Quite often, age brings respectability with it, if not then just ask The Rolling Stones (not that they really care most likely). That seems to be the case with oil and gas exploration outfit Salamander Energy. Once of the more unproven stocks in its sector it is now "almost respectable," The Times' Tempus column says, given that is already enjoys at least a couple of more reliable assets which are already producing. So much so that the company has managed to find the necessary new bank financing facilities to develop some of the same, such as its two oil platforms in the Gulf of Thailand (the second of which has just come on-stream) or a gas field in Kalimantan, Indonesia. Other assets, such as the North Kutei field, off-shore Indonesia, is much more speculative, Tempus warns.
"It will either fizzle out or provide a sharp up-kick" it adds. For all of the above reasons, the shares, at 173.5p last night, are for those who like their exploration risk muted with a bit of certainty, in the form of more reliable producing assets, Tempus writes (Last IC rating: Buy, 30 Aug).
Steady as she goes seems to be the "motto" at Spectris. That at least is what Tempus opines. While the company's sales are only growing at an approximately 2 per cent year-on-year rate the company is enormously diversified as far as its client base is concerned. Likewise, its business is more or less evenly split on a geographical basis, between Asia, Europe and the US. More important even, the firm is one of those little-known British businesses with a strong position in some admittedly obscure markets. Amongst other things this specialization has recently allowed it to purchase at least two smaller rivals Stateside. Furthermore, the industrial concern is expected to further refine its portfolio of businesses via the sale of its Fusion UV unit, in anticipation of a move by the market towards LED technology.
The result of all the above has been a near doubling in its share price so that, with a market capitalisation of £2.4bn, it is now knocking on the doors of the Footsie. The shares, up 22p at £20.37 yesterday, sell on about 14 times earnings but look like one of those stocks that have further to go long term, absent any significant economic downturn, Tempus concludes (Last IC rating: Buy, 19 Oct).
The word that analysts tend to use about Berendsen is "reliable". This is the old Davis Service Group, providing washroom services to hotels, hospitals and the like and unwilling to divert its energies into riskier areas elsewhere. Yesterday's trading statement showed revenues increasing by 2 per cent, excluding foreign currency effects, in the first 11 months of the year, which is about where they have been growing for the first three quarters, and margins improving. The question is where it can all go wrong. About 40 per cent of the business is in the UK, but the rest is in northern Europe, with some exposure to the Eurozone - the latest acquisition, for example, was in the Netherlands, though much of the business is in Scandinavia.
The company reckons to have enough in the tank, in terms of work won but not yet contributing, to counter any reasonable economic deterioration. The company is performing well on cash conversion - more than £100 million of free cash flow in 2012 - which along with those falling European currencies will help to cut debt. The shares have been stellar performers, up by more than a third this year. They sell on about 11 times' earnings, with a forward yield of more than 4 per cent. Up with events for now, but a good long-term hold, Tempus believes (Last IC rating: Hold, 24 Aug).
Business press headlines:
The continued haggling with Saudi Arabia over the price of 48 Eurofighter Typhoon jets could hit full-year profits at BAE Systems. The British defence contractor said that negotiations with the Royal Saudi Air Force about the price of the aircraft may not be concluded before its results announcement in February. That could wipe 3p per share off underlying earnings, the company warned in a trading update yesterday. Analysts are forecasting earnings of about 40p per share, compared with 37p in 2011. [The Times]
Incoming Bank of England governor Mark Carney will pocket an annual £250,000 housing allowance, taking his total pay package close to £1m a year when he takes the reins next summer, the central bank has revealed. Carney will receive the allowance as part of a generous package put together by the chancellor, George Osborne, to lure him from his current job in Ottawa as boss of the Canadian central bank. It was already known that Carney would be paid a salary of £480,000 and pension contributions worth £144,000. He will also receive free health and dental insurance and the use of a chauffeur-driven car. [The Guardian]
The Bank of Japan has stepped up its monetary easing with a Y10tn ($118bn) increase in the size of its asset-purchasing programme, and signalled that it could move to adopt a higher inflation target, as requested by Shinzo Abe, the incoming prime minister. Mr Abe welcomed the BoJ's move, saying "what we called for during the Lower House election is being realised one by one." During the election campaign, he called for the BoJ to do more to combat persistent deflation by adopting "unlimited" easing and an inflation target of 2 per cent or more. [Financial Times]
The Department of Justice has charged two former UBS traders with conspiracy to manipulate Libor, on the same day the Swiss banking giant agreed to pay £940m in fines to settle charges linked to the key global interest rate. Tom Alexander William Hayes, 33-year-old British former Tokyo-based trader, and Roger Darin, a Switzerland-based managing director responsible for the bank's Libor submissions, were both charged with conspiracy, the US Justice Department said. Hayes was also charged with wire fraud and a "price-fixing violation arising from his collusive activity with another bank to manipulate Libor". Mr Hayes' official naming followed his arrest last week by the Serious Fraud Office in connection with its own investigation into Libor-rigging. Two other men, both brokers in the City, were also arrested. [The Telegraph]
America's two largest mortgage lenders could have lost more than $3bn (£1.85bn) as a result of banks' alleged manipulation of Libor. Fannie Mae and Freddie Mac, the giant US mortgage lenders, have been told they should consider suing banks amid allegations that several major financial institutions rigged key borrowing rates for several years. According to reports, the two lenders are likely to have lost several billions of dollars as a direct result of interest rates being artificially increased and decreased by banks. [The Telegraph]
Next year will be "a make or break" year for Greece's future as a member of the eurozone, the country's finance minister has said, warning Europe's leaders that Athens still faces "the possible risk" of crashing out of the currency bloc. "We can make it next year if we can stick to the programme agreed with the EU and IMF," Yannis Stournaras said in an interview with the Financial Times. However, "the break would be if the political system finds the situation too difficult to handle", he added, referring to the danger of social unrest about austerity that could force the two left-of-centre parties to bring down the governing coalition. [Financial Times]
GlaxoSmithKline has reached a $150m (£92m) preliminary settlement with US drug wholesalers who claimed the company improperly delayed entry to the market of generic alternatives to its nasal spray Flonase, according to court documents. The settlement was reached with, among others, AmerisourceBergen, Cardinal Health and McKesson Corp, who maintained that Glaxo had abused the citizen's petition process to maintain a market monopoly. [The Independent]
The soap opera continued at Bumi yesterday after yet another board member was forced to resign from the conflict-riven Indonesian coal miner created by Nat Rothschild and the Bakrie family in November 2010. In a day of action, the Takeover Panel ruled that there was improper disclosure about the close relationship between two key shareholders - the Bakrie brothers and Rosan Roeslani - when the group was created by injecting the Bakries' Indonesian coal-mining assets into Mr Rothschild's listed cash shell. The Panel ruled yesterday that the two groups had acted "in concert" - and cut the voting power of their combined 57 per cent stake almost in half, to 29.9 per cent. [The Independent]
