PM Bolt On: FTSE Re-jigs + Greggs (GRG) belatedly joining HIK in an exclusive club (for now).

Good Evening,

Kicking itself out of the FTSE 100 to the FTSE 250 is Tullow Oil (TLW) and being replaced by Hikma Pharmaceuticals (HIK). This evening saw the departure from the FTSE 250, Afren (AFR), Game Digital (GMD) and Oxford Instruments (OXIG). In goes AA Plc (AA.), Imagination Technologies Group (IMG) and Virgin Money Holdings (VM.) 

As a positive, HIK has long been established in the do not short category, near 5 years. With institutional owners reducing the stock may see some selling in the short-term. The potential of Pfizer/Hospira impacting on HIK's market is limited. With regions becoming more competitive expect HIK's margins to be under-pressure with modest growth but resilient and very competitive. 

With the Darwazah family holding at circa 30%, any offer would have to be of stellar proportions to be sufficiently enticing to gain the support of the family. With HIK's performance to date you'd be a fool to bet against the company without sufficient news to validate the position. Greggs may have just joined this rather exclusive club...

The reserves list being: 

• Berkeley Group Holdings (BKG)
• Cobham (COB)
• Inmarsat (ISAT)
• Merlin Entertainments (MERL)
• Provident Financial (PFG)
• Rexam (REX) (canned/poor I know).

EMC: Greggs (GRG) Tuesday, 13 January 2015 longs were validated after being categorically wrong. The profits up just over 40% today (Preliminary Results), benefiting from a smoother blend of coffee (instead of floor sweepings (EMC View), expanding almost Costa like into motorway service stations (even an Isle of Wright ferry) they are certainly grasping the Greggs turnaround plan. With the bakery, pies and pasties still the butt of jokes but key to the end-users perception of food on the go, namely fresh and perceived decent value. 

The risks are not to be ignored in terms of the food-on-the-go competition hotting up, with a target of circa 2K stores, Greggs still has some decent head-room and upgrades likely, with expansion paying well whilst consumer confidence is positive. One would be wise not to get complacent. With a reviewed target price of near 990 pence, patience may be needed as momentum is clearly in place for the management and a favourable outlook with lower oil prices, improved consumer mood, and employment on the up (if one ignores some elements including zero hours). A real risk to Greggs is that it has been suggested that some management may be enticed by "bigger fish." 

Atb Fraser

N.B. Abusive or ignorant commentary will never be published, don't waste your time as it just enters my spam bin.

Morning Mumble: Pathfinder Minerals (PFP), Fox Marble (FOX), Greggs (would be rude not too) & WRES (tide turning)

Good morning, a hectic weekend and myself finding myself in the Christmas spirit, yes I'm officially long Christmas. 

Pathfinder Minerals Update Re. Mozambique Court Proceedings brought some Christmas cheer to the holders of the litigation fuelled PFP. The market has rightly ascribed a value to PFP's claims and the outlook is better after today than had previously been priced in. Over to General Veloso and Diogo Cavaco to decide the next move. One assumes now that ownership is not in dispute the remedy is closer than most parties envisaged. Obviously there's more to do it in terms of legal representations. The supreme court paperwork based on the information in the public domain makes for a common-sense outcome, this does not mean that shall happen but its certainly looking more than likely. 

Fox Marble Holdings Sales Agency Agreement came out today, with sales agency agreement with Zhong Shengdestone Co, ("ZSC") headquartered in Beijing, China. It bodes well for Fox Marble, but an exclusivity agreement does not for Fox, this should have been a regional agreement over any Country licence. We'll ignore the fact should a customer become the agent as there's pros and cons to this type of agreement but exclusivity like certain issues Baxi faced with British Gas a few years back, did not turn out as planned. This is something to consider if/when INSP (Inspirit Energy) if the gossip is to be believed. 

We'll await further sales agreement updates before going negative, but suffice to say the company's positives are being limited by this type of agreement. Upside yes, but now being limited, exclusivity with the quality of stone should have been with some form of financial payment to FOX to motivate the partner. The minimum order of 10K tonnes is...erm...paltry.  

Gregg's (GRG) came out today with yet again better than expected results in their trading update today. Expect some reviews and upgrades, the comparison year should not be read as like for like based on the previous years figures being below par. Its not wise to attempt to go negative with the company performing better than market expectations, so yet again the patient are waiting for the turn (negative). The GRG model appears to be well received by their customers including the face lifts and product offerings. Was I wrong to call the results in September a fluke? My view not, but the market and the company have clearly told me otherwise today. With my eye more so on the weather and retail, its under review  with this type of model / business likely to benefit from falling oil prices (more money in the customers profit). 

Johnson Matthey sold its Gold and Silver Refining Business for £118 million to Asahi Holdings Inc. JMAT has yet to suffer on the same scale as the likes of most refiners / commodity operators due to the value the market is placing on its chemical and technological applications. Why JMAT are flogging the refining business with returns of Circa 25% which is above what JMAT's other parts of the business provide gives an indication on the outlook for Gold. It's a good return in the current climate for gold. Being valued at Circa £6.8B JMATs above its money, expect it to give up some of the recent gains, in light of commodities and pricing including some pressure on JMAT's margins. JMAT's previous half year results for the six months gives an indication of the pressure they're under until the cycle in commodities (and commodity based tech) improves.  

Today's no news award goes to Kefi Minerals (KEFI) as they announce that the total Mineral Resource at Jibal Qutman is approximately 30% greater than previous estimates (whoopee?). With the current gold price and recovery of around 80% on this low grade project its really a question of why they're bothering with it (at the moment). The focus is on the ex-Nyota Minerals Tulu Kapi, perhaps Kefi should reduce the number of spinning plates post honouring the new 4 license commitments to minimal exploration. The noise will be about Tulu Kapi through to June/July 2015. Should I be turning bullish, unlikely...

W Resources Plc (WRES) turns the Power On at La Parrilla Mine Connects to Spanish Grid. This might go some way to stop the rot in the SP. Investors seem to be blind to the declining tungsten prices, led 4 weeks ahead by China (yes it has got that predictable). The funding arrangement with Bergen Global Opportunity Fund, LP did not help matters but now with a further reduction in costs, assuming this doesn't make its way to boardroom remuneration the company is starting to tick a few boxes. 

The punt is on the ramp up in production and the utilisation of funding to scale the ops, currently targeting around 25t/pm looks more than likely with Production rates at La Parrilla increased significantly. WRES state they're achieving target rates of around 1 tonne per day on a number of days during the second half of November following the installation and successful commissioning of new feed systems in early November. Strong interest has been expressed from a number of customers for 2015 supply contracts and deliveries continue to our European customers. 

Limited time, Atb Fraser