Today's edition features:
• Ariana Resources (LON:AAU)
• Kier Group (LON:KIE)
"The Dow Jones gave up almost a 100-point gain yesterday evening, to close in the red as it became clear that House Republicans would have to postpone Thursday's planned vote on a bill designed to dismantle the Affordable Care Act. As of Thursday afternoon, Republican lawmakers remained short of the votes needed; this is, of course, highly sensitive, considering most economists view the outcome to be a barometer on President Trump administration and, ultimately, whether he will be able to push through dramatic agenda for policy changes like tax cuts, fiscal stimulus and deregulation, optimism for which has spurred international financial markets to new record highs post his election. A further attempt will be made later today, although the White House Budget Director, Mick Mulvaney, has already conceded that Trump will have to leave Obamacare in place if he fails to muster sufficient support. The principal US indices tumbled in unison during the last trading hour to all end with fractional losses. This year's big winners, financials and industrials, were obvious casualties of the news, although energy stocks also managed to notch up their six-consecutive day of losses as crude prices fell on concerns of unabated rising US inventories and doubts regarding international adherence to scheduled production cuts. Despite this, Asia-Pacific equities regained some risk appetite Friday morning, with the Nikkei sparking higher as the Yen weakened against the stronger US$ that followed the Robert Kaplan suggesting three rate hikes in 2017 to be a 'reasonable baseline'. This also boosted the ASX that otherwise would have been concerned by soft overnight minerals prices, while the Shanghai Composite followed closely behind to leave just the Hang Seng treading water. Possibly a measure of investor cynicism, and in sharp contrast with the past, financial markets barely noticed Wednesday's terrorist attack in London, underscoring conviction that such events have limited scope to undermine businesses or the economies of affected regions. While the FTSE-100 spent most of the day with marginal losses, despite February Retail Sales data emerging slightly above consensus, it staged a late recovery inspired by a firmer US opening, itself on stronger than anticipated on February New Home Sales, to close with a modest gain. European stocks, by comparison, shone quite brightly, with the Stoxx Europe 600 hiking 0.85% as analysts continued to point out the wide valuation gap that now exists between it and the S&P-500, at a time when macro and political confidence for the Continent appears to be rising. UK macro release due today are limited to January BBA Mortgage Approvals, although March Preliminary PMI figures are due form the EU. The US provides February Durable Goods and its own Market Preliminary PMI data; speeches are also due from the Fed's Chales Evans and James Bullard. UK corporates due to release earnings or trading updates include Smiths Group (SMIN.L), Henry Boot (BHY.L), and Concurrent Technologies (CNC.L). As investors are in 'wait and see' mode with this afternoon's vote in the US expected after the close, little can be expected from the London markets today. The FTSE-100 is seen trading just 5 points either side of unchanged during early business."
- Barry Gibb, Research Analyst
Markets
Europe
The FTSE-100 finished yesterday's session 0.22% higher at 7,340.71, whilst the FTSE AIM All-Share index added 0.41% to stand at 917.61. In continental Europe, the CAC-40 finished up 0.76% at 5,032.76 whilst the DAX was 1.14% higher at 12,039.68.
Wall Street
In New York last night, the Dow Jones fell 0.2% to 20,656.58, the S&P-500 lost 0.11% to 2,345.96 and the Nasdaq lost 0.07% to stand at 5,817.69.
Asia
In Asian markets this morning, the Nikkei 225 had gained 0.92% to 19,261.60 , while the Hang Seng faded 0.18% to 24,284.74.
Oil
In early trade today, WTI crude was up 0.42% to $47.90/bbl and Brent was up 0.34% to $50.73/bbl.
Headlines
Call for 'decently paid' maternity leave
Statutory maternity pay for UK mothers is among the worst in Europe, according to an analysis by the TUC. The trade union body says only Ireland and Slovakia have worse "decently paid" entitlements. It defines decently paid as two-thirds of a woman's salary or more than £840 a month. The government said the UK's maternity system was one of the most generous in the world and most mothers could take up to 39 weeks of guaranteed pay. That was nearly three times the EU minimum requirement of 14 weeks, a statement said. The TUC argues that statutory maternity pay should be at least as much as the minimum wage so mothers do not have to return to work prematurely. "The UK is in the relegation zone when it comes to decently paid maternity leave," said Frances O'Grady, general secretary of the TUC. "Many European countries offer decent support to new mums, but lots of parents here are forced back to work early to pay the bills." The analysis is based on research by the Leave Network, an international group that analyses and researches leave policies.
