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Press tips & headlines: Wincanton, Royal Mail, Petropavlovsk

Markets are underestimating the turnaround story at small-capitalisation haulage firm Wincanton (WIN). The current consensus of analysts' estimates is calling for pre-tax profits to come in at about £25m this year, followed by a small increase to £26m next year, on the back of largely flat revenues. However, after renegotiating its financing and with plans to exit costly leases the well-diversified firm can easily beat those forecasts.

Not surprisingly, Chief Executive Eric Born thinks he can grow profits and cash flows even without the benefit of mergers and acquisitions or an economic recovery. At just eight times expected earnings the shares are cheap and worth buying, writes The Telegraph's Questor column.

The decision by French competition authorities to launch an investigation into the practices of Royal Mail's (RMG) European parcel service operation, GLS, could see the company face a fine of as much as £160m, according to analysts at Espirito Santo. The stock has fallen considerably this year, as competition grows and parcel volumes slowdown. Nonetheless, free cash flow is expected to come in at about £250m in this fiscal year, expanding to £300m two years later. Hence, the 500-year old outfit has the financial werewithal to withstand any such fine.

As well, this year's forecast dividend of 22p per share provides a yield of 4.6 per cent and is seen growing by 15 per cent on average over the next two years. Lastly, the UK Parcel, International and Letters (UKPIL) - which generates about 86 per cent of revenues and three quarters of its operating profits - has a dominant market position. At a price-to-earnings multiple of 13 the stock is cheaper than German rival Deutsche Post DHL, on 15. Long term the stock remains a hold, says The Telegraph's Questor column.

Russia-focused gold miner Petropavlovsk (POG) generated £190m in earnings before expenses last year and is on track to dig a record amount of the "yellow metal" out of the ground this year. Financial markets, however, now place a negative value on the company's stock, to the tune of -£33m. That compares to the £98m valuation assigned just to its 40 per cent stake in Hong Kong listed iron ore miner IRC. The problem is the company's debt load. When combined with the sharp fall in the price of gold the outfit will not be able to pay back its lenders even under the rosiest of scenarios. Making matters worse, the start of production at IRC's iron ore mine next to the Chinese border has fallen behind schedule.

Furthermore, two of IRC's Chinese partners fell into arrears, as of April, on $68m of debt. Petropavlovsk is thus now negotiating a haircut with creditors on a $310m bond due in February. Everything now hangs on Chief Executive Peter Hambro's ability to win a reprieve from creditors, writes Danny Fortson in The Sunday Times' Inside the City column.

BUSINESS PRESS HEADLINES:

US President Barack Obama has called for an "immediate ceasefire" between Israel and Hamas, after the bloodiest day of fighting in Gaza raised the number of Palestinians killed to 476. The call came as Israel escalated its offensive which on Sunday claimed 120 Palestinian lives, a third of them women and children. Thirteen Israeli soldiers were also killed on the same day, in the heaviest loss of life for the Israeli military in years, two of them US citizens. - The Guardian

BSkyB (BSY) is pushing ahead with plans to create a European pay TV giant by buying 21st Century Fox's satellite broadcasting assets in Germany and Italy. Talks about the group acquiring Sky Italia and Fox's 57 per cent stake in Sky Deutschland have been progressing and reports yesterday claimed that a deal could be struck within weeks. - The Times

Royal Mail will this week face a stormy shareholder protest when the company holds its first annual meeting since its controversial privatisation. The 500-year-old company is likely to face questions about the £1.35m pay package awarded to the chief executive, Moya Greene, and its warning that the universal service obligation - the pledge to deliver to every address in the country for the same price six days a week - is under threat. - The Guardian

Bankers and brokers accused of wrongdoing face investigations going back far longer as regulators are granted double the amount of time they previously had to look at allegations of market abuse and financial misbehaviour. The Financial Conduct Authority and the Prudential Regulation Authority will from Thursday have as much as six years to bring disciplinary action against City professionals, giving the authorities much longer to conduct in-depth investigations into market scandals, such as Libor-rigging and foreign exchange manipulation. - The Times

The prices demanded by sellers putting their homes on the market have fallen for the first time this year, in the latest sign that some of the heat is coming out of the UK housing market. The average asking price fell by 0.8 per cent, or £2,116, to £270,159 in July, according to the property website Rightmove. It was the first monthly drop since December and compared with a 0.3 per cent rise in July 2013. - The Guardian

Banks should be forced to issue immediate warnings to a staggering two million homeowners at risk of financial difficulty when interest rates start to rise, a leading think-tank will warn this week. The 'at-risk mortgage borrowers' include those on high loan-to-value mortgages and who have had recent difficulties making payments, both of whom face what the report from the Resolution Foundation calls 'an unwelcome shock' when rates go up. - The Daily Mail

Former Co-operative Group chief executive Euan Sutherland, who resigned from the embattled mutual in March after ten months in the role, is to receive a £1 million payoff - equivalent to a year's basic salary. The Scots-born former chief operating officer of B&Q owner Kingfisher took the helm of the group in May last year, and his resignation followed a row over the leaking of details about his £3.6 million pay package. - The Scotsman

Dividend payouts grew at their slowest rate for more than three years in the second quarter, dragged back by paltry handouts at Britain's 15 biggest listed companies, according to the latest analysis. Stock market investors collected £25.8bn in dividend payments during the three months to the end of June, only 1.2 per cent higher than the same period last year, Capita Asset Services found in its latest Dividend Monitor, published today. - The Times

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