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MARKET REPORT: AZ Electronic Materials suffers shares debacle

The London Stockmarket is an unforgiving place. Just ask Geoff Wild, chief executive of former glamour stock, AZ Electronic Materials.

The company that makes the chemicals that coat the flat-screens for Samsung televisions and Apple iPads and iPhones, as well as microchips, had more than £415m wiped off its market value and Wild was looking at a painful £1m-plus paper loss on his shareholding, following a shock profits warning.

of the Luxembourg-based group, which had risen 25 per cent over the past year, crashed to 235p before closing 129p, or 35 per cent, down at a 52-week low of 240p as investors sprinted for the exit on hearing that profits will be below normal levels this year.

AZ said that lower-than-expected sales – down 7 per cent – at its IC materials business in the first-quarter were compounded by increased pressure from dual sourcing by some customers.

Broker UBS stated that the company is now facing some company-specific challenges and given the reset required to estimates, it expects the shares to come under considerable pressure. The profit warning is ‘unexpected’ and the margin outlook ‘significantly below expectations’.

Video search engine company Blinkx was initially chased up to 85p on speculative buying fuelled by revived talk of a possible bid from Google. The close was 0.75p better at 80.75p.

Blinkx has recovered from last year’s shenanigans when the shares collapsed after Hewlett Packard announced it was taking a £5.5bn write-down on Autonomy due to ‘accounting irregularities’.

  More... FTSE CLOSE: US earnings cheer perks up investors

HP inherited a near-13 per cent stake in Blinkx after acquiring Autonomy, and bears roared that perhaps there could have been some accounting irregularities at Blinkx. Not so.

Canaccord prompted a recovery, saying at the time that the share price reaction was both ‘illogical and excessive’.

In a bullish trading update in February, Blinkx said it expects 2013 revenues to grow to £118m-£121m, compared with previous guidance of £108m. Driven by continued strong execution of the integration of acquisitions Burst and PVMG, combined with some timing benefits from the US election. Numis has a target price of 108p.

Better-than-expected first-quarter figures from aluminium giant Alcoa and Chinese inflation data gave miners a big lift and they helped lift the Footsie 36.27 points to 6,313.21, while the FTSE 250 rose 74.59 points to 13,598.3. Wall Street opened 20 points up on hopes that Alcoa’s performance augurs well for the rest of the reporting season.

Hopes that Chinese demand for metals will continue left platinum group Lonmin up 21.2p at 295p. Kazakhmys advanced 20.9p to 393.5p, Vedanta Resources 56p to 1116p, Eurasian Natural Resources 12.7p to 260p and Rio Tinto 143.5p to 3135p. BHP Billiton gained 66p to 1944p on a Citigroup recommendation.

Ferrexpo, the FTSE 250 iron ore group, jumped 29.8p to 184.9p after reporting a 10 per cent rise in first-quarter pellet production.  

A combination of revived US bid and recovery hopes attracted buyers to hedge fund giant Man Group, 5.6p better at 93.7p.  

Investec advised clients to buy Premier Foods, 7.75p up at 76p. The stock has underperformed the FTSE 250 by 45 per cent since the surprise resignation of former chief executive Mike Clarke, on January 28, and is 15 per cent down since the end of March on fears the group needs a fund-raising. But the broker says it has been discounting such an eventuality for months and its existing price target of 95p reflects this.

Rupert Murdoch’s satellite TV group BSkyB cheapened 11p to 863p on nervous selling. Regulator Ofcom is investigating Sky’s refusal to run adverts promoting BT’s sports channels. Sky argues that ‘there are many other avenues for BT to advertise its sports channels without seeking to take advantage of the investments that the group has made to build Sky Sports’. BT, under pressure of late on growing concern about its growing pension deficit, rallied 2.4p to 268.1p.

Mining and exploration company Kenmare Resources firmed 1.8p to 30p after reporting an increase in its ilmenite and zircon production in the first-quarter of 2013.

Production of Heavy Mineral Concentrate was 189,800 tonnes, up 20.9 per cent from the previous quarter. This was processed into 137,500 tonnes of ilmenite and 10,400 tonnes of zircon, a mineral used as a gemstone and in industry.

UK property investor NewRiver Retail climbed 5.5p to 205.5p after giving a portfolio update ahead of full year results on 23 May. During the year, Primark was introduced to the portfolio as a tenant for the first time, and a joint venture with PIMCO provided new capital that has been immediately deployed.

An exceptional leap of 290 per cent in first-half profits helped Getech, which provides gravity and magnetic data and services to oil and mining industries, improve 3.5p to 67.5p.

The performance was based on securing further Globe sponsors and major sales of its global gravity and magnetic data-sets. There is net cash of £5.3m in the bank. Shop broker WH Ireland raised its target price to 72p from 67.5p.

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