Welcome to our summary of the weekend's quality press tips, provided on Mondays by Weekend City Press Review.
PRESS TIPS:
The Times
■ Tempus: Martin Waller says Phoenix Group (PHNX), up 10p at 785p on Friday, has had a strong run, a big cash pool and a healthy dividend yield of about 6.7 per cent (Last IC rating: Buy, 22 Aug), against 4.5 per cent for Legal & General (LGEN): a good yield, and better if the price weakens (Last IC rating: Hold, 6 Aug).
■ SVG Capital (SVI), 404p, are attractive, even if doubled since Tempus's last tip in late 2011 (Last IC rating: Fairly priced, 12 Aug, 2011).
■ Quintain Estates (QED), 95.5p; cutting debt to below £400m by the end of March 2014, and making headway on a large scheme in Greenwich, the shares are a buy (Last IC rating: Buy, 3 Sept).
The Independent
■ No Pain, No Gain: Derek Pain sees more to come from the Makro deal and good predicted growth for Booker Group (BOK), bought into the portfolio at 24.5p in January 2009 and now 146p; shareholders who followed Pain should sell half of their holding to lock in a profit and enjoy a free ride (Last IC rating: Buy, 18 Oct).
■ Market Report: Buy Chime Comms (CHW) (Last IC rating: Hold, 28 Aug), 316.75p; Hold Aquarius Platinum (AQP) (Last IC rating: Sell, 8 Aug), 45p; Sell Mitie Group (MTO) (Last IC rating: Sell, 22 May), 311.7p.
The Daily Mail
■ Investment Extra: Ian Lyall says the Merlin Entertainments float has been given a much-needed nudge by the success of the Royal Mail; a suggested valuation of £3bn (£4bn including debt) and forecast earnings of £400m before tax will make this a more keenly priced flotation, but the management team has a record of delivering strong underlying growth (Last IC rating: Await documents, 23 Oct).
The Sunday Times
■ Inside The City: Danny Fortson says Premier Foods (PFD) has been mired down for five years, laden with debt, losing a chief executive brought in to beat the company into shape in January, followed by the finance director, but maybe the company has turned the corner under chief executive Gavin Darby, and investors seem to think so, with the share tripling in value since August and now at 180.5p - it shows immediate promise, but a very uncertain long-term, with a market value only a fifth of its debts (Last IC rating: Hold, 30 Sept).
■ AstraZeneca (AZN) appointed chief executive Pascal Soriot a year ago, but he is still under the same pressures, losing income to generic copies and waiting for a blockbuster to come through the pipeline; while the stock has picked up 10 per cent since the appointment, that is only half of the gain made by the FTSE 100 in the same time (Last IC rating: Sell, 1 Aug).
The Sunday Telegraph
■ Questor: Hold Inchcape (INCH), 640.5p; the luxury car seller has seen revenue growing 7 per cent in Q3, and a £100m share buy-back announced, but squeezed margins and tough trading in some markets make the shares only one to hold (Last IC rating: Buy, 2 Aug).
The Mail on Sunday
■ Midas: Joanne Hart says Northern Petroleum (NOP), 31.5p after tumbling headlong from 200p in July 2007, has seen changes, with a boardroom shuffle and several exciting projects in place in Canada, Sussex, French Guiana and Australia; while a high-risk stock, potential rewards are enticing, so a buy for the bold while still cheap (Last IC rating: Hold, 8 Jun, 2012).
■ Update: Plexus Holdings (POS), tipped in January 2011 at 55p, is now trading at 264p and brokers believe the stock has further to go; investors might want to sell half after a great run but keep the rest (Last IC rating: Buy, 23 Oct).
Business press headlines courtesy of Weekend City Press Review:
Boost for Osborne on economic data
Chancellor George Osborne claimed the UK was 'on the path to prosperity' after the economy expanded by 0.8 per cent in Q3, the fastest rate in three years, while the Labour party's call for a freeze on fuel bills dominated the political agenda as ex-PM Sir John Major weighed into the argument against the energy providers. Mr Osborne dismissed it as 'essentially the argument Karl Marx made in Das Kapital'. Data from the ONS showed production, services and construction rose by 0.5 per cent, 0.7 per cent and 2.5 per cent respectively, while manufacturing (within production) grew by 0.9 per cent; the economy is now larger than the Bank of England expected it to be at the end of the year, but output is still 2.5 per cent below its pre-crash level. But falling real incomes and rising energy bills are forcing Mr. Osborne to use his autumn statement to tackle cost of living issues. [Financial Times, p.1]
Serco taps former Balfour Beatty boss
Ian Tyler, former chief executive of Balfour Beatty, who left the builder in January, is believed to have been selected as a leading candidate to replace Serco (SRP) chief Chris Hyman, says the Sunday Times. Capita's number two Andy Parker is also thought to be in the frame. Serco chairman Alastair Lyons was called to the Cabinet Office this month and told that the company needed to change its ways; Lyons is understood to have begun the search for a possible new chief over the summer and has hired headhunters to find an external candidate. The Cabinet Office reportedly said of the departure of Hyman: 'This is a positive move by Serco and a step forward.' [Sunday Times, p.3.1]
Tax chief to be rapped over Google
Jim Harra, director general of business tax at HM Revenue & Customs, is one of three officials due to come before the public accounts committee of the Commons tomorrow to explain the use of 'immoral' tax-avoidance techniques by multinationals including Google. At the centre of the grilling will be a chain of 10,000 emails and documents delivered to the Sunday Times by former Google employee Barney Jones which show that Google's UK-based workers were directly involved in selling advertising to clients, and not, as the multinational claims, only workers in the Republic of Ireland. The committee, chaired by Margaret Hodge, is likely to question tax paid by Amazon and Facebook. [Sunday Times, p.3.1]
£1bn sale on Pizza Express menu
Private equity company Cinven, which owns Gondola Holdings, owner of the Zizzi and Ask chains, is planning a £1bn sale or float next year of the largest brand in the portfolio, Pizza Express. The company is said to favour a sale or break-up of the pizza chain it has owned as part of Gondola since 2006, and has seen annual sales grow to £60.4m at the restaurant, with outlets in 477 sites internationally. Goldman Sachs was reportedly favourite to handle the sale, which follows Gondola's £100m sale of the Byron burger chain earlier this month.
