LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices midday Wednesday.
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FTSE 100 - WINNERS
Admiral Group, up 7%. The motor insurer reported a 7% increase in 2013 pretax profits despite a fall in net revenue as it faced significantly lower costs, mainly because of a reduction in the cost of net insurance claims. It posted a pretax profit of GBP370.2 million, compared with GBP344.6 million in 2012, beating the GBP363.9 million consensus estimate that the company said analysts had been expecting. Net revenue fell to GBP924.4 million from GBP984.3 million, as insurance premium fell marginally. Net insurance claims fell to GBP303.0 million from GBP404.5 million in 2012, meaning it was the driver as total expenses dropped to GBP554.2 million from GBP639.7 million.
Standard Chartered, up 0.6%. The emerging markets-focused bank reported a USD6.06 billion pretax profit for 2013, compared with USD6.85 billion in 2012, as operating income was slightly lower at USD18.78 billion. Operating expenses fell to USD10.19 billion from USD10.72 billion. Although the results mark the first drop in pretax profits after a decade of growth, analysts now see the bank in a stronger capital position than expected. The fully loaded CT1 ratio increased by 60 basis points from the half-year position to end the year at 11.2%, which is ahead of many analyst expectations and appears to have been well received by the market.
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FTSE 100 - LOSERS
Melrose Industries, down 6.7%. The engineering investment group's large increase in profit and revenue in 2013 has not been enough to prevent the firm's shares dropping sharply. Numis Securities analyst David Larkam says that while the company's pretax profit for the year was 1% above expectations, he sees downside risk in the short-term. Looking ahead, the company has warned of continued benign end markets and currency headwinds, says Larkam. Moreover, Melrose's shares are the second most expensive in the UK engineering sector. Subsequently, Numis has cut its recommendation to Reduce from Hold.
Persimmon, down 5%. The company is a big faller after Credit Suisse revised its position on the majority of the housebuilding sector. Credit Suisse has lowered Persimmon to Neutral from Outperform, cutting its price target to 1,486 pence, from 1,532p.
Legal & General, down 1.9%. The life pensions and investment company's shares have fallen despite the company reporting a 10% rise in 2013 pretax profits, supported by strong growth across the business. Although Shore Capital analyst Eamonn Flanagan views the group as a "real juggernaut" after its results came in above its expectations, he says that the share price decline comes on the back of a strong performance in the run up to the results. Its shares had risen by more than 12% since the beginning of February ahead of the release. Subsequently, "there has been an element of profit taking," says Flanagan.
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FTSE 250 - WINNERS
Perform Group, up 6.8%. The digital media company continues to rise, having jumped 19% on Tuesday after it announced full-year results in-line with expectations as well as announcing a new cost-saving plan. Also lifting the stock, Numis Securities upgraded Perform to Buy from Add after the UK equity market close on Tuesday. While Numis believes that there is no hiding from the severity of the warning provided by the company in December, when it indicated it would miss revenue expectations in 2013 and 2014, Perform has now provided a clear explanation for these revenue shortfalls, all of which have now been addressed.
Grafton Group, up 3.4%. The builders merchants and DIY company reported a strong increase in profits in 2013 as its markets started to recover from the long economic downturn, and it predicted further steady progress this year. The group reported a pretax profit of GBP67.7 million for 2013, up from GBP25.1 million in 2012, as revenues increased 8% to GBP1.90 billion, from GBP1.76 billion and its operating margin increased to 4.1% from 3.5% as it cut costs. Additionally, it said trading so far in 2014 has been helped by the lack of freezing conditions seen in early 2013.
Carillion, up 1.2%. Despite the company's underlying pretax profit falling to GBP174.7 million in 2013, down from GBP200.0 million in 2012, and its fully diluted earnings per share slipping to 34.7p, these were both ahead of Liberum Capital's expectations of GBP173 million and 33.5p, respectively. However, "the cash-flow is where the real surprise is," says Liberum analyst Joe Brent. The firm's cash generated from operations rose by 64% to GBP160.9 million, up from GBP97.9 million in 2012. Subsequently, Liberum has upgraded Carillion to Buy from Hold, saying that it believes the company has reached the end of the downgrade cycle. Carillion also said it has won two contracts worth a combined GBP520 million.
Dignity, up 0.9%. The funeral company has posted higher profits and revenues for its 2013 financial year, helped by strong sales of pre-arranged funeral plans, and said it expects further growth in 2014 despite a slow start to the year. The company reported a pretax profit of GBP49.6 million for the 52 weeks to December 27, 2013, up from 45.4 million a year earlier, as revenues rose to GBP256.7 million, from GBP229.6 million. It will pay a final dividend of 11.83 pence, up from 10.75 pence.
