UK WINNERS & LOSERS: Housebuilders Doing Well After Liberum Upgrades

LONDON (Alliance News) - The following stocks are the leading risers and fallers on the main London indices midday Tuesday.

-------

FTSE 100 - Winners

BP, up 4.8%, is the biggest gainer on the blue-chip index after it increased its quarterly dividend by 5.6% to 9.50 US cents per share. Total revenues and other income increased 3.8% to USD98.20 billion in the third quarter, although pretax profit fell 36% to USD5.17 billion from USD8.06 billion due to asset sales, lower refining margins and a big tax bill in Russia. It's going to keep selling assets, saying it plans to divest a further USD10 billion in assets before the end of 2015.

Persimmon is up 1.7% after Liberum Capital increased the company's price target to 1,261.00 pence from 1,245.00p. Liberum analyst Charlie Campbell believes that the current rise in UK house prices is sustainable without getting out of hand. Prices are likely to continue to rise because of government help, subdued interest rates, and good affordability, while subdued real incomes and more rigorous mortgage market supervision will ensure that price rises do not get out of hand, says Liberum. Also, subdued land prices and unprecedented government support mean that housebuilder margins will be higher. In support of the upgrade, UK mortgage approvals in September rose to 66,735 in September from 63,396 in August, slightly higher than the 66,000 increase forecast.

-------

FTSE 100 - Losers

Lloyds Banking Group falls 1.9% after reporting interim results that showed the bank's provisions for payment protection insurance claims have risen to more than GBP8 billion. The new GBP750 million PPI provision helped widen its pretax loss to GBP440 million in the third quarter, compared with a GBP151 million loss for the same quarter in 2012. Similarly, the costs of Project Verde and simplifying the bank also hit, with costs widening to GBP408 million in the third quarter, from GBP218 million for the corresponding period last year. Project Verde has seen Lloyds launch TSB as a new bank as part of a process ordered by the European Commission as a condition of the government's bailout of Lloyds in 2008. In spite of those costs, Lloyds' underlying profit more than doubled to GBP4.44 billion for the first nine months of the year, as the bank reported its first results since the government sold the first tranche of its stake in the bank in September.

Standard Chartered is down 1.2% after it reported that its profit growth had been hindered by currency depreciation and weakness in Korea. According to the company, there has been some recent depreciation in several emerging market currencies, including the Indian Rupee and Indonesian Rupiah. Based on current rates, the full-year impact of this would be some USD200 million on income and around USD70 million on profits. In Consumer Banking, operating profit for the first nine months of the year was down by a mid-single-digit percentage, as its performance in Korea continues to have a material impact on the segment. Excluding Korea, Consumer Banking grew both income and profits by high single digit percentages. Income in the third quarter was slightly ahead of last year. According to the lender, income remains well spread with strong performances in Hong Kong, India, MESA, China and Africa offsetting weaker performances in Korea and Singapore. Despite this, the Asia-focused lender said its operating profit for the first nine months of the year was up by a low-single-digit percentage and that income grew at a similar rate, as the lender witnessed strong client activity.

Tullow Oil drops 1.2% after it abandoned its Wisting Alternative Well offshore Norway after failing to find a significant oil discovery. The company said the well reached total depth and encountered oil shows in deep formations, but the reservoir rock was of poor quality when penetrated. The site was drilled five kilometres north west of its major Wisting Central light oil discovery but following the completion of operations at the site and extensive data studies the well will now be plugged and abandoned.

-------

FTSE 250 - Winners

Stagecoach Group is up 2.5% after it said that overall profitability for the group remained "satisfactory" as it retained its expected adjusted earnings per share forecast for the year ending 30 April 2014. Stagecoach reported like-for-like revenue growth for the financial year-to-date in each of its main divisions, apart from its UK Bus business in London. However, the 1.6% reduction on 2012 figures for this division can be attributed to non-recurring revenue related to the London Olympic and Paralympic Games, and was expected by the firm. Stagecoach says the group maintains a strong financial position with overall trading good and prospects remaining positive.

Bovis Homes Group, up 2.8%, Redrow, up 2.2%, Taylor Wimpey, up 1.7%, Bellway, up 1.5%, and Barratt Developments, up 1.4%, are amongst the top gaining stocks after Liberum increased the companies' price targets in a positive assessment on the whole sector. Liberum increased Bovis's price target by 15% to 911.00 pence from 791.00p, Redrow's was increased by 26% to 304.00p from 241.00p, Taylor Wimpey's to 127.00p from 113.00p, Bellway's to 1,760.00p from 1,700.00p, while Barratt's price target was raised to 387.00p from 374.00p. Bovis Homes and Redrow were both upgraded to Buy from Hold by the brokerage.

