Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Beaufort Securities Breakfast Alert Evgen, Great Western Mining Corporation, Stratmin Global Resources, RSA Insurance Group and others

Beaufort Securities Breakfast Alert Evgen, Great Western Mining Corporation,  Stratmin Global Resources, RSA Insurance Group and others
no_picture_pai.jpg

The Markets

Market opening: The FTSE-100 is expected to start the session around 52-points higher this morning.

New York: Wall Street ended in the red after a rout in China’s stock markets. Moreover, increased geopolitical tensions in the Middle East hurt investor sentiment. The S&P 500 fell 1.5%, with the financial sector losing the most.

Asia: Equities are trading lower, as investors remained concerned over slowdown in China’s economy. The People’s Bank of China infused ¥130bn to stabilise China’s markets. The Nikkei 225 declined 0.4%, while the Hang Seng was trading 0.7% down at 7:00 am.

Continental Europe: Markets closed in the negative territory amid large sell-off in China’s market. Furthermore, rising tensions between Iran and Saudi Arabia weighed on investor sentiment. Germany’s DAX and France’s CAC 40 shed 4.3% and 2.5%, respectively.

Crude Oil: Yesterday, WTI and Brent prices decreased 0.8% and 0.2%, respectively. The spread between the two varieties stood at US$0.5 per barrel.

UK small caps: The FTSE AIM All-Share index closed 0.42% lower yesterday at 735.71

Today’s news

Manufacturing growth in UK slows in December

As per Markit, the UK Purchasing Managers’ Index (PMI) fell to 51.9 in December from 52.5 in November, the lowest in the last three months. The manufacturing sector failed to contribute to the country’s growth in the first three quarters of 2015, with the services sector driving the UK’s economic recovery.

Company News

Great Western Mining Corporation (LON:GWMO) – Speculative Buy

Great Western Mining Corporation (GWMC), the mineral exploration company focused on copper, gold and silver deposits in south-western Nevada announced yesterday that the Nevada Bureau of Mining Regulation and Reclamation (BMRR) has approved the reclamation permit for the company’s Target 4 exploration project (M4). Following statutory appeal under the Nevada Administrative Code the permit became effective on 2 January 2016.

Our view: GWMC has cleared an important hurdle for continued exploration on its M4 project. With the final approval in place management can commence drilling on the M4 target. The company also has a drilling permit in place for its M2 target where results have shown favourable geology for iron oxide copper-gold IOCG mineralisation. As such, we maintain a Speculative Buy on the Stock.

Beaufort Securities acts as corporate broker to Great Western Mining Corporation PLC

StratMin Global Resources (LON:STGR) – Speculative Buy

StratMin Global Resources, the graphite production and exploration company with assets in Madagascar, announced yesterday the completion of the first tranche funding from ASX listed Base Metals of £0.5m under the investment agreement announced 2 September 2015. Completion of the first tranche gives Bass Metals a 6.5% interest in Graphmada Mauritius with StratMin holding the balance and completion of the second tranche of £1.5m by 31 March 2016 will give a 25% interest. The Base Metal’s funding has allowed StratMin to make a number of plant and machinery improvements at the Loharano operation. In addition, StratMin has ordered a new diesel generator power supply which will enable reliable power supply for the increased demand due to the production expansion that occurred over the previous quarter.

Our view: We are encouraged with the continued commitment of Bass Metals. The funds received from the second Tranches will allow StratMin to continue to progress the expansion of Loharano operations. The investment agreement with Bass Metals has greatly reduced the financing risk for StratMin and we look forward to further updates from the Loharano operation. As such, we maintain our Speculative Buy on the stock.

Beaufort Securities acts as corporate broker to StratMin Global Resources plc

Evgen Pharma (LON:EVG) – Speculative Buy

Evgen Pharma plc, the clinical stage drug development company focused on the treatment of cancer and neurological conditions, is pleased to announce the appointment of Dr Hamina J Patel MB BCh MSc MRCPI as Chief Medical Officer. Dr Patel is a pharmaceutical executive with more than 15 years industry experience, leading global cross functional teams in the development and commercialisation of drugs primarily within the field of oncology. She was previously Director of Drug Development specialising in Oncology, at Johnson and Johnson, where she helped to build a broad and differentiated portfolio of indications. During this time, Dr Patel was also instrumental in the success of a new indication (the second-line treatment of mantle cell lymphoma) based on a Phase II clinical study.

Our view: This is an important and necessary appointment. Evgen is on course to commence two phase II clinical trials this year. This is the stage at which the Group needs to put together the right team with deep clinical experience in preparation for developing and implementing strategies for its indications. It also needs to sound out potential partnerships with a view to considering alliances capable of co-developing products and optimising pipeline potential. Dr Patel has an impressive industry track record and a breadth of relevant clinical experience, particularly given her key role with the successful filing, approval and commercial launch of a new indication for VELCADE in over 35 countries worldwide. As such, her appointment represents a key hire for Evgen while strengthening its core team. Therefore, we maintain our Speculative Buy rating on the stock.

Diageo (LON:DGE) – Buy

Yesterday, Diageo announced the completion of the sale of its major wine interests, the US-based Chateau and Estate Wines and the UK-based Percy Fox, to Treasury Wine Estates. The company announced the sale of its assets on 14th October 2015.

