LONDON (Alliance News) - The following stocks are the leading risers and fallers on the main London indices Thursday morning.
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FTSE 100 - Winners
Aberdeen Asset Management is up 5.5% after it said it is in discussions with Lloyds Banking Group over a possible acquisition of the bank's Scottish Widows Investment Partnership, an asset manager with GBP145.79 billion in funds under management. The talks are focused on the possibility of a strategic partnership with Lloyds, it added. Scottish Widows Investment Partnership is a subsidiary of Scottish Widows insurance, which wouldn't be included the sale being discussed. Aberdeen said it expects any deal to be "materially earnings per share enhancing", while it would also reinforce the asset manager's commitment to a progressive dividend policy and to return surplus capital to shareholders over time.
Rolls-Royce is up 2.4% after airplane maker Boeing, one of its big customers, late Wednesday lifted its earnings outlook following a jump in third-quarter profit. Liberum analyst Ben Bourne, who just attended an investor day at peer Senior, says the "outlook remains rosy" for the whole sector and the Boeing results illustrate this. Separately, Rolls-Royce said it signed a GBP22 million contract to supply thrusters and deck machinery for two semi-submersible drilling rigs to be built at Samsung Heavy Industries in Korea for Stena Drilling. The deal is tiny for the company which has an order book worth GBP69 billion, and the share move is down to the good news in the sector, analysts say.
WPP, up 1.9%, is one of the biggest blue-chip gainers after the advertising and PR company said its third quarter revenues were up 7.4% from the previous year, well above analysts' forecasts, as US and UK advertising markets continue to recover strongly, and it revised its full-year revenue forecast higher. The company reported like-for-like growth of 5% at constant currencies, up from 2.4% in the in the first half of the year. Total revenues were GBP2.68 billion, up 7.4%. At constant currencies the growth was 6.4%, up from 5.5% in the first half of the year. It said it now expects full-year revenue growth of over 3%, compared with a previous forecast for 3%. WPP is outstripping its peers and growing well beyond expectations, said Numis Securities analyst Paul Richards, who was encouraged with the growth in developed markets. Liberum Capital, which has a Buy rating on the stock, expects other analysts to upgrade earnings per share forecasts.
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FTSE 100 - Losers
Sports Direct International, down 4.0%, is the biggest faller on the FTSE 100 after Chief Executive Mike Ashley Wednesday sold GBP106 million worth of shares on the day the newly promoted FTSE 100 company saw its stock rise in the wake of strong results. A regulatory filing from the company Thursday showed Ashley had sold 16 million shares at 662.5 pence each through his MASH Holdings Ltd investment company, a 2.7% stake in the company. He is still left with a 61.7% stake in the business after the sale, although has pledged not to sell any more shares for 180 days as a condition of the sale. Ashley's discounted sale price effectively set a new market value for the stock.
Randgold Resources is down 1.2% after Goldman Sachs cut the company's price target to 5,500.00 pence from 5,700.00p, with a Neutral recommendation.
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FTSE 250 - Winners
Ophir Energy is up 8.8% after it said it is looking to sell down its interests in the Pweza-3 well in Tanzania. The sale makes sense for the company as the Tanzania project is expensive to develop from a capital exposure point of view, says Liberum Capital analyst Kate Sloan, but she thinks the market is too optimistic. The market's view of the value of East African gas assets have been influenced by recent merger and acquisition activity in Mozambique, but achieving the same price in Tanzania demands optimism on cost of capital or early delivery, she says. The potential impact of capital gains tax is also being overlooked, she thinks, although it's unclear at this stage if it would be levied on any sale.
Kazakhmys climbs 4.7% after its nine-month ore extraction rates were up 6% on the previous nine months, with its copper-cathode output especially strong during the period. The copper miner operating in Kazakhstan reported ore extraction of 29.6 million tonnes in the first nine months of 2013, driven by an increase in output from the Central Region, with its Konyrat mine contributing an additional 2.0 million tonnes of ore. Copper cathode equivalent production from the company's own concentrate of 214,900 tonnes was in line with the prior period.
