Tuesday tips round-up: Ryanair, Invensys, Gulf Keystone

16th Jul 2013 06:41

Ryanair has bold plans to increase its European market share to 20 per cent from 15 per cent and transport 100m passengers a year by the end of the decade, The Telegraph's Questor points out. In order to meet its objective, the low-cost airline will buy more planes. In May it announced it was buying 175 aircraft from Boeing, amid claims it had managed to get such a large discount it was paying 2005 prices. The group expects the acquisition to increase its passenger numbers by about 7 per cent each year over the medium term. Shares in Ryanair are trading on a March 2014 earnings multiple of 16.1, which is line with rival easyJet, but this falls to just 13.7 in 2014. Questor said it thinks shares in Ryanair are a 'buy' based on management's revised and ambitious growth targets. Schneider Electric, of France, was revealed last week to have made an indicative bid for Invensys because of pressure from the City Takeover Panel. However, no offer is guaranteed, The Times' Tempus column said. It has yet to complete due diligence on Invensys and has until August 8th to make its move, which could prompt a response from other suitors. "Those who have been holding Invensys shares since the start of last year, when I recommended them, might ponder the share price graph and think that the present price offers a decent enough profit. Certainly, if it were my money, I would be tempted to take about half off the table and keep the rest in as a gamble that a counter-bidder will emerge," Tempus added. The indicative offer from Schneider assigns a sky-high multiple to the shares of about 18 times earnings. Fund manager M&G is unhappy that Gulf Keystone Petroleum has nominated four directors for next week's annual meeting, fiercely opposed by the company. "Gulf Keystone could probably do with a better board," according to the Financial Times' Lex column, which believes there is a lot to be said for independent directors to keep executives in line. "Its bigger problem, though, is not too few independent directors but too many soldiers," it added. Gulf has proposed two non-execs of its choice, arguing that M&G's nominees lack the right experience and knowledge of the Kurdistan region of northern Iraq, where Gulf Keystone owns a little over half of the giant Shaikan oil discovery. The company's other problem is the outcome of the court case taken by Excalibur Ventures, its one-time partner in Kurdistan, which claims to have been unfairly shunted aside by Gulf Keystone. Lex believes at only when that is out of the way will Gulf Keystone's share price reflect both the value of its assets and its attractiveness as a takeover target.RDPlease 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.