Hot small caps: Brewin starts as "hold"
LONDON (Reuters) - The following is a round-up of key small cap movers on the London stock market on Tuesday.
2:22 p.m. - Group weak; Brewin starts as "hold"
Shares in RPS Group (RPS.L) shed 3.6 percent as Brewin Dolphin initiates coverage of the international environmental consultancy with a "hold" rating and 180 pence price target.
The broker says, in its view, RPS will not be immune to the global macro conditions and the cooling economy could temper growth prospects and impact utilisation and margins, which it has reflected in setting below consensus forecasts for the group.
Brewin Dolphin says it sees long-term value in RPS shares but recognises that sentiment is likely to continue to be a key share price driver for the firm over the next 12 months.
1:08 p.m. - Robert Wiseman down, Citi cuts estimates
Shares in Robert Wiseman Dairies (RWD.L) fall 3 percent as Citigroup repeats its "sell" rating, cuts its target price to 285 pence from 310 pence and reduces its estimates, following RWD's downbeat figures on Friday.
Citigroup downgrades its full-year 2008 and 2009 profit forecasts by 26 percent to 22.5 million pounds and 13 percent to 29.3 million pounds respectively.
The broker says RWD's results were in-line with its forecasts but adds there are too many uncertainties surrounding input cost lines to make it comfortable owning the shares.
The sector was dealt a further blow on Monday when Dairy Crest (DCG.L) issued a profit warning.
12:47 p.m. - Babcock International up as H1 profit soars
Shares in Babcock International (BAB.L), the engineering services company, climb 5.6 percent as it reports a 30 percent rise in first-half profits, leading Singer Capital Markets to repeat its "buy" recommendation and 570 pence target price.
Singer says Babcock's interim results are 15-10 percent ahead of its own and consensus forecasts respectively, underpinned by a strong contribution by the Marine division.
The broker says management are being typically prudent and full-year 2009 consensus earning estimates seem likely to edge up by 2-4 percent.
Singer says Babcock's shares currently trade at a discount to peers, which it believes is unwarranted.
12:28 p.m. - Property groups fall on grim retail outlook
Shares property groups slide after the British Retail Consortium says UK retail sales fell for a fifth straight month in October, prompting fears that tenant demand for premises will continue to fall.
Mall owners Hammerson (HMSO.L) and Liberty International (LII.L) slide 6.6 percent and 5.6 percent, respectively. British Land (BLND.L) sheds 6.8 percent and Land Securities (LAND.L) is down 3.9 percent.
"In the retail sector, potential tenants are taking a cautious stance towards singing leases at new schemes ... as retailers brace themselves for a difficult Christmas trading period, there is increasing concern that landlords will have to concede softer letting terms in the face of a general rise in tenant defaults in the new year," says Charles Stanley analyst Tina Cook.
12:26 p.m. - FTSE 100 falls 2.3 pct at midday; miners oils weak
The leading share index is 2.3 percent lower by midday as economic worries return to the fore to hurt global markets, knocking miners, oils and banks. By 12 p.m., the FTSE 100 index .FTSE is 102.36 points lower at 4,301.56 after gaining 38.96 points, or 0.8 percent, on Monday.
Miners fall sharply, reflecting lower metals prices amid further evidence of a weakening Chinese economy, with Lonmin (LMI.L) down 9.3 percent and Vedanta Resources (VED.L) falling 7.0 percent. Heavyweight oil companies are also a drag on the blue-chip index as crude prices fell $2.50 to below $60 a barrel. BG Group (BG.L) loses 7.1 percent, Tullow Oil (TLW.L) drops 7.4 percent, BP (BP.L) shed 2.5 percent and Royal Dutch Shell (RDSa.L) is off 2 percent.
Banks are big blue-chip losers as well, with HSBC (HSBA.L) shedding another 6.1 percent, Standard Chartered (STAN.L) losing 5.3 percent, Lloyds TSB (LLOY.L) down 8.0 percent and HBOS shares 5.3 percent weaker.
12:22 p.m. - Property groups fall on grim retail outlook
Shares property groups slide after the British Retail Consortium says UK retail sales fell for a fifth straight month in October, prompting fears that tenant demand for premises will continue to fall.
Mall owners Hammerson (HMSO.L) and Liberty International (LII.L) slide 6.6 percent and 5.6 percent, respectively. British Land (BLND.L) sheds 6.8 percent and Land Securities (LAND.L) is down 3.9 percent.
"In the retail sector, potential tenants are taking a cautious stance towards singing leases at new schemes ... as retailers brace themselves for a difficult Christmas trading period, there is increasing concern that landlords will have to concede softer letting terms in the face of a general rise in tenant defaults in the new year," says Charles Stanley analyst Tina Cook.
