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News & Tips: Centrica, ITV, Carillion, Weir Group, Molins, Macau Property Opportunities, esure, Sound Oil, Globo & more

Today's market overview

Equities have regained a little of their equilibrium after yesterday’s post-Italian election blow out but The Trader Dominic Picarda is looking for signs of whether the recent volatility means the latest rally has run out of puff.

IC TIP UPDATES:

British Gas owner Centrica (CNA) is attracting headlines today after issuing annual results which showed the consumer gas supply business growing adjusted operating profits by 9 per cent to £1.09bn. Overall group adjusted earnings rose by 5 per cent to £1.4bn. After the recent news of a £500m share buy back, we retain our buy recommendation.

Broadcaster ITV’s (ITV) turnaround continues to gather pace with annual results showing growth across all areas of the business with particular strength in online operations and the ITV studios business. Overall cash earnings before exceptional items rose by 13 per cent to £520m. The board is proposing a 4p a share special dividend on top of the full year dividend of 2.6p. The first quarter of 2013 has begun well with advertising expected to be 5 per cent higher. We keep our buy rating.

Carillion (CLLN) accompanied solid full year results with news that it has been appointed preferred bidder on £210m worth of work in the Middle East as part of a total of £650m of new and ‘probable’ orders. Buy.

Simon Thompson recommendationMolins (MLIN) has continued its positive progress, recording sales growth of 3 per cent in 2012 and profits up by 9 per cent to £4.9m. Growth was positive across its three divisions of scientific services, packaging machinery and tobacco machinery.

Macau Property Opportunities (MPO) saw its adjusted net asset value per share rise by 6.2 per cent in the six months to December, as its property portfolio rose by 6.5 per cent in value, which means its shares are now trading at a 40 per cent discount to net asset value. We maintain our buy rating.

Sell recommendation Intu Properties (INTU), formerly Capital Shopping Centre Group, has announced the acquisition of the Midsummer shopping centre in Milton Keynes today for £250.5m. The company is planning to raise funds from shareholders and revamp its borrowings to fund the deal with a proposed placing of 86m shares underway. Our recommendation is under review.

Barratt Developments (BDEV) is the latest housebuilder to announce impressive results with pre-tax profit more than doubling to £46.1m in the six months to December. Buy.

Engineer Weir Group (WEIR) continues to perform strongly, posting record profits of £443m for 2012, boosted by strong performance from its minerals division. The full year dividend has been increased by 15 per cent to reflect the current strength of performance with management expecting another double digit increase this year. We keep our buy recommendation.

Aerospace and defence engineer Bodycote (BOY) grew revenues by 3 per cent in 2012, leading to an 18.5 per cent leap in pre-tax profits to £89.8m. Buy.

KEY STORIES:

Insurance business esure is looking to follow in the foot steps of rival Direct Line and float in London. The esure and Sheila’s Wheels brands owner wants to raise £50m, primarily for founder Peter Wood and investor Tosca Penta, which will leave the company ungeared. Management is hoping to offer a retail element of the float via private client brokers.

Chemring (CHG) has reported flat revenues in the period from 1 November to date and says that positive performance in pyrotechnics and counter-IED products has been offset by weaker sales in countermeasures and munitions.

OTHER COMPANY NEWS:

Sound Oil (SOU) has updated investors with its revised drilling plans in Italy following a portfolio review which the company hopes will accelerate cash flow from its various discoveries including the Nervesa discovery where further drilling will happen later this year. The company has also contracted a rig for three drilling campaigns in 2014.

Globo (GBO) has signed a distributor deal for the US with Ingram Micro for its mobile enterprise products.

Victoria Oil & Gas (VOG) has appointed Renaissance Capital for a strategic review of its interests in the West Medvezhye oil, gas and condensate license area in Russia.

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By Graeme Davies,
27 February 2013

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