Source: BBC News
Company news
Ariana Resources (LON:AAU, 1.88p) – Speculative Buy
Ariana Resources, the gold-silver exploration and development company, announced today that the first gold-silver doré bar (5.25kg) has been poured at the Kiziltepe Mine. Kiziltepe is part of the Red Rabbit Joint Venture with Proccea Construction and is 50% owned by Ariana. Final statutory inspections and technical approvals and have been received and the mine site has been issued an Operations Permit. The Company stated that it expects production to ramp over the coming weeks and through Q2 2017. In the meantime, Ariana will continue advancing exploration programmes on other projects to enhance its resource base and future production at Kiziltepe.
Our view: The long-awaited Operation Permit and, more importantly, the first gold pour and have finally arrived at Kiziltepe. This is a monumental moment for Ariana and its JV partner Proccea Construction. With all permits now approved and the processing plant in operation we look forward ramp up to full production over the next weeks. The Kiziltepe mine is expected to deliver c 20,000oz gold equivalent per annum over eight years. In the meantime, management can now focus on further enhancements to the project through resource extension and upgrades to reach its target of a minimum ten-year mine life. We look forward to completion of the ramp up stage in the coming weeks as well as quarterly production updates and maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as corporate broker to Ariana Resources plc
Kier Group (LON:KIE, 1,503.00p) – Buy
Kier Group, a leading property, residential, construction and services group, yesterday announced its interim results for the 6 months ended 31 December 2016 ('H1 FY2017'). During the period, at an underlying basis, revenue fell by -1% to £2,004m, against the comparative period (H1 FY2016). Due to +0.1% improvement in operating margin to 2.8%, operating profit advanced by +4% to £56.5m, while pre-tax profit jumped +12% to £46.3m, leading basic earnings per share to rose +11% to 38.9p. On a statutory basis, revenue increased +1% to £1,996m, operating profit rose +149% to £47.0m, pre-tax profit grew +712% to £34.9m, leading basic earnings per share up +405% to 39.9p, as this year benefited from £39m profit on disposal of Mouchel Consulting in October 2016, in line with its portfolio simplification strategy. Net debt widened by +3% to £179m. Operating cash inflows before working capital including income from joint ventures stood at £70m (H1 FY2016: £67m). On a separate announcement, the Group confirmed that it has formed a joint venture with CKH Developments Limited ('Cross Keys'), a housing association and care services provider. Kier will transfer part of its land bank and a number of its residential developments valued up to £97m, into the JV, while Cross Keys will contribute up to £4m of equity into the JV. The JV (Kier has 90% shareholding with 50% voting rights) will be funded by a non-recourse revolving credit facility from HSBC and Kier will receive a cash payment of up to £64m for the assets. Kier's CEO, Haydn Mursell, commented "The Group's breadth provides some resilience against economic uncertainty and we continue to shape Kier to focus on our core competencies. We remain on course to deliver our expectations for the full year and we are well positioned to achieve our Vision 2020 goals". The Group declared an interim dividend of 22.5p per share, up +5%, to be paid on 19 May 2017.
Our view: Kier delivered a satisfactory performance for H1 FY2017, with results in line with expectation given profits are weighted towards H2. Net debt was ahead of expectations with net debt to EBITDA to be maintained at 1.0x for the full year. Looking ahead, the Group reiterated its full year expectations, and said it remains confident to achieve Vision 2020 goals of double-digit profit growth on average each year to 2020. In the H2, the Group is expected to exit from its Caribbean operations, in line with its portfolio simplification strategy and the Group continue its final account negotiations of £33m additional provision. Kier has strong order book of £8.9bn, up +5%, in Construction and Services businesses, supported by strong pipeline conversion in regional building and highway services. The Group has secured 100% of forecast revenue in Construction and Services for FY2017 and already secured c.70% for FY2018. Kier is focused on portfolio simplification, yet has a balanced portfolio of businesses and market leading positions in regional building, infrastructure and housing. The Chancellor's Autumn Statement and Housing White Paper both reassured investors regarding domestic infrastructural budgeting, and push for higher housing supply. The shares are valued at FY2017E and FY2018E P/E multiple of 13.5x and 12.1x along with dividend yields of 4.6% and 4.8% respectively. Based on this low valuation, high quality management and continuing market opportunity, Beaufort continues to award Kier Group a Buy recommendation.