12:15 p.m. - FTSE Small Cap Index down 1.1 percent at midday
The FTSE Small Cap Index .FTSC continues to slide in mid-session trade, down 1.1 percent, taking its cue from the wider UK market, as the FTSE 100 Index .FTSE falls 2.3 percent.
Work Group (WORK.L) slumps 41 percent as the human resources services provider issues a profit warning, saying markets have continued to weaken, following its interim management statement on September22 2008, adding it is taking steps to reduce costs.
Motive TV (MTVE.L) climbs 20 percent after announcing its comedy production company Brown Eyed Boy has received orders worth more than 1.2 million pounds for three comedy series.
11:52 a.m. - Punch lower on renewed debt fears
Shares in Punch Taverns (PUB.L) fall 9.7 percent on renewed fears over its 4.5 billion-pound debt pile after InterContinental Hotels (IHG.L) says the current financial crisis is having an impact on the availability of debt finance.
Punch, whose debt stands at more than 10 times the market value of its equity, scrapped its dividend earlier in the year in order to help it meet debt repayments due next year and has taken steps in recent weeks to repurchase tranches of debt.
"Punch, being such a geared company, has been hit by Intercontinental saying finances are becoming harder to come by," said Derren Nathan, an analyst at Blue Oar Securities.
11:25 a.m. - Land of Leather down as furniture sales slow
Shares in struggling sofa chain Land of Leather LAN.L plunge 24 percent to 9.75 pence after the British Retail Consortium on Tuesday says last month's sales of furniture and related goods fell at their fastest rate for eight years, while overall retail sales drop for a fifth straight month, coming in 2.2 percent lower than in October 2007.
"Persisting housing market weakness and low consumer confidence continued to hit DIY sales as larger DIY projects were adversely impacted by the unstable economic environment. The squeeze on discretionary spending continued as financial uncertainty fed through into consumer behaviour -- the Christmas outlook remains bleak," says Investec's Natalia Marisova.
10:53 a.m. - Kofax slumps as sales growth slows
Shares in Kofax (KFX.L) fall as much as 9.5 percent after the software provider says reaching its double-digit sales growth targets for the year will be tougher than expected and that it is taking longer than expected to see the benefits from restructuring and revenue growth initiatives.
Numis analysts cut their valuation on the stock by about 30 percent to 160 pence per share, reflecting risks to forecasts. The stock is down 6.8 percent at 137.5 pence by 1053 GMT having earlier fallen as low as 133.5 pence.
"Kofax remains a strong cash generator, with a potentially good turnaround story," they write. "However, in the current market we can see plenty of attractively valued software companies (e.g. Aveva and Fidessa) and see little need to get too excited yet by Kofax."
10:39 a.m. - ET-China tumbles on forecasts warning
Shares in ET-China.com International (31E.L) slump 30.6 percent, after the South China travel services group says due to current conditions it is not expecting to meet market expectations.
"The slowdown in economic activity is the single main cause for the Chinese consumer turning extremely cautious over the month of October," Amit Thakar, an analyst at Seymour Pierce, says.
However, Seymour Pierce, which repeats its "buy" stance, says the group is well funded and the fragmented industry in is ripe for the company to take advantage of the distressed situation.
10:29 a.m. -Tomkins down, Deutsche Bank cuts forecasts
Shares in engineer Tomkins (TOMK.L) fall 4.5 percent as Deutsche Bank reduces its forecasts and cuts its target price to 115 pence from 125 pence in reaction to the company's update on Nov 6, 2008.
Deutsche Bank reduces its 2008 and 2009 estimated EBIT by 12 percent and 17 percent respectively.
However, Deutsche Bank raises its recommendation to "hold" from "sell" citing valuation grounds.
9:57 a.m. - Psion tumbles on H2 profit warning
Shares in Psion (PON.L), the technology group, plunge 16.2 percent after it warns second-half profits will be lower than first-half due to the economic slowdown, prompting RBS to downgrade its estimates.
Charles Brennan, an analyst at RBS, says: "The Business slowdown during the last 6 weeks has come during the group's seasonally strongest quarter."
As a result, RBS has provisionally downgraded 2008 pretax profit estimates by 38 percent to 8.2 million pounds, and 2009 pretax profit forecasts by 33 percent to 11 million pounds.
Psion said it expects comprehensive reorganisation to reduce costs by up to 15 million pounds in a full year and improve its market position in 2009, protecting revenues and restoring profitability.
