Tuesday’s Stock Market report featuring Britvic, BP, Ocado and Tracsis
The Markets
The European Commission has widened its investigation of improper corporate tax behaviour to include Belgium, saying that the government made deals with a number of firms that shifted “a substantial part of their business” into the country. Commissioner Margrethe Vestager outlined the EU’s concerns by commenting that “the Belgian ‘excess profit’ tax system appears to grant substantial tax reductions only to certain multinational companies that would not be available to stand-alone companies” which would amount to a serious distortion of the internal market.
Down under, the Reserve Bank of Australia cut interest rates from 2.5% to 2.25%, with effect from tomorrow morning, due to modest domestic and global growth being seen as well as declining commodity prices. The Bank’s explanatory statement also pointed to low inflation and spare economic capacity as factors for its decision. Some analysts feared that the cut may fuel certain trends in the country, with many suggesting that the fall in rates could further inflate a current property bubble.
At the London close the Dow Jones had increased by 171.07 points to 17,532.11 and the Nasdaq grew by 0.20 points to 4,188.79.
In London the FTSE 100 closed up by 89.25 points at 6,871.80 and the FTSE 250 grew by 214.74 points to 16,570.30. The FTSE All-Share increased by 46.85 points to 3,685.14 while the FTSE AIM Index rose by 1.97 points to 693.02.
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Broker Notes
Mineral processing technology firm Alexander Mining (AXM) has been rated as a “buy” and given a target price of 2.6p by Northland Capital after the company confirmed that it has been granted a US patent for a method of leaching zinc from carbonate ores. The broker said that IP protection was a crucial factor for the firm’s long run success and Northland is waiting to hear how Alexander plans to commercialise the technique. The shares ended the day flat at 0.625p.
Beaufort Securities has reiterated its “buy” rating on budget airline Ryanair (RYA) after the company posted strong revenue growth for the nine months to 31st December compared to the same period of 2013. The firm also turned a profit for the three quarters, rather than posting a loss in the prior year. Beaufort believes that net full year profits could be in the region of €850 million (639.8 million pounds). The shares climbed by €0.20 to €9.98.
WH Ireland has opened coverage on soft drinks producer Britvic (BVIC) with an “add” rating and 713p target price, praising management’s recent restructuring efforts for improving margins. The broker believes that there is a great deal of room for international growth, particularly in the franchise market, and said that the current 15.5 earnings multiple valuation was attractive. Britvic shares rose by 20.5p to 733.5p.
Broker expects sparkling results from Britvic
Blue Chips
Oil and gas giant BP (BP.) earned profits of $3.78 billion (2.51 billion pounds) in 2014, dramatically lower than the $23.45 billion (15.6 billion pounds) made in the prior year due to an exceptional gain on disposal booked in 2013. The final quarter was weak, with a loss of $4.4 billion (2.93 billion pounds) for the three months to 31st December, largely due to impairments in the upstream arm of the business. BP shares grew by 12.15p to 449.85p.
Fuel and energy firm BG Group (BG.) has written off additional assets after the recent decline in oil prices, crossing 6 billion pounds off its books as it also announced cutbacks to investment. The company is looking to reduce operating costs by 10% over the current year, on top of previously announced staffing cutbacks. BG Group lost $2.3 billion (1.52 billion pounds) before tax in 2014. The shares rose by 10.80p to 945p.
Oil fall erodes BG assets
Mid Caps
Telecoms firm TalkTalk (TALK) said that total revenues for the three months to December were 449 million pounds, 4.2% higher than during the equivalent quarter of 2013. The company added more than 250,000 customers to its various TV, internet and phone offerings over the period and client churn dropped to 1.3%, its lowest level for the last three year. TalkTalk shares dropped by 3.3p to 315p.
Consumer transport operator National Express (NEX) announced that its rail franchise c2c has been selected by the Bavarian passenger transit authority as the preferred bidder for running all Nuremburg S-Bahn Services. Two twelve year contracts will be awarded at the end of the tender process with expected combined revenues of €1.4 billion (1.06 billion pounds) over the period. The shares grew by 7.2p to 263.5p.
Food distribution and online retail company Ocado Group (OCDO) made gross sales of 972 million pounds over the year ended 30th November. a 15.3% increase over the prior year. The firm reported a statutory profit of 7.2 million pounds, a significant improvement on 2013’s 12.5 million pound loss. Ocado successfully launched a new offering with Morrisons in January, which is ramping up as planned. The shares rose by 19.7p to 435.2p.
Ocado finally making a profit
Small Caps
Mobile commerce firm Proxama (PROX) said that revenues for 2014 will be in line with the previous year at around 0.8 million pounds, with the EBITDA loss expected to widen to 5.6 million pounds, from 3.1 million recorded in 2013. Management believe that the market for its technologies leapt forwards in 2014 and thinks that 2015 will deliver substantial growth. Proxama shares fell by 0.03p to 1.92p.
Resource optimisation software developer Tracsis (TRCS) performed in line with expectations during the six months ended 31st January with revenues believed to be in excess of 11 million pounds as the firm continued to expand its North American operations. The integration of rail data business Datasys is proceeding well and the firm contributed significantly to the improved results. Tracsis shares dropped by 14p to 406p.
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Support and consultancy services provider Castleton Technologies (CTP) said that its strong sales momentum has continued through recent weeks after a record month in November. In the the three months to the end of January, the firm won deals worth a combined 1.5 million pounds. Management said that they were actively seeking investment opportunities to accelerate growth. The shares rose by 0.03p to 2.25p.
Equipment design and manufacturing outfit Newmark Security (NWT) recorded revenues of 11.9 million pounds for the six months ended 31st October, a 34% increase on the equivalent period of 2013, driven by the acquisition of CSI at the start of November last year. Profits from operations before exceptional items were 1.5 million pounds. Following the end of the period, the company has received a new 4 million pounds from a high street bank. The shares climbed by 0.03p to 2.875p
Grocery warehousing and distribution group NWF Group (NWF) saw revenues for the six months ended 30th November drop by 4,6% to 247.1 million pounds. Operating profits contracted to 2.8 million pounds as a result of the fall in oil prices impacting the fuel business and a collapse in margins for the animal feeds arm of the company. Shares in NWF Group closed flat at 128p.
Animal feed eats in to NWF profitability
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