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Pretty soon Britain’s second-biggest milk processor, Dairy Crest, will have to make a choice: jump into the water and swim, or get swallowed up by the sea. The dairy industry is in the midst of violent change. In the past year, Dairy Crest’s two domestic rivals have been gobbled up by deep-pocketed foreign predators. Robert Wiseman fell to Germany’s Müller, while Milk Link combined with Arla, the Danish co-operative. That has left Dairy Crest exposed. Its problem is that its core liquid milk operation — pasteurising and processing milk for the masses — is barely break-even. It brings in more than £1bn in annual turnover — roughly two-thirds of Dairy Crest’s total business — yet profits were less than 1%. For processors, the key is branded yogurts, butters and cheeses. The margins are miles better. Dairy Crest needs to beef up beyond milk, and it has the cash to do so. It banked £347m from the sale of its European spreads business, St Hubert, this summer. Word around the cheese tray is that it has drawn up a list of targets. What is clear is that Dairy Crest is fast approaching its sink or swim moment. Its shares, which closed on Friday at 344p, are cheap. Despite the challenges, European rivals have cast a ravenous eye on Britain. Dairy Crest had better get its water wings ready, The Sunday Times´ Inside the City column says.

Whether one regards it as raping the Earth or fuelling the future, mining is always a rough old game for those involved – and sometimes for investors, too. Last week the Bakries said they wanted to buy back the mines in return for giving back their 23.8% stake in Bumi as well as cash in a deal worth £930m. This equates to about £4.80 per share, less than half the £10 a share at which the firm listed. Some analysts reckon the deal would enable Bumi investors, whose shares fell 90 per cent before the offer became public, to get out of a big mess with some cash. Rothschild, who owns about 12% and who declined to comment, is understood to believe the Bakries are trying to buy the assets on the cheap. It is all a sad end to a venture that promised investors they would get their money back ‘two or three times’ over. However, the collision of Western corporate governance standards and the freebooting world of mining is often troubled. Whatever the outcome of the report and of the Bakries’ efforts, the affair has given investors one more reason to look warily at overseas mining ventures and complex company structures. It has also severely tarnished Rothschild’s reputation for good judgement, a blot that many believe will take some time to fade away, The Financial Mail on Sunday says.

Engineering firm AMEC (AMEC) announced a restructuring of its business, which will now be managed of a geographical basis, instead of on just a sector basis. To this end, the group has appointed Simon Naylor, John Pearson and Hisham Mahmoud as the new heads of the American, Europe and Growth Region divisions, respectively. The company believes that this new organisational structure will allow it to target previously unexplored opportunities for growth. The shares slipped by 13p to 1,103p.

Coverage Hargreaves Lansdown (HL.) reported record levels of assets under management of 28.5 billion pounds as at 30th September, up by 2.2 billion pounds from the end of July. The group added that it achieved a 20% rise in year-on-year revenues for the quarter ended 30th September to 68.7 million pounds, despite share dealing volumes slipping by 6% to 357,000. The financial services firm also noted that the number of Active Vantage clients rose by 7,000 to 432,000 and that 10,000 new accounts were opened. Hargreaves shares jumped by 24p to 712p.

Northland Capital kept its "buy" stance for Bellway (BWY) with a target price of 1,050p. The housebuilder will release full year results on 16th October and the broker expects to see operating margins rise to 11%, from 10.1% in its first half, with the completion of 5,226 sales. Northland noted that the firm benefited from rising average sales prices, up 6% on 2011's levels at around 187,000 pounds, as it improved its product and regional mix. On the broker's forecasts, the shares trade on a prospective earnings multiple of 14.9 times for 2012, falling to 11.9 times in 2013. The shares fell by 5.5p to 934.5p.

Panmure Gordon maintained its "buy" rating for Ladbrokes (LAD) with a 195p target price. The broker believes the bookmaker had a resilient performance in its third quarter, with better than expected football results compensating for a number of horse racing cancellations. Panmure forecasts full year EBIT of 202.5 million pounds but believes that this will fall to 197.1 million pounds in 2013 as the company faces the introduction of Machine Games Duty. Ladbrokes shares lost 0.7p to 177.4p.

Shore Capital reiterated its "sell" recommendation for PZ Cussons (PZC), noting concerns over its short-term prospects. The personal healthcare company continues to suffer from civil unrest in Nigeria and the broker also pointed to difficult trading in the UK, leading it to downgrade its forecasts. However, Shore noted that the firm has attractive growth opportunities in the medium-term in countries such as Indonesia and that any improvement to conditions in Nigeria could have a dramatic impact on the group. The shares gained 2.1p to 314.6p.

