Monday’s Stock Market Report featuring Imperial Innovations, Compass, Polymetal and Cenkos Securities

The Markets

The Bank of England has set out parameters for this year’s round of stress tests for the banking industry. Institutions will have to show that they are able to withstand sharp contractions in the Eurozone and Chinese economies, a well as a deep UK recession. However, the Bank is less concerned about UK property values than last year and has slightly lessened the drop that banks will have to weather.

At the London close the Dow Jones had increased by 264.45 points to 17,977.11 and the Nasdaq rose by 34.73 points to 4,367.59.

In London the FTSE 100 closed up by 36.41 points at 6,891.43 and the FTSE 250 rose by 45.46 points to 17,208.10. The FTSE All-Share increased by 20.45 points to 3,722.07 while the FTSE AIM Index  grew by 2.13 points to 719.73.

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Broker Notes

Engineering support services provider Babcock International (BAB) has retained its “buy” rating from Shore Capital after the firm said that trading in the current period was strong and reiterated the encouraging guidance issued in February for revenue growth and cash conversion over the coming two years. Shares in Babcock International dropped by 11.5p to 962p.

Westhouse Securities has rated ITV (ITV) as an “add” after the broadcaster completed the acquisition of Talpa Media, in a deal which the broker believes significantly expanded ITV’s capabilities in the content space. Talpa is a Dutch production firm with rights to a number of global formats including The Voice and the business earned revenues of €233 million (£179 million). Shares in the business grew by 3.9p to 255.2p.

Beaufort Securities rated Imperial Innovations (IVO) as a “buy” after the firm’s revenues for the six months ended 31st January jumped to £2.8 million as royalties and licencing income grew. The company fell into a loss for the year, but the broker felt that this was outweighed by the increasing value of the firm’s portfolio. The shares fell by 19p to 466p.

Blue Chips.

Catering and support services outfit Compass Group (CPG) expects to record organic revenue growth of roughly 5.5% over the six months to 31st March, driven by a strong performance in North America and emerging regions. European and Japanese markets also returned to growth with new business wins but net volumes remain below peak levels. The shares rose by 12p to 1,186p.

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Mid Caps

Technical services provider Diploma (DPLM) said that sales in the half year to 31st March will be around 9% higher than in the comparative period due to excellent contributions from the firm’s recently acquired businesses. Profit margins in the Life Sciences arm has been negatively impacted by the recent depreciation of sterling. Shares in Diploma dropped by 2p to 809p.

Private healthcare group Al Noor Hospitals (ANH) saw its revenues improve by 23% to $449.1 million (£303.7 million) over the course of 2014, driven by significant increases in patient volumes. Profits before taxation were $84.4 million (£57.08 million). Management plan to expand outside the United Arab Emirates during the current year in a bid to grow the business further. The shares fell by 53p to 1,025p.

Minerals extraction outfit Polymetal (POLY) saw revenues during 2014 that were broadly in line with the prior year despite the declining prices of precious metals as the firm increases volumes by 7%. The company’s loss for the year widened to $210 million (£142 million). Management said that they were pleased with Polymetal’s cash flow and cost performance under difficult market conditions. The shares rose by 5p to 569p.

Small Caps

Investment banking services provider Numis Corporation (NUM) said that revenues and profits for the six months ended 31st March will be significantly ahead of the same period a year ago as activity in the markets has remained high. Numis completed 23 transactions including six IPOs in the half year and has a healthy pipeline for April and beyond. The shares declined by 1.5p to 233.25p.

Restaurant operator Tasty (TAST) earned revenues of £29.7 million in 2014, an increase of 28% over prior year after the firm opened seven new branches. Profits before tax grew by 46% to £2.55 million. Management say that the firm will continue to expand during 2015, with three new sites already opening this year and additional restaurants planned. No dividend will be paid. The shares climbed by 1p to 139p.

Gold and copper explorer Bezant Resources (BZT) recorded a post-tax loss of £0.38 million in the six months to December, but retains cash holdings of £2.1 million and significantly cut expenditure relative to the same period of the prior year. The company is considering the sale of its flagship Mankayan project in the Phillipines and has minimised its spending commitments on its Argentian assets. The shares fell by 0.125p to 2.375p.

Financial settlement specialist Billing Services (BILL) earned a profit of $2.1 million (£1.4 million) during 2014, a significant improvement over the previous year’s loss of $6.2 million (£4.2 million). Margin improvements of 290 basis points offset a 21.4% drop in revenues to $42.4 million (£28.6 million). Current trading is in line with the board’s expectations for 2015. The shares dropped by 0.25p to 2.88p.

Institutional brokerage and advisory firm Cenkos Securities (CNKS) increased pre-tax profits by 152% to £27 million in 2014 after the company increased its revenues to £88.5 million and raised 15% of all funds on the AIM market during the year. Management said that demand remains strong in 2015 and the company has engaged in a number of capital raisings so far this year. The shares rose by 10.5p to 196p.