Tuesday tips round-up: Ladbrokes, Morrisons, Dairy Crest...

20th Sep 2011 06:52

The clock is now ticking on Ladbrokes' proposed takeover of Sportingbet, says the Tempus column in the Times. Under the new takeover rules that came into play yesterday, the bookmaker has been given until October 17 to "put up or shut up" which, given that the two sides have been in talks since June, seems reasonable enough. The problem is that agreeing terms in the world of gambling ? particularly internet gambling ? is far from straightforward. Even if thorny issues such as price, shareholder approval and boardroom egos can be overcome, takeover talks in the sector still face big regulatory hurdles. The fear is that if the Sportingbet deal goes the same way as 888, Ladbrokes's online strategy would be left looking threadbare. But the chances of a deal happening are increasing and, even if the complexities make the October 17 deadline impossible to meet, there should be no problem in getting an extension from the Takeover Panel, says the Times.From its roots in the north of England, grocery retailer Morrisons has transformed itself over recent years, through both acquisitions and new build stores, becoming a UK wide retailer, writes the Scotsman. In fact, the company plans to add a further 2.5 million square feet over the next three years. Consumers have become far more cost conscious, shopping around to find the best deal and Morrisons' "price crunch" promotions have reinforced its position as a low cost retailer, without jeopardising the quality of the produce offered. A current P/E of around 12, to yield just under 4 per cent, could well whet the appetite for some further analysis of the company. Hold, suggests the Scotsman.Inflation remains stubbornly high, but the food producer Dairy Crest appears to be on track, saying yesterday that its profits for the first half were on course to be "slightly ahead" of the same period last year, says the Investment Column in the Independent. The performance should keep the shares on firm footing, as investors, rattled by the market volatility, switch into companies that are perceived as relatively safer in their respective peer groups. Yesterday's update suggests that another upswing in the shares may be on the cards, as the recent pullback has left Dairy Crest on what we view as an affordable valuation. At around six times forward earnings, the stock, which has an enterprise multiple of closer to five times, is not expensive. Besides, we think the business deserves credit for the way it has managed to navigate recent challenges. Buy, says the Independent.Derwent London, the Central London property developer has generated £8.5 million of rent in new lettings in its first half of the year ? more than in the whole of 2010, despite the financial uncertainty, notes the Tempus column in the Times. It has since secured another £4.1 million of new rent and is on site or due to start developing 450,000 sq ft in the West End and the City. Derwent, under chief executive John Burns, has the balance sheet firepower to press ahead with its development pipeline. Mike Prew, property analyst at Jefferies, said recently Derwent was "heading from good to great status, with the slickest business model and savvy financing", declaring it to be one of the few property businesses that had been able to establish a property brand. With a £2.6 billion property portfolio and a net asset value per share up 10 per cent in the first half to £16.21 ? always the best indicator of a property company's performance ? Derwent London is of the best bets in the sector. The shares, down 39p to £15.97, are a buy, recommends the Times.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.