Sunday share tips: Mytrah Energy, BG Group, Centrica

4th Nov 2012 17:42

Mytrah Energy listed on the Alternative Investment Market on October 12th, 2010, at 115p. At the time it had no assets. Today it is the second largest independent wind power company in India, with contracts in place to sell electricity for the next 20 years. Wind turbines may be controversial in Britain but India is sufficiently large that farms can be built without seriously damaging the beauty of the countryside. Mytrah is already making money and profits are expected to soar over the next few years. Yet the shares have fallen to 74½p. At this price they are a bargain. In the year to March 2012, Mytrah turned over nearly 4.5m pounds and made a loss of 1.75m pounds. However, in the year to March 2013 the group is expected to make profits of up to 28m pounds, rising to 60m pounds in 2014. Mytrah is well funded and will be able to sustain decent growth for the next five years from its cash resources. All of the above leads the Financial Mail on Sunday´s Midas column to the following conclusion: "Mytrah shares have suffered because investors are wary of Indian companies and one large shareholder - the US hedge fund Eton Park - hit problems and sold all its stock in the summer. No company operating in India is free of risk but this business looks more secure than most and, at 74½p, the shares are a buy."Oh dear. BG, the City's favourite oil and gas group, dropped a clanger last week when it warned of lower profits and production delays around the world. Analysts reacted as if they had just been dumped. "Has the circle of trust been broken?" asked Jefferies. Macquarie called it a "Hallowe'en horror". Deutsche Bank was left "confused and very disappointed". Britain's biggest oil explorer after BP and Shell is suffering growing pains. Nevertheless, the City was shocked. BG's market value plummeted by nearly a fifth last week ? roughly £8bn. No one disputes that BG has one of the most promising portfolios of oil and gas fields in the world. The company is still growing. However, whereas production had been forecast to surge by between 6% and 8%, now it is forecast to be flat. What was announced were delays, not irrecoverable losses, say the company's supporters. The problem is that analysts are less inclined to take the word of Sir Frank Chapman, the company´s Chief Executive, who, after 12 years at the helm, already has one foot out of the door. He plans to leave when he turns 60 next year. As recently as this summer, 23 of the 25 analysts following BG rated it a buy. By the end of last week it was 15 buys, 9 holds, and 1 sell. Perhaps Chapman should go round for a chat. Chocolates often help, The Sunday Times´s Danny Fortson writes.Moving on to the other company that was produced by Margaret Thatcher's privatisation of British Gas, Centrica, The Times´s Danny Fortson says he has a prediction. The firm is going to pull out of its joint venture with EDF Energy to build nuclear reactors in Britain. The company has the right to join the £14bn project to build reactors at Hinkley Point in Somerset. It will decide by the end of the year whether to proceed ? everything depends on talks with the government over the level of subsidy. No matter what the number is, though, it's a big ask. Citi, the investment bank, estimates Centrica's share could run to £3bn, which will yield "very little, if anything, by way of returns in the current decade." There are better ways for Centrica to spend its shareholders´ money, he believes. ABPlease 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.