Monday’s Stock Market report featuring Paragon Diamonds, CRH, Grainger and Motif Bio

By Swen Lorenz 02 February 2015

14 mins. to read

The Markets

The UK manufacturing sector appeared to have picked up pace in January according to the latest PMI survey of industrial firms. The index rose to 53 for the month, up from an upwardly revised 52.7 in December. Activity increased by more than many analysts had expected, but companies cut prices at the fastest rate in five years due to flagging demand in key Eurozone markets. Paul Hollingsworth from Capital Economics said that, “it seems likely that lower oil prices should continue to enable manufacturers to lower prices and so support demand. The latest survey evidence offers some hope that the manufacturing sector may have passed the worst.”

George Osborne has warned that the stand off between Greece and its Eurozone creditors is becoming the largest risk to the global economy after meeting the country’s new Finance Minister, Yanis Varoufakis, earlier today. The Chancellor said that the new regime must act responsibly in debt talks but also urged Eurozone authorities to deliver “a better plan for jobs and growth”.

At the London close the Dow Jones had increased by 86.18 points to 17,251.13 and the Nasdaq rose by 16.50 points to 4,164.93.

In London the FTSE 100 closed up by 33.15 points at 6,782.55 and the FTSE 250 grew by 49.79 points to 16,355.56. The FTSE All-Share increased by 16.48 points to 3,638.29 while the FTSE AIM Index dropped by 0.04 points to 690.30.

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Broker Notes

Westhouse Securities reiterated its “buy” stance and 201p target price for oil and gas outfit Rockhopper Exploration (RKH). This came after the firm announced that the rig for its six well drilling programme in the Falklands basins was in transit from West Africa and expected to arrive in the first week of March. The broker says that today’s news highlights potential catalysts for price movements in the near future. The shares grew by 4.5p to 56.25p.

London brewer and pub operator Fuller, Smith and Turner (FSTA) had been given a “buy” rating by Beaufort Securities after like-for-like sales in its managed outlets rose by 6.8% for the 43 weeks ended 24th January and by 4% in tenanted venues. Total output of beer and cider grew by 4%. The broker believes that the firm’s record Christmas and new site acquisitions suggest that further growth may be on the way. Shares in the brewer rose 4.5p to 984p.

Northland Capital has opened its coverage of mining and exploration company Paragon Diamonds (PRG) with a “buy” rating and a 12.9p target price. The broker said that the firm was fully funded to enter initial production at the Lemphane project during the second quarter of this year and that this would allow Paragon to collect the necessary information to assess further prospects in the area. The shares climbed by 0.2p to 5.5p.

Broker takes a shine to Paragon

Blue Chips

Building materials firm CRH (CRH) announced a placement of 74 million ordinary shares to fund the acquisition of certain assets that will be sold by Holcim and Lafarge in the course of their merger, for an enterprise value of roughly €6.5 billion (4.9 million pounds). The placing is being underwritten by a number of major financial institutions including UBS and JP Morgan. CRH shares rose by 115p.

CRH looks to stack up new wares

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Mid Caps

Polymer based engineering products outfit Fenner (FENR) has bought US firm Charter Medical for a cash consideration of $29.9 million (19.6 million pounds). The deal is expected to be immediately earnings enhancing. Charter manufactures single use assemblies and medical devices for processing and filtering biological fluids. Fenner shares grew by 4p to 190p.

UK property specialist Grainger (GRI) has exchanged contracts for the acquisition of a regional, tenanted, residential portfolio for around 58 million pounds. The deal includes 614 properties that are predominantly occupied and generate an annual gross rent of roughly 4.5 million pounds. The purchase is in line with the firm’s stated aim for this year of investing more heavily in UK regions outside London and the South East. The share price increased by 4p to 190p.

