Market Report: Gushing profits at oil service firms
Friday 31 August 2012
Servicing the lucrative oil and gas sector is paying off on the mid caps, where Kentz and Hunting reported gushing profits yesterday, while Cape's results were better than feared. Kentz saw its interim profits flare 36 per cent higher and shareholders were delighted with a 10 per cent dividend increase. Its shares jetted up 19p to 400p.
Hunting was happy with half-year results revealing sales up 62 per cent to £407m. Its shares, after making gains in early trade yesterday, slipped back to fall 1.5p to 778.5p.
While Cape shares spurted up by 19 per cent, or 37.4p, to 230p as the company, which issued two profit warnings earlier this year, said it is now on track to meet its recently reduced expectations for the year. Analysts at Numis Securities raised their rating on the stock from add to buy.
The mid-cap services group posted first-half profits of £12m, down from £34m last year. But Investec scribes said the underlying Cape business "remains buoyant and that demand for Cape's services is robust". Investec reiterated its buy recommendation with a target price of 300p and said: "In our view Cape is an attractive recovery story."
The wider oil sector stayed in focus after a note from Barclays did the rounds ahead of its energy conference in New York next week. Barclays' experts said the "key difference between oil and most other energy markets is supply, where the challenge is replacing declining oil production". It recommends buying "oil and oil-biased equities and credits".
Rumours re-emerged for Aim-listed oil explorer Bowleven. Whispers began in July for the Cameroon-focused business, and shares rose 2.8p to 65.8p yesterday.
In stark contrast to oil and gas, mining stocks are still in the doghouse with rising iron ore prices and fears of slowing Chinese demand weighing heavy. Kazakhstan-focused miner Kazakhmys was the biggest FTSE 100 loser, down 30.5p to 586.5p while FTSE 250 Ferrexpo lost 13.5p to 159.1p.
Qatar's sovereign wealth fund confirmed for the first time yesterday that it will vote against the Glencore and Xstrata merger. The pair's shares continued their fall with Glencore down 11.05p at 357.45p and Xstrata losing 23.1p closing at 901p.
The FTSE 100 remained down, on weak volumes, and fell 24.08 points to 5719.45.
There was good news for comedian Graham Norton – ITV is stumping up £17m to buy his company, which produces his shows as well The Sarah Millican Television Programme for the BBC.
ITV, via its production hub ITV Studios, will pay £10m for So Television, with a further cash payment to follow. Its shares added 0.15p to 84.3p.
Ahead of freshers arriving at university, student digs provider Unite Group soared 24.5p to 248p after it revealed it had doubled its pre-tax profits.
Meanwhile, all bets are on for the online gaming group sector. Poker expert bwin.party was one of the top, mid-cap gainers yesterday, up 5.5p to 93p.
Over on the small caps, hazy speculation that bidders are circling Sportingbet continued, and its shares edged up another 0.5p to 40p.
Betting types are throwing various names in the ring including various Malaysian investors, including Genting and Indonesia's Sampoerna family, while others think there could be a split of the company on the cards.
Investors were also betting on online gaming software group Playtech, which moved to the main list in July. It posted a 64 per cent rise in first-half earnings. Shares jumped 16.3p to 389p. The company said that it had been boosted by a growing demand for online bingo and casino games.
Findel, the home shopping firm which owns Kleeneze, continued its rise this month as analysts at WH Ireland maintained their keenness on the stock. Its shares advanced 0.24p to 6.3p.
Bollywood film producer Eros International Media has also had a solid run in August and it moved up another 6p to 223.5p on Aim. Listed in the UK and India, it had been planning to list on the New York Stock Exchange (NYSE) and delist from London, but the plans were delayed earlier this summer.
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