Tuesday tips round-up: UK E&Ps, Anite

13th May 2014 08:14

UK-listed oil exploration companies have done well of late, after the valuations for many of these fell below their net asset values per share over the winter and many oil majors - including Shell, BG, BP - were busy selling upstream assets. Indeed, over the last three months the FTSE 350 oil producers' index has gained 12 per cent, about three times the performance put in by the FTSE All Share. In fact, quite a few listed exploration and production (E&P) outfits continue to trade cheaply. As Bank of America points out, half of UK E&Ps are changing hands at less than $6 per barrel, way below the $14 which Glencore paid for Chad-based Caracal Energy. Put another way, on an enterprise value-per-barrel basis the sector is at its least expensive in five years. As well, some of these specialists, like Afren, deserve a premium rating. Shares in the sector may yet have further to rise, writes the Financial Times' Lex column. Although it has yet to put any numbers on it, Anite's fourth quarter was encouraging. The manufacturer of equipment to test handsets and mobile phone networks saw better order levels than in the first half. During that period the company's orders for its handset testing business fell off a cliff. Of course, it must be kept in mind that this segment represents 60% of the firm's business. However, that appears to have been a one-time event, as handset revenues stabilised thanks to improved business with China Mobile after that company won a 4G auction.At the moment there are 288 4G networks being put in place worldwide, with a total of 350 expected by year-end. All in all, Anite now looks set to hit market forecasts for the full year. Furthermore, a weekend report indicated it may sell its travel side to Lloyds' private equity division for £40m. The stock is selling on about 14 times' earnings for the present year, historically quite a low level for Anite, although immediate visibility is limited. "Assuming no further upsets, the shares look like making further progress. At this level, a buy," writes The Times' Tempus.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.AB