07 February 2011

The Intelligent Investor U.K.
The Economic Monitor Series. Free Edition.

INSIDE THE REPORT

MARKETS AT A GLANCE

Stock recommendations and price targets from top brokerage firms Analysis and views on U.K. car sales and Randgold FY profits Economic Indicator Watch Important Events Scheduled on 08 February

Britain's top share index fell with energy shares lower after results from Royal Dutch Shell disappointed investors and dented sector sentiment. The FTSE 100 was down 16.73 points, or 0.28 percent, at 5,983.34 The yield on 10-year gilts hit a fresh eight-month high after a solid auction of 2040 gilts and a stronger-than-expected PMI survey of Britain's dominant services sector. At 1439 GMT, the 10year yield hit 3.799 percent Sterling pared gains versus the dollar in a move driven largely by a sharp drop in the euro after European Central Bank President Jean-Claude Trichet dampened expectations for a rate hike in the euro zone. Sterling traded down around 0.3 percent at $1.6140 in afternoon dealing after rising as high as $1.6279 on the UK PMI data. Spot gold was bid at $1,328.70 an ounce at 1532 GMT, against $1,336.00 late in New York on Wednesday, having earlier touched $1,337.40. U.S. gold futures for April delivery fell $2.90 to $1,329.20. ICE Brent crude for March rose as much as $1.03 to $103.37 a barrel, the highest intraday price since September 2008, and was up 88 cents at $103.22 at 0419 GMT.

Economic Events & Indicators

UK finance minister George Osborne takes questions in parliament RICS Housing Market Survey (January)

Corporate Events

McBride first half yearly results Low & Bonar, Beazley, Patsystems preliminary results BG Group Q4 results Wolfson Microelectronics Q4 and full year results Xstrata final results

STOCK INDICES
INDEX FTSE 100* FTSE 250* LAST 5983.34 11575.83 2164.59 7193.68 4036.59 284.56 CHNG -16.73 -30.83 -6.42 10.01 -29.94 -0.03 % CHNG -0.28 -0.27 -0.30 0.14 -0.74 -0.01

Breaking News

FTSE techMARK 100* DAX* CAC 40* Stoxx Europe 600 * CLOSING VALUES

Domestic and export orders drive CBI SME’s trend Retail sales up in Jan despite worries: BDO Kofax interim results hit records Randgold FY profits surge, sees 70 pct jump in production St. Modwen Properties returns to profitability Another disappointment for AstraZeneca 888 Holdings Q4 income jumps 18%

CURRENCIES
INDEX Euro (EUR/USD) UK Pound (GBP/USD) Japanese Yen (USD/JPY) LAST 1.3647 1.6157 81.49 PRIOR 1.381 1.6189 81.55

All prices are at 11:52 AM EST

FUTURES
LAST Crude Oil Natural Gas (Mar) Gold, (Feb) Copper (Mar) 90.75 4.349 1335.9 453.75 CHANGE -0.11 -0.08 3.8 -0.65

All prices are at 11:41 AM EST

The Intelligent Investor - U.K.
STOCK RECOMMENDATIONS BY BROKERAGE HOUSES
BROKERAGE/COMPANY Espirito Santo Investment Bank ACTIONS RATING PREV CLOSE

Restaurant Group
UBS

Starts with buy rating Cuts to neutral from buy
Raises to buy from neutral

Buy Neutral Buy
Overweight

288.60p 382p
348.70p

Hiscox Meggitt
JP Morgan BT Group Credit Suisse Hikma

Raises price target to 220P from 200p

187.70p

Raises price target to 970p from 792p

Outperform

822.50p

Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before taking any investment decisions.

The Intelligent Investor - U.K.
ANALYSIS AND VIEWS

January car sales down 15% in UK
By IBTimes
New car registrations in the UK in January fell by 11.5 percent compared to the same period year ago, The Society of Motor Manufacturers and Traders said in a statement today. The Society of Motor Manufacturers and Traders (SMMT) said the decline was in line with its forecast and partly reflected the ending of the car scrappage scheme. The loss of the scrappage incentive scheme is expected to adversely affect the market during the first half of 2011. Overall volumes are forecast to decline by 5% in 2011 to 1.93 million cars. "New car registrations fell by 11.5% in January. This is in line with SMMT forecasts and marks the beginning of a challenging year for the UK motor industry," said Paul Everitt, SMMT Chief Executive. "Consumer confidence is low and it is important that the government uses the March Budget to help relieve some of the financial pressure on motorists by freezing fuel duty, while providing stability and certainty on motoring taxes. Despite the challenging conditions, the demand for low CO2 emitting and highly fuel efficient cars continues to grow." Over 65,000 new diesel cars were sold in the UK last month compared with close to 62,000 petrol models, said the SMMT. The Ford Focus was the best selling new car in January and also the top selling diesel model in the month followed by Vauxhall with 12 percent.

