Market Report: Russian miner loses lustre for investors

 

What's in a name? Peter Hambro, scion of one of Europe's oldest banking families, changed the name of his gold miner to Petropavlovsk in September 2009. Since then the shares have fallen more than 70 per cent.

The name change to an indigenous Russian moniker cannot be blamed for the shares burial near the bottom of the mid-tier index yesterday. A change of heart in the City on the prospects for Russian gold is the likely cause of investors rushing for the exit.

Nomura's metal experts now reckon that Petropavlovsk's lack of exploration success and its focus on getting gold out of its Pokrovskiy mine via a complex process known as POX (pressure oxidization) is the problem. The POX process could be expensive, and until investors have a clearer idea of the time and cost of this process then the shares are "in limbo", Nomura reckon.

They are so unsure of the outcome for the miner that they have slashed their rating of the stock from "buy" to "reduce", and took the red pen to the share price target – down from 760p to 240p.

Yesterday the shares responded with a 21.3p decline to 253.2p.

If the POX hub at Pokrovskiy is delivered on time and on budget the shares will rise, but until investors and analysts have an idea that this will actually happen Normura thinks the shares are not worth buying.

The only worse-performing stock on the second tier yesterday was the travel group National Express. Investors took the exit road following news that the activist investor Elliott International is selling half its stake.

After the markets closed on Wednesday night, the US fund Elliott said it plans to sell half its stake – 9.9 per cent of the company – and the shares parked at the bottom of the mid-cap index.

Elliott turned up for a ride on the coach-to-train group after the 2009 rights issue. Deutsche Bank's scribes think "this investment has not been as successful as Elliott would have wished", but the sale "reflects a desire for better return on capital rather than any fundamental problem with National Express".

The placing will increase liquidity in the shares, but Oriel Securities' analysts question what Elliott will do with the rest. Oriel said: "The tone of the statement does not suggest a desire to sell more in a hurry, but much may depend on future share price performance."

Liberum Capital gives the shares a 280p target price, but they journeyed down 25.5p to 204.5p.

The worst performer on the benchmark index was the insurer Aviva. News that it had slashed its final dividend by 44 per cent after reporting a £3bn loss sent the shares south – down 45p to 314.8 p.

The FTSE 100 index dipped during the afternoon session on news that the Bank of England would not go for more stimulus, but it closed the day up 11.52 points to 6,439.16.

The shopping centre owner Intu Properties, a blue-chip stock set to be downgraded to the mid-caps on 18 March, has made an £800m bond issue, and the shares added 2.7p to 332.2p.

Meanwhile, back on the mid-cap index, the oil company Ophir Energy was given an upgrade by analysts at Bank of America Merrill Lynch, who think that it has addressed its funding gap as well as its drilling programme. Last month Britain's richest man, the Indian steel tycoon and Queens Park Rangers part-owner Lakshmi Mittal, sold half his stake alongside Och-Ziff Capital Management. Merrill gives the shares a 575p price target and the shares added 7.5p to 524.5p.

The defence services group Cobham's chief executive, Bob Murphy, was upbeat, and said the group would turn to profitability next year. The shares added 5.5p to 234.7p.

The packaging firm DS Smith said that it is cautious about its paper division following a continued "poor" performance, and its shares packed in a 9.1p loss to 231.4p.

The Vimto owner Nichols' shares fizzed up 7.75p to 895.5p after it revealed a 13 per cent rise in profits to £20.5m. Brendan Hynes, chief executive of the group which has a licensing deal with Levi Roots for his Reggae Reggae sauce, will step down at its AGM in May. He will be replaced by the managing director of its UK drinks business, Marnie Millard.

AIM-listed Circle Oil revealed positive test results from a well drilled in Egypt but the shares trickled down 0.13p to 18.25p.

Buy

Cineworld

Snap up shares in Cineworld, Investec suggests. The broker says the outlook is "positive" for the cinema chain and makes particular mention of the new Imax the business is planning to open in Glasgow this year. This year is also blessed with "no major event interruptions" (think the Olympics). The shares are 277p with a 310p target.

Sell

Morrisons

Sell shares in the supermarket Morrisons, analysts insist. Signs of improvement in sales trends is not yet apparent at the supermarket. Barclays analysts say they "expect earnings expectations to continue to drip downwards" following next week's results. They add: "Share price support from the £1bn buyback is also likely to end imminently – and we do not expect a fuller balance sheet review for another six months." They give a 240p price target for shares that are 259p, and retain their underweight rating.

Hold

Avocet Mining

Hang on to shares in Avocet, Canaccord Genuity recommends, giving the mining business a price target of 40p for shares which are presently 23.5p a pop. The broker says that although Avocet has taken a $135m writedown on the Inata asset, "it is most likely to be seeking equity finance shortly".

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Property
pets
Arts and Entertainment
tvGame of Thrones season 5 ep 4, review - WARNING: contains major spoiliers!
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Sport
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
News
Tiger Woods and Lindsey Vonn are breaking up after nearly three years together
peopleFormer couple announce separation in posts on their websites
Sport
football
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Arts and Entertainment
Haunted looks: Matthew Macfadyen and Timothy Spall star in ‘The Enfield Haunting’
tvThe Enfield Haunting, TV review
News
news
News
The Mattehorn stands reflected in Leisee lake near Sunnegga station on June 30, 2013 near Zermatt, Switzerland
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living