Sector movers: Compass drags Leisure sector south

27th Sep 2012 16:15

Mining stocks have followed metals prices higher, on the back of reports that China's central bank has pumped record amounts of liquidity into the banking system.Not all mining stocks are going well, however. Mining giant Bumi added to recent losses on reports of a rift between the company's major shareholders.The Bakrie family has (metaphorically) come to blows with Samin Tan, the business tycoon who nine months ago rescued the Bakrie Group when he invested $1bn in Bumi in return for a 47.6% stake split evenly between Tan and the Bakries. Since Tan made the investment, shares in Bumi have fallen around 80%, causing Tan to be "furious" with the Bakries, who are one of Indonesia's wealthiest and politically connected families.The battle between the two could risk the $3.0bn deal that was signed in 2010 with the aim of making Bumi one of the world's largest coal exporters. Shares in Bumi have been hit this week after Bumi said it was investigating allegations of financial and other irregularities at its Indonesian operations. The investigation centres on PT Bumi Resources, in which the company has a 29% interest, with particular focus on that firm's development funds.The Travel & Leisure sector is led lower by Compass after some brokers decided that the occasion of the group's full-year results would be a good time to review future prospects.According to broker Seymour Pierce's calculations, the company's £0.5bn budget to buy back shares should be blown by the end of the year, at which point the questions becomes: "is there more to come?" Although the net debt to equity ratio is still healthy, by the broker's reckoning, at less than 30%, the need to spend money to sort out Southern Europe may make the company more cautious over announcing a further buyback. The group has announced a restructuring of its Southern Europe operations which should yield £95m of cost savings a year a couple of years down the line. The restructuring will lead to exceptional cash charge of £150m over two years and a non-cash exceptional charge of £195m. "We remain positive on Compass and stick with a 770p target price. However, further share progress may depend on more returns of capital, which could now be delayed. We move from Buy to ADD (Buy since 31 March 2009)," the broker concludes. Panmure Gordon, however, is sticking with its "buy" recommendation, as its discounted cash-flow derived target price of 820p implies potential upside of around 15%. Oriel Securities has also reiterated its "buy" recommendation, as has Espirito Santo Execution Noble but Numis Securities has downgraded the stock to "hold", while leaving its target price at 750p. Shore Capital is also a holder.Top performing sectors so far todayIndustrial Metals & Mining 2,654.80 +1.89%Mining 18,104.76 +1.41%Oil Equipment, Services & Distribution 25,145.39 +1.19%Banks 3,930.20 +1.12%Aerospace and Defence 3,840.07 +1.04%Bottom performing sectors so far todayFood & Drug Retailers 4,187.92 -0.93%Electronic & Electrical Equipment 3,356.90 -0.62%Travel & Leisure 4,980.60 -0.61%Insurance (non-life) 1,570.47 -0.41%Life Insurance 4,598.70 -0.31%JH