ANALYSIS AND VIEWS

Randgold FY profits surge, sees 70 pct jump in production
By IBTimes
Randgold Resources sees a surge in production for 2011 as it reported a 43 percent rise in full-year profit in spite of operational and political setbacks. The West Africa-focused miner, which boosted its annual dividend by 18 percent to 20 cents, forecasts production to be between 750,000 and 790,000 ounces for 2011, up more than 70 percent on last year. For the year ended Dec. 31, profit increased to $120.6 million from $84.3 million. Gold sales rose 12 percent to $487.7 million lifted by a rise in price. Attributable production fell 10 percent to 440,107 ounces from 488,255 ounces. Chief executive Mark Bristow said "given the scale and complexity of the projects the company was developing, 2010 was always going to be a tough year, and it proved even more difficult than expected due to technical problems related to the expansion of the Loulo complex in Mali and the unsettled situation in Cote d'Ivoire." For the fourth quarter, the company's profit fell to $32.2 million from $38.7 million in the year-ago period. Earnings would have increased 40 percent had it been able to sell all the gold produced at the Tongon mine in the Ivory Coast, Randgold said. The Tongon mine was commissioned on schedule despite difficult circumstances, pouring its first gold on November and producing 28,126 ounces by the end of the year, the company said, adding that 23,428 ounces remained unsold at Tongon at year end resulting from disruptions in Cote d'Ivoire following the disputed presidential elections in November. Randgold expects Tongon to contribute 260,000 to 270,000 ounces for the year, provided the political situation in Cote d'Ivoire does not impact on the mine much longer. Loulo complex's production for 2011 was expected to be in line with the forecast of 420, 000 to 440, 000 ounces.

The Intelligent Investor - U.K.
THE NEXT TRADING DAY

Economic Events
UK finance minister George Osborne takes questions in parliament at 1430 GMT

Company Events
McBride which is due to report its first half yearly results had earlier warned at the beginning of January that full year performance could be at the lower end of its expectations because of an uncertain retail outlook. Analysts expect the interim result to give a clue as to how close to the bottom end the full year results are likely to be. Panmure Gordon has forecasted a 1% decline in revenues to £408m and a 26.5% fall in profit before tax to £16.5m, giving an earnings per share of 6.8p. “Input cost pressures are likely to remain a significant headwind for McBride and should provide a test of the recently implemented procedures to recover costs more quickly. Promotional activity remains high in personal care and in some categories in Household such as “Auto dish wash” but any further insight into the current promotional environment would be useful,” Panmure Gordon said. Investec analyst says that "Given the cautious outlook, we are trimming numbers by 3 million pounds -- this is not as a result of under-recovery of cost inflation seen to date, but more a reflection of the tougher environment and the likelihood that this could trigger further brander price action as well as the possibility of some new inflation emerging." Specialist materials group Low & Bonar which is due to report its preliminary results, forecast a full-year pretax profit to be at the upper end of market view on improved sales across the board. The company predicts its fiscal 2010 sales growth of over 10 percent on increased exposure to high-growth markets. The company which is restructuring its loss-making technical yarns business, also stated that it expected to close its Ostend facility by June 2011 and the manufacturing output of the Ostend facility in Belgium will be transferred to a new facility in Abu Dhabi. The company said it had refinanced its banking facilities on favourable terms through to February 2015. Lloyd's of London insurer Beazley, which will report its preliminary results on Tuesday had recently dropped its bid interest in rival Hardy Underwriting, saying that it would consider handing back more cash to shareholders. In its latest interim management, the company Chief Executive Officer Andrew Horton said that the profit-focused underwriting underpinned a continuing strong performance at Beazley in the third quarter. He further added that the company remains on track to achieve an excellent result in 2010 despite increasing competition for business and catastrophes in Chile and New Zealand. He said that the company recorded a strong trading performance in the first nine months of 2010 and their investment performance was satisfactory in the third quarter, with the annualised yield increasing from 0.5%, as reported in July, to 0.8%.

ECONOMIC INDICATOR WATCH ON FEB 08, 2011

RICS Housing Market Survey (January)
Forecast: -38, Previous: -39
The Royal Institution of Chartered Surveyors' survey is expected to show house prices continued to fall in January, albeit at a slightly more moderate pace than at the end of 2010. Other housing market data have been weak, mortgage approvals, which fell to their lowest in almost 2 years in December. And most economists reckon that tight credit conditions and worries about the economic outlook, as well as the prospect of higher interest rates will put pressure on house prices this year. House prices in England and Wales fell in December, but fewer new houses coming on to the market helped the pace of decline to moderate for a second consecutive month. The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance nudged up to -39 from -44 in November, improving more than the consensus forecast of -42. The index hit an 18-month low of -49 in October. New buyer enquiries fell in December, but at a slower pace than November. Heavy snowfall in December kept transaction volumes subdued but surveyors were hopeful turnover would pick up in the spring.

