Thursday tips round-up: Fenner, Capital & Counties and Hargreaves Services

8th Nov 2012 06:43

Tempus in The Times writes that Fenner, with more than two thirds of revenues across the group coming from repeat orders for equipment that has come to the end of its natural life, should not be as exposed to a slowdown in new investment as some of its peers.Fenner shares rose by 9.5p to 359.5p on the release of a positive set of results to the end of September. Pre-tax profits came in 30% higher at £103.9m, while a final dividend of 7p increases the total by a generous 31% to 10.5p. Fenner is never going to be immune to global economic trend but the shares, on about 10 times earnings, look like good long-term value, the paper says.Tempus writes that strength of the Central London property market never ceases to amaze. Capital & Counties Properties, whose Covent Garden estate is its main asset, has lifted the estimated rental value of those properties to between £60m and £65m by the end of 2015; only in March, it was shooting for £50m by the end of 2013. The new estimate was part of a £149m cashraising in September; Capco has pledged to spend £200m on Covent Garden, which was valued at £850m in June, and has already spent more than £60m since then. This includes a deal for a corner site at a little more than £800 a sq ft, against an average £1,000 per sq ft for the estate as a whole. Capco shares, below 200p in May, have risen to reflect the prospects for Covent Garden. They are on a 13% premium to estimated net asset value, in line with equivalent London property companies, and look about up with events, Tempus says.Questor in The Telegraph writes that Hargreaves Services' shares rose yesterday, despite the coal group revealing its Maltby Colliery is now likely be mothballed. This is the worst possible outcome for the company and its miners, but markets prefer clarity and abhor uncertainty. That's why the shares improved.Analysts have not slashed their estimate as they awaited the outcome of the review, but closure is likely to hit profits in the year to May 2014 by about a fifth. Obviously, should a closure occur, there will be a writedown, which will probably be in the order of £50m and will come in the year to May 2013. It is expected that the cost of redundancy will be covered by the sale of plant and equipment at the mine. The current May 2014 earnings multiple is five times earning forecasts; however, downgrades have yet to make their way into the system. A 20% cut in earnings would make the 2014 multiple about 6.1. This still looks too cheap, however. Questor rates the shares as a hold for now. Please 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.CM