Inchcape rises 3.4% after it said it has delivered a "robust trading performance" in the third quarter, with revenue up 7% to GBP1.625 billion at actual currency, 7.8% at constant currency. The company also reports a 3.5% rise in like-for-like revenue at actual currency, up 4.2% at constant currency. Inchcape said it has benefited from its international portfolio and long-standing partnerships with premium automotive brands, reporting total revenue for the nine months to September 30 2013 of GBP4.937 billion, up 6.7% at actual currency and 6.1% at constant currency. Like-for-like revenue was up 2.5% and 1.9% at actual and constant currency, respectively. The firm said it expects full-year results to remain robust and that it is well positioned to benefit from consolidation opportunities and growth prospects in the automotive market.
Home Retail Group, up 2.7%, continues to rise after its first-half results Wednesday beat expectations. Profits fell in the first-half of the year due to costs for restructuring Argos, but excluding those costs, pretax profit rose by 53% to GBP27.4 million, from GBBP17.9 million a year earlier. Exane BNP Thursday has lifted the company's price target to 160.00p from 140.00p, Citigroup has raised it to 195.00p from 115.00p, Deutsche Bank to 185.00p from 160.00p, while Barclay's also boosted its price target to 115.00p from 110.00p.
Serco Group is up 2.3% after it won a GBP355 million five-year extension to its contract to run and maintain the Dubai Metro. The new contract will run until September 2019, with an opportunity to extend for a further two years.
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FTSE 250 - Losers
Spirent Communications is down 6.0% after it said it expects revenues in the region of USD115 million to USD120 million in the fourth quarter, hit by delayed orders, and as it reported lower revenues in its third quarter. For the third quarter ended September 29, the company posted revenues of USD107.7 million, down from USD111.7 million in the previous year. Revenue grew 6% in the US, but was weighed down by a 7% drop in Asia and 25% in Europe. Operating profit was down to USD16.1 million from USD27.9 million in the previous year. Numis has cut Spirent's price target to 145.00p from 160.00p, while Panmure lowered it to 148.00p from 156.00p.
Debenhams falls 5.5% after reporting that its full-year pretax profit was down despite a recovery in the second half which failed to offset the first-half weakness. The department-store chain reported a pretax profit of GBP154.0 million for the 53 weeks to August 31, down 2.7% from GBP158.3 million a year before, and said that its group gross margin was flat when compared with the prior year. The company also said it remains cautious about the pace of any UK consumer recovery and a highly competitive marketplace.
De La Rue, down 3.2%, continues to slide after saying Wednesday that it expects full-year operating profits to fall short of its GBP100 million target due to more difficult trading conditions in its Currency division and Cash Processing Solutions business. The banknote printer said it expects operating profits for the full year to come in around GBP90 million, GBP10 million below a three-year target set out in the company's Improvement Plan in May 2011. The company warned that its Currency division faces a worsening pricing environment in the printed banknote market because there is overcapacity in the market. JP Morgan Thursday cut De La Rue's price target by 206.00p to 974.00p from 1180.00p.
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AIM - Winners
Imaginatik jumps 38% after it signed a three year contract with an unnamed Canadian banking and financial services corporation. The company said that through the provision of consulting services and its enterprise software platform, Innovation Central, it will support the bank in its innovation activities initially across several divisions and over time expanding its reach within the enterprise, enabling the client to tap into the collective resource of its employees.
Petards climbs 14% having won another contract to install its CCTV system on trains, this time on 46 new Alstom trains being built for the Greater Stockholm Local Transport SL in Sweden. The latest win comes after it earlier this month won a contract worth over GBP1.75 million to provide on-board digital CCTV systems for Electrostar trains being made by Bombardier for Southern Railway in the UK, and in September won a multi-million euro contract with Hitachi Rail Europe Ltd to supply passenger counting systems for new intercity trains for the Great Western Main Line.
Densitron Technologies is up 13% after it settled a claim made against it by the landlord of the property in Newcastle that had previously been occupied by its former subsidiary Densitron Ferrograph Ltd. The company did not disclose any details of the settlement, but did say that it had agreed to a settlement amount and the rectification of the lease on the building at the current market rent.
Digital Globe Services is up 11% as it said revenues in its fiscal first quarter increased 67% year-on-year and 21% quarter-on-quarter. The company, which provides online customer acquisition services, said revenues had been bolstered by the growth of its US telecommunications business and entering into new territories.
