Withdrawal plan boosts PayPoint
WELWYN Garden City-based PayPoint got the big thumbs up from City analysts after surprising everyone with plans to sell its lossmaking parking and online payments businesses alongside in-line results. The news lifted shares 72p or 8pc to 950p, making a recovery of about 20pc from the early May low. Discussions have begun with interested parties for the sale of the businesses which have a book value of £54m.
Chief executive Dominic von Trotha Taylor said the business requires too much investment and the board believes there are better owners elsewhere. Online and mobile payments have attracted great interest over the past 12 months with deal value in excess of £7.8bn, three times more than in 2013.
Broker Jefferies’ analyst Will Kirkness says that in the race to become the global leader, huge investment and consolidation is occurring. The impact on PayPoint’s business is that contracts are being bid on low to lossmaking rates.
Kirkness, who lifted his target price to 1330p from 1240p, says selling the market leading but loss-making businesses is a logical step and allows earning upgrades, the potential material return of cash to shareholders and increased focus on the core business. As far as the latter is concerned, PayPoint plans to release a third-generation, tablet-based terminal for retailers soon.
Dog of the day was Marimedia, the Israelibased digital media company. Shares crashed 47.5p or 40pc to 70p after announcing it will no longer be investing in its now non-core legacy display business. The company said an industry shift to mobile phones has caused directors to transition the business fully to mobile.
Monotonous speculation about whether or not Greece will reach a deal with its creditors at the week- end saw the FTSE 100 trade within a range of 40 points before closing 7.59 points up at 7040.92. Wall Street lost 36.87 points to close at 18,126.122 because of ongoing concerns about a possible Greek default and an unexpected rise of 7000 to 282,000 in weekly US jobless claims.
The Street of Dreams was treated to another blockbuster bid. Shares of chipmaker Broadcom surged 21pc on news of a $36bn (£23.5) takeover by rival Avago Technologies. US merger and acquisition activity in May now stands at an incredible $231bn – one of the busiest months ever.
Buyers switched on to electrical retailing giant Dixons Carphone, 9.2p higher at 473.5p, ahead of Wednesday’s fourth-quarter trading update. RBC Capital Markets has an outper- form rating and sees the potential for double- digit UK like-for-like sales underpinned by market share gains and a positive contribution from the CPW store-within-a-stores. The broker’s price target is 500p.
Some investors hung up on BT, 9.25p off at 449.75p, despite bullish comments by Berenberg. The broker estimates that by 2018, BT will generate £3.8bn of free cashflow, post-restructuring charges and pre-pension topup payments. Based on a post-EE acquisition market cap of £45bn, this equates to a free cashflow yield of 8.4pc, one of the most attractive valuations in the telecoms sector.
Zoopla Property Group jumped 18p to 258p after Jefferies raised its target price to 400p from 269p.
Vitesse Media climbed 19pc or 0.5p to 3.2p after reporting a 7pc gain in full-year revenues to £ 2.26m. The operating loss is expected to be substantially reduced to close to break even.
Data analytics company Fusionex International rose 12.5p to 387.5p after impressive interim results. Big Data guru George O’Connor at Panmure Gordon has a target price of 692p. He said: ‘Fusionex is a superb investment play in the growing Big Data market as an established, profitable, cashgenerative company which operates at the beating heart of the segment – ie analytics.’
Recently floated Stride Gaming, the multibranded online bingo-led operator, improved 6.5p to 198p. It posted maiden interims showing first-half net gaming revenue up 173pc at £11.7m. Current trading is strong.
Speculative Ascent Resources, which has European offshore projects and operates a gas project in Slovenia, firmed 2pc to 0.23p on hot gossip it has received three farm-out approaches.
International marketing and PR firm Porta Communications improved 0.25p to 7.38p after full-year results. Gross profit (fee income) jumped 135pc to £19.4m.
Camco Clean Energy put on 0.62p to 5.88p after concluding a transaction with a major multinational corporation to assign the rights to the future stream of California Carbon Offsets. Connemara Mining rose 0.25p to 1.88p after positive initial results from the Inishowen Gold licences.
SOFTWARE company Galasys rose 1.5p to 28p on news it has won two new contracts with a total value of £280,000, equivalent to 3.5pc of broker WH Ireland’s 2015 revenue forecast of £8.1m. The contracts are with Wanda Xishuangbanna Theme Park and Wanda Kids Park, both in China. Galasys trades at a 43pc discount to its peer group of London-listed software firms and a 56pc discount to closest comparator — Accesso.