http://www.jamessharp.co.uk/ Stock tips from James Sharp & Co. - Independent Stockbrokers en-uk http://www.jamessharp.co.uk/tip.cfm?id=1 McKay reported another sound result on 8th June 2006. Adjusted Net Assets increased spectacularly from 330p in 2005 to 421p, and dividends rose again. The management has consistently delivered on target over many years and they remain confident about future growth, with a notable recent acquisition in Staines. We continue to believe that McKay Securities are worth following. They might benefit from the introduction of REITs in due course and have sold 10.5acres of land in Chobham for £9.75m since the latest results were published. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=1 http://www.jamessharp.co.uk/tip.cfm?id=7 For investors looking for Income, we recommend preference shares. With a fixed coupon (interest rate) clients can plan their income receipts and reduce risk to the volatility of the equity market. The price of preference shares is largely governed by the underlying interest rate, with a fall in interest rates often being followed by a rise in preference share prices (and vice versa). We are particularly keen on small issues of preference shares, which give the added attraction of a potential repayment at a capital gain. Please call to discuss. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=7 http://www.jamessharp.co.uk/tip.cfm?id=8 Equity Release specialist Sovereign Reversion released full year results of 03/07/06. They show another good year of progress, with net assets per share of 344.6p (331.5p - 2005). Earnings Per Share grew by 42.3% to 12.43p and cash flow was up 153.7% at 22.2p. Sovereign expects to benefit from the regulation of the Home Reversions as a means of Equity Release, over the next few years. A significant portfolio acquisition after the year-end gives the group an interest in over 780 properties with a vacant value of over £140m (Vs Mkt Cap of £44m). Chief Executive, Graeme Marshall, holds about 7.6% of the Ordinary Shares. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=8 http://www.jamessharp.co.uk/tip.cfm?id=9 Otherwise known as the Spanish Stock exchange, Bolsos Y Mercados Espanol floated 31% of it's capital on Friday 14th July. Recently the Deutsche Borse has announced a merger with Euronext, and the London Stock Exchange has fought off several approaches from potential suitors. We believe the global consolidation of Stock Exchanges will continue, as each one is unique and often offers a virtual monopoly within it's own market. Investors might wish to take a look at the Spanish Exchange now that it's shares are tradeable. There will no doubt be volatility in the early stages, but we believe the patient investor will be rewarded. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=9 http://www.jamessharp.co.uk/tip.cfm?id=10 Many clients will be familiar with El Oro as it has been a favourite of James Sharp's for many years. It's portfolio of investments includes many James Sharp favourites, such as Daejan, Fuller Smith & Turner, Young & Co Brewery, James Halstead and Mountview Estates. Its portfolio of mining and mineral companies will have given good exposure to this booming sector and takeovers of Bristol Water, East Surrey and Hardys & Hansons will have a positive impact on results. The company is presently moving onto the AIM, which can force sellers into the market as the shares can no longer be held in PEPs & ISAs. Any resulting weakness ought to be viewed as a buying opportunity. Results for the 18 months ended 30/06/06 will be released in Autumn. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=10 http://www.jamessharp.co.uk/tip.cfm?id=11 Marshalls, the landscape product specialist, released good interim results on 08/09/06. Half-year profits were up 3.7%, an indication of a return to growth in 2006/07 after a relatively flat 2006. Growth has been driven by increased orders from the public sector and commercial market. We like its cash-generative nature which could point to either acquisitions or a further return of cash in the future. Gearing is low (26.7%) and net assets equate to 123.8p per share. The dividend was raised to 4.3p (2005-4.1p), well covered by earnings of 12.21p (11.8p). The Chief Exec is forecasting that full-year results are unlikely to disappoint and we expect year-end earnings per share of around 19.5p (18.55p) Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=11 http://www.jamessharp.co.uk/tip.cfm?id=12 Please go to Downloads Section to view our recent circular. If you would like to receive similar summaries automatically in future, please follow the instructions at the top of the previous page. