Tuesday’s Stock Market Report, featuring Burberry, Kingfisher, Wood Group, Churchill China and LED International

4 mins. to read

The Markets
UK economic growth for 2014 has been revised upwards to 2.8%, in the latest set of official figures published by the Office for National Statistics. The ONS also raised its estimate for the fourth quarter to 0.6% on the back of a stronger than expected performance in export markets. The ONS also announced that household disposable incomes were at the highest level since 2010. Ben Bartrell, Senior Economist at Hargreaves Landsdown, commented, “given the outlook for consumer spending, the Office for Budgetary Responsibility’s forecast of 2.5% for 2015 looks a touch pessimistic, and could come under some upward pressure in the coming months”.
At the London close the Dow Jones was down by 90.00 points at 17,886.31 and the Nasdaq was up by 18.76 points at 4,364.06.
In London the FTSE 100 closed down by 118.39 points at 6,773.04 and the FTSE 250 fell by 117.46 points to 17,090.64. The FTSE All-Share fell by 55.85 points to 3,663.58 while the FTSE AIM Index grew by 2.83 points to 716.90.
Broker Notes
Specialist risk and reinsurance outfit Beazley (BEZ) saw its “sell” rating reiterated at Westhouse Securities this morning, despite the firm having signed a cooperation agreement with Korean Re that contains a reinsurance swap valued at around $20 million. The broker does not believe that the deal will tip the firm in to short term profitability, but said it represents a positive strategic move. The shares dropped by 1.6p to 287.7p.
Credit Suisse and Citigroup reiterated their respective “neutral” and “sell” ratings on miner Antofagasta (ANTO) after rumours emerged about a potential merger with the Canadian group Teck. Citigroup said that such a deal would not make sense, as it would offer only minor synergies and no obvious benefits. Credit Suisse said that it could expand Antofagasta’s range of copper projects, but would bring a great deal of baggage. The shares fell by 7p to 732.5p.
RBC Capital Markets downgraded fashion and luxury goods label Burberry (BRBY) from “outperform” to “sector perform”. Other analysts have recently covered the stock with Deutsche Bank reiterating a “hold” rating yesterday and Goldman Sachs restating a “conviction buy” position last week. The shares declined by 39p to 1,733p.
Blue Chips.
Home improvement retailer Kingfisher (KGF) saw sales drop by 1.4% to 10.9 billion pounds during the year ended 31st January due to adverse currency movements. Kingfisher today annouced the closure of certain loss making stores in mainland Europe and around 15% of its B&Q retail space in the UK as it tries to transition towards a more centralised management model. The shares rose by 15.8p to 380.6p.
Mid Caps
Engineering support services provider Wood Group (WG.) announced it has won a significant contract with Total worth millions of dollars over the next five years. Wood Group will deliver procurement, construction and commissioning services to 4 offshore UK assets and 2 onshore sites. Wood Group has worked with the 4 platforms for the last 12 years. The shares lost 8p and closed at 636p.
Plastic packaging manufacturer RPC Group (RPC) said that revenues and operating profits for the year ending 31st March will be in line with expectations and significantly ahead of the prior period, due to organic growth and new acquisitions. Delays in passing on falling polymer prices helped to strenghen profit margins, despite being largely offset by currency shifts. The shares grew by 2p to 580p.
Management services and outsourcing firm Mitie (MTO) said it believes its results for the financial year ending today will meet market expectations after a strong performance in the company’s facilities management arm, which secured a new contract with Lloyds Banking Group in December and more recently a deal with Jones Lang LaSalle worth an estimated £24 million over the next 5 years. The shares rose by 16.4p to 276p.
Small Caps
Coal extraction outfit Churchill Mining (CHL) continues to pursue its case against the Government of Indonesia at the International Centre for Settlement of Investment Disputes after the country after the country revoked Churchill’s mining licences. The company made a loss before taxation of $1 million (£0.68 million) during the six months ended 31st December 2014. Churchill shares dropped by 2p to 11p.
Energy management consultancy LED International (LED) earned revenues of HK$12.3 million (1.07 million pounds) in the six months to 31st December and losses before taxation narrowed to HK$5.35 million (0.46 million pounds). Management are cautiously optimistic in the business’s long term growth potential in Chinese markets and are considering expanding the firm’s offering in the country. The shares fell by 30p to 77.5p.
Renewable products developer Inspirit (INSP) made a pre-tax loss of £419,000 during the half year ended 31st December, a significant increase from the £237,000 loss in the comparative period. Management have agreed to a new £350,000 financing arrangement in order to further develop its mCHP boiler and extensively field test it. Shares in the company ended the day flat at 0.63p.
Renewable energy specialist China New Energy (CNEL) said that while recent falls in oil prices have lead to project delays, all work is otherwise proceeding and none has been cancelled to date. The company believes that the market will be challenging in the current price environment, but that the energy security and job creation benefits will help to attract and keep clients. The shares grew by 0.08p to 1.05p.

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