Wed, 27 Aug, 2014

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Wed, 27 Aug, 2014
Far from slowing down, after opening its 200th office centre in the first half of the year the provider of temporary office accommodation Regus is set to accelerate its expansion. A full 450 new centres are due to open this year and as many next year. The company does have its doubters however, given its ambitious growth plans. As well, the fact that 85% of its sales hail from overseas means that it is exposed to currency fluctuations - hence the flat profits before tax seen in the first six months. Operating margins at its mature offices however rose to 14.4% during the last reporting period, from 10.6%, showing just how profitable its business model can be.
Tue, 26 Aug, 2014
There is a lot to be said for value-based investment strategies as the year-to-date performance of The Daily Telegraph Questor column's six picks for 2014 show. They have held up despite market turbulence. The old stock market saying "never sell Shell" held true once again, with the shares delivering a total return of 16%, well ahead of the market. Bellway's performance has been less impressive, but the builder is growing earnings and dividends by more than 20% and offers a yield of 3.2%. The shares remain a buy.
Sun, 24 Aug, 2014
Bwin's tie-up with PartyGaming was premised on achieving such size that it would be better able to compete in the booming markets for gambling and sports betting - but in the event those expectations did not pan out. Furthermore, Philip Yea, who came on board three months ago from 3i, has yet to manage a turn-around in the share price. Hence, investors in Bwin.Party are baying for blood. A special dividend or a partial break-up might appease them. Activist investor Spring Owl recently appointed a member to the board, making a dramatic move more likely. One option may be to spin-off its payment processing arm, Kalixa, which may be worth over £100m to shareholders. At 12 times' forward earnings the stock is cheap and investors want action, "place your bets," says The Sunday Times' Danny Fortson.
Fri, 22 Aug, 2014
The first City appearance by the new boss of Premier Oil was a bit of an anticlimax on Thursday, according to The Times's Tempus column, though there were some signs that the oil explorer might "rediscover its mojo".
Thu, 21 Aug, 2014
Investors in Latin-America focused precious metals miner Hochschild Mining should be wary. The company has made good progress cutting its costs, delivering $70m more in savings last year than the $200m originally envisaged. However, cost reductions can only go so far. The company's quandary is much the same as for many other miners. It over invested during the good times, when the prices for gold, and especially silver, were much higher. Thus, the investment phase for its new Inmaculada mine in southern Peru is now almost over, but the prices for those metals have yet to recover. As well, the company is vague on when the new facility will reach full production - even if it is indeed completed at the end of the year, as expected.
Wed, 20 Aug, 2014
As the Financial Times' Lex column would have it, the heads of BHP Billiton may yet stand accused of imperial overreach in the eyes of shareholders. As the man on the street would put it, bigger is not always better. To address the situation the company has announced its intention to demerge assets spread over four continents, including the two largest silver and manganese mines on the planet. Nevertheless, the combined market capitalisation of the above may only reach $15bn. Hence, while by no means as great as ancient Rome the mining giant may still be stretched out too thin.
Tue, 19 Aug, 2014
Bovis Homes saw legal completions jump 54% to 1,487 homes for the six months ended on 30 June and has already sold almost the entirety of the houses which it plans to build this year. The result of the above were outsized gains in both revenues and pre-tax profits which in turn fed a 200% increase in the company's interim dividend - well ahead of previous estimates. More significantly, the government's Help-to-Buy scheme should sustain dividend income from the sector. On eight times' next year's earnings the stock offers an attractive prospective dividend yield of 4.1%. Hence, while the best in terms of share price appreciation might be behind the shares continue to be a 'hold' for that growing dividend, says The Daily Telegraph's Questor column.
Sun, 17 Aug, 2014
Aga, the maker of cast-iron cookers, could be getting its act together after business plunged in the recession, Danny Fortson argued in his Inside the City column in the Sunday Times. The booming property market has helped Aga, which said in July that orders for its Rangemaster cooker were up 6% this year. Next year, a plan to support Aga's pension scheme could be completed, leaving the company room to reinstate its dividend. At first-half results on August 22nd investors will want to hear how the property market has benefited Aga and how its trendy new City 60 cooker is doing. It may be "time to warm the cockles", Fortson said.
Fri, 15 Aug, 2014
Carillion is trying to bite off more than it can chew. The construction outfit is aiming to what in effect would be the acquisition of its larger rival Balfour Beatty - its much larger rival. At £8.7bn Balfour Beatty's revenues are more than double those of its suitor. Pursuing mergers for cost savings is the best possible motive and in this case Carillion thinks a combination of the two firms could free up £1.5bn in savings on a taxed and capitalised basis.
Thu, 14 Aug, 2014
Standard Chartered is under increased scrutiny from investors now that a decade-long run of record profits has just ended. During the past financial crisis the lender offered a rather unique value proposition. Its only links to the west were its UK listing and London headquarters. Furthermore, it has an extensive footprint in the booming east. Now the tables have turned. Developed markets are coming back. Hence, investors are now analysing the details of its past profit growth and the outlook for growth prospects in the east.
