The Investment Column: World Cup fever to give beer market a kick

Max shares are high enough; Simple maths of Avanti's satellites

But there's nothing like a major football tournament to lure people into the pub and boost flagging beer sales. Scottish & Newcastle, the UK's largest brewer with brands including Foster's, Kronenbourg, John Smith's and Strongbow, reckons the World Cup could lift overall beer sales in the UK by 1 per cent. That could translate into £5 to £6m profits for S&N, which has a 27 per cent slice of the British market.

"It depends how far England go," admitted the chief executive Tony Froggatt, who also revealed that whatever the impact on S&N's business, he would be cheering for his native Australia. "But most of our big European markets also have good teams, which could help overseas sales."

The brewer could do with a boost after yesterday's annual results failed to excite the market. Pre-tax profits rose 9.5 per cent to £392m. In Britain, S&N's own beer and cider brews served up respectable volume growth of 2.8 per cent last year while the overall market was down 2.1 per cent. The top four brands shone with 7 per cent growth. But the international division disappointed, especially in France where sales fell, prices came under pressure and the outlook remains uncertain due to changing laws.

S&N is scrambling to reverse this decline by reorganising its French sales team, selling its Champigneulles brewery in the hope of garnering annual cost savings of €20m, and pushing ahead with the launch of Kronenbourg Blanc and Super Chilled lagers.

An imminent smoking ban in Scotland and next year, in England, means S&N has to contend with changing consumer profiles. It admits that it will have to rejig its brands to become "much more democratic in its appeal, rather than focus on the male boozer".

The bright spot remains Eastern Europe. S&N's joint venture with Carlsberg, BBH, produces Russia's leading beer Baltika and saw volume growth of 12 per cent last year. S&N has also invested in India and China, potentially two of the biggest beer markets in the world.

That means, combined with a dividend yield of 4 per cent and persistent takeover speculation, the shares, at 507p, are worth holding.

Max shares are high enough

Since its October float, Max Petroleum shares have made great progress. They started trading on AIM at 35p and yesterday closed at 108p. But it is not only Max's stock that has made major strides during this time.

As well as preparing for the development of its Blocks A and E in Kazakhstan, the explorer secured something of a coup when it bought a field, again in the central Asian country, next to the a legendary Gazprom gas project. Max paid £37m for the Astrakhansky prospect in January and it caused a huge amount of excitement in the City because it sits next to the (Gazprom) Astrakhan field which is located across the border in Russia and is well known to be one of the world's biggest.

Also, adjoining Max's asset (on Kazakh territory) is another major proven field. These factors clearly indicated that the region is gas rich and it would be very strange if Max's site turns out to be a disappointment.

However, Max is by no means a one-trick pony. Since its float the company has been collecting seismic data which will tell it how best to develop its A and E blocks. Each of these in their own right could also prove to be a major find. And then there is the group's East Alibek block which although the least exciting of the four is estimated to have a 25 per cent chance of success.

Yesterday, Max consolidated its already impressive foothold in Kazakhstan by securing access to local oil treatment infrastructure. The question for investors is to what extent all this priced into Max's £330m market capitalisation? Clearly the company is a long-term investment. At present it has no production, no booked oil or gas reserves and only an outline of drilling plans. A concrete exploration success is key for the company if its shares are to make further progress.

This may not occur for a while. Hence a company like Victoria Oil & Gas seems much better value. The group trades at a discount to Max and despite the fact that its West Medvezhye field boasts 5.5 trillion cubic feet of recoverable gas. Max Petroleum shares are high enough for now.

Simple maths of Avanti's satellites

Yesterday's interim results from Avanti Screenmedia are of little significance really given the company's reliance on revenues generated in the second half of its financial year. The provider of plasma screens to pubs, bars and shops for advertising purposes reported first half losses of £180,000 but the group assured the City that it is on course for a profit of between £3m and £3.5m by the year end.

To achieve this it needs to sign up two fresh pub or retail chains over the next six months. Avanti should have little trouble - it has been in talks with five potential clients for some time.

The satellite business Avanti is working to develop is the exiting part of the group. It has been granted exclusive use of radio frequency spectrum and satellite resources by regulators which will allow it to break into the highly profitably European satellite industry.

The maths is simple. Avanti plans to use £50m of company money to set up a business which has little running costs but is capable of generating £25m of sales a year for at least 15 years. The group has the funding in place. It will use the cash raised from November's £25m share placing and £25m of debt financing. Buy.