Wednesday tips round-up: Petrofac, Domino Printing, Hutchinson

26th Jun 2013 06:39

Petrofac shares have continued to underperform but The Telegraph's Questor believes the falls have been overdone. The oil services group confirmed on Tuesday that it expected modest growth in net profit this year with the majority of it being weighted in the second half. The firm also said anticipated double 2010 earnings by 2015.While some investors are concerned about future profits at Petrofac's core onshore engineering and construction (OEC) unit and its decision to move into subsea operations, Questor has retained a 'buy' rating for the company's stock based on its expected growth. However the column also highlighted the company's need to win some substantial contracts in its OEC. The unit needs to win about $2.0bn of orders in the second half to meet expectations, after winning $2.0bn in the first half.Domino Printing Sciences has written down its investment in Ten Media. In an effort to reduce its reliance on stamping bar codes and expiry dates on foods, the company agreed to pay $50m last year for a 15% stake in Ten. However, the venture hit operational and regulatory issues, and ran out of cash. Domino has written down the investment to a tenth of its value, losing $45m. The Times' Tempus column said it is a "black mark for a promising high-tech British company with a strong position in global markets". The announcement came with half-year figures which showed a fall in underlying profits as the company invested heavily in research and development. Tempus said the company's vulnerability to macro-economic trends means that while markets in the US and Germany are doing well, other parts of Europe are weak. "The shares, even after recent falls, sell on about 16 times' earnings. Hard to justify at that level."Hong Kong conglomerate Hutchinson Whampoa this week spent $1.1bn buying Telefonica's Irish unit. While the company has agreed or closed five deals worth more than $4.0bn this year, the reaction has been minimal, the Financial Times' Lex column pointed out. Hutchison, which as a market capitalisation of $42bn, flies under the radar. Only 16 analysts follow it, according to Bloomberg - half the number on average for the other giants in the MSCI Asia Apex 50. "Complexity will account for some of the missing market mojo. Hutchison's deals this year have covered telecoms, ports and infrastructure. Its operations span those plus retail, energy and property," according to Lex. Rather than smallish acquisitions, Hutchison tends to outperform when it is selling more businesses than it buys and Lex believes market reaction would perk up if it were to do so.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.