UK MARKET TALK ROUNDUP: BROKERS COMMENTS

2nd Jul 2010 07:57

Broker comments in the UK today. Compiled by Dow Jones Newswires Markets Desk, [email protected] Contact us in London. +44-20-7842-9464 [email protected] 0657 GMT [Dow Jones] The replacement of the Australian resource super profits tax with another regime is clearly good news for all Australian mining companies, says Seymour Pierce. Says this is particularly good for non-ferrous producers such as Norseman Gold (NGL.LN), rated at buy. Says a policy transition group will now be created to consult with the industry and to advise the government on implementation of the scheme. Norseman closed on Thursday at 50p. ([email protected]) 0653 GMT [Dow Jones] Chloride Group's (CHLD.LN) decision to recommended a GBP997M takeover offer from Emerson Electric (EMR) is clearly positive for Chloride's shareholders albeit not a surprise after the withdrawal of Swiss engineer ABB Ltd (ABBN.VX), says an analyst. "Chloride's board has done very well to extract the right value for a premium company," he adds. Emerson all-cash offer for Chloride is at 375p plus 3.3p dividend, valuing the company at around GBP997M, which represents a 15% premium to ABB's 325p offer on June 8 and a 36% increase from its 275p offer on April 26, notes Numis Securities. Chloride shares closed at 370p. ([email protected]) 0645 GMT [Dow Jones] UBS upgrades Savills (SVS.LN) to buy from neutral. Says the shares have declined by 25% from their peak in mid-March. Thinks this represents an attractive entry point. Cuts the price target to 300p from 360p. Meanwhile, expects a strong 1H, reflecting a continuation of the momentum seen in 4Q '09. Says 1H activity has been particularly strong in Asia Pacific but there are signs of this cooling, and thinks this momentum will cool in 2H, particularly in China. Lifts '10 EPS forecast to 16.1p from 15.3p and '11 to 20p from 19.9p. Shares closed Thursday at 274.8p. ([email protected]) 0645 GMT [Dow Jones] Travis Perkins (TPK.LN) issues a positive trading update, says KBC Peel Hunt. Says merchanting or trade sales are up 5% like-for-like while retail sales are down 0.4% like-for-like. Says Travis is still "making hay" from the weakness of Wolseley (WOS.LN) and notes that there is still a high rate of failure amongst smaller independents. Says generally, the merchants are not especially vulnerable to the cuts in major public sector capital spending. Has no rating for Travis. Shares closed on Thursday at 709p. ([email protected]) 0631 GMT [Dow Jones] Citigroup upgrades Amlin (AML.LN) to buy from hold, and raises its target price to 470p from 420p. Says shares have been treading water of late, and while this represents a strong performance relative to the broader market, "it fails to capture the group's strategic progress and continued value creation." Adds with a strong capital position and virtually all assets held in cash and short-dated high quality bonds, Amlin shares are intrinsically low beta. "While they might underperform any relief-led macro rally, the company's entrenched focus on return on equity should ensure solid share performance," adds Citigroup. Shares closed at 381p. ([email protected]) 0622 GMT [Dow Jones] JPMorgan Cazenove lowers Great Portland Estates (GPOR.LN) to neutral from overweight. Says the company has outperformed UK property by 17% and peer Derwent London (DLN.LN) by 7% year-to-date. Says the downgrade to Great Portland's rating is based on relative valuation "while we believe that market rental growth expectations may have become too bullish." Still, says Great Portland is a quality company, with a strong development pipeline. Has a 350p target price. Shares closed at 283p. ([email protected]) 0558 GMT [Dow Jones] It is not surprising that Australian government's mining super-tax has not progressed in its original form, says a trader, considering the criticism directed towards it. Thinks now that the Australian government has negotiated a reduction in the headline rate to 30% from 40%, it will be interesting to see if the miners are able to pass the tax on. Says the muted reaction of the affected stocks in Australia, Friday, suggests that this still has a long way to play out. On Thursday, BHP Billiton (BLT.LN) closed at 1694.5p, Rio Tinto (RIO.LN) at 2904.5p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 02, 2010 02:57 ET (06:57 GMT)