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News & Tips: Next, Galliford Try, Menzies, Entertainment One, William Sinclair, Bellzone, Northern Petroleum & more

Today's market overview

Equities have given up only a little of yesterday’s chunky gains as traders digest the fact that the New Year resolution to the fiscal cliff drama was only the starting point in a period of policy uncertainty in the US which could last into the spring. Meanwhile, The Trader Dominic Picarda is back and looking for a short term pull back as an opportunity to buy the markets again.

IC TIP UPDATES:

Galliford Try (GFRD) has announced four construction contract wins totalling £55m in aggregate, all in the UK. We retain our buy rating.

Entertainment One (ETO) says that the expiry of an applicable waiting period under the Canadian Competition Act means that it can now press on with its proposed $225m acquisition of Alliance Films. Buy.

Sell recommendationWilliam Sinclair (SNCL) has detailed the misery wrought upon its peat and associated garden products businesses by last year’s heavy and persistent rains. The previous year’s profit of £3.18m was reversed into a deficit of £403,000, prompting a cut in the full year dividend from 6.2p to 4.5p.

John Menzies (MNZS) says it expects full year results to be in line with expectations. The company has also said it is closing its cargo handling operations at Chicago Airport, at a cost of £7m in the 2012 accounts but this will improve earnings by £1.4m in 2013. In total restructuring charges in 2012 will be £18m. Finance director Paul Dollman is to leave the company in May after 10 years with the business.

Guinean iron ore miner Bellzone Mining (BZM) has announced the first export of iron ore from the country since 1966 from its Forecariah joint venture. But the company’s arrangements for transferring the ore to ocean going vessel did not go totally to plan, and the transhipping system is being re-engineered. This will mean higher shipping costs for the next few months. Nonetheless, we retain our buy.

KEY STORIES:

Retailer Next (NXT) has once again pulled off the trick of massaging expectations only to outperform. In the first of the high street’s Christmas trading updates, Next reported 3.9 per cent growth in brand sales over the period from 1 November to 24 December, with retail producing 0.8 per cent growth and the online and catalogue Directory business up by 11.2 per cent. This has allowed the company to narrow its forecast range towards the top end of previous estimates with profit forecast to be in the £611m-£625m range, from previous guidance of £590m-£620m.

Balfour Beatty (BBY) has acquired the US energy storage business SubSurface Group to bolster its Parsons Brinckerhoff Energy Storage Services business. SubSurface is expected to report revenues of $50m for 2012.

OTHER COMPANY NEWS:

Software specialist Delcam (DLC) says December orders for its software products were 10 per cent higher than last year, representing a record December for the business and a record quarter to end the year.

Nighthawk Energy's (HAWK) oil production at its Smoky Hill and Jolly Ranch licences in Colorado averaged 276 barrels of oil a day in December and 192 barrels a day during the fourth quarter. Further exploration drilling during 2012 has also been largely successful.

Northern Petroleum (NOP) and Wessex Petroleum (WSX) have announced that the second well in the Guyane Maritime Permit, off French Guiana, has begun drilling. The well is operated by Shell and the two juniors have a marginal interest in the permit.

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By Graeme Davies,
03 January 2013

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