-------

FTSE 250 - Losers

Regus slips 4.4% as it warned that full-year results will be impacted by the costs of its aggressive expansion programme. The company has increased its target to 420-450 new centre openings in 2013, from 350 new centres, having already completed 292 in the year-to-date. As a result, Jefferies expects this to result in significant downgrades to current consensus for both full-year 2013 and full-year 2014 pretax profit estimates. However, the investment bank believes that, given the fact that new openings continue to deliver post tax 25% of the internal rate of return, this is the correct strategy for the group to take. The company booked a 26% increase in third-quarter revenue, rising to GBP386.6 million in the quarter ended September 30 from GBP307.3 million in the same period a year before.

-------

AIM - Winners

Weatherly International jumps 15% after it said it has drawn down an initial USD3 million from its Tschudi loan facility in order to repay an outstanding loan that its subsidiary Ongopolo Mining has with Louis Dreyfus Commodities. The company said that following the debt repayment to Dreyfus and the release of the related security, Orion Mine Finance will then take the security and release the second tranche of funds from the loan, allowing Weatherly to fund development of its Tschudi Copper project. Weatherly signed a USD91 million loan facility deal with Orion last month, giving it full financing for Tschudi.

Savannah Resources is up 11% after it said its initial drilling programme at the company's 80% owned Jangamo heavy mineral sands project in Mozambique had begun. It said it has commenced a 2,000 metre, reverse circulation drilling programme to further define the site after previous regional scout sampling found 18.1% total heavy minerals at the site including ilmenite, rutile and zircon in the mineral concentrate.

Nighthawk Energy climbs 9.1% after it reported a farm-out deal at its Colorado site. The company said a Denver-based oil and gas company will drill three vertical wells on a 4,572 acre site at its Jolly Ranch project in Colorado, carrying some of the costs of the work but also getting a share of revenue. The unnamed company will carry all the costs of the work, earning a 50% working interest in the area and 40% net revenue interest once the work is completed. Under the so-called farm-out deal, drilling is to start no later than April 30 next year, and the drilling company's earn-in will fall if it decides to drill fewer wells than the three agreed." This allows us to focus our own financial and operational resources on additional Pennsylvanian and Mississippian targets, opening up a larger proportion of our acreage to potential development," Nighthawk Chairman Stephen Gutteridge said in a statement.

GETECH Group is up 9% as it doubled its dividend after reporting a jump in full-year profits and revenues, driven by record data sales and increased sales and sponsorship of its key product. The provider of data, studies and services to oil and gas companies and miners proposed a final dividend of 1.6p, up from 0.8p last year, bringing the total for the year to 2p, up from 1p. The company, which said it actively seeking acquisitions, reported pretax profit of GBP2.25 million, ahead of WH Ireland's forecasts of GBP2.05 million, while earnings per share was 5.6p, considerably better than the broker's 4.9p forecast. On the back of the strong momentum, WH Ireland has raised its price target to 92.00p from 86.00p, while reiterating a Buy rating.

North River Resources climbs 6.9% after it commences underground diamond-bit drilling at its Namib lead, zinc and silver project in Namibia. The company said the initial 5,000 metre drilling campaign is designed to upgrade and expand the project's compliant resource. The company said the site currently has an inferred and indicated resource of 668,000 tonnes at 6.6% zinc, 2.5% lead and 46 grams per tonne of silver.

-------

AIM - Losers

ViaLogy drops 31% after it said it will spin out its energy services business into a new US-based company, allowing it to focus on other technologies it has developed and to reduce its working capital requirements as it considers new funding opportunities. The energy services business is head-quartered in California and provides seismic data to more accurately detect oil and gas deposits for clients around the world, but Vialogy UK manages its finance and administration. It will now be spun out as a US incorporated company called ViaLogy Energy Corp, with ViaLogy PLC taking a 75% stake and the rest owned by founder Sandeep Gulati and two key members of the energy services technical team. Costs of the operations will be fully borne by the new US company, while the UK company will consolidate its share of revenues.

Next Fifteen Communications Group falls 22% after it warned that its profits for the full-year will fall materially short of market expectations due to audit adjustments relating to issues at its Bite agency. The company expects revenues to remain in-line with expectations.

New World Oil And Gas slips 13% after it said that the government of Belize has approved its application for the third renewal of the Blue Creek production sharing agreement. The approval extends the term of the PSA in the Peten Basin of Belize until October 2015. The company said that in the second year of the renewal period, it will either drill one exploration well or drop the licence, and the company is continuing to seek a farm-in or joint venture partner to share the exploration of the Blue Creek acreage.

Leyshon Resources is down 11% as the firm continues to work on the de-merging of its energy assets into Leyshon Energy Ltd and review potential acquisitions. It now expects its shareholder meeting to approve the demerger in late November or early December 2013 and will now only apply for an AIM listing, not ASX, as 86% of its shares are held outside of Australia.

-------

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

Copyright 2013 Alliance News Limited. All Rights Reserved.