Sweett Group climbs 10% as it expects full-year results to be slightly ahead of its previous expectations after it performed "very positively" in the first half of its financial year, driven by a recovery in the UK and Europe, while the unwinding of an Australian dollar currency derivative will add GBP1 million to its full-year pretax profit. The company said it has seen clear signs of increased recovery across its European markets, of which the UK is the biggest. Its traditional markets like retail, commercial and healthcare are improving while it described its decision to develop its transport, energy and infrastructure businesses as "well judged". It said business in the Middle East has got off to a steady start, with orders growing, while Asia Pacific is trading in line with its expectations, It said its Indian operation is continuing to grow at a "healthy" pace, and it has just opened a fifth office in the country in Kolkata.
Brady is up 9.4% after it won a contract with MAG Commodities, a Swiss international marketer for agricultural products, for its Trading and Risk Management software. Brady provided no financial details of the contract. It comes just a day after the company said it had won a contract with a global metal trading company for services to handle cross-commodity trading and risk requirements.
Firestone Diamonds is up 8.4% after it said Wednesday that it had increased its base diamond price at its Liqhobong Diamond Mine in Lesotho, excluding its potential large stones, to USD107 per carat. Firestone said its decision to update the resource came after analysis of the pilot plant's diamond production over the past 22 months. It said that the new base diamond pricing represents an increase in its expected revenues to USD2.35 billion. The company also said that the expected price would be increasing further to USD156 per carat, with expected revenues of USD3.4 million if you include possible diamonds over 100 carats.
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AIM - Losers
Nyota Minerals plunges 19% after it gave further details on its possible subsidiary sale agreement for the Tulu Kapi Gold Project in Ethiopia. The company said that it expects the deal to be for a 75% stake of its Nyota Minerals (Ethiopia) Limited, which holds the Tulu Kapi site. Nyota will be left with a 25% stake and will be required to contribute to the funding of the subsidiary's exploration activities once an updated mineral resource statement is completed at the site. The company said that under the agreement, its subsidiary has been valued at GBP6 million and consideration for the 75% shareholding is expected to comprise GBP1 million in cash and the balance of GBP3.5 million in shares in the partner. Nyota said the partner has not been named to mitigate the risks of the sale, but it is a junior exploration and development company listed on a regulated stock market. The company told Alliance News last week that the deal was not with Centamin PLC, which had been a key player in discussions over Nyota's future. Nyota said recently that it would've run out of cash by the end of September, but in a recent statement said cost cutting and careful management of its spending means it has enough to get it through to the end of October at least. Its cost cutting has included reducing fees paid to its directors by half.
Port Erin Biopharma Investments is down 13% after it said it was undertaking a strategic review to determine how to address the substantial discount to net asset value its shares hold. The company urged shareholders to change the company's investing policy so that it would be able to make an in-specie transfer of its eligible assets to a UCITS sub fund. This fund would be managed by Charlemagne Capital, which Chairman Jim Mellon would act as advisor to.
Tracsis is down 8.7% after it posted lower pretax profits despite increases in revenues for the full year ended July 31. It posted a pretax profit of GBP2.6 million, down from GBP3.0 million in the previous year, due to high share-based payment charges in relation to the company's long-term incentive plan and one-off exceptional costs in relation to its April acquisition of traffic survey firm Sky High. Administrative costs rose to GBP5.3 million from GBP3.8 million in the previous year. Eric Burns, analyst at WH Ireland, is not sure as to why the company is such as big faller. Revenue of GBP10.8 million was above WH Ireland's estimate of GBP10.4 million, with profit before tax of GBP3.3 million coming in ahead of its GBP3.1 million forecast, earnings per share, reaching 11.2p, was also ahead of the expected 10.3p.
ASOS, down 2.1%, is not one of the big fallers, but is of interest. The online fashion retailer, by far the biggest stock on AIM, is down after senior managers sold GBP94.1 million worth of shares in the wake of the company's strong results Wednesday. Chief Executive Nick Robertson will use some of his return from the placing to award staff a GBP2.8 million special bonus, a spokesman said.
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By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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