MARKET REPORT: Olympic effort from Aggreko

By GEOFFREY FOSTER FOR THE DAILY MAIL
Updated:

Glasgow-based portable power supplier Aggreko ended the week ding dong, merrily and on a big high ahead of its promotion to the Footsie on Monday.

Shares in the group, which will be supplying power equipment to the 2012 Olympic games, sprinted 65.5p ahead to a year's peak of 900p following an upbeat fourth-quarter trading statement.

Aggreko revealed that trading has been better than anticipated, driven by a strong performance in International Power Projects. As a result, it now expects revenue for the year will be slightly above £1bn, and operating profits around £260m.

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Investec upgraded its pretax profit forecasts on the news, increasing its 2009 fullyear estimate by 4pc to £245m and next year's by 15pc to £230m.

Having safely negotiated the potentially dangerous early morning Triple Witching expiry, where stock index futures, index options and stock options expire simultaneously, the Footsie stood 70 points higher before elevenses.

Then unconfirmed rumours that Iranian forces had stormed some Iraqi oil fields and raised the Iranian flag sparked nervous selling. As buyers ran for the hills, prices drifted lower and the close was 20.8 points lower at 5,196.81.

Wall Street traded 40 points higher following favourable corporate results from Research in Motion, Oracle and Nike which reinforced confidence that companies will be able to grow profits next year.

Satellite group Inmarsat rose 11.5p to 662.5p on revived takeover gossip. US hedge fund Harbinger Capital owns 28pc of the equity and would have to reach agreement with any bidder.

GDF Suez bid speculation refuses to lie down and professional punters continue to happily chase shares of the international electricity generator International Power up a further 1.7p to 297.7p.

Selling of Lloyds Banking Group gathered pace and the 43pc government-owned bank topped the Footsie fallers with a loss of 2.4p making a two-day relapse of 6.8p at 48.7p.

Credit Suisse analyst Jonathan Pierce believes the Basel committee recommendations will knock its tier-one equity capital, as it will Barclays' (9.6p easier at 264.25p) and 83pc government-owned Royal Bank of Scotland, down 0.91p at 29.83p.

Fashion retailer Next added 11p at 2,021p after UBS raised its target price to 2,250p from 2,050p and expects it to have a good Christmas trading period. Next will reveal all on January 6. UBS is also a fan of healthcare group Smith & Nephew, 9p up at 622.5p.

Tullow Oil gushed 15p to 1,252p on hearing that Heritage Oil (2.2p dearer at 422.2p), which owns a 50pc stake in Blocks 1 & 3A onshore Uganda, announced it has entered into a full Sale and Purchase Agreement with Eni for the sale of the licences.

Dealers gave the thumbs up to Mears' (4p off at 265.5p) £27.2m agreed share-exchange offer for Supporta (3.5p up at 28p), which provides local authorities with carers to work in people's homes.

Bob Holt, boss of the social housing and domiciliary care firm, said the deal was ' earnings enhancing and transformational'. Altium Securities has a target price of 355p for Mears, adding the Supporta deal 'stacks up strategically and financially'.

Topps Tiles jumped 3.25p to 84p on relief that it is withdrawing funding for its lossmaking Dutch subsidiary which is unlikely to be able to continue trading on a going concern-basis. KBC Peel Hunt says Topps remains undervalued.

Property website Rightmove cheapened 2.8p to 482.3p. Collins Stewart, which advised clients to buy up to 690p, reminded the market that over the past two weeks, the company has spent £5.5m buying back 1pc of its shares at an average price of 484p in an unplanned buyback. It has the capacity to spend £10m buying back stock over the next few weeks and a further £25m in 2010-11.

Sweetener company PureCircle rose 2p to 236.5p on news that Singapore commodities firm Olam International recently bought 13.3m shares at 250p a pop from a subsidiary of palm oil firm Wilmar International, thus increasing its stake to 20pc. PureCircle supplies sweeteners to PepsiCo and Coca-Cola.

Ricardo added 3.75p to 254.75p on a bullish Nomura Code note. The broker has a 297p price target for the automotive consultancy business which should benefit from the global race to introduce more fuel efficient cars.

  • Set-top box maker Pace slipped 2p to 197p but broker FinnCap says the shares should be put back on fund managers' shopping list. Its balance sheet looks very comfortable, with net cash of £50m. An acquisition could be on the cards at some point in 2010. All in all, the valuation is still undemanding despite profits having been upgraded twice in recent months.

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