Wed, 13 Aug, 2014
Outsourcing specialist Serco's latest set of half-year results make for grim reading. On the positive side of things, the company seems to have its eye on the ball, improving its return on capital employed. Auspiciously, if one is optimistic, its new chief executive Rupert Soames - the ex-boss at Aggreko - did just that at his previous stint. However, until next March investors will be none the wiser about just how he intends to go about that, the Financial Times' Lex column points out.
Tue, 12 Aug, 2014
Management Incentive Through Investment Equity may prove to be the proverbial 'mouse that roared', writes The Times' Tempus. Yes, Mitie. Once criticised for its relative lack of exposure to central government contracts the outsourcing specialist has been quietly restructuring itself towards higher-margin work, such as healthcare. Out has gone mechanical and electrical engineering work.
Sun, 10 Aug, 2014
Buy shares of Bellway, whose valuation looks cheap, the Sunday Telegraph's Questor tipster advised. The housebuilder reported record trading on August 8th but the shares have fallen 6% this year on fears that rising interest rates could burst the UK's housing bubble. That leaves the shares trading at 10 times earnings, falling to eight times next year. The continued boost from the Government's Help to Buy scheme made Bellway one of Questor's tips for the year, a recommendation it is sticking with.
Fri, 08 Aug, 2014
Cobham's first-half results were "landmark" as revenues from its commercial activities surpassed those from the defence sector for the first time ever, as the firm progresses on its transformation into a true technology outfit. Indeed, two thirds of the company's sales now come from 'connectivity' - including from satellite technology, micro-electronics and 4G base station testing. As part of its move into higher growth markets, the firm also recently purchased US rival Aeroflex for £869m. That gave the firm a foothold in components used in communications technology, The Times's Tempus pointed out.
Thu, 07 Aug, 2014
One needs to be careful when choosing a metric on which to value a company. Using so-called "cash" production costs to do so for miners is a case in point, the Financial Times' Lex column says. That is foolish as the latter do not include shipping costs nor debt expenses. In the case of African Minerals investors might thus miss the fact that the company is being weighed down by its debt load, given the drop in iron ore prices on international markets.
Wed, 06 Aug, 2014
Temporary power provider Aggreko's fortunes seem to have turned a corner but its shares are not inexpensive at the moment, writes The Times's Tempus. Sales at its power projects division increased by 14% at the half year stage as demand from several countries recovered after recent weakness. Well, if one strips out adverse currency effects, that is. Nonetheless, the company did raise its guidance for capital expenditures this year by £20m to reach £235m, signalling confidence in the outlook on the part of management.
Tue, 05 Aug, 2014
Holding shares for dividends alone may sound nice in theory but in practice is by no means a risk-free endeavour. Exhibit number one: HSBC. Year-to-date its stock price has fallen by 12%, wiping out more than twice the equivalent value of the dividends which it has paid out during the same period. True, the lender's solid capital position means that its pay-out should be safe enough. In fact, Neil Woodford, a well-known fund manager in the UK, included the stock within the sixty top holdings of his new income fund.
Sun, 03 Aug, 2014
Stay on the sidelines until Diageo chief executive Ivan Menezes has got a grip on his sprawling drinks empire, Danny Fortson advised in the Sunday Times. In his Inside the City column, Fortson said Menezes had inherited a business that was hard to control when he took over last July. The strong pound, a clampdown on excess by Chinese officials and a botched execution of strategy contributed to disappointing results last week. It is not a crisis. Menezes has cut costs, a new single grain Scotch for the Chinese market could meet local tastes, and destocking by customers will have to stop sometime.
Fri, 01 Aug, 2014
Markets are understandably concerned by the situation facing BG Group in Egypt. The authorities there have been diverting the gas which should be shipped out to the domestic market instead, which is less profitable for the company. There are positive signs in this regard, but the risk of another write-down does exist. On a more positive note, production at its Brazilian assets has been running ahead of expectations and the first LNG shipment from its Queensland project is on schedule despite industrial unrest.
Thu, 31 Jul, 2014
Fund manager Jupiter's shares are set to offer a yield that makes them worth looking at despite analysts' confusion over just how high a payout they can expect from the company. The business model requires relatively low investment. The company had net cash of £170m at the end of the half-year. About a third of excess cash may be paid out. As well, it intends to funnel about half of its earnings per share as a straightforward dividend to shareholders - equivalent to about 14p per share. As well, the proceeds from the sale of its private client business to Rathbones will allow for a one-off payment of another 4.5p. Hence, the payout this year may rise to 24p or 25p, such that the stock will yield about 6%, giving investors every reason to hold on to the stock, says The Times's Tempus.
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