the sale of its
federal notes due September 2014, Bundesbank said. The auction drew bids
totaling EUR 8.446 billion against a target of EUR 5 billion. The yield
on the two-year debt known as Schatz rose to 0.06 percent from zero
percent seen in the previous sale on August 22.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.55 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.49 percent.
The DAX of Germany climbed by 0.59 percent and the CAC 40 of France advanced by 0.54 percent. The FTSE 100 of the U.K. rose by 0.43 percent and the SMI of Switzerland gained 0.51 percent.
In Frankfurt, Porsche gained
7.82 percent. The automaker won the dismissal of two investor suits in
connection with the allegations that the company had lied about its
failed Volkswagen takeover plan in 2008.
Volkswagen climbed by 1.96 percent, BMW rose by 1.46 percent and Daimler finished higher by 2.25 percent.
Commerzbank increased by 2.14 percent and Deutsche Bank added 1.74 percent.
In Paris, Bouygues dropped
by 0.54 percent, but peer Vinci rose by 1.07 percent. HSBC downgraded
Bouygues to "Neutral" from "Overweight," while initiating Vinci with a
"Neutral" rating.
Michelin raised its adjusted earnings
guidance for 2015 to 2.9 billion euros from its previous target of 2.5
billion euros. The stock closed up by 1.31 percent.
STMicroelectronics fell by 2.09 percent, after S&P Equity Research downgraded the stock to "Sell" from "Hold."
Renault advanced by 2.11 percent and Peugeot gained 1.40 percent.
In London, Lonmin climbed
by 0.62 percent. The striking miners at its Marikana platinum mine in
South Africa's North West province finally struck a deal with the
management on wages after a 39-day violent strike. The protesting miners
were demanding pay rises and recognition of a new union.
Smiths Group
reported a decline in fiscal 2012 profit hurt by one-time costs. The
British technology company's revenue, however, increased with growth
across all divisions. The stock finished higher by 1.63 percent.
HSBC rose by 1.83 percent and Lloyds Banking Group gained 1.65 percent. Royal Bank of Scotland also climbed, by 0.49 percent. Holcim increased by 2.0 percent in Zurich, after JPMorgan raised its rating on the stock.
|
| US Market Report |
Stocks Posting Modest Gains In Mid-Day Trading
While
buying interest has remained relatively subdued, stocks have moved
modestly higher over the course of the trading day on Wednesday. The
markets have benefited from a positive reaction to news out of Japan as
well as U.S. housing data.
The major averages have moved roughly sideways in recent trading, clinging to slim gains. The Dow is up 44.02 points or 0.3 percent at 13,608.66, the Nasdaq is up 4.10 points or 0.1 percent at 3,181.90 and the S&P 500 is up 4.14 points or 0.3 percent at 1,463.46.
The
modest strength that has emerged on Wall Street is partly due to news
of additional stimulus from the Bank of Japan, although the move is
largely seen as symbolic.
The Bank of Japan increased its asset purchase program by 10 trillion yen, but the purchases are exclusively earmarked for 2013.
In a research note, Capital Economics
said, "The Bank of Japan surprised markets today with a move that gave
the impression of coordinated easing by the major global central banks,
providing a welcome boost to confidence."
"However, we had
already expected them to ease by this amount in October, so although the
timing is slightly earlier than we (and most others) had anticipated,
it is not a game changer," the firm added.
Traders are
also digesting a mixed batch of U.S. housing data, including a report
from the Commerce Department showing that housing starts rebounded in
August but still came in below economist estimates.
The Commerce Department
said housing starts rose 2.3 percent to an annual rate of 750,000 in
August from the revised July estimate of 733,000. Economists had
expected starts to climb to 768,000 from the 746,000 originally reported
for the previous month.
Building permits, an indicator of future housing demand, fell 1.0 percent to an annual rate of 803,000 in August from 811,000 in July.
A separate report from the National Association of Realtors showed that existing home sales jumped by more than expected in August, reaching their highest level since May of 2010.
NAR said existing home sales
jumped 7.8 percent to an annual rate of 4.82 million in August from
4.47 million in July. Economists had expected existing home sales to
climb to an annual rate of 4.55 million.
Chris Low, chief
economist at FTN Financial, said, "Bear in mind this report, and this
morning's housing starts, pre-date the Fed's QE3 mortgage purchase
announcement. The Fed's help for housing comes on top of a recovery
already in progress."
"Housing is not booming, but it is
improving and will continue to do so in part because the Fed is
determined to drive mortgage rates to new historic lows," he added.
Among individual stocks, Cracker Barrel
(CBRL), AutoZone (AZO), and General Mills (GIS) are all posting notable
gains after reporting their quarterly results before the start of
trading.
|
| Broker tips |
Smiths, Ashtead, Kingfisher
On the whole analysts at Credit Suisse have a favourable opinion of the final results posted today by Smiths Group.
They thus describe the company´s second half performance as “solid,”
while highlighting the 10% top line growth and 19.2% margin achieved.
Nevertheless, they also take note of the company´s references to the
ongoing macro uncertainty and the pressure on government spending, which
led to some caution on the outlook for fiscal year 2013 (in particular
for the second half of that year) and as a result, trim their forecasts
for the next two fiscal years (2013 and 2014) by 2% an 1%.
Credit Suisse also calls attention to the fact that the “focus of the
group is now shifting towards generating top line growth, primarily
through 1) investment in new products and 2) expansion in growth
markets.”
That now that the main restructuring program has been completed.
Credit Suisse analysts have reiterated their outperform recommendation
on shares of Smiths, as well as their 1,200p price target.
Credit Suisse has issued a very bullish research note today on the shares of plant hire firm Ashtead.
More specifically, its analysts cite several factors which, when
combined, make the company their favourite in the sector. Additionally,
they indicate that the company faces minimal downside risks based on
their HOLT model.
For all of the above reasons they have
decided to raise their price target on its shares to 400p from 316p
beforehand, while reiterating their outperform rating.
This
despite the 149% rise in its stock price over the last twelve months,
which has seen the company´s share price outperform by no less than
120%.
In particular, they cite two reasons for the above.
First of all, they highlight the fact that the structural shift to
renting from owning construction equipment in the US is on track. In
second place, the company has started to improve the profitability of
its UK operations.
“Positive” risk-factors to watch out for
are the possibility of a mild winter and the fact that their US EBITDA
margin targets (39% estimated for this year and 41% in FY14E) remain
substantially below management medium term guidance of around 45%.
Nomura has this morning downgraded its view on the shares of do-it-yourself retailer Kingfisher to neutral from buy.
This as housing
starts in France have been declining since the start of the year, which
should weigh on Brico’s performance, thus creating uncertainty around
near-term trading for the business.
Furthermore, and across
regions, “improvements in discretionary spend have been few, with
significant recoveries unexpected near term,” the broker says.
For all of the aforementioned reasons, and the resulting limited
visibility in the near-term, they expect the stock to continue trading
below their discounted cash flow (DCF) valuation of 338p. Rather, they
believe it will trade more in line with its 12x price-to- earnings
multiple, hence their downgrade and the reduction in the price target to
287p from 328p before.
|
|
No comments:
Post a Comment