9:44 a.m. - Irvine Energy plunges on funding fears
Irvine Energy IVE.L shares plunge 57 percent -- the biggest fall on AIM -- as the oil and gas exploration group says it has incurred cost over-runs on its seismic programme in Kansas and may need to raise additional finance. The group said it is also in talks regarding potential asset sales.
Evolution Securities says this news is a "major blow" to the group's expansion plans, and withdraws both its investment recommendation and earnings forecasts for the company pending clarification of the situation.
9:41 a.m. - Tanfield down on gloomy 2009 outlook
Shares in Tanfield (TAN.L) plunge as much as 18 percent after the electric vehicle and lift platforms maker reinforces its September trading statement by saying it sees no sign that poor current trading levels will improve next year. Although the group is cutting costs to save cash, it forecasts nothing better than a break-even performance in 2009.
"Management reiterates its previous statement, in which it indicates that trading conditions remain difficult, not least due to the lack of credit to its end customers and a global reduction in demand. The business is now running at break-even and management has indicated that it expects a similar trading environment for 2009," says Arbuthnot analyst Xavier Gunner.
9:35 a.m. - Work Group slumps on profit warning
Shares in Work Group (WORK.L) are marked down 41 percent to 11.5 pence after the human resources services provider says its full-year pretax profit will be materially below market expectations as it secures fewer contracts and sees more projects deferrals.
"Management was extremely cautious regarding prospects in September but this has not prevented a profits warning being issued...The group has reported that its markets have continued to weaken since the interims with net fee income 11 percent lower in Q3 and trading expected to slow further in Q4," says FinnCap analyst Charles Pick.
9:06 a.m. - Northern Foods up as H1 beats consensus
Shares in Northern Foods (NFDS.L) rise 6 percent after the food manufacturer reports first-half pretax profit ahead of market expectations. Pretax profit of 16.9 million pounds is ahead of the consensus forecast of 16.5 million.
Citigroup says the results were "somewhat better" than it anticipated, highlights margin delivery. It expects the shares to be relatively strong on Tuesday.
9:02 a.m. - Electrocomponents hit by trading update
Electrocomponents (ECM.L) shares fall as much as 5 percent after the electrical parts distributor reports trading conditions deteriorating in its half-year results statement.
"Reported results are in-line with our expectations but current trading conditions have deteriorated. With a weak trading outlook and forecast risk on the downside, we reiterate our cautious stance," says Panmure analyst Andy Brown, who has a "sell" recommendation on the stock.
8:58 a.m. - Harvey Nash higher on outsourcing deal
Harvey Nash (HARV.L) shares jump 13.5 percent after the global recruitment consultancy and IT outsourcing company announces a two-year deal with Alcatel-Lucent for an initial 54 million euros (44 million pounds).
Stockbrokers Seymour Pierce says this is a "significant positive development... The shares are trading on a very undemanding 2.6 times earnings and should go better on this news." The brokerage reiterates its 'buy' recommendation for the stock with a target price of 45 pence.
8:40 a.m. - Cookson shares hammered by trading update
Cookson Group's (CKSN.L) shares fall as much as 30 percent to a fresh record low after the British industrial materials company says 2008 performance will fall short of management expectations and weaker end-market conditions since the end of the third quarter are expected to continue into 2009.
Cazenove analysts cut their 2009 earnings per share forecast for Cookson by 18 percent to 50.9 pence and its 2010 EPS forecast by 14 percent to 59.5 pence but say they are keeping their "in-line" rating on the stock.
8:25 a.m. - FTSE Small Cap Index down 0.3 percent early
The FTSE Small Cap Index .FTSC falls 0.3 percent in early trade in a quiet opening for markets, as good figures from Vodafone (VOD.L) offset Monday's bad corporate data from the U.S., with the FTSE 100 Index .FTSE down 1.2 percent.
Irvine Energy IVE.L loses 44.8 percent of its value after the company says that it intends to sell none-core assets in order to pay for cost overruns incurred on its 3-D seismic programme, as well as additional operational expenditure.
UTV Media (UTV.L) rises 13.4 percent as TVC Holdings continues its stakebuilding in the company by acquiring a further 3 percent of its share capital, taking its total holding to 18 percent, following its purchase of 15 percent in July, 2008.
8:23 a.m. - Taylor Wimpey down as debt worries persist
Shares in housebuilder Taylor Wimpey (TW.L), which have lost over 90 percent of their value over the last 12 months, fall as much as 9.4 percent after the company issues a management statement that gives little update on the debt it is trying to renegotiate.
"The recommendation call on Taylor Wimpey remains highly leveraged to the group's ability to sort out its financial position. This statement does little to clarify the outlook on this front," says Citi analyst Clyde Lewis.
