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Press headlines & tips: BG Group, Telecity, Weir Group

Find out which shares today's quality papers are tipping
November 6, 2012

PRESS TIPS:

In The Times Tempus writes that the fall in the BG Group share price since last Wednesday's profits warning looks unjustified. The company was not saying that large chunks of its reserves were not actually in the ground, after all, simply that some would take longer than expected to reach production. Significantly, the market in the company's corporate bonds barely moved; any serious threat would have been reflected there. So it is another case of the market overreacting to any bad news. Analysts' target prices for BG are all over the place, ranging from £10 to £19, though only one has a "sell" note out. The shares, one of Tempus' tips for this year, will take a while to recover, but, at their present level, this looks like a long-term buying opportunity (Last IC rating: Buy, 31 Oct).

Tempus writes that the Finnish capital - Helsinki - is the main hub through which traffic from the huge Russian market reaches the West. This explains the decision by Telecity Group to spend €33m on acquiring a market-leading position, with the purchase this summer of two operators of data centres there. Unfortunately, the market reacted negatively to the deal, fearing that Telecity, which needs a steady rate of growth in capacity, was getting to the point where it was having to pay too much for this expansion, which would dilute earnings. The shares fell 8.5 per cent to 835p yesterday. This looks overdone and it brings down next year's earnings multiple to about 23. The rest of the third-quarter trading statement suggests the company is still trading robustly, while the 15MW capacity added so far this year, to 83MW, is a record for the outfit. Telecity says it has sites with sufficient planning permission to get it to 135MW across Europe in three to five years. If this rate of growth can be achieved, the shares continue to look like a good long-term bet (Last IC rating: Hold, 6 Aug).

Questor in The Telegraph writes that Weir Group bears must have been smarting yesterday, as the shares were the biggest gainer on the FTSE 100 after its third-quarter update. Questor continues to like Weir and the markets in which it operates. All of its end-users are in sectors with good long term prospects. US gas prices are unlikely to stay this low, particularly as the country could start exporting gas at some point in the not too distant future. Questor remains in the bull camp. Weir is a market leader with its technology and innovation and the exploitation of shale gas is expected to spread to other areas of the world. Trading on a 2013 multiple of twelve times earnings and yielding 2.2 per cent, the shares remain a buy (Last IC rating: Buy, 31 Jul).

 

Business press headlines:

The International Monetary Fund has told France to take urgent measures to head off national economic decline, warning that the country risks being left behind as southern Europe embraces reform. Throwing the gauntlet at the feet of the Socialist president Francois Hollande, the IMF said rising tax rates are undermining France as a place "to work and invest" and leading to a "significant loss of competitiveness". "There is a risk it will get worse if France does not adapt at the same pace as its trading partners in Europe, notably Italy and Spain," it said. The IMF challenge had an added piquancy coming from a body headed by France's Christine Lagarde, widely touted as the next Gaulliste leader and a future rival for the French presidency, The Telegraph says.

The earnings of directors at Britain's top companies rose last year, despite the influence of the Shareholder Spring and government opposition. Total earnings for FTSE 100 directors rose by almost 11 per cent and salaries by 3.5 per cent, according to a report by Incomes Data Services, the research group. Bonuses fell by 4.9 per cent to £605,000 - the first dip since 2008 - but the value of long-term incentive plans rose by 81 per cent from £519,625 last year to £938,888. The schemes belonging to chief executives rose to £1.6m, according to The Times.

"Not only is youth unemployment costing us billions now, but the damage done to the future employment and earnings prospects of those affected will cost us billions for years to come, every year, long after the economy as a whole has recovered." So said Jonathan Portes, director of the National Institute of Economic and Social Research (NIESR), on launching a report into the "scarring effect" of youth unemployment earlier this year. Total unemployment has been remarkably low during the most recent recession, peaking at 8.4 per cent compared with 10.7 per cent in the 1990s, but the hard times have fallen disproportionately on the young, The Telegraph explains.

Apple's share of the global tablet market has fallen from two-thirds to a half in the past six months, market researchers say, raising the stakes for its new iPad mini against a slew of new challengers using Google's Android and Microsoft's Windows software. The iPad mini almost sold out after it went on sale this weekend, Apple said on Monday, but the iPad's dominance of the tablet market is under assault from lower-priced competitors, led by Samsung and Amazon, while Microsoft's new Surface is taking aim at the business market. After a slow start, tablets using Google's free operating system have now put a "sizable dent" in Apple's tablet market share, IDC, an analyst group, said on Monday. Apple's share of worldwide tablet shipments fell from 59.7 per cent a year ago to 50.4 per cent in the three months to the end of September, IDC said, while Samsung's leapt from 6.5 per cent to 18.4 per cent, the Financial Times reports.

Two of Britain's biggest banks have said that they could ring-fence high street operations from riskier investment divisions earlier than planned, as they urged the Government to make sure that such proposals were "flexible". Barclays and HSBC said that they may act before the 2019 deadline to introduce the separation set out by Sir John Vickers in the report by the Independent Commission on Banking. However, Santander UK said it would impossible for it to speed up the timetable. The banks said that any acceleration was conditional on the Government and Parliament agreeing the precise nature of the plans as quickly as possible, complaining that uncertainty was damaging, writes The Times.