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News & Tips: Genel Energy, Heritage Oil, Local Shopping REIT, Macau Property Opportunities, San Leon, Aurelian Oil & Gas, Providence Resources, Cape & more

Today's market overview

Equity markets are quiet so far today, but The Trader Dominic Picarda believes that the recent correction, which has lasted since late September, is here to stay for a while yet.

IC TIP UPDATES:

Genel Energy ( GENL ) has received a 49 per cent stake in the Miran gas field in Kurdistan from Heritage Oil ( HOIL ) in lieu of payment of a $294m loan. Genel will now take sole operatorship of the field. Meanwhile Genel has separately farmed into a prospect offshore Somaliland. We keep our buy recommendation for Genel.

Retail real estate investment trust Local Shopping REIT ( LSR ) has said that the difficulties in building a business of sufficient scale have prompted the company to launch a strategic review which could end up with the business being sold.

Macau Property Opportunities (MPO) saw the value of its portfolio rise by 2 per cent to $385m in the three months to September, furthermore it achieved good rental growth at its Waterside development. Buy.

Ithaca Energy ( IAE ) saw production of 5,061 barrels of oil per day in the third quarter, up by 28 per cent from the previous quarter as it benefited from a first full period of production at the Athena field. The company has since acquired interests in two more North Sea fields and also updates today on the development plan for the Greater Stella field, with development drilling starting in early 2013. Greater Stella is expected to produce 16,000 barrels of oil a day. We keep our buy rating.

Kentz ( KENZ ) is expecting to deliver full year performance in line with expectations. Its order backlog stands at $2.53bn with a prospect pipeline of $13.1bn. Buy.

Funerals business Dignity ( DTY ) continues to make impressive progress, announcing revenue growth of 8.7 per cent and profit growth of 10.3 per cent in the three months to September. We maintain our buy recommendation.

African budget airline Fastjet ( FJET ) has announced a $2.4m placing to accelerate its expansion plans in southern Africa. Buy.

Sell recommendation Hibu ( HIBU ), formerly Yell, has extended the deadline for its debt holders to vote on waivers and consents for the company to not services its debts as a part of a wider plan to restructure its borrowings. Such a plan is unlikely to see any value for shareholders.

Film and television distributor Entertainment One ( ETO ) has announced a solid set of interim results with revenues up from £204.6m to £220.5m, but underlying earnings fell by 43 per cent due to investment in the business and also a greater weighting towards the second half in terms of film releases and other revenue streams. We keep our buy rating.

Cobham ( COB ) has confirmed that full year performance is expected to be flat and that it expects to see organic revenues decline by low-to-mid single digits in 2013 as US defence spending cuts kick in.

KEY STORIES:

San Leon Energy ( SLE ) and Aurelian Oil & Gas ( AUL ) have announced plans to merge in a deal which values Aurelian at £61m. The deal will see Aurelian shareholders receive 1.3 San Leon shares for each Aurelian share, which means they will hold 34 per cent of the enlarged company.

Providence Resources ( PVR ) has announced results from early seismic testing on the Drombeg prospect offshore West Cork. Tests indicate recoverable resource potential of 872m barrels, although this is a very early stage assessment.

Valiant Petroleum ( VPP ) has started production on the Causeway field in the northern North Sea, with early flows of 4,500 barrels of oil per day. The company expects to end the year with production of 11,500 barrels of oil per day.

Housebuilder Taylor Wimpey ( TW .) says trading remains stable despite tight mortgage lending conditions. In addition the government’s NewBuy scheme has resulted in 467 net reservations.

Fellow housebuilder Bovis Homes ( BVS ) says it has now secured sufficient reservations to meet full year completion expectations. Average sales prices in 2012 are likely to be £190,000, against £180,100 last year.

Energy support services business Cape (CIU) continues its rather troubled recent run. Its interim management statement today reports year on year revenue growth of 6 per cent for the past three months but also indicates further deterioration in trading conditions in its Australian businesses. A review of the Australian onshore business is ongoing but has already identified a number of balance sheet issues in terms of valuation of assets. This review is now being extended company-wide.

OTHER COMPANY NEWS:

IDOX ( IDOX ) has said that it expects revenues and profits to be ‘comfortably’ ahead of market expectations for the full year.

Printing.com’s (PDC) interim results showed a 2.8 per cent dip in turnover and a 30 per cent fall in pre-tax profits.

READ MORE...

Read this week's press headlines and share tips.

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By Graeme Davies,
12 November 2012

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