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News & Tips: Dairy Crest, AZ Electronic Materials, Brammer, Baobab Resources, Arian Silver, Rank Group, Severfield-Rowen, Sound Oil, Chariot Oil & Gas, Circle Oil & more

Today's market overview

Equities are up marginally in another quiet start to trading and The Trader Dominic Picarda has voiced his frustration at a flat performance in February following January’s fireworks, but he believes there could be further upside to indices through to April.

IC TIP UPDATES:

Dairy Crest Group (DCG) says that the reorganisation of its business, which has seen the sale of various non-core brands to create a unified dairies business, is largely complete and from April the business will be consolidated into a single structure. Meanwhile finance director Alastair Murray is leaving after 10 years to be replaced by internal appointee Tom Atherton. The company has also announced the successful re-tendering for a 3 year contract with Sainsbury from 2014. We keep our buy.

AZ Electronic Materials (AZEM) has announced solid results with profits up 3 per cent despite flat revenue growth. The company expects further modest growth in the first half of 2013. Buy.

Surgical Innovations (SUN) reports significantly improved trading in 2012 with second half orders up by 85 per cent over the first half but delays in US regulatory approval and capacity constraints at its Leeds facility meant £1m worth of orders has slipped into the current year. We keep our buy.

Iron ore explorer Baobab Resources (BAO) says that its pre-feasibility study on the Tete iron ore prospect in Mozambique is close to completion and management is sufficiently confident of the outcome to commence expenditure on time critical equipment. We maintain our buy recommendation.

Industrial parts supplier Brammer (BRAM) has ridden out the uncertainty in the eurozone well with 2012 figures showing record group revenues of £639.6m and a 19 per cent improvement in pre-tax profit to £34.5m. Our recommendation is under review.

Mexican silver miner Arian Silver (AGQ) reports that the Juan Reyes mill which it has contracted to process 90,000 tonnes of material from its San Jose mine, is up and running. We keep our buy.

KEY STORIES:

Rank Group (RNK) has received conditional clearance for its acquisition of Gala Casinos provided it disposes of five casinos in locations where the Competition Commission says its position would be uncompetitive.

Coal-fired power station owner Drax Group (DRX) has reported a fall in revenues and profits for 2012, in line with expectations. The company says it is on track to fire up its first biomass-converted unit in April, with a second unit expected in April 2014.

Severfield-Rowen (SFR) has completed a review of 90 per cent of its projects after recently reporting damaging cost overruns on a key contract at Leadenhall Street in London, where a previous expectation of profits has been revised and £9.9m of losses booked against 2012’s accounts. A further three contracts have revealed cost overruns of £2.9m to be taken in 2012’s figures and five forward contracts have seen their forecast value slashed by £7.3m. A further 61 contracts are performing in line with expectations. Discussions with shareholders have indicated support for a fundraising of up to £50m.

Morgan Sindall’s (MGNS) figures for the year to 31 December show an 8 per cent reduction in revenues to £2.05bn and a 15 per cent reversal in pre-tax profit to £34.2m.

OTHER COMPANY NEWS:

Shares in Chariot Oil & Gas (CHAR) have sold off after the company published an operational update. The company reported that its cash balance almost halved in the second half of 2012 after it acquired seismic data on various prospects and also acquired further interests in West Africa. Further commitments of $40m are laid out for 2013 with drilling not expected on a number of its prospects until 2014, although the company says it is fully funded for all its drilling plans.

Sound Oil (SOU) says that the farm in offer for its Badile prospect in Northern Italy was not sufficiently attractive to tempt the board and it is pushing on with development of the prospect itself.

Circle Oil (COP) has confirmed its plans for 2013. It expects gas production in Morocco to rise by 50 per cent to between 6.5m-7m cubic feet per day in the first quarter of the year. Production in Egypt averaged 9,091 barrels of oil per day in January with additional production now on stream. In Tunisia and Oman, seismic data collection is under way.

READ MORE...

Read today's press headlines and share tips.

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By Graeme Davies,
19 February 2013

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