BUY OR SELL-Rumours, takeover bids boost CO2 market stocks
LONDON, July 1 (Reuters) - A U.S. climate bill may eventually stoke major investment in the environmental sector, but analysts say a rise in takeover rumours is providing a short-term boost to shares in greenhouse gas emissions trading and offsetting companies. Britain is home to four major, publicly-traded carbon emissions trading companies, all of which have seen a marked rise in their share prices in the past month.
Clean energy project developers EcoSecurities (ECO.L), Camco International (CAMIN.L) and Trading Emissions (TREM.L) aggregate and sell emissions offsets, called Certified Emissions Reductions (CERs), issued under the Kyoto Protocol climate pact, while Climate Exchange (CLIE.L) owns and operates carbon trading marketplaces in the U.S., Europe and Asia.
Earlier this month, EcoSecurities rejected an offer from the trading arm of France's EDF (EDF.PA), days after it rebuffed a bid by a co-founder and former president. [ID:nBNG489930]
Camco shareholder Generation IM Climate Solutions Fund, chaired by former U.S. Vice-President Al Gore, upped its stake to 19 percent in March from 14.6 percent in February. In April, Camco posted a maiden full-year profit for 2008. [ID:nBNG491797]
Trading Emissions announced it would pay its first dividend despite a pretax loss for the six months ended in Dec. 2008. It has bought back over 20 million ordinary shares for cancellation since early December, while several funds have been steadily increasing their holdings in the fund so far this year.
Shares in Climate Exchange rose by over a third since last Monday after IntercontinentalExchange (ICE.N) said it had taken a 4.8 percent stake in the company. [ID:nLN473668]
Despite the recent run-up in share prices, several London-based analysts still see value in the sector:
ECOSECURITIES (ECO.L) - at 77.5p, up 78 pct since June 1
* Agustin Hochschild, Mirabaud Securities - Rating: BUY, Price Target: 143p
"Historically, EcoSecurities has the largest CER portfolio and was the cheapest play. It had questions over liabilities on its forward book ... but now that CER prices have dropped it has become a more favoured play due to its downside protection."
(CERs CEREZc1 closed at 11.78 euros per tonne on Tuesday)
* Andrew Shepherd-Barron, KBC Peel Hunt - Rating: BUY, Price Target: 100p
"With the prospect of a bidding war it is unlikely that EcoSecurities will survive as a listed entity -- the question is the price. Because the two putative offers to date are at discounts to fair value at today's CER price, and its assets should be of interest to others, we expect bidding to continue." Continued...