James Moore in the Independent wonders whether Indy readers will cancel their subscription when they see he is recommending buying shares in BAE Systems, the defence firm which has just seen its proposed merger with Airbus owner EADS collapse. He explains that it is a "speculative buy", with a high level of risk attached, and certainly not one for ethical investors. However, BAE is actually very cheap, Moore claims. It trades on just 8 times this year's forecast earnings, while yielding a chunky 6 per cent. That yield is more than two times covered by earnings, so is not at any risk just yet.

Tempus in the Times writes that cardboard box maker DS Smith has been transformed by its recent acquisition of Swedish rival Svenska Cellulosa Aktiebolaget (SCA). Yesterday it gave a positive update on the first 100 days since the deal. Expected annual savings have been raised to 100m euros within three years. However, it is exposed to a contracting European economy. This could provide opportunities to pick up weaker rivals but “even if the SCA deal has been successful to date, others may not be. Hold.”

Tempus reckons that Ashmore, the emerging markets investment manager, which only fell out of the FTSE 100 four weeks ago, could soon jump back in. Yesterday it gave a positive trading update covering the quarter to the end of last month, as assets under management rose by 6.8% to $68bn. The shares, at 328p when it was evicted, have recovered strongly, so much of the optimism is priced in. “For those who like emerging market proxies, buy on weakness.”

Valuation: Good growth and low peak leverage Low short-selling activity in Inmarsat reflects the confidence in this equity story. The shares trade on a sector premium but this is justified by the opportunity if GX succeeds and the lower peak net debt to EBITDA ratio (of 3x) than its peers

http://www.edisoninvestmentresearch.co.uk/researchreports/InmarsatQV121012.pdf

Analysts at Credit Suisse have issued a short term trading sell on miner Antofagasta, on which they are broadly neutral, with a target price of 1,250p (up from 1,150p in fact). The Swiss bank sees three short term drivers of underperformance. Firstly, consensus production estimates look too high by up to 10% over the period 2013-16. Secondly, the shares have outperformed peers and the copper price and valuation is at the top end of its ten year range. Third, copper price may underperform other commodities in the near term (given the resilient performance year-to-date and improving mine supply in the second half of 2012).

Peter Pollock, Group Chief Executive commented, "Investors may deduce from this statement that the Group is confident about future progress in the medium and longer term. We are excited about the opportunities and challenges which lie ahead and will keep investors informed of progress."

http://www.investegate.co.uk/Article.aspx?id=201210110700034175O

LED lighting manufacturer LPA Group (LPA) has won two contracts worth a combined 0.7 million pounds and believes that it may have exceeded market expectations for the year ended 30th September. However, the firm noted that trading conditions have been "unusually good" due to a number of short-term medium sized contracts. The group now plans to begin a period of investment to develop its technical and sales resources and admitted that this may lead to a reduction in growth in the short term. LPA shares sank by 2.5p to 82p

Commenting on the results, Kate Swann, Group Chief Executive said: "We have delivered another strong performance across the Group with EPS up 22% in the year. In Travel we have grown profit by 11% and have made further good progress in our international channel, with over 100 units either open or won. In High Street we saw another resilient performance, with profit up 4% and continued strong cash generation. "The Group remains cash generative enabling us to invest in our businesses and in new opportunities, whilst returning cash to shareholders. We are recommending to increase the final dividend by 22%, which is in addition to the £50m share buyback completed last year and the further £50m announced in August. "Looking ahead, we expect the trading environment to remain challenging, however we are a resilient business with a consistent record of both profit growth and cash generation, and we are well positioned for continued growth in the UK and internationally."

http://www.investegate.co.uk/Article.aspx?id=201210110700044360O

High street retailer WH Smith (SMWH) announced pre-tax profits of 102 million pounds for the year ended 31st August, up 10% on 2011's performance, driven by its travel division, which now has 619 units. The firm noted that it generated free cash flows of 91 million pounds and finished the period with a net cash position of 36 million pounds. The group added that it has identified a further 12 million pounds of cost savings in addition to the 17 million pounds it has already achieved. However, WH Smith shares fell by 18p to 634p after the company announced that CEO Kate Swann will step down from her position, after nine years, on 30th June next year. She will be succeeded by Commercial Director Steve Clarke.

http://www.investegate.co.uk/Article.aspx?id=201210110700044278O