The Week In Review: Woolies needs a takeover deal
Saturday 01 April 2006
Woolworths has posted another set of poor annual results and, once again, its management is blaming the inheritance it received when the retailer was demerged from Kingfisher. Profits at the group slumped to £57.7m from £68m in the previous year. Its key retail division's performance was particularly weak: profits slumped from £40m to £17m.
Trevor Bish-Jones, the chief executive, argues that Woolies suffered years of underinvestment during Kingfisher's stewardship - it even sold the group's remaining properties, leaving it with just two freeholds out of 806 stores - and complains that the company is still suffering. To remedy the situation, he plans to pump £90m into the business by refitting stores, reforming the distribution network and putting in place more efficient IT systems.
However, these measures do not solve the fundamental identity crisis Woolies faces. And while a takeover is possible, without a deal, Woolies shares are unlikely to rise any higher. Avoid.
Telecoms group Fibernet says its full-year results will not live up to expectations after it failed to win enough new business in the second quarter. Analysts have slashed their forecasts and now predict Fibernet will register earnings before interest, tax, depreciation and amortisation of just £17.5m this year, compared with £19.7m previously. Sell.
Vislink is a global leader in microwave and satellite broadcast systems. It has work to do to convince investors its UK business will one day be profitable, but this is outweighed by orders from outfits such as the US Department of Homeland Security. Buy.
Consumer debt in the UK stands at more than £1.1 trillion and companies offering advice to debt-laden consumers are flourishing - especially those that specialise in individual voluntary arrangements. Accuma is the second biggest player in this industry, with a 12 per cent share. Buy.
The talk show Trisha Goddard is produced every day at the Pinewood Shepperton studio and, without it, the latest annual results from the company would have been worse. But the 58 per cent slump in profits to £5.3m came after the UK film industry suffered major disruption and Pinewood is in good shape going forward. Hold.
Alexon is a low-profile clothing group, home to Dolcis shoes and Kaliko womenswear. At first sight, the company looks to offer as much value as the clothes it sells: its shares trade at a discount to the retail sector. But the latest full-year figures show profits down from £29m to £20m. Hold.
Stripping out imminent disbursements, Delta's ongoing operations - a steel-galvanising business and a company that produces materials used in batteries - are valued at £70m. This is too low. Buy.
Neutec Pharma has two drugs in the end stages of development and has spent just £17m getting them there over the past nine years. By the standards of the biotech industry, that is good going. Buy.
Anyone who bought into Kazakhmys at the company's float six months ago will be happy. Shares in Kazakhstan's biggest copper miner have now almost doubled in value. Further rises this week followed solid annual results and a bullish statement. Buy.
Camera retailer Jessops is firmly back on the growth path, with a pleasing first half performance with sales for the 25 weeks to March 26th up 6.5 per cent, ahead by 2.6 per cent on the like-for-like basis. Buy.
The fixed-line telecom business is not a good one to be in these days. The sector is fiercely competitive so life is not easy for any operators but if, like Thus, you happen to be one of the industry's minnows it is a miserable experience. Sell.
The above recommendations are taken from the daily Investment Column.
Cash in on Neteller, and you too can enjoy huge profits
The awesome growth at the online money-transfer group Neteller, one of the biggest companies on the AIM, continues. It has unveiled a set of full-year figures that can only be called outstanding. Sales rose 108 per cent to $171m (£98m), pre-tax profits soared 114 per cent to $98m, and the all important cash-flow figure jumped 49 per cent to $114m. Is there no end to the company's growth?
Its chief executive, Ron Martin, says not for a long while. In North America, where Neteller gets 80 per cent of its business, sales remain strong and rising. In Europe and Asia, where operations are in their infancy, revenues are climbing steeply. To give these an extra push, Neteller is planning to launch services in four European languages.
The downside to all this is that the US authorities hate online gambling. In fact, several bills prohibiting the practice are awaiting Congress approval.
In November, the company's founders sold £218m worth of their shares at 625p. Since then the stock has risen; anyone who bought in at the 200p float would do well to follow. Take profits.
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