LONDON (Alliance News) - The following stocks are the leading risers and fallers on the main London indices Friday morning.
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Royal Mail has jumped 32% to 434 pence in conditional trading Friday, with 102 million changing hands within the first hour of trading as it soared above the 330 pence offer price. That gives it a valuation of over GBP4.5 billion, up from GBP3.3 billion at the offer price, and if that level is maintained it's almost certain to enter the FTSE 100 at the next index review in December. As it currently stands, the government owns 37.8% of Royal Mail, while retail and institutional investors will own 52.2%. Royal Mail's 150,000 or so employees own a 10% stake in the company. The UK government said that it will drop its stake down to 30% if the over-allotment is taken in full.
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FTSE 100 - Winners
Anglo American is up 2.4% after the company said strike action related to the restructuring of its Anglo American platinum business in South Africa has ended. The mining company said it has concluded a deal with the Association of Mineworkers and Construction Union, which commenced strike action on September 27 at its Rustenburg and the North of the Pilanesburg operations. The strike action began after Anglo American began implementing restructuring plans which would have threatened 14,000 jobs. After extensive talks with the Department of Mineral Resources and the South African union, the company revised this down to 6,000 affected employees. As part of the settlement, 3,300 affected employees who had previously not taken up the offer of redeployment, voluntary separation or early retirement, and were to be let go without compensation, have now been granted voluntary separation packages.
Glencore Xstrata is up 1.9%. Two groups of Chinese mining companies are competing for control over Glencore's USD5.9 billion Las Bambas copper mine in Peru, Reuters reports. The company agreed this year to sell the Las Bambas project to meet demands from China's competition authorities after its record-breaking takeover of mining group Xstrata. According to Reuters, several sources said that initial bids for Las Bambas - due to begin production in 2015 - had come in around the USD6 billion mark, including the sum invested in construction so far. Glencore said publicly last month that it had seen robust Chinese interest and expects a sale agreement before the year end.
Travis Perkins, up 1.8%. Liberum Capital has raised the company's target price to 1,900 pence from 1,890p and increased its second-half like-for-like sales growth forecast to 4.3% from 2.9%, with 2013 earnings per share estimates rising by 2% to 103p from 101p. The brokerage cites the improving UK housing market, with transactions up 9% in the year to date and up around 20% in July and August.
Lloyds Banking Group climbs 1.4% after the company said it will sell its Australian operations to Westpac. Having generated cumulative losses of over GBP3 billion, Australia was probably the worst example of "adverse asset selection" in the entire ill-fated HBOS international debacle, says Investec analyst Ian Gordon. The exit will result in a GBP350 million tax write-down for Lloyds which cuts 0.3p from third quarter earnings per share. However, Gordon believes that the exit is overwhelmingly positive and reiterates a Buy rating on Lloyds, with a price target of 80p.
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FTSE 100 - Losers
BAE Systems, down 2.2%, is retracing Thursday's gains. The company had said its outlook is unchanged, but only if it can conclude long-running talks about renegotiating its deal to sell Eurofighters to the Saudis and as long as the US shutdown isn't protracted. It has sent 1,200 staff home in the US due to the shutdown, although it's not having a "material" impact on its finances so far. (see Chemring).
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FTSE 250 - Winners
N Brown Group climbs 4.4%. After four consecutive down-days, the company's share price is re-tracing. The retailer is currently one of the biggest risers on the FTSE 250.
Ashtead Group, up 1.9%, extending gains after Numis Thursday upgraded the company to Add from Hold with a price target of 670p, in the wake of a 15% under-performance over the past quarter. The equipment-rental company's share price weakness comes on the back of profit-taking, following a steep rise to 700p from 100p over a two-year period, according to Numis. Investors who missed out on the jump have been reluctant to chase the stock, while some who bought at a lower level have taken profits. However, Numis is encouraged by the US business, Sunbelt, which continues to prosper "from structural growth in an era of historical lows for US construction markets." The company looks set for a number of years of strong earnings growth as the US market recovers, it says. For the full year, Numis expects Sunbelt to achieve rental revenue growth of 15%.
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FTSE 250 - Losers
Chemring, down 22%, is by far the biggest loser on the FTSE 250. The company warned that the US government shutdown is hitting its US business and operations, and warned of a GBP8 million operating profit hit from this and other issues. The defence technologies company also warned that its performance in its next financial year is likely to be worse than the current year due to continuing difficult market conditions. In a trading statement, the company said it doesn't yet know the full impact of the US government shutdown, but its order intake in October will be hit, as will deliveries to the US Department of Defense in the last few weeks of its fiscal year. On top of the US shutdown problems, Chemring warned that its Kilgore flares business is still experiencing quality and production issues, meaning overall revenues will be down. The sterling-dollar exchange rate has also gone against it, reducing the value of sterling profits earned in the US. On top of this, it said that recent tensions in the Middle East have constrained the availability of shipping to the region and this will have a short term impact on cash receipts for certain munitions contracts until the first quarter of its next financial year. It said it was continuing to closely manage its cash and working capital.
Kenmare Resources is down 10% after it said it had raised GBP66.3 million by placing 250 million new shares at 26.5 pence each. Each subscriber to the new shares will also get one warrant for each five shares bought. The warrants have an exercise price of 29.09 pence and can be exercised after 13 months, but expire in five years.
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AIM - Winners
Kedco, up 22%, continues to push higher after it said Thursday that it had chosen a preferred contractor to build its Enfield Biomass plant and a preferred partner to buy the electricity the plant will produce, while its Pluckanes wind turbine project had started exporting electricity to the grid.
Baobab Resources jumps 11% after it raised money from its largest shareholder that will allow it to complete a feasibility study at its Tete Iron project and fund future works. African Minerals Exploration & Development SICAR SCA, which holds 26.73% of the company's voting rights, will pay GBP750,000 for 5 million shares immediately, and will take an option to provide a further GBP1 million for a further 5 million shares. Baobab will also place a further 8.5 million shares with its shareholder conditionally, raising a further GBP1.3 million, and options on those shares which could raise a further GBP1.7 million if taken.
21st Century Technology climbs 6.7% on the back of directorate changes. Russ Singleton has been appointed as Chief Executive Officer, with Glenn Robinson assuming the role of Group Finance Director. Chairman Mark Elliott will continue to oversee a review of the company's businesses and strategy before he reverts back to being non-executive chairman. Wilson Jennings, who has been with the CCTV provider for 14 years as chief financial officer and then chief executive, will step down from the board immediately, but will stay will the company for up to three months to handover.
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AIM - Losers
FastJet shares, down 13%, has fallen after its biggest shareholder, Lonrho, reduced its stake in the company. Lonrho now controls around 26%, down from 29%, according to a filing with the London Stock Exchange.
Minera IRL falls 7% after LionGold Corp confirmed talks over a proposed possible takeover of Minera have ended. On October 4, Minera said that it was in discussions with Singapore-based LionGold for it to subscribe for up to USD10 million of the share capital in Minera over two tranches, which it hoped would lead to a full offer being made for Minera in time. On Friday, LionGold said that due to the current volatility in the company's share price, which fell by over 11% Thursday, it has ceased all negotiations and discussions over the placement and possible offer.
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By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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