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Beaufort Securities Breakfast Alert : Eurasia Mining, PHSC, Prospex Oil & Gas

Beaufort Securities Breakfast Alert : Eurasia Mining, PHSC, Prospex Oil & Gas

Markets
Europe
The FTSE-100 finished yesterday's session 0.16% lower at 7,327.50, whilst the FTSE AIM All-Share index was down 0.36% at 1,020.75. In continental Europe, the CAC-40 finished 0.26% lower at 5,375.53 whilst the DAX was down 0.08% at 13,048.54.
Wall Street
Last night in New York, the Dow Jones closed 0.45% lower at 24,180.64, the S&P 500 fell 0.37% to end at 2,629.57 and the Nasdaq finished 0.19% lower at 6,762.21.
Asia
In Asian markets this morning, the Nikkei 225 was down 1.97% at 22,177.04 and the Hang Seng was 1.58% lower at 28,387.07.
Oil
In early trade today, WTI crude was 0.36% lower at $57.41 per barrel and Brent was down 0.3% at $62.67 per barrel.

Headlines


First tax havens blacklist published by EU
The European Union has published its first blacklist of tax havens, naming 17 territories including Saint Lucia, Barbados and South Korea. A "watchlist" of 47 countries promising to change their tax rules to meet EU standards has also been issued. The "grey list" includes several with UK links, including Hong Kong, Jersey, Bermuda and the Cayman Islands, as well as Switzerland and Turkey. Both lists have been criticised as omitting the most notorious tax havens. The lists follow the leaking of the Panama Papers and the Paradise Papers, revealing how companies and individuals hid their wealth from tax authorities around the world in offshore accounts. EU tax commissioner Pierre Moscovici said the blacklist represented "substantial progress", adding: "Its very existence is an important step forward. But because it is the first EU list, it remains an insufficient response to the scale of tax evasion worldwide."
Source: BBC News

Company news
Eurasia Mining (LON:EUA, 0.30p) – Speculative Buy
Eurasia published a detailed announcement yesterday. The headline news is the submission of a mining license application over Monchetundra, its 2Moz PGM, gold and base metal project on the Kola Peninsula (North West Russia). The announcement also describes the situation at its 75% owned alluvial platinum mine, West Kytlim, where the contractor hasn't delivered the tonnage required. Looking forward into 2018, Eurasia are considering using additional contractor(s) to reduce the "single operator risk". Eurasia has also been optimising the recovery plant which in recent weeks has been performing much better. The announcement also reports it has applied for two new licenses adjacent to West Kytlim.

Our view: Good news on the Mochetundra licence application. Mixed fortunes at West Kytlim, although the situation there appears to be improving. Significantly, since the West Kytlim contractor failed to deliver to the pre-agreed mine schedule, it has lost its exclusive right to mine the property. This allows Eurasia to invite bids from other contractors and should result in a better West Kytlim performance in 2018.

Beaufort Securities acts as corporate broker to Eurasia Mining plc

PHSC (LON:PHSC, 10.00p) – Speculative Buy
The diversified services and consultancy business yesterday released unaudited Interim Results for the six months ended 30 September 2017. The Group reported a return to profitability, with EBITDA of £197,000 compared with a loss of £93,000 for the corresponding period last year. Earnings per share of 1.08p against a loss of 0.85p, while period-end cash amounted to £129k compared with £301k. While revenues rose only modestly, 3.7% to £3.72m, the operational improvement was achieved through a combination of factors, including an improved performance from the Group's security technology operations, strong revenues from quality systems management and training, steady income from general health and safety services, and reduced losses from asbestos consultancy. In particular, QCS International Limited enjoyed a good first half, with stronger sales benefitting from increased demand for management systems training. Total income from the security related businesses, B to B Links Limited and SG Systems Limited, was £2.26m, generating EBITDA of £149,700 before management charges. B to B finished the first half strongly, despite continuing to suffer the effects of the weak exchange rate, while last year's comparatives were £1.98m and £19,200 respectively. The Board has declared an interim dividend of 0.5p per ordinary share, to be paid on 28 February 2018 to those on the register of members on 5 January 2018.

Our view: PHSC continues its on-going rationalisation and cost reduction programme. Progress here is being made with higher value-added security-related technology services generating 61% of Group revenues in the first half, compared with 55% in 1H'2016/17. The second half of 2017/18E, however, is traditionally less predictable for the Group, with retail clients tending to defer projects that may prove disruptive to their sales over the Christmas and subsequent sales periods. Q3'2017 is therefore seen as being quieter, with a focus on completion of those installations currently underway before the go-ahead is given for new installations and further upgrade work. The second half will also bear some additional costs, including redundancy and associated closure fees at loss-making Adamson's Laboratory Services. By contrast, however, the remaining health and safety businesses are expected to remain profitable. There is also a high expectation that QCS will continue to exceed targets for sales and profits in the delivery of quality management consultancy and training services. Although progress in repositioning the Group is evident, right now it would only be realistic to anticipate payment of a final dividend on the basis the plc manages to successfully dispose to the freehold-owned Essex premises occupied by ALS prior to next year's AGM. PHSC's equity nevertheless continue to trade at a deep discount to its pro-forma net asset value (unaudited) of 38.7p per share, on which basis the Beaufort retains its Speculative Buy recommendation with a price target of 16p.

Beaufort Securities acts as corporate broker to PHSC plc

Prospex Oil & Gas (LON:PXOG, 0.73p) – Speculative Buy
Prospex has announced positive news from its well (17% interest) in the Po Valley, Italy. Downhole log results show a gross gas pay of 53m, starting 12m above the level of previous production wells. Gas is demonstrated by high resistivity and the operator and JV partners have agreed to case, perforate and complete the well.

Our view: This is the positive news we have been waiting for. i.e. evidence of gas where expected and a decision to complete the well for testing and production. Well completion is targeted to finished mid December with flow testing planned for early January. We reiterate our Speculative Buy recommendation.

Beaufort Securities acts as corporate broker to Prospex Oil & Gas plc



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