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Tuesday preview: Cairn, Persimmon, Oxford Bio
Wed, 08 Feb, 2012
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Tuesday preview: Cairn, Persimmon, Oxford Bio
Mon, 23 Aug 2010, 15:48:00
Scottish oil company <b>Cairn Energy </b>releases half-yearly results little more than a week after it agreed to sell off a controlling stake in Cairn India to <b>Vedanta </b>for $8.5bn. The company plans to give some of the Vedanta cash to shareholders but a large chunk of it will be used to finance an active multi-year exploration and drilling programme in Greenland and also enable the company to consider "further material growth opportunities", said Cairn chief Bill Gammell. As such, the deal has, notwithstanding the Indian authorities' threats to derail it, made the performance of Cairn India largely irrelevant to the performance of the company. Cairn India's results were, in any case, published on 27 July so the focus on Tuesday will be elsewhere. Cairn is drilling two wells in Greenland with a further two planned. "It is targeting 4bn barrels of oil though the chances of success are put at between 7-14%," said broker Charles Stanley. "There has been much speculation about the potential for Greenland and next week's drilling update is keenly awaited but it is probably too early in the campaign for major exploration news," the broker added. FinnCap is another broker note looking forward to a Greenland exploration update from Cairn. "Full results from the first well might not be announced, however, we would expect a wealth of new information as the basin is previously undrilled," the broker said. "We estimate a one billion barrel discovery could be worth more than 300p per share but would caution that the chances of a commercial success is around 1 in 20, Cairn is likely to dilute its interest in any discovery going forward and the company has not provided individual prospect volume guidance," FinnCap added. Housebuilder <b>Persimmon </b>'s market value has slipped below that of <b>Berkeley Group </b>, meaning it is no longer top dog in the sector, but with "its robust balance sheet, good-quality land bank and ongoing potential for write-backs," the company is sitting relatively pretty, reckons Panmure Gordon. "We are expecting the group to report a 16% increase in legal completions, with average selling prices increasing by 8%. Of that 8%, around 2-3% is likely to be due to underlying inflation, with the remainder mix driven. Net margins should see a significant improvement (we are forecasting a 600bp [six percentage points] improvement), with the group likely to report an H1 profit of £34.1m versus a 2009 first half loss of £18.0m," the broker forecasts. After a period of strong recovery housebuilders have gone off the boil of late, as fears of a double-dip recession have had their effect on an already fragile housing market. However, "both Taylor Wimpey and Bellway commented that conditions had been pretty stable a couple of weeks ago, and with Persimmon a pretty good indicator of how the market is performing, it will be interesting to see how those comments fit," Panmure Gordon said. Penny stock <b>Oxford Biomedica </b>presents interim results that "are not expected to reveal a great deal", according to Panmure Gordon, "as financial performance relies on revenue recognition from deals completed in prior years." The broker is predicting revenues of £3m, with research and development expenditure of £6m and administration costs of about £1.4m. Loss per share is tipped to 0.56p. Of more concern than earnings to Panmure Gordon is the cash balance, which it forecasts to be £19m, worth 4p per share. This would imply cash burn of £1.1m a month in the first half of 2010. "By our calculations, £19m of cash would represent some 18 months worth of cash runway, which would make some sort of corporate activity pressing at this stage," the broker states. The company is looking to license its ProSavin product but Panmure Gordon is not expecting news on licensing deals, "although any news on the pipeline should be received positively by the market," the broker said. INTERIMS Aer Lingus Group, Cairn Energy, Corin Group, CRH, Development Securities, Gem Diamonds, H & T Group, John Wood Group, Jupiter Fund Management , OJSC Magnit GDR (Reg S), Oxford Biomedica, Persimmon, Plaza Centers, Promethean World, Source BioScience, Spectris, Spirax-Sarco Engineering, Vitec Group, WPP Group INTERIM DIVIDEND PAYMENT DATE Maven Income and Growth VCT 3 INTERNATIONAL ECONOMIC ANNOUNCEMENTS Gross Domestic Product (GER) (7.00) Private Consumption (GER) (07:00) Government Spending (GER) (07:00) Imports (GER) (07:00) Exports (GER) (07:00) Industrial New Orders (EU) (10:00) Existing Home Sales (US) (15:00) Richmond Fed Manufacturing Index (US) (15.00) ABC Consumer Confidence (US) (22:00) GMS Imaginatik ANNUAL REPORT Aortech International EGMS OJSC Polyus Gold ADR AGMS Acorn Income Fund Ltd., ProVen Growth and Income VCT, ProVen VCT, ProVen VCT 'C' Shares, ProVen VCT 'D' Shares TRADING ANNOUNCEMENTS Persimmon UK ECONOMIC ANNOUNCEMENTS BBA Mortgage Lending Figures (09:30)
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