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Press tips & headlines: Ashtead, Royal Dutch Shell, MySale

Here is a selection of today's business press headlines.
June 18, 2014

After rising strongly so far this year shares in rental equipment company Ashtead (AHT) have came off despite the company having delivered an apparently sparkling update. To a degree that is probably down to profit-taking. From a more fundamental point of view, investors are probably asking themselves what might go wrong. The most typical worry is over-investment, of which there have been instances in the past. However, its hire fleet is now the youngest ever, as customers prefer. On the one hand, that means the firm can now reinvest for growth, instead of just replacement, and get ahead of its rivals.

More importantly, Ashtead is heading into an upturn as the US ramps up for a five- to 10-year investment programme to make itself self-sufficient. Furthermore, its investments in greenfield sites Stateside have the potential to provide returns on investment of 20 per cent-plus within a few years. At about 15 times earnings for a growth story The Times´ Tempus column said it sees no reason to sell. Hence, the recent share price fall looks like another buying opportunity. “Ashtead has manoeuvred well through the recession, and its strengths suggest further gains as the American market recovers, Buy,” Tempus said.

On Tuesday Shell (RDSB) finally managed to sell-down another significant portion of its stake in Australian energy outfit Woodside Petroleum for about $5bn after the government blocked earlier attempts to take over the entire company. Hence, the oil major´s $15bn divestment plan is now accelerating. In February it sold three North Sea oil assets and a 23 per cent stake in a deepwater project offshore Brazil for $1bn, together with a refinery and lubricant asset in Australia for $2.6bn.

On top of that, the company´s cash flow is growing just as its investment plan is due to slow down, while the current level of gearing is not an issue for Shell. Given that the price of oil is expected to be persistently high returning more cash to shareholders may be an option. Just as important, the company´s B-shares contine to trade at a discount to the FTSE in terms of its price-to-earnings ratio. “We continue to like their long term prospects. Buy,” says The Daily Telegraph´s Questor column.

BUSINESS PRESS HEADLINES:

The Bank of England "will not hesitate" to take further action to cool Britain's booming housing market and stop the economy from boiling over, Mark Carney has said. On the day official data showed the average UK house price is ten times bigger than the average salary, the Governor used the Bank's annual report to highlight the steps it had already taken to prevent people from taking out unaffordable mortgages. Mr Carney said the Bank was prepared to use its so-called macro-prudential toolkit to support these steps. - The Daily Telegraph

Shares in MySale (MYSL) have slumped 17 per cent since they floated on Monday as confusion over the pricing of the Australian online retailer’s stock continued in the market yesterday. In a second day of mixed trading after a botched debut — in which the retailers’ stock was mistakenly priced in pounds rather than pence by Macquarie, the stock broker sponsoring the issue — MySale’s shares closed down at 187.5p after listing at 226p. The Times understands that the London Stock Exchange had warned Macquarie Capital, the nominated adviser and joint broker and bookrunner with Zeus Capital, that it was unusual to list the price in pounds rather than pence. - The Times

The Government has yet to demonstrate that its flagship Help to Buy mortgage guarantee policy is providing value for money, an influential committee of MPs has found. The House of Commons Public Accounts Committee (PAC) warned that the scheme - under which Government equity loans finance up to 20 per cent of the purchase price of homes worth up to £600,000 - has created a "medium and long-term risk" to the taxpayer in the shape of a £10bn portfolio of loans that will impose a "heavy administrative burden" for decades to come. - The Daily Telegraph

Customer complaints to the big six energy companies have reached their highest-ever levels. The big six suppliers – British Gas, EDF Energy, E.ON, Npower, Scottish Power and SSE – received a total of 1.7m complaints in the first quarter of 2014, up from just under 1.5m in the same period last year, according to consumer group Which?. - The Guardian

Trade links with China strengthened yesterday after billions of pounds of deals were signed to coincide with the first visit to Britain by the country’s new premier. BP (BP.) announced a 20-year, £12bn contract to supply Beijing with liquefied natural gas. The London Stock Exchange also said that it had signed an agreement with the Agricultural Bank of China to make it easier for Chinese companies to draw from London’s large pools of investor capital by building up the market for renminbi-denominated equity products. - The Times

The energy watchdog has backtracked on its decision to stop small supplier Ovo Energy paying interest on gas and electricity bill overpayments. Last week, Ofgem caused outrage when it tried to ban the firm from paying 3 per cent interest on their balance to customers who have built up a credit. The bonus has made households more than £1m since 2010. It claimed the interest payment was too confusing and breaks its new rules on the number of discounts suppliers can offer. - The Daily Mail