Grainger says assets outside London key to success

Small Caps

Construction, design and project management outfit ISG (ISG) said that while its International, UK engineering and retail divisions performed well during the six months to 31st December, UK construction operations have been adversely affected by three poorly performing contracts to such an extent as to outweigh the gains made elsewhere. As a consequence, full year results will be around 7 million pounds lower than forecast in the AGM statement last month. The shares were the worst performing on the London market, plunging by 92.5p to 261p.

Household connectivity software developer LightwaveRF (LWRF) posted revenues of 3.04 million pounds for the year ended 30th September, a 189% increase on the prior year. Losses before taxation narrowed considerably to 0.3 million pounds and net debt was also reduced by 0.46 million pounds. The company’s order book held 1.8 million pounds worth of deals at the year end. Shares in LightwaveRF grew by 1.5p to 36.5p.

Feed additives manufacturer and marketer Anpario (ANP) traded well over 2014 and management believe that profits will be in line with expectations. The board said that the firm retained a strong balance sheet and was debt free with cash reserves of 6.6 million pounds as at December 31st. Full results for the year will be published in early March. Anpario shares ended the day flat at 295p.

Building products manufacturer Epwin (EPWN) said that results for 2014 are in line with expectations and that management are pleased with the progress made throughout the year. The firm ended December with a net cash balance despite paying out 1.9 million pounds in dividends during the second half of 2014. Full results will be published in mid-April. The shares rose by 5.87p to 91.5p.

Antibiotic drug researcher Motif Bio announced its intention to list on AIM and hopes to raise at least 4 million pounds via the issue of new shares. The company is working to develop treatments suitable for patients infected with drug resistant bacterial strains and believes that they could be ready for commercialisation within 36 months. The funds raised would provide working capital and support clinical trials.

Motif AIM to offer new treatments

The Markets
The UK manufacturing sector appeared to have picked up pace in January according to the latest PMI survey of industrial firms. The index rose to 53 for the month, up from an upwardly revised 52.7 in December. Activity increased by more than many analysts had expected, but companies cut prices at the fastest rate in five years due to flagging demand in key Eurozone markets. Paul Hollingsworth from Capital Economics said that, "it seems likely that lower oil prices should continue to enable manufacturers to lower prices and so support demand. The latest survey evidence offers some hope that the manufacturing sector may have passed the worst."
George Osborne has warned that the stand off between Greece and its Eurozone creditors is becoming the largest risk to the global economy after meeting the country’s new Finance Minister, Yanis Varoufakis, earlier today. The Chancellor said that the new regime must act responsibly in debt talks but also urged Eurozone authorities to deliver "a better plan for jobs and growth".
At the London close the Dow Jones had increased by 86.18 points to 17,251.13 and the Nasdaq rose by 16.50 points to 4,164.93.
In London the FTSE 100 closed up by 33.15 points at 6,782.55 and the FTSE 250 grew by 49.79 points to 16,355.56. The FTSE All-Share increased by 16.48 points to 3,638.29 while the FTSE AIM Index dropped by 0.04 points to 690.30.
 
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Broker Notes
Westhouse Securities reiterated its "buy" stance and 201p target price for oil and gas outfit Rockhopper Exploration (<a href=”http://www.bulletincentral.co.uk/?T=RKH”>RKH</a>). This came after the firm announced that the rig for its six well drilling programme in the Falklands basins was in transit from West Africa and expected to arrive in the first week of March. The broker says that today’s news highlights potential catalysts for price movements in the near future. The shares grew by 4.5p to 56.25p.
London brewer and pub operator Fuller, Smith and Turner (<a href=”http://www.bulletincentral.co.uk/?T=FSTA”>FSTA</a>) had been given a "buy" rating by Beaufort Securities after like-for-like sales in its managed outlets rose by 6.8% for the 43 weeks ended 24th January and by 4% in tenanted venues. Total output of beer and cider grew by 4%. The broker believes that the firm’s record Christmas and new site acquisitions suggest that further growth may be on the way. Shares in the brewer rose 4.5p to 984p.
Northland Capital has opened its coverage of mining and exploration company Paragon Diamonds (<a href=”http://www.bulletincentral.co.uk/?T=PRG”>PRG</a>) with a "buy" rating and a 12.9p target price. The broker said that the firm was fully funded to enter initial production at the Lemphane project during the second quarter of this year and that this would allow Paragon to collect the necessary information to assess further prospects in the area. The shares climbed by 0.2p to 5.5p.
Broker takes a shine to Paragon
Blue Chips
Building materials firm CRH (<a href=”http://www.bulletincentral.co.uk/?T=CRH”>CRH</a>) announced a placement of 74 million ordinary shares to fund the acquisition of certain assets that will be sold by Holcim and Lafarge in the course of their merger, for an enterprise value of roughly €6.5 billion (4.9 million pounds). The placing is being underwritten by a number of major financial institutions including UBS and JP Morgan. CRH shares rose by 115p. 