■ Eclectic Bars, owner of bars in Chelsea and the LoLaLo chain, is planning to raise £20m in a flotation on Aim; the company is 60 per cent owned by Avanti Capital. [Sunday Times, p.3.3]
Osborne stops short of breaking up RBS
A final report from Treasury officials on the future of Royal Bank of Scotland (RBS), due to be delivered to chancellor George Osborne this week, is expected to stop short of recommending a radical split of RBS into 'good' and 'bad' banks, and will instead posit a rapid run-down of about £50bn in problem loans, mostly from commercial property and Ulster Bank, and a move forward of the sale of the US business Citizens, scheduled currently for next year; advisers Morgan Stanley are said to be close to appointing a book-runner. The Sunday Times quotes industry sources who believe that RBS will close its investment banking business and fold its remaining markets-based operations into its corporate bank. Critics such as Lord King, former governor of the Bank of England, argue that the pressures of dealing with the bad loans legacy are preventing RBS from playing more of a role in improving the economy, but City analysts say there is no evidence to support a split, and shareholders have threatened to block any attempt to parcel off bad loans to the government. If the structure of the future bank is set, the way could be cleared to beginning to sell the 81 per cent stake held by the taxpayer by the end of 2014. [Sunday Times, p.3.2]
Shoe chain on the brink
Footwear retailer Barratts, owned by Michael Ziff, has approached lenders and investors for £3m in short-term funds to cover stock in the run-up to Christmas trading. The retailer, bought out of administration for the second time in December 2011, has 90 stores and employs over 1,000; while bargain retailers and high-end department stores are anticipating bumper Festive seasons, those in the mid-market are steeling themselves for a tough time. [Sunday Times, p.3.1]
RBS profits return as split looms
Royal Bank of Scotland (RBS) is set on Friday to announce Q3 profits of more than £400m after losses of £1.2bn last year in the first set of results under chief executive Ross McEwan. A Treasury report is expected calling for the division of RBS into 'good' and 'bad' banks, and indications from chancellor George Osborne that RBS 'is top of my in-tray' leads the Sunday Telegraph to expect plans for a break up to be imminent, as Rothschild is to report on the bank and BlackRock is analysing the £54bn 'non-core' toxic assets portfolio. [Sunday Telegraph, p.B1]
2,000 Merlin staff to share £200m IPO windfall
2,000 senior managers and long-serving staff at Merlin Entertainments will share in a £200m windfall when the Legoland, Alton Towers, Madame Tussauds and London Eye owner floats next month. A prospectus is due this week, and it is expected that the company will be valued at around £3bn, with an additional £1bn of debt. Merlin said last week that it is planning to float a fifth of the business on the London Stock Exchange, raising around £200m to reduce debt; major shareholders Kirkbi, Blackstone and CVC Capital Partners are also expected to dispose of around £400m. Merlin is hoping that 10 per cent-15 per cent will go to retail investors committing at least £1,000. [Sunday Telegraph, p.B1]
Shale energy 'could supply UK's gas needs for four years and save jobs'
John McGoldrick, chief executive of Dart Energy, warned that stopping fracking would put UK jobs at risk and miss out on a fuel source that could power the country's gas needs for four years from one company alone. Mr. McGoldrick said he hoped to begin drilling for shale gas in 2015 with £24m of backing from GDF Suez. Dart believes there are 110 trillion cubic feet of shale gas in its licence areas, spanning an area of 500 square miles from Wrexham to York, and says if only 10 per cent could be recovered, that would be four years' worth of UK consumption. [Sunday Telegraph, p.B1]
Bank of England in new Co-op inquiry
The Sunday Telegraph reports that the Bank of England's Prudential Regulation Authority is to conduct an inquiry into the circumstances leading to the discovery of the £1.5bn black hole at the Co-operative Bank in May of this year, dating back to before the Co-op's merger with the Britannia Building Society. The review will assess whether the PRA and predecessor the Financial Services Authority failed in its supervision and whether the shortfall could have been revealed earlier asking what may have changed between the bank's 2012 annual results in May and June when the shortfall was disclosed. [Sunday Telegraph, p.B3]
