Hot Small Caps: Senior up on hopes for Boeing strike deal

Fri 31 Oct, 2008 12:14

LONDON (Reuters) - Following is a round-up of key small cap movers on the London stock market on Friday.

12:00 GMT - Senior jumps on hopes for Boeing strike deal

Shares in aerospace engineer Senior (SNR.L) rise as much as 38 percent amid mounting hopes a strike at Boeing , one of its most important customers, will be resolved this weekend.

The dispute is costing Senior about 1.5 million pounds a month, says analyst James Tetley at Brewin Dolphin. The company's ability to weather it without earnings downgrade so far points to its strength, Tetley says, but it can only continue doing so until early November.

"We expect Boeing to resume production with all guns blazing," he says. "It bodes well (for Senior) for next year."

11:11 GMT - Petmin up as Numis repeats "Buy"

Shares in Petmin, , the AIM listed minerals, mining and processing company, climb 4.7 percent as Numis repeats its "buy" recommendation, saying the company will benefit from weakness in the South African Rand and is immune to lower commodity prices.

The broker, which also keeps its 48 pence target price on the stock, says prices have been locked in for all Petmin's 2009 volumes and it is upgrading Petmin's Rand based earnings figures.

Furthermore, Numis says it expects the company's net cash position to increase during 2009 and 2010, believing it is well positioned to weather any downturn in commodity prices, while expecting earnings to remain robust.

11:08 GMT - Ithaca Energy soars on asset sale news

Shares in Ithaca Energy Inc. (IAE.L) , the North Sea focused oil and gas exploration group, almost double to trade over 96 percent higher -- one of the top risers on AIM - after a series of asset sales to Dyas UK Ltd gives the group the necessary funding to develop other prospects. In total, the sales could be worth $126.8 million if certain options are exercised.

Investment Research firm Tristone Capital says the transaction will alleviate a funding gap for its Jacky development and allow the field to proceed to full production. It has a target price of 53 pence for Ithaca's shares which are up 88 percent at 28.4 pence having earlier risen as high as 29.5 pence.

10:49 GMT - Goldenport falls after trading update

Shares in Goldenport (GPRT.L) fall 13 percent after a trading update in which the shipping company says that during October the market changed dramatically, with the financial crisis hitting the market segments in which it operates.

Panmure Gordon says that the latest trading update, combined with a number of company specific events, prompts it to reduce its EPS estimates for 2008 and 2009 by about 16 percent, and 50 percent, respectively, and to slash its target price, to 200 pence, from 500 pence.

The broker however, keeps its "buy" recommendation saying the company's financial position remains strong, and Goldenport seems well positioned to weather this unprecedented storm.

10:19 GMT - Empyrean Energy up on positive well result

Shares in AIM-listed oil and gas exploration group Empyrean Energy Plc jump as much as 29 percent after the group gives a positive update on its Sugarloaf Prospect in Texas. The company said the Block A-4 well had consistent flow rates in excess of 2.0 million cubic feet of gas per day.

Craig Howie, an oil analyst at Blue Oar Securities, said the flow results were "very positive news" for the company and bring the full commercialisation of the SugarLoaf Project a step nearer. "Flow rates from the A-4 well are commercial and will be put into long-term production. This bodes well for the full development of the field," he said.

09:15 GMT - Vectura higher on 6 mln stg milestone payment

Shares in Vectura Group Plc (VEC.L) rise 6.5 percent to 45 pence after it receives a 6.0 million pounds milestone payment from pharmaceuticals group Boehringer Ingelheim for work undertaken on the development of a new inhalation device.

"Although the terms of the original deal were never disclosed, the payments received to date have now reached about 37.5 million euros and are set to rise further as more molecules are developed for the device," says Charles Stanley's Franc Gregori. "Our 71p price target is conservative and, in our view, easily achievable."

Stockbroker FinnCap says that for each individual drug that Boehringer elects to develop in the inhaler, it estimates Vectura may receive up to 22.0 million euros in milestone payments and a royalty of up to 5.0 percent of sales. It reiterated its "buy" recommendation for the shares.

09:30 GMT - London Scottish down; fails to raise fresh capital

Shares in London Scottish Bank slide over 14 percent as the company says after Thursday's close that it has been unable to raise the new regulatory capital as required by the medium term revolving credit facility entered into by the company's debt purchase and collection subsidiary, Robinson Way & Company.

In addition, the company is required to effect the sale of the London Scottish Bank Group or Robinson Way & Company by June 30, 2009.

Stockbroker Daniel Stewart calls the news "extremely disappointing", and notes that for years, Robinson Way has been the "jewel in the crown."

08:54 GMT - Office2Office rises on update, Altium "buy"

Shares in Office2Office (OFF.L), a business supplies and managed services company, climb 7 percent after what is seen as a reassuring update, prompting Altium Securities to repeat its core 12-month "buy" recommendation.

Altium says the update was positive as the group performed in line with expectations.

The broker says the increasingly disinflationary environment on raw materials will help the company, as will further efficiency gains it is already flagging.

As a result, Altium retains its forecasts but reduces its target price to 140 pence from 170 pence, in line with changes in the support services per group, while it repeats its "neutral" 6-month trading recommendation.

08:47 GMT - Entertainment Rights falls after H1 results

Shares in Entertainment Rights fall 5.3 percent after interim results statement, in which the company says negotiations regarding content and music publishing rights in the U.S. could result in a further EBITDA reduction of 10 million pounds in the current year.

Altium Securities cuts its recommendation to "sell", from "hold".

The broker says the likely 10 million pounds drop in EBITDA would result in an EBITDA figure of about 16.5 million pounds based on its current forecasts, "further jeopardising the group's financial position and banking arrangements."

"Worryingly there is also no news of concrete asset disposals this morning despite the fact that the group's principal bank has had to grant a short-term covenant waiver and provide additional short-term funding," Altium says.

08:39 GMT - Blacks Leisure jumps on cost cuts, sales rise

Shares in Blacks Leisure (BSLA.L) rise 13.6 percent to 34 pence after the British outdoor clothing and footwear retailer says second half trading has started well with its Outdoor business -- 260 Millets stores and 110 Blacks stores -- delivering like-for-like sales growth of 4.5 percent in the two months to October 29.

The group also exceeds its annual cost savings target of 3 million pounds by cutting 5.6 million pounds of costs in the first half alone.

"The current trading statement on Outdoor is better than we expect for the second half ... Cost reductions exceeded our expectations," said Altium analyst David Stoddart.

08:33 GMT - Southern Cross soars as gets refinancing

Care home operator Southern Cross (SCHE.L) soars 47 percent after it announces that it has successfully concluded a refinancing with its banking syndicate.

"The market was generally of the view that the refinancing would not succeed and they would have to resort to existing shareholders. I expect it to be up 35-40 pct this morning," says Brewin's Sahill Shan.

08:29 GMT - FTSE Small Cap Index opens flat

The FTSE Small Cap Index opens flat, bucking the wider market trend, as the FTSE 100 Index (UKX.L) heads 1.2 percent lower, after key Asian markets slip overnight.

Southern Cross Health Care (SCHE.L) surges 46 percent after the company surprised market speculators when it successfully concluded its refinancing with its banking syndicate.

SDI (SDIG.L), which designs, builds and supports integrated materials handling solutions for international retail, slumps 21 percent after a profit warning.