Equities are off form in early trading after a downwards lurch in the US overnight but The Trader Dominic Picarda remains positive overall.
IC TIP UPDATES:
Full year results from Gulf Keystone Petroleum (GKP) showed losses reducing from $81.8m to $32m after a ramp up in production from its fields in Kurdistan during the year. Exports have now begun to Turkey and further increases in production are slated for 2014 with the Shaikan field expected to produce 40,000 barrels of oil per day by the end of this year. Our recommendation is under review.
Babcock International (BAB) is launching a £1.1bn fundraising in order to fund the acquisition of Avincis from World Helicopters. The deal is worth £920m while Babcock will also assume £705m of debt. Avincis specialises in helicopter and fixed wing services for medical, search and rescue and emergency services in Europe and also serves the oil and gas sector in the North Sea. It ended 2013 with an order book of €2.3bn. We keep our buy recommendation on Babcock.
Thomas Cook Group (TCG) has ended the winter season well, having sold 93 per cent of all holidays and the summer season is also reported to have started positively with bookings up 2 per cent on last year but pricing has slipped with selling prices 3 per cent lower than last year due to competition and a higher proportion of one week holidays. Cost cutting benefits have mitigated the lower pricing. Buy.
Oil producer Afren (AFR) posted record production of 47,112 barrels a day and revenues of $1.6bn for 2013. And 2014 could set further records with production forecast to rise to an average of 62,000 barrels of oil per day and an active exploration campaign to boot. We keep our buy rating.
Sell recommendation Laura Ashley (ALY) edged profits up by 2 per cent to £20.5m in the year to 25 January despite a 1.4 per cent dip in total group sales and a 0.4 per cent reversal in like for like sales. Current trading looks a little more promising with like for like sales up 2 per cent.
Land remediation and property development specialist Henry Boot (BHY) saw its profits rise by 37 per cent in 2013 after strong trading activity in its land sales business. The strategic land bank grew during the year from 9,011 acres to 9,723 acres. Buy.
Environmental consultancy WYG (WYG) says that full year results are now likely to be 10 per cent ahead of expectations and its order book has grown by 13 per cent since this time last year. We maintain our buy rating.
Rolls Royce (RR.) has been selected by All Nippon Airways to supply $1.1bn worth of Trent engines for 25 Boeing Dreamliner aircraft. Buy.
Meat processing specialist Hilton Food Group (HFG) grew revenues by 9 per cent to £1.1bn in 2013 but profits grew more modestly from £18.9m to £19.5m due to investment in the business and in particular its operations in Australia. We keep our buy recommendation.
Interim results from wellhead technology developer Plexus Holdings (POS) showed a 12 per cent uplift in revenues and a 13 per cent rise in post-tax profits despite a 20 per cent increase in research and development spending. Buy.
Ophir Energy (OPHR) announces that it has been awarded an exploration block offshore Myanmar. It is the 95 per cent operator of the 10,000 square kilometre AD-03 block which is relatively close to the huge Shwe gas field. We keep our buy.
KEY STORIES:
The ‘big six’ energy companies will come under increased scrutiny in the coming months after the regulator Ofgem said it was minded to refer the industry to the Competition and Markets Authority for a full investigation. Centrica (CNA) and SSE (SSE) have both issued statements welcoming the decision and the opportunity to ‘clear the air’ once and for all.
Serco (SRP) has been awarded an extension to its contract, in joint venture with Dutch rail operator Abellio, to run the Northern Rail franchise for a further 22 months to February 2016.
Plastics specialist RPC (RPC) reports that fourth quarter trading is ahead of last year due to the combined effect of acquisitions and better underlying trading. The full year outcome looks likely to be in line with expectations.