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=12 http://www.jamessharp.co.uk/tip.cfm?id=14 At the AGM on 1st December 2006, the chairman reported: "As we stand today, five months into the financial year, I can say with confidence that progress continues to be made. In recent weeks we have obtained planning permission for an extension to one of our main production lines and equipment has been ordered for a major upgrade to the plant. We continue to win specifications for significant flooring projects and, in addition, our day to day distribution business continues to be robust. I have often made note of prestigious flooring installations but I feel that our motorcycle accessories business merits mention. We have distributed Arai crash helmets in the UK for 28 years and no doubt everyone is aware of the very high speed crash that the television presenter Richard Hammond was involved in a few weeks ago. Richard Hammond was wearing a standard production Arai helmet and this was one of the few, if not the only standard production helmet in the world, that was capable of saving his life. The Group is well on track for another good year and will not disappoint market expectations. Last year, at the AGM, I announced a special dividend to be paid of 25p per share and today I have pleasure in announcing that we will be paying another special dividend of 30 pence per ordinary 5p share payable on 2 February 2007." Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=14 http://www.jamessharp.co.uk/tip.cfm?id=15 We note the meteoric rise of Daejan Holdings, which reached £60.00 per share today. Though the company remains extremely well run and backed by assets, the recent surge in price is more likely to have been fuelled by a shortage of stock as the shares become a constituent of the FTSE250 index. Index tracker funds will be forced to buy shares to maintain their weighting in the index, though with up to 80% of shares held by the Freshwater family, there is little liquidity. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=15 http://www.jamessharp.co.uk/tip.cfm?id=17 JT Davies now controls over 90% of Brakspear and has announced it's intention to de-list the shares from PlusMarkets and to force the remaining shareholders to accept the offer. Whilst we remain disappointed at the exit price, reluctantly we concede that shareholders are now best advised to ACCEPT THE OFFER. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=17 http://www.jamessharp.co.uk/tip.cfm?id=18 Conygar is an acquisition vehicle for quoted and unquoted companies with property assets, with a focus on capital appreciation potential rather than running yield (no current intention to pay a dividend). It is currently looking at opportunities in both the real estate and marina sectors and has so far made acquisitions in Bedford Square and Buckingham Street (London). Both have continued to yield good profits on sale. The company has also taken 50% in a joint venture with local developers and Vinci Construction as preferred developer for Pembroke Dock Waterfront. The planning application is anticipated to include 450 houses and apartments, 300 marina berths and associated car parking, a factory outlet, a pub, restaurant, shop, hotel and multiplex cinema. The application for Planning Permission has been made and the outcome is awaited. In October 07, a joint venture was created with Stena Line, to develop surplus land at Holyhead, Anglesey, Wales. This will be an exciting regeneration scheme to complement the Pembroke proposal. Property-related shares remain out of favour, though we are encouraged by the sound Balance Sheet - including £38m of cash plus other assets (property & land) valued at £37m. With a Mkt Cap of £73m, the market is placing no value on the development upside of these 2 waterfronts which we believe to have great potential. We continue to recommend BUY FOR THE LONGER TERM. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=18 http://www.jamessharp.co.uk/tip.cfm?id=19 Clients may have noticed the fall back in Daejan shares recently. Having moved from £43 up to a peak of £65 following the companys inclusion in the Mid 250 Index, there has been a gradual reduction in the share price recently. We still have confidence in the management at Daejan and believe that this fall back is a buying opportunity on a longer term basis, based on a significant discount to NAV. Results are due towards the end of July 2007. Last year, the company produced earnings of 690p per share which implies a current PE ratio of below 7. The yield at 1.45% is low but the dividend policy has been progressive over the years. The Freshwater family control 79% of the issued equity, a stake they originally held when the company listed in 1959 and which has never changed. