Broker tips: Lonmin, Home Retail, Metminco

B.C. | ShareCast | 10 Jun, 2011 12:23 - Updated: 12:26 | | |

Trading screen

UBS has initiated coverage on Lonmin with a ‘sell’ rating and 1,500p target price, highlighting its concerns over the current cost environment.

“Lonmin is one of the highest-cost producers in the platinum industry, and is significantly exposed to the major cost pressures of wage inflation, electricity prices and the South African rand,” the broker said.

UBS highlights sector mining peer Xstrata, which holds a 24.9% stake in Lonmin following a failed takeover bid in August 2008. “While M&A may prove a long-term catalyst for Lonmin, we do not believe Xstrata, or indeed any other firm, will make a bid for it in the next 12 months.”

Nomura has pulled back its target price for Home Retail Group by 20p, on the back of margin pressures and concerns at its Argos chain.

The Argos and Homebase owner reported a “disappointing” first quarter, according to the Japanese broker, in which like-for-like (LFL) sales declined sharply (by 9.6%) and gross margins fell by 75 basis points. These were driven by a poor TV and video gaming sales, which were down over 20%.

“We see ongoing negativity in consumer electronics, while our concerns around product positioning and demographics at Argos remain,” Nomura said. A ‘reduce’ rating is kept, while the target price is reduced from 180p to 160p.

Metminco’s shares have dropped by 20% over the past week on concerns over a potential windfall tax on mining profits in Peru, but Singer Capital Markets believes that fears are unreasonable and keeps its ‘buy’ rating.

“The Peruvian election result spooked mining investors as perceived left wing candidate Ollanta Humala won a 5 year Presidential term. His proposal for a windfall tax on mining profits was the main fear and on Monday morning investors chose the ‘sell now ask questions later’ approach,” said analyst Charlie Long.

However, Long thinks that given the strength of the mining industry in Peru – combined with Humala’s modest representation in congress – high taxes are an unlikely outcome. A target price of 33p is kept.



More news

15:32 Lloyds Banking Group contemplates moving Scottish Widows to England

Lloyds Banking Group may plan to move the group's Scottish Widows division to England, following the rejected independence referendum last week.

15:21 Banking stocks jump as FPC leverage ratio rules softer than feared

The Financial Policy Committee (FPC) announced tougher leverage ratio requirements for the UK's largest banks on Friday, though the rules were seen as softer than many had feared, causing banking stocks to surge in the City.

14:51 Balfour Beatty completes sale of Parsons Brinckerhoff

Infrastructure group Balfour Beatty has completed the sale of Parsons Brinckerhoff to WSP Global, it announced on Friday.

14:51 US open: Markets soar after unexpected stimulus from BoJ

US stocks soared on Friday, as the Dow Jones Industrials hit a new all-time intra-day high of 17,350.93 soon after the open, with investors buoyed by an unexpected boost to stimulus from the Bank of Japan.

14:11 Ebola latest: 82% of people support 21-day quarantine

Welcome to our rolling coverage of the Ebola crisis. Refresh for updates on the outbreak as they happen.

14:20 FPC announces leverage ratio requirement for banks of 4.05%

UK banking stocks reacted positively on Friday to new rules from the Financial Policy Committee, which require the country's largest lenders to have a leverage ratio (non risk-weighted) of 4.05%.

14:03 University of Michigan consumer confidence gauge rises to 86.9 in October

The ‘final’ reading on the University of Michigan’s consumer confidence index came in at 86.9 points for the end of October, besting the 86.4 forecast by economists.

13:55 US Chicago PMI shoots past forecasts

The US Chicago regional purchasing managers’ index for the manufacturing sector shot up to a reading of 66.2 in October, following a print of 60.5 in the month before.

13:51 US employment cost index edges past forecasts

The US employment cost index increased by at a 0.7% quarter-on-quarter pace in the three months to September, according to the Department of Labour.

14:22 Market overview: UK banking stocks jump after FPC reveals leverage ratio requirements

1414: UK banking stocks, already aided by strong results from RBS this morning, have reacted positively to new rules from the Financial Policy Committee, which require the country's largest lenders to have a leverage ratio (non risk-weighted) of 4.05%. This was the lower end of the 4-5% threshold expected by the market. RBS is up 5.1%, Barclays has jumped 7.2% while Lloyds has risen 2.3%.



vuelo ebola
Ebola latest: 82% of people support 21-day quarantine

Rolling Ebola coverage. Refresh for updates.


Support and resistance levels Support and resistance levels 31st october 2014