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Today’s market overview

Equities have regained a little of their recent losses in early trading as concerns over an imminent military strike in Syria have dissipated a little, but The Trader Dominic Picarda thinks there is more downside to come.

IC TIP UPDATES:

Vodafone (VOD) has cofirmed it is in talks with Verizon Communications over the potential disposal of its 45 per cent stake in Verizon Wireless. According to press reports the stake could be valued at north of $100bn. We keep our buy rating.

Results from Heritage Oil (HOIL) illustrate the impact that the acquisition of the OML30 licence in Nigeria is having on the company. First half average gross production of 15,327 barrels a day was held back by infrastructure issues but since then it has ramped up significantly, hitting 44,000 barrels of oil per day gross in August. Second half gross production is expected to be 45,000 bpod, rising to 60,000-65,000 bpod next year. Buy.

Simon Thompson recommendation Molins (MLIN) posted a 20 per cent rise in group sales in the opening six months of the year and almost doubled underlying profits to £1.5m.

Industrial property specialist Hansteen (HSTN), which this week announced a new deal to double its UK industrial property portfolio under management, enjoyed a 29 per cent bounce in ‘normalised’ profits in the six months to June. We keep our buy recommendation.

Mining royalties specialist Anglo Pacific (APF) has maintained its interim dividend at 4.5p despite a dip in royalty income and profits as the commodity markets suffered a tough six months. Buy.

KEY STORIES:

Results from Serco (SRP) were overshadowed by the company admitting that performance on one of its Ministry of Justice contracts to deliver prisoners to court had been overstated. An improvement programme is being put in place and £2m of profits from the contract since 2011 will be handed back. At a group level, international diversification helped drive improved performance with revenues up by 10.4 per cent and adjusted profits by 10.5 per cent. The order book stood at £18.5bn at 30 June.

Advertising giant WPP (WPP) has enjoyed an improving opening half to the year with overall billings up by 5 per cent to £22.7bn, like for like revenues 2.4 per cent better and profits up by 19 per cent to £427m.

Eurasian Resources Group, which is bidding to take over ENRC (ENRC), has acceptances from almost 95 per cent of shareholders.

Stagecoach Group (SGC) has reported on solid trading for the first quarter of its year to April with all divisions bar London bus growing revenues in mid-single digits.

The acquisition of Elster by Melrose Industries (MRO) is proving to be a very shrewd move if the latest financial results are anything to go by. Revenues more than doubled to £1.02bn in the six months to June and pre-tax profits followed suit to £139.4m. The Elster acquisition improved its operating profit by more than a third and has already achieved its target margin two years ahead of plan.

Oil and gas explorer Soco International (SIA) is taking advantage of its burgeoning cash flows to propose a return of cash to investors worth 40p a share. The news came alongside interim figures which showed production had risen to record levels for the third consecutive reporting period, averaging 17,135 barrels of oil per day, helping produce record post tax profits of $105.4m.

Recruiter Hays (HAS) posted predictably flat results in what it described as ‘fragile’ conditions. The year to June saw net fees dip by 2 per cent and profits by 3 per cent.

OTHER COMPANY NEWS:

Student property specialist Unite Group (UTG) grew like for like rental income by 1.2 per cent in the opening half of the year and its adjusted NAV per share rose by 3.1 per cent to 361p. Reservations for the forthcoming financial year are running at 90 per cent, which should support rental growth of 3 per cent.

Printing technologies business Xaar (XAR) continues its strong progress with adjusted revenues up by 78 per cent against the first half of 2012 and profits more than trebling to £22.3m.

Interim figures from Cape (CIU) reflect continued poor trading in the Asia Pacific region as pre-tax profits more than halved to £4.2m. Order intake was ‘subdued’ at £239m, down from £363m in the first half of last year.

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