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=19 http://www.jamessharp.co.uk/tip.cfm?id=20 Despite a recent fall in the share price to around 390p, shareholders and directors were in fine spirits at the AGM. After over 35 years of service to the company as MD & Chairman, Eric Lloyd retired at the end of the meeting & his former-colleagues paid tribute to the exceptional long-term growth of McKay under his stewardship. Whilst the entire property sector appears to be out of favour with the city at the moment (and may remain so for a while), patient investors have, time and again, been rewarded by their investments in McKay. As a REIT, the dividend yield will improve and, at a discount of over 25% to its NAV (515p), we feel investors should view any further weakness as an opportunity to BUY FOR THE LONGER-TERM. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=20 http://www.jamessharp.co.uk/tip.cfm?id=21 Readers who followed our advice to buy Bolsas Y Mercados (Spanish Stock Exchange) at 30Euros in July 06 have been well-rewarded with a 56% rise to the current price (47Euros). Despite this rise, we feel there could be more upside in this sector: There has been a big move to consolidate the World's stock exchanges with France, Belgium & Holland merging to form Euronext; Euronext in turn merged with the NYSE; Nasdaq (USA) has merged with OMX of Scandinavia; The London Stock Exchange (LSE) has been the subject of numerous bid approaches and currently is 35% owned by Dubai & Qatar investors; The LSE itself recently bought the Italian Stock Exchange.... Deutsche Borse (¬126.5 or £91.00) has missed several opportunities to consolidate and has one of the better product mixes in the sector (including securities and derivatives trading, transaction settlement, the provision of market information, as well as the development and operation of electronic trading systems. With its process-oriented business model, Deutsche Börse increases the efficiency of capital markets. There are HUGE economies of scale for consolidation and therefore we see further mergers & takeovers in due course. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=21 http://www.jamessharp.co.uk/tip.cfm?id=22 Clients who followed our advice to buy waste management specialist BIFFA after it was de-merged from Severn Trent will be pleased to note an agreed bid of 350p today. The bid, by Montague, GIP & UCIL consortium, values BIFFA at £1.23bn, which we feel is not quite enough to win the day. The stockmarket seems to agree as BIFFA is trading at 366p - 16p more than the bid price - this implies a further, higher bid is expected. AWAIT FURTHER DEVELOPMENTS BEFORE TAKING ACTION Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=22 http://www.jamessharp.co.uk/tip.cfm?id=23 In recent years there has been a move towards consolidation amongst the World's stock exchanges with France, Belgium & Holland merging to form Euronext; Euronext in turn was taken over by Nasdaq of America; The London Stock Exchange (LSE) has been the subject of numerous bid approaches and currently is 35% owned by Dubai & Qatar investors; The LSE itself recently bought the Italian Stock Exchange.... London Stock Exchange has repelled predators and last year merged with Borsa Italiana. Third quarter revenue rose 87% as market volatility lifted trading. Dubai Bourse and Qatar Investment Authority respectively hold 20% and 15% with market rumours suggesting Qatar would be willing to acquire the stake held by Dubai. The shares have traded between 1100p and 2002p in the last year  they currently yield 1.24% but have previously given a return of capital due to strong cash flow. Current price  1150p. Deutsche Borse has also benefited from vibrant turnover in equities and derivatives with trades up 65% in the calendar year. Expansion of its electronic trading system will double in April the companys trading capacity. The shares have traded between £55 and £97 yielding 1.45%. Current Price - £72 (Euro 90) Bolsas Y Mercados is approximately 66% controlled by Spanish banks with the remaining capital in free-float. Trading volumes rose 45% in 2007. The shares have traded between £24 and £36 in the last 12 months, they yield 3.2%. Current Price - £24.65 (Euro 30.50) Whilst we appreciate banks are looking to build trading platforms such as Turquoise to compete with exchanges, we feel market volatility will continue to provide cash generation for the established exchanges. This activity coupled with further prospective consolidation will support the shares on a medium/longer term basis. Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=23 http://www.jamessharp.co.uk/tip.cfm?id=24 Please go to the DOWNLOADS section to view our suggestions for Spring 2009 Tue, 30 Jun 2009 09:08:42 GMT http://www.jamessharp.co.uk/tip.cfm?id=24