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Macroeconomy
AsthelAsthelatestbatchofeconomicnewsonboth
sidesoftheAtlancdisputesanydoubtabout
therecoveryoftheUS,stockscloseuparound
thehighsoftheyear.TheDowJonesIndexput
on2%to10,059andtheS&Pgained3.8%to
1,310thislastweek.Sovereign-debtworries
andnewpolicalregulaonscausedatempo-
rararysetbackthreequartersprevious.The
strongupwardmomentumaswitnessedinthe
lastsixmonthscontradictstheweakereconom-
icdata,parcularlyintheareasofEquies,
CurrencyandCommodies.Capitalinflowinto
themarketisbecominguncertain,suggesng
companiesmightencounterweakerdemand
fromabroadasglobaleconomicrecovery
slows.
Lastweekend,aUSsmulusprogrampushed
riskymarketsupandtheUKgovernment
backedtheUSmovebysayingitwouldalso
supportmarketsifneedbe.Theoverwhelming
fearisthatinflaonarypressuresarejusttoo
highintheUK,withinflaonsoaringatanan-
nualised4.8%.Riskassetshavebeendecreas-
ingininginvolality,whichreinforcessometraders’
beliefthatthecurrentrallywillconnue.
U.S.non-farmpayrollsslippedby147Klast
monthamidforecastsofa10Kincreaseinem-
ployment.Asthelabormarketdeteriorates,
theFederalReserveholdsadovishoutlookfor
futurepolicies,stangthatthedownturnin
employmentcanleadtoaprolongedrecovery.
TreasurySecretaryGeithnerancipatesthe
joblessjoblessratetopeakinthenextquarterofthis
year.Thecentralbankiswidelyexpectedto
keeptheinterestrateattherecord-lowover
thecomingmonths.
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Jefferson’sPLC
WhilemoWhilemostrivalssufferfromfundamental
problemsandheavycoststructurethisquarter,
Jefferson’sisexpectedtoreportgoodresults
thisweek.Despitetheconnuousdeteriorang
labourmarket,weakeningconsumerconfi-
denceandincreasingoperangexpense,sales
forthelastquarterrose20%.Theretailgiant’s
turnturnoverhasimprovedby7.5%to$70.6billion.
TherecenthikeinVATintheUKfrom17.5%to
20%willaffecttheretailerthisyearsincethe
UKisitsmainsourceofincome,howevermost
costsarelikelytobepassedontotheconsum-
er.
ThisyearJefferson’slaunchedstrategicinia-
vestostrengthenitsplaormforgrowthand
profitability.Thisincludesupgradingitsonline
shoppingsystem,ajointventurewithSonyand
anewflagshipstoreinLondon,featuredwitha
neverbeforeseendesign.Thecompanygrew
theretaildistribuonnetworkbyopening46
didirectlymanagedretailstoresintheworld.Last
quarterJefferson’se-shopplaorminEurope
extendeditsreachtoCzechRepublic,Poland,
UkraineandTurkey,wherethereisnodirectly
managedretailstoresatpresent.Thelaunchof
e-shopinthesecountrieswillfacilitate
Jefferson’sinreachingnewcustomersinaneffi-
ciecientandcost-effecveway.
Jefferson’scurrentmarketsharestandsat
16.3%,andisrapidlyapproachingthatofits
rivalAsda.Weexpectthismonth’smarketdata
onthisrankingverysoon.
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PHBTelecom
FForthepastsixmonths,PHBTelecommain-
tainedrelavelygoodmomentuminitsbusi-
nessdevelopment.Ithasincreaseditsoperat-
ingrevenueby1.1%overthesameperiodlast
yearto$20.4bn.Itssharepricekeptinline
withthesectorforthebeginningquarterofthe
yeartodate,thenoutperformedaerastream
ofbrokerupgrades,howeverrecentlywehave
seensomeunderperformance,possiblydueto
uncertaintyaboutitscurrentbidtoexclusively
hostthenextAndroidphone.
Tofurtherincreaseitscompe venessandim-
proveitscustomer’sexperience,PHBTelecom
connuestosearchforexcellence,innovaon
andallocatesextraresourcesonits “value-
addedpackage”.Revenuefromthe“value-add-
edpackage”increased15.6%comparedtolast
financialyear,contribung29.5%toTelecom’s
operangrevenue.Thisisaributabletoits
fastermobilebroadbandconnecon,enriched
voicemessagesystem,addional4Gdatatech-
nologyenhancementsandmoreflexibleusage
planstocustomers.PHBiscurrentlyinthe
middleofabidforexclusivenetworkrightsto
thenewestAndroid8Gphone,whichcouldsig-
nificantlyimproveitsrevenues,nottomenon
itsbrandandimage.However,pressspecula-
ontwomonthsago,thatacompetorwill
takethecontracthascausedaselloffinthe
shareprice.Weexpectanannouncementon
theclosureofthisdealthismonth.
