WINNERS & LOSERS SUMMARY: Sainsbury's Up As Home Retail Offer Unveiled

Tue, 02nd Feb 2016 10:26

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

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FTSE 100 - WINNERS

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J Sainsbury, up 1.9%. The supermarket chain said it has reached an agreement on the terms of a possible offer for Home Retail Group, the Argos and Homebase owner. The possible offer and proposed capital returns together imply a value of around 161.3 pence per Home Retail share and a value of approximately GBP1.3 billion for Home Retail's share capital. Home Retail's market capitalisation stands at GBP1.24 billion, and its shares closed Monday at 152.90p. Under the terms of the offer, Home Retail shareholders will own approximately 12% of the combined group. Shares in Home Retail were up 0.2% to 153.2p.

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FTSE 100 - LOSERS

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BP, down 8.1%. The oil and gas major reported an underlying replacement cost profit that was way below analysts expectations for the last quarter of 2015, causing the company's underlying profit for the full year to more than halve. BP said it made an underlying cost replacement profit of USD196.0 million in the fourth quarter of 2015, way below the USD730.0 million analysts were expecting, according to a market consensus provided by BP. Replacement cost profit is a standard measure used in the oil industry that takes into account the price of oil. BP also said its USD196.0 million underlying profit is down from USD2.23 billion a year ago and down from USD1.81 billion in the third quarter of 2015. BP, as expected, maintained its dividend for the year, announcing an interim dividend for the final quarter of the year of 10.0 cents per share.

Royal Dutch Shell, down 3.2%, BG Group, down 2.6%. Shell and BG, who will imminently complete their merger, were trading down amid the weaker BP results and a fall in the oil price. This was despite Shell being upgraded to Buy by both Citi and Liberum. Brent crude slid back from its recent highs, quoted at USD33.52 a barrel Tuesday, having hit a low of USD33.43 overnight. BG, meanwhile, was double downgraded by Liberum to Sell from Buy. Shell will report earnings on Thursday, while BG will report on Friday.

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FTSE 250 - WINNERS

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TalkTalk Telecom Group, up 8.4%. The telephone and broadband provider said trading conditions have returned to normal following the cyber attack on the company in late 2015, with the group registering customer growth in January. TalkTalk said its revenue growth for the third quarter to the end of December hit 1.8% year-on-year, though it said it saw a total net loss of customers of 101,000, with 95,000 of those attributed to the cyber attack which hit the group in October.

UDG Healthcare, up 2.2%. The healthcare provider said its trading for the three months to December 31 was well ahead of the prior year, on the back of a strong performance in the US and Europe. Operating profit was up across divisions for the first quarter, ahead of its annual general meeting in Dublin on Tuesday, and said, in light of the figures, it expects a good underlying cashflow performance for the year.

Ocado Group, up 1.1%. The online grocery delivery service reported growth in profit in its recently ended financial year, as revenue was boosted by an increase in order volumes and active customers, despite the challenges posed by deflation in the average price of items across the UK grocery market. Ocado said its pretax profit in the year ended November 29 grew to GBP11.9 million from GBP7.2 million the year before, as revenue rose 17% to GBP1.10 billion from GBP948.9 million. Ocado added that it expects to sign "multiple deals in multiple territories" in the medium term for its international offering through Ocado Smart Platform.

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FTSE 250 - LOSERS

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Tullow Oil, down 7.0%. Liberum downgraded the oil and gas company to Hold from Buy and lowered its price target to 170p from 251p. Tullow shares were trading at 159.2p. Liberum said its enthusiasm for Tullow has dropped amid concerns over its balance sheet, a lack of a dividend and struggles for investors on where returns will come from given the tough market conditions for making new discoveries.

Weir Group, down 6.5%. Liberum reiterated a Sell rating on the company and said despite Weir having underperformed the market over the past 12 months, it remains too soon to turn positive on the company. 2016 will see a further contraction in activity for its oil and gas business and pressure is building on its balance sheet, raising fears for the broker that the only panacea would be a rights issue.

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MAIN MARKET AND AIM - WINNERS

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ZincOx Resources, up 60%. The zinc producer said it has agreed a conditional placing to raise GBP205,000 to back work on developing its technology outside the South Korean market. The company said it will issue 20.5 million shares at 1.0 pence per share, an 82% premium to its closing price in Monday. ZincOx said the funding will provide it with the necessary space to review options for its future once the transfer of 90% of its interest in its Korean subsidiary is moved to Korea Zinc. It intends to focus on exploring the potential to develop its Rotary Hearth Furnace and Consecutive Metal Leaching zinc dust recycling technologies outside the Korean market.

Red Rock Resources, up 14%. The miner said infrastructure upgrades have been completed at the Shoats Creek Field in Louisiana, while production has started at the LM20 well. The completed work at Shoats Creek includes the installation of 5,400 barrel oil and water storage tanks, the installation of high and low pressure separators, heating, flare stacks and other production equipment, and the installation of associated pump and pipeline work.

Ceres Power Holdings, up 7.5%. The fuel cell technology company said it has signed a new evaluation deal with a leading manufacturer for its Steel Cell technology. Under the agreement, Ceres will provide a complete Steel Cell system to the unnamed manufacturer to be tested. Should the testing be a success, Ceres said the two companies will form a joint venture to develop a fuel cell system.

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MAIN MARKET AND AIM - LOSERS

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Dewhurst, down 6.9%. The components company said its revenue and profit for the current financial year will be materially lower year-on-year as it continues to struggle with a drop in demand in the UK. Dewhurst, which makes lift and rail components and keypads used on ATMs, said the weak UK demand it had cautioned on in its final results in December has continued. It said the strength of sterling against the euro had hit its ability to compete with rivals and had encouraged customers in the UK to import packaged lift components from Europe. In addition, Dewhurst said demand for its keypad product unexpectedly and rapidly slowed in the first quarter to the end of December, though the situation has stabilised in January.

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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun