Daily Telegraph (UK): Shell's unification puts funds firmly in the 'buy' camp: Wednesday 29 June 2005
Market report
By Caroline Muspratt (Filed: 29/06/2005)
The decision by Anglo-Dutch oil giant Shell to unify its dual structure sent waves through the stock market as traders said funds would have to buy into the stock to adjust the weighting of their portfolio.
Dealers also said the simplified structure would allow Shell to offer paper rather than cash for potential acquisitions. They singled out BG Group and Spain's Repsol as possible targets. Shell gained 17 to 545p, helping the FTSE 100 rise 46.9 to 5090.4. BG rose 18¼ to 472p, while high oil prices also helped Shell's rival BP gain 11 to 595p. In the FTSE 250, Soco International rose 34½ to 605p as the oil and gas group reported the successful testing of a well in Yemen.
Blue chip miners also gained yesterday as broker Numis issued a positive note on the sector. It reiterated buy ratings on Rio Tinto, which rose 23 to £16.99, Antofagasta, up 26 to £12.16 and Xstrata, up 18 to £10.65. BHP Billiton was also boosted as Morgan Stanley raised its price target on the stock to 820p from 800p and lifted its earnings per share forecasts on the back of the rising oil price. The shares rose 15 to 719½p.
Carpetright gained 100 to 999p following full-year results and positive comments from chairman Lord Harris that the company had continued to gain market share.
There were also final results from music retailer HMV that pushed the shares up 7¼ to 236¾p. HMV said sales were up 3.8pc in the year.
Associated British Ports rose 7 to 485p as it said it expects underlying operating profits to grow at least 3pc in its ports and transport activities in the first half. However, Forth Ports slid 6 to £13.05 as it said first half results will be in line with expectations.
Recruitment group Hays rose 3½ to 129¼p as it said profits for the year would be in line with expectations.
Supply chain management group Exel rose 19 to 838½p after a positive trading update, dealers said. JP Morgan kept its overweight rating on the stock and WestLB reiterated its outperform stance, they said.
Deutsche Bank lifted its price target on National Grid Transco to 600p from 550p and repeated its buy rating, lifting the shares 9 to 536p.
Shares in British Gas owner Centrica came under pressure after rising the day before, weighed down by cautious comments from Morgan Stanley. Traders said Morgan Stanley had advised clients Centrica could be one of the potential losers in the next stage of the commodity cycle. The shares slipped 3 to 231p.
Benson & Hedges and Mayfair cigarettes maker Gallaher slid 2½ to 809p as it confirmed the loss of 250 jobs in Europe and said restructuring costs will rise to around £95m from the £65m pencilled in earlier. It also said annual cost savings will rise to £30m from £20m.
Among the second liners, Computacenter fell 51 to 181p as the group said it did not expect an improvement in trading conditions, meaning profits will be "substantially below" current market forecasts.
Medical software provider ISoft slid 15½ to 417½p as it emerged chairman Patrick Cryne had sold 3.5m shares at 425p each. That leaves Mr Cryne, who analysts say is expected to retire at the end of April 2006, with a 2.4pc stake.
Shares in Intertek fell 24½ to 700½p after the testing and inspection specialist said the weak dollar wil hit first half profits.
Housebuilder Wilson Bowden said volumes in the first half of 2004 will be 10pc below last year though headline prices remain firm. The shares fell 20 to £11.30, while in the same sector, Crest Nicholson slipped 12¼ to 376p and George Wimpey fell 7½ to 430p.
John Menzies, the newspaper distribution and aviation services group, slipped 1 to 543p as it said trading was in line with expectations.
Support services group Bunzl slid 5 to 508½p as it also said trading was in line, driven by strong sales in North America and Europe.
On Aim, printing technology group TripleArc dropped 7¾ to 10p as it warned full year results will be "significantly below" expectations. It also said finance director Peter Houston had resigned to pursue "other interests".
Healthcare group Shiloh rose 26½ to 129p as Synergy Healthcare unveiled a recommended cash offer of 130p a share, valuing Shiloh at around £8.7m.
Online learning group Epic rose 13 to 79½p on confirmation it was in preliminary takeover talks.
Online auctions group QXL Ricardo rose 61 to £30.01 after confirming payments of $2.3m (£1.3m) and £60,000 it received earlier this month had come from the administrator of QXL Poland.
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