The Intelligent Investor - U.K.
TOP STORIES

Domestic and export orders drive CBI SME’s trend
Small- and medium-sized UK manufacturers reported a rise in output in the three months through January, but they also saw a marked rise in input costs and passed on some of the price rise. Confederation of British Industry's latest SME trends survey revealed that net 13% of respondents reported an increase in output in the three months through January, up from a net 9% in the previous quarter. A net 28% reported unit costs rose, with net 6% reporting a rise in domestic prices and a net 6% a rise in export prices. Output was driven up by an improvement in both domestic and export orders growth. CBI expects the unit costs to rise further, with a net 24% expecting a rise, the highest balance since July 2008.

Retail sales up in Jan despite worries: BDO
A new figure from the analyst BDO revealed that the High Street sales rose for the month of January by 9.1% as compared to a year ago. The rise in retail sales was despite worries on VAT rise and worries over the government’s austerity programme which is likely to hit consumer sentiment. BDO said that there were strong fashion and homewares sales during the month and with 49% surge in online purchases. It also stated that mid-market retailers were driven by milder weather and continued discounting. Don Williams, National Head of Retail and Wholesale at BDO however warned on the outlook saying that “Now the New Year buzz has worn off, retailers will be preparing for a tough first quarter.”

Kofax interim results hit records
Kofax, a scanning software specialist reported a record first half yearly results, lifted by strong performance at its software business and expects 14% revenue growth for the full year. The group adjusted EBITA for the six months ended 31 December jumped to $23.5m from $8m in 2009. Revenues increased 20% to $121.7m. Chief executive officer Reynolds Bish said that the first half of fiscal year 2011 yielded exceptional results, however he added that as the global economic environment continues to be fragile, hence the sustainability of any recovery is still difficult to predict.

Randgold FY profits surge, sees 70 pct jump in production
Randgold Resources sees a surge in production for 2011 as it reported a 43 percent rise in full-year profit in spite of operational and political setbacks. The West Africa-focused miner, which boosted its annual dividend by 18 percent to 20 cents, forecasts production to be between 750,000 and 790,000 ounces for 2011, up more than 70 percent on last year. For the year ended Dec. 31, profit increased to $120.6 million from $84.3 million. Gold sales rose 12 percent to $487.7 million lifted by a rise in price. Attributable production fell 10 percent to 440,107 ounces from 488,255 ounces.

St. Modwen Properties returns to profitability
St. Modwen Properties returned to profitability in the full year ended 30 November 2010. The group went from a pre-tax loss of £119.4 million in the previous year to pre-tax profits of £37.5 million. Property profits were reported as rising from £7.6 million to £21.9 million. During the period St. Modwen embarked on a new joint venture with housebuilder Persimmon, aimed at developing 2,000 houses at seven sites. Following the return to profitability the group said it would be resuming final dividends of two pence per share. Bill Oliver, Chief Executive of St. Modwen Properties, said, "Looking ahead, we are confident that St. Modwen's long-established strategy will once again give us the opportunity to provide sector-leading returns to shareholders. "We have a strong balance sheet and a landbank that is full of latent value. Our development pipeline for 2011 and beyond is strengthening and a number of significant schemes are being marshalled for delivery in future years, he added."

Another disappointment for AstraZeneca
AstraZeneca faced another disappointing drug development results as the advanced trial on the drug's impact on men with non-metastatic, castrate resistant prostate cancer exposed that it had no benefit to the patient. The company said that a trial is still in progress assessing zibotentan's effectiveness with chemotherapy in more advanced cases. The company said that this trial will continue and full results are expected in the second half of 2011.

888 Holdings Q4 income jumps 18%
888 Holdings, the gambling company reported a strong rise in income in the fourth quarter ended 31 December 2010. The group's total operating income increased 18 per cent from the previous quarter to $71 million. 888 said it had seen a 71 per cent rise in "active customers" from the third quarter to the fourth quarter, taking active customer numbers to 283,000. In the full year ended 31 December 2010 group total operating income increased six per cent to $262 million. EBITDA is expected to be in line with consensus forecasts, the group said. Gigi Levy, Chief Executive Officer of 888 Holdings, said that 2011 has started well and given that the company's various business initiatives are progressing as planned they expect to grow the business further during the year.
Disclaimer - All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. This is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment. This document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. It may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance.

This report is produced by International Business Times For questions or comments reach us at researchanalysis@ibtimes.com For more information about our products visit www.ibtimes.com © IBTimes 2010. All rights reserved.

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