PHBTelecomissettoreleasefullyearresults
immanently.Analystsexpecta$7.70to$7.80
EPSreleaseinconsensus.
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ImperialBankingGroup
ImperialBankingGImperialBankingGroup(IBG)isaglobalretail
bankwithastrongandprofitableprivate
client’sfranchise.Overtheprevioussixmonths,
IBGhasbeenfocusingonexpandingitscom-
mercialbankingfacilies.Ithasbeenaperiod
ofchallengefortheenrefinancialindustry.
However,withadisnguishedhistoryand
clieclient-focusedbusiness,IBGhassucceededin
thepastfewmonthsthroughexecungseveral
importantstrategiciniaves.
Eightmonthsago,IBGsharesdropped9%aer
areportfuelledspeculaonthatKPMGaudi-
torswereinvesgangtheGroup’sCEO,Darren
Young.Twomonthsago,hewasaskedtostep
down.Themarketexpectstheannouncement
ofhisreplacementimmanently.
RRelavetothewidermarket,IBGshareshave
underperformedoverthelastfewmonthsand
havemissedoutontherallythatmoststocks
haveseenfuelledbyspeculaonofmorequan-
taveeasing.GordonJames,banksanalystat
EvoluonSecuriessays“oncethemarkethas
aclearperceponofwhowillreplaceMr.
YounYoung,therewillofcoursebesomevolality,
butweshouldseeIBGsharescatchupwiththe
widermarket”.
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ChemikaPharmaceucals
ChemiChemika’sQ3profitbeatanalystesmates
aeraweakerJapaneseYenbackover6
monthsago,andtheproductsgainedfromits
acquisionofacompetorboostedsalesfur-
ther.Q4resultsareexpectedthisweek,witha
consensusanalystesmateofamassive8%
revenuegrowth,anythingunderthisshould
signifisignificantlydisappointthemarket.
Shareshaverecentlydroppedbackbelowthe
levelstheyweretradingsixmonthsprevious
andtolowsoftheyearduetoinvestorcon-
cernsovertheirrecentbalewiththeUSFood
&DrugAssociaon.Thedisputednewdrug,
Nerpodol,isdesignedtoreduceaffectsof
asthmabuthasbeenheavilyopposedbyindus-
tryprofessionals.
Chemikahas2,010drugstoresacrossJapanand
planstofurtherexpanditssupplynetworkin
theUS.Ithired25,500health-careprofession-
alslastyear,upfrom22,000thepreviousyear.
Theconsensusesmateacrossthestreetis
thatChemikawillconnuetoexpand(butnot
atsucharate)andhire17,000thisyear.Ithas
alsolaunchedsomehome-alsolaunchedsomehome-carefaciliesand
mailservicepharmaciesinruralareas.Chemika
sold$24billionworthofconverblebondsto
replenishitsworkingcapitaltosupportthein-
venonofnewdrugsandresearchinbreast
cancer.
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SrlinPetroleum
SrlinclaimsSrlinclaimstobeoneoftheworld’slargestoil
producersinEurope.AccordingtotheInterna-
onalEnergyAgency,ithastheninth-largest
reservesontheglobe.Astrengtheningoil
pricehasenabledglobalplayerslikeSrlinto
massivelyimprovetheirmarginsoverthepast
fewmonths,despitefearsoverweakeningeco-
nomicgrowth.ThisyearSrlin’snetprofitrose
3.7%duetohigheroilpricesandfuelsalesin
GermanyandFrance.TheEnergyDepartment
menonedthattherewouldbeacrudestock-
pilefallingnearly10millionbarrelsto401.0
millionbarrels,becauseofstronggrowthin
emerging-marketoildemandanddeclinesin
pproducon.Crudeoilclimbed68centsto$94a
barrelinthelasttradingsession,thehighest
pricesincethismonthin2008.
Srlin’ssharepricejumpedamassive25%
abouteightmonthsago,asarivalintheNorth
FalklandIslandsbasin,GulfKeystonePetro-
leum,placedanoffertoacquireSrlinfor$35
pershare.Originallythestocktradedatapre-
miumtothebidpriceonspeculaonthatan-
othercompetorcouldcomeinwithacounter
bid.Sincethenthepricehasbeenveryvolale
andiscurrentlytradingbelowtheofferprice,
withcertainmarketparcipantscommenng
thatthedealwouldbe“structurallyimpos-
sible”.However,thereareasmallnumberof
marketparcipantsthatsllbelievethedeal
willgoaheadandwillhave“significantben-
efits”forSrlin’sshareholders.Anyoneowning
thesharesatthislevelwouldmakea3%return
ontheirinvestmentifthebidgoesahead,butif
thebidfallsthroughthesharescouldslump
backto$27pershare,whichrepresentsa20%
lossofcapitalinvested.
Srlinisduetofinishseveralkeyprojectsthis
month.Thisincludesitsdeepwateroffshoreoil
developmentinitsNorthSeaCaseyBrigand
exploringforoil3kilometresbelowtheocean
surface.
