Wednesday tips round-up: Centamin, Shell, Barr

10th Jul 2013 06:43

Centamin's 20 per cent rise in shares since the overthrow of President Morsi in Egypt is perplexing, The Times' Tempus column noted. The Morsi government seemed to back the Egyptian miner and its asset, the Sukari goldmine. A lawsuit challenging its right to operate is still before the administrative court and there seems no reason why it should not be settled in Centamin's favour. "But the above suggests that any eventual government formed is unlikely to be much better for Centamin than the one just replaced, while, plainly, the situation in Egypt could get substantially worse," Tempus said. The political risk is unquantifiable and share prices could go either way.Royal Dutch Shell's appointment of Downstream Director, Ben van Beurden, as its new Chief Executive Officer, surprised markets on Tuesday. However, the Financial Times' Lex column believes the shock reaction to the news was a "bit surprising" given the fact that Shell's downstream activities accounted for a fifth of its 2012 net earnings, a quarter of its operating cash flow, and 90% of its group revenue. The reason for the reaction may be because followers of the company are too obsessed with the exploration and production side as it generates the most operational and financial momentum. Companies such as Shell are increasingly focused on a small number of very large projects so operational and exploration expertise is a must. But Van Beurden knows as much about Shell's strengths and weaknesses as anyone. As head of Shell's chemicals division, he fixed a difficult business that now contributes 5.0% of net earnings versus a loss in 2008.Chief Executive of Barr, Roger White, can count himself unlucky, according to Tempus. In February a deal to merge Barr into Britvic to create Britain's second biggest soft drinks group was on track but then the Competition Commission stepped, in what many considered an entirely unnecessary inquiry. The deal was formally cleared on Tuesday and the Takeover Panel gave Barr until July 30th to put together an offer or walk away. However, during the hiatus the conditions have changed with Britvic in a better position. Initially Barr was able to take effective control of the business as it was the stronger of the two. But Britvic appointed new chief, Simon Litherland, who introduced a successful cost savings strategy. Tempus said Panmure Gordon analysts suggested a 70:30 split between Britvic and Barr in a deal "but there is no guarantee this will happen and, if I had to bet, I would say it will not".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.