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FTSE 250 - LOSERS
Playtech, down 9.3%. The online gaming company said its founder Teddy Sagi had ended up selling a 15% stake in the business after strong demand for his share placing. The company had said Tuesday that Sagi's Brickington Trading Ltd was proposing to sell about 29.3 million Playtech shares at 725 pence through a secondary placing. That would have represented a 10% stake and taken Sagi's total holding in the company he founded down to 39%. However, Brickington agreed to increase the size of the placing to 45.0 million shares due to "overwhelming demand from existing and new investors," Playtech said. That has left it with 98.6 million shares, or a 33.6% shareholding. The sale banked Sagi GBP326 million.
SOCO International, down 8.4%. The major oil-and-gas exploration-and-production company said its pretax profit fell significantly in its full year 2013 on lower revenues and exploration write-off costs. It said its pretax profit fell 25% to USD333.3 million from USD445.6 million the previous year as revenues fell 2.2% to USD608.1 million from USD621.6 million in 2012.
Bellway, down 3.4%, Taylor Wimpey, down 3.4%, Barratt Developments, down 2.4%, and Bovis Homes, down 2.4%. Credit Suisse has downgraded ratings or price targets for all four. Bellway is lowered to Neutral from Outperform, with its price target cut to 1,876p from 2,058p. Taylor Wimpey has been cut to Neutral from Outperform, with a reduced target price of 127p, down from 134p. Bovis Homes' price target has been lowered to 952p from 1,004p, while Barratt Developments' rating has been downgraded to Neutral from Outperform, though with an increased price target of 458p.
Rentokil Initial, down 2.1%. The company said it has acquired Chilean pest control, hygiene and office services company Bestway, a deal that makes it the biggest hygiene services provider in the country and gives it a platform to expand in Colombia as it continues to expand in emerging markets. No financial details for the deal were provided.
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AIM - WINNERS
Flowgroup, up 18%. The alternative energy products company said it expects 2013 revenue to be slightly ahead of analyst forecasts, and confirmed that it is on schedule to launch its new boiler product in the second half of 2014. It said it had seen significant achievements during the year such as the successful launch of its energy business Flow Energy, and the launch of a domestic pilot for its microCHP Flow boiler. The Flow Energy business continued to exceed expectations, Flowgroup said, as it produced annualised revenues of no less than GBP30 million.
ServicePower Technologies, up 15%. The group has announced that it has signed a multi-year contract with AB Electrolux Home Appliances which it expects to deliver significant revenue.
BlueRock Diamonds, up 12%. The diamond exploration and production company said it is progressing with trial mining operations, has recovered its first diamonds, and has completed improvement works on its processing plant at Kareevlei in South Africa. It said it has now excavated a further roughly 70,000 tonnes of ore from the K1 and K2 pipes at Kareevlei since December and has encountered weathered kimberlite, the igneous rock known for containing diamonds, at expected lower levels.
Independent Oil & Gas, up 9.9%. The group said that it will buy UK licence block 48/22a in the North Sea, which contains a gas discovery that will be renamed Cronx, from Swift Exploration for an initial payment of about GBP468,000. The initial payment for the block will be made on completion, which the company expects to happen at the end of April. Additional milestone payments will then be made depending the performance of the field, up to a maximum of GBP13.2 million in milestone payments.
Dekeloil, up 8.2%. The palm oil producer said it has successfully met the conditions regarding its tax exemption application in the Ivory Coast, meaning profits from its palm oil extraction mill there are now fully exempt from corporation tax for a 13 year period. It said the tax exemption greatly enhances the economics of the mill after the site began crude palm oil production ahead of schedule in February.
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AIM - LOSERS
Strategic Natural Resources, off 17%. The natural resources developer said it is continuing in talks with a potential strategic investor to commence recapitalisation of the company. It said it is currently evaluating a revised financing proposal involving the investor, and it is seeking proper evidence of funding from the investor which should allow of certain funds over the course of this month. If the revised financing proposal is not agreed, the company said is in discussions with alternative providers of finance at a preliminary stage. However, if it is unsuccessful in securing any additional investment, it will need to consider the company's options for protecting the interests of creditors.
Eco City Vehicles, down 13%. The group, which supplies Mercedes Vito taxis in the UK, has announced that its chief executive has stepped down to pursue other interests as it warned that trading since the start of this year had got tougher due to increased competition in the London taxi market. Although the company said its revenues rose slightly in 2013, and that it expects its EBITDA to be flat to slightly higher, it warned that trading conditions so far this year had become tougher as new entrants arrived in the London taxi market. It also blamed Transport for London for being ambiguous about the emissions standards for taxis that it will require from 2018.
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By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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17 Sep 2014 12:34