Our view: This sale is in line with Diageo’s plan to focus on its core assets. The proceeds from the sale would be used by the company to reduce its borrowings. In the recent past, Diageo, Heineken and The Ohlthaver & List Group of Companies (the controlling shareholder of Namibia Breweries [NBL]) completed the restructuring of their respective joint ventures (JV) in South Africa and Namibia. This bodes well with the company’s plan to focus on core markets. Diageo recently sold its interest in Desnoes & Geddes (D&G) and Guinness Anchor Berhad (GAB) to Heineken and acquired additional shares in Guinness Ghana Breweries Limited (GGBL). Meanwhile, the company remains cautious in the emerging markets as weaker currencies could hamper margins. Diageo is undertaking focused brand-building initiatives that include innovative marketing techniques and an improved distribution platform. The company implemented several cost-saving and pricing measures to boost earnings and continues to make efforts to expand into new markets. In the light of the above argument, we maintain a Buy rating on the stock.

RSA Insurance Group (LON:RSA) – Hold

Yesterday, RSA Insurance Group (RSA) informed that it has completed the sale of its Italy-based business to ITAS Mutua following the receipt of regulatory approval.

Our view: The sale is part of the company’s strategic refocus programme. The company recently announced the sale of its entire shareholding (75%) in Intouch Insurance (RSA Russia) to Joint Stock Insurance Company BLAGOSOSTOYANIE for £5m, to be paid in cash. Meanwhile, the company inked an agreement with Nationwide Building Society to underwrite all of Nationwide’s home insurance products for five years starting from the spring of 2017. However, the insurance sector has of late suffered due to tough regulations and high competition, especially from non-traditional providers. In addition, Zurich Insurance’s decision to drop its proposed takeover bid of RSA was a setback to the latter. We would like to wait and see the company’s performance in the near future. For the time being, we maintain our Hold rating on the stock.

Economic News

Germany manufacturing PMI

As per the data released by Markit, the final manufacturing PMI of Germany for December increased to 53.2 from 52.9 in November. This was better than the market expected reading of 53.0.

Eurozone manufacturing PMI

Manufacturing PMI for the Eurozone rose to 53.2 in December from 52.8 in November, final data from Markit showed yesterday. This was better than the market expectations of a reading of 53.1.

UK mortgage approvals

As per data from the Bank of England, mortgage approvals for house purchases rose to 70,410 in November from 69,867 in the previous month. The markets expected the approvals to fall to 69,800.

Germany CPI

Consumer price index (CPI) in Germany fell 0.1% m-o-m in December, following a 0.1% increase in November, as per the initial estimates published by the Federal Statistics Office yesterday. The markets expected a 0.2% increase in prices. On y-o-y basis, prices increased 0.3% in December, after a 0.4% rise in November.

US manufacturing PMI

The final Markit PMI for the US stood at 51.2 in December, from 52.8 in November. The markets expected a reading of 51.1.

US ISM manufacturing

US manufacturing PMI fell to 48.2 in December from 48.6 in November, as per the Institute of Supply Management (ISM). Economists forecasted a reading of 49.0.



Important Risk Warnings and Disclaimers 

This report is published by Beaufort Securities Ltd ("Beaufort Securities"). Beaufort Securities Ltd is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange. 

RELIANCE ON THIS NOTE FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE YOU TO A SIGNIFICANT RISK OF LOSING ALL OF THE FUNDS, PROPERTY OR OTHER ASSETS INVESTED OR OF INCURRING ADDITIONAL LIABILITY. 

This document is not an offer to buy or sell any security or currency. This document does not provide you with individually tailored investment advice. It has been prepared without regard to the your financial circumstances and objectives The appropriateness of a particular investment or currency will depend on your individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for you. 

This research is non-independent and is classified as a Marketing Communication under FCA rules. As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition on dealing ahead of the dissemination of investment research in COBS 12.2.5. However Beaufort Securities has adopted internal procedures which prohibit analysts from dealing ahead of non-independent research, except for legitimate market making and fulfilling clients' unsolicited orders. 

By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of Beaufort Securities. When distributing this document, Beaufort Securities is not acting for you and will not be responsible for providing advice to you in relation to this document. Accordingly, Beaufort Securities will not be responsible to you for providing the protections afforded to its clients. 

Beaufort Securities may effect transactions in shares mentioned herein and may take proprietary trading positions in those shares, and may receive remuneration for the publication of its research and for other services. Beaufort Securities may be a shareholder in any of the companies mentioned in this report. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to Beaufort Securities or the Group, which is not reflected in this material. The remuneration of the author of this report is not tied to the recommendations on any shares mentioned nor to the any transactions undertaken by Beaufort Securities or any affiliate company. Further information on Beaufort Securities' policy regarding potential conflicts of interest in the context of investment research and Beaufort Securities' policy on disclosure and conflicts in general are available on request. Please refer to http://www.beaufortsecurities.com/important-info. 

Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. The listing requirements for securities listed on AIM or the ICAP Securities & Derivatives Exchange are less demanding and trading in them may be less liquid than main markets. This may make it more difficult to buy and sell these securities. 

 

This document includes certain statements, estimates, and projections with respect to the anticipated future performance of securities listed on stock exchanges and as to the market for these shares. Such statements, estimates, and projections are based on information that we consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates, and projections or as to its fitness for the purpose intended and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them. This report has not been disclosed to any of the companies mentioned herein prior to its publication. 

This document is based on information Beaufort Securities has received from publicly available reports and industry sources. Beaufort Securities may not have verified all of this information with third parties. Neither Beaufort Securities nor its advisors, directors or employees can guarantee the accuracy, reasonableness or completeness of the information received from any sources consulted for this publication, and neither Beaufort Securities nor its advisors, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document (except in respect of wilful default and to the extent that any such liability cannot be excluded by the applicable law). You should not rely on this document and should not use it substitution for the exercise of the independent judgment of yourself or your adviser. 

The information contained in this document is confidential and is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. Other persons who receive this document should not rely on it. Beaufort Securities, its directors, officers and employees may have positions in the securities mentioned herein.

 

© Proactive Investors 2016

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.