CRH looks to stack up new wares 

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Mid Caps
Polymer based engineering products outfit Fenner (<a href=”http://www.bulletincentral.co.uk/?T=FENR”>FENR</a>) has bought US firm Charter Medical for a cash consideration of $29.9 million (19.6 million pounds). The deal is expected to be immediately earnings enhancing. Charter manufactures single use assemblies and medical devices for processing and filtering biological fluids. Fenner shares grew by 4p to 190p.
UK property specialist Grainger (<a href=”http://www.bulletincentral.co.uk/?T=GRI”>GRI</a>) has exchanged contracts for the acquisition of a regional, tenanted, residential portfolio
for around 58 million pounds. The deal includes 614 properties that are predominantly occupied and generate an annual gross rent of roughly 4.5 million pounds. The purchase is in line with the firm’s stated aim for this year of investing more heavily in UK regions outside London and the South East. The share price increased by 4p to 190p.
Grainger says assets outside London key to success
Small Caps
Construction, design and project management outfit ISG (<a href=”http://www.bulletincentral.co.uk/?T=ISG”>ISG</a>) said that while its International, UK engineering and retail divisions performed well during the six months to 31st December, UK construction operations have been adversely affected by three poorly performing contracts to such an extent as to outweigh the gains made elsewhere. As a consequence, full year results will be around 7 million pounds lower than forecast in the AGM statement last month. The shares were the worst performing on the London market, plunging by 92.5p to 261p.
Household connectivity software developer LightwaveRF (<a href=”http://www.bulletincentral.co.uk/?T=LWRF”>LWRF</a>) posted revenues of 3.04 million pounds for the year ended 30th September, a 189% increase on the prior year. Losses before taxation narrowed considerably to 0.3 million pounds and net debt was also reduced by 0.46 million pounds. The company’s order book held 1.8 million pounds worth of deals at the year end. Shares in LightwaveRF grew by 1.5p to 36.5p.
Feed additives manufacturer and marketer Anpario (<a href=”http://www.bulletincentral.co.uk/?T=GRI”>ANP</a>) traded well over 2014 and management believe that profits will be in line with expectations. The board said that the firm retained a strong balance sheet and was debt free with cash reserves of 6.6 million pounds as at December 31st. Full results for the year will be published in early March. Anpario shares ended the day flat at 295p.
Building products manufacturer Epwin (<a href=”http://www.bulletincentral.co.uk/?T=EPWN”>EPWN</a>) said that results for 2014 are in line with expectations and that management are pleased with the progress made throughout the year. The firm ended December with a net cash balance despite paying out 1.9 million pounds in dividends during the second half of 2014. Full results will be published in mid-April. The shares rose by 5.87p to 91.5p.
Antibiotic drug researcher Motif Bio announced its intention to list on AIM and hopes to raise at least 4 million pounds via the issue of new shares. The company is working to develop treatments suitable for patients infected with drug resistant bacterial strains and believes that they could be ready for commercialisation within 36 months. The funds raised would provide working capital and support clinical trials.
Motif AIM to offer new treatments

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