Market Report: Samsung deal takes the heat off Wolfson
Thursday 11 April 2013
Samsung has put paid to market fears about future growth at Edinburgh-based Wolfson Microelectronics by signing a new partnership deal. The worry for punters had been that Wolfson could have been losing out to other Samsung suppliers which were getting close to the Korean mobile phone giant, whose Galaxy S3 was the most popular smartphone brand of 2012.
But the news of a deal for Wolfson to become Samsung's "primary audio partner" was music to the ears of shareholders. Wolfson said the deal was a "multi-year" intellectual property licensing and component supply agreement.
Liberum Capital analysts said the deal "de-risks the Wolfson story as it now has a strong and growing position with the largest smartphone original equipment manufacturer". Liberum rates the shares a buy with a 230p price target, and they dialled up a 9p gain to 179p on the news.
Wolfson's knowhow will be included in the Galaxy 4 phones to be launched this month.
On the benchmark index, an absence of bad news from the eurozone and reasonable jobs figures from the US meant investors were continuing to return to equities, albeit in weak volumes. The FTSE 100 advanced another 28.77 points to 6,416.14.
The clothing to food retailer Marks & Spencer was one of the beneficiaries, and the shares were 16.6p better off at 400.4p after it revealed a rise in quarterly sales – a strong food business offset a fall in clothing sales. Research from Markit found that the short interest – the number of shares out on loan – in M&S is close to the annual low.
Another retailer in favour on the bluechip index was the luxury brand Burberry. It will issue a trading update next week which analysts at Société Générale think will clarify the integration and expansion of its perfume and beauty businesses. The shares sashayed up 38p to 1,318p.
The Russian steel producer Evraz, down 23.9p to 185.8p, got the wooden spoon after revealing losses. The fall put its position in the FTSE 100 under threat. The shares have lost about 30 per cent since the start of the year and are well below their November 2011 flotation price of 320p.
Over on the mid-tier index Man Group, the world's largest listed hedge-fund manager, got a boost from news that it won't need to hold as much cash on its balance sheet as it had thought.The Financial Conduct Authority has cut the amount of capital it must hold by $250m (£162m), after the new watchdog switched Man to a limited licence group instead of a full-scope group. Man did warn that its Internal Capital Adequacy Assessment Process submission remains subject to review by the FCA. This could result in "higher or lower capital requirements in the future". But for now punters were pleased and the shares jumped 6.6p to 104.3p. The rise followed two previous days of gains totalling 20 per cent – the best three-day gain in four years.
Man's share price has been suffering since 2011 when it began to report outflows from across its funds. Its shares picked up slightly late last year when rumours of potential takeover interest emerged. The hedge-fund star Crispin Odey built up a 5 per cent stake in anticipation of a bid for the group from a larger US rival. The group was also recently boosted by news that the asset value of its flagship fund, AHL, rose 2.1 per cent last week.
Fellow mid-tier fund manager Ashmore was also having a good day. The emerging markets investment manager said it had won new clients, and the shares ticked up 46.1p to 401p – top of the table on the mid-caps.
On Aim, Leni Gas & Oil said it was adding a second rig to its Goudron programme in Trinidad, but its shares were static at 0.84p.
Noventa, the Aim-listed tantalum concentrate supplier, signed an agreement with Richmond Partners Master on the settlement of the loan on which its indirect subsidiary, Highland African Mining Company Minerals, had defaulted. Noventa shares declined 0.25p to 0.48p.
Park Group, the Christmas savings club business, reported steady sales growth, and the shares collected a 1.75p rise to 59.75p.
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