The government is a bit late to the party but the first step in the winding down of its stake in Lloyds should be welcome. In particular, it is a positive that it finally opted for a placing among institutional investors, rather than an initial public offering [IPO] or convoluted share giveaway, as some had suggested. It is also selling at the right time. Lloyds shares
have almost doubled over the past year. On 1.4 times book value, they trade in line with HSBC and just below Standard Chartered, and look fully valued. So long as the placing is priced over 73.5p, it has made a profit. However, that is not terribly important. The government put money into the banks to avert the consequences of their collapse, not to make a profit.
That is best kept in mind for RBS. Its shares have been held back this year by excessive government meddling and the possibility of a good bank/bad bank split. Lloyds shares, by contrast, have been propelled by the prospect of a government exit. The government should not wait too long before extending the disposal process to RBS, the Financial Times´ Lex column says.
Malaysia´s state-backed oil company Petronas has turned to Petrofac to build and operate two high-tech training centres. At $120m (£75.4m) the contract is not particularly large, rather the opposite given that the FTSE-250 listed outfit is used to working on multibillion-dollar projects. Nevertheless, the UK outfit hopes the facilities will cement ties with Petronas and help its Integrated Energy Services [IES] division to win more work in Malaysia to add to its $2bn of contracts. Critically, the IES division goes beyond the traditional model for oil services providers by managing old fields on behalf of national oil companies under long-term contracts. Petrofac reckons that by 2015 it can contribute about $250m of the annual group profit target of $866m.
As well, IES has been cultivating ties with Mexico´s state-owned oil firm, PEMEX, just as the country's oil industry opens up to foreign investment. It is a compelling story, but the shares, which jumped 8% last month after solid first-half results, already reflect this. Some analysts worry that growth targets could be missed next year. Hold, says The Times´s Tempus.
Optimal Payments has cemented its reputation as one of the AIM-quoted stocks to watch after reporting spectacular first-half results. The online money transfer company's profits soared to $15.5m from $1.7m last year. Hence the 15% surge in the company´s shares, which have more than trebled in a year. The company describes itself in part as PayPal for online gamblers. The firm also provides merchant accounts to higher-risk companies that may find it difficult to borrow from banks, such as travel companies. The third leg, which offers the most growth over the longer term, are "mobile e-wallets", making it easier for consumers to make purchases on the move.
The company will benefit from the gradual return of online gambling to the US, which had been outlawed. Six years after it was forced to exit the huge market, after being hit with a $136m penalty by US prosecutors, it has struck an agreement with Caesars Entertainment. Numis analysts upped their full-year profit forecasts by 14% to $49m yesterday. If performance in the second half was as good as in the first, profits would be even higher at $75m, they said, although they cautioned the first half was likely to be exceptional. Buy, Tempus says.
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