Friday tips round-up: Rank, Chemring, Soco International...

24th Jun 2011 06:47

It is game over for Rank Group. Despite its misgivings, the company has told shareholders to accept a ridiculously low offer from the Malaysian billionaire Quek Leng Chan. The assumption was that the 150p a share offer would fail, leaving outside shareholders with a small majority. For some reason it attracted sufficient support to go through 50%, though Guoco said it would retain the listing in London. Analysts had an average target price of 191p, which suggested the shares could have had farther to run. The safest course is for investors to take Rank's advice with whatever grace they can muster and accept these miserable terms, according to the Times.Until now we haven't been the biggest fans of Chemring, the military equipment maker that issued half-yearly results yesterday, says the Independent. The worries, which we aired in detail in a note last year, were down to the defence squeeze and its likely impact on the sector. Adding to our caution was the fact the group's shares were trading at a premium to the wider sector in advance of the defence review. Fast forward to yesterday and Chemring not only posted higher revenues - up by nearly 30% - but also higher profits in the six months to the end of April. And despite the budget cuts and spending pressure here and on the other side of the Atlantic, it managed to grow its order book, which rose to a record high of nearly £1bn. Buy, recommends the Independent.Soco International's business is set to be transformed in the third quarter by the development of its TGT oilfield, offshore Vietnam; yet the stock continues to trade at a 40% discount to our 595p-a-share net asset value, which makes it one of the least expensive stocks in our international universe. We forecast that the TGT development will help lift Soco's production, from 2,500b/d in early 2011, to more than 20,000b/d in 2012. And, under the terms of its production sharing contract (PSC), the company could be allocated 45% of the field's revenue. As a result we calculate Soco's post-tax cash flow should leap 20-fold. Buy, recommends the Scotsman.No one could accuse Micro Focus International of inconsistency. I said in December this computer software company had had a truly horrible year. Six months on, and the company has had a truly horrible six months. It provides software for large corporates such as Tesco; its downfall came in 2009 when it bolted on two small companies to create AMQ, a testing business. Core revenues were off 0.2% in the year to the end of April, those from AMQ down 16%. Micro Focus shares sell on about ten times this year's earnings, pathetically cheap for the sector. One for the brave only, and those with a long-term view, says the Times.Safestore took a knock yesterday after making downbeat noises about the economy and revealing that headline interim pre-tax profits had slumped by 85% to £973,000 from £6.6m. The latter was largely down to a cautious valuation of the company's existing property portfolio. At the operating level, things look rather better. Despite the tough economic climate, occupancy was up 3% and customers are paying more to stash their things with the storage group. Buy, recommends the Independent.---BCPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.