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THE WEEK AHEAD
Brian Souter will face up to the likely eviction of his
Stagecoach group from the prestige FTSE 100 share index in defiant mood on Wednesday when he is due to confirm that the transport giant remains firmly on track to deliver record profits this year.
The Perth group is expected to lose its status as one of the UK's most powerful companies at a quarterly review on December 10 following a near 50% slump in its share value in the last two months.
It is currently valued at just £1.2 billion, well below valuations placed on a number of non-Footsie members, including Home Retail, Tate & Lyle and Serco.
But the Stagecoach founder will attempt to allay investor fears about prospects with a robust trading update to accompany news that underlying profits rose to around £100 million from a previous £84 million in the opening half year.
He will point to particularly good returns from the UK bus business, accounting for some 60% of group profits, and could confirm that its American low-cost buses business, Megabus, has moved into profit after enjoying a surge in demand.
The one disappointment is likely to be Virgin Rail, Stagecoach's partnership with Sir Richard Branson, which will produce flat revenues as a result of disruptions caused by the upgrades to the west coast mainline.
Even here, though, Souter will point out that there has been no adverse profit impact because of compensation arrangements.
Scottish coal mining group ATH Resources, which has also seen its share price crumple by 50% in recent weeks, could join the list of companies to offer a 10%-plus yield on its shares on Wednesday, as directors express their own confidence in the future, despite tumbling prices for the mineral.
Investec expects directors to announce a 12p a share dividend - which means shareholders collect £12.60 for every £100 invested at the current 95p share price - to accompany news of a lift in annual profits from £7.8m to around the £8.6m mark.
The brokers look for a further increase to above £10m this year as a result of increased production after previous planning delays and a new move into regeneration projects in Australia.
Dunfermline-based Optos is likely to keep the champagne on ice on Thursday, when directors are expected to announce that sales of their medical imaging equipment topped $100m (£65m) for the first time last year.
Analysts say the figure represents an 18% sales increase against previous hopes of up to 25%, although analysts at Panmure still believe profits may have pushed ahead from £800,000 to as much as £2.2m.
Braveheart Investment Group, the Perth-based finance group with investments in some 30 small companies, will reflect tough conditions in its markets with news of further half-year losses on Wednesday.
But chief executive Geoffrey Thomson will signal his confidence in the future after recently opening a London office, and will point out that the group is now sitting on £4m cash ready to take advantage of buying opportunities.
The company itself has a stock-market value of only £4.7m at its current 35p share price.
Leading brewery and pubs group Greene King, owner of Belhaven, is likely to reflect tough conditions in the hospitality trade with news of a dip in underlying first-half profits from £76m to around £59m on Tuesday.
Scotland is expected to provide an isolated bright spot with like-for-like sales at the managed estate growing by 4.6% compared with falls of around 1.6% elsewhere.
Leading travel group Thomas Cook could show its resilience on Tuesday, when analysts expect to hear of a rise in full-year profits from £200m to above the £300m mark.
Much of the increase is likely to have come from cost savings and rationalisation measures which have reduced overall capacity since the merger of the Cook with MyTravel last year, and analysts are taking a cautious view about prospects in 2009 as the recession deepens.
One casualty could be the group's £290m share buyback programme which could be suspended to preserve cash in readiness for tougher times ahead.
Aberdeen-based John Wood could also be a casualty of the review of FTSE 100 members, as its own stock-market value has dipped to a similar £1.2bn.
Stocks Focus: Cairn Energy
CAIRN Energy, the oil and gas exploration and production company, has high hopes for Greenland. The Edinburgh-based independent's exploration director, Mike Watts, was in Greenland for a signing ceremony for two oil and gas exploration blocks off southern Greenland. Describing Greenland as a "true frontier country" with regards to the oil and gas exploration industry, he said that while many technical, operational and environmental challenges lie ahead, Cairn "believes in the potential of Greenland, and wants to play an active and catalytic role". Shares closed at £16.90.
Stocks Focus: Superglass
ROOF and wall insulation manufacturer Superglass, which has been hit by the downturn in the housing market and soaring energy costs, revealed a 6.6% drop in sales to £41.1 million for the year ending August 31. But John Smellie, chief executive of the Stirling-based firm, said the UK government's carbon emissions reduction target (Cert) scheme could help put the firm "back on track". Superglass, which is not heavily reliant on new-build homes, could also benefit from government plans, outlined in last week's pre-Budget report, to tackle fuel property. Shares closed at 30.5p.
Stocks Focus: JD Sports
SPORTS chain JD Sports, peforming well after becoming less reliant on sales of replica football kits, acquired a 10.2% stake in its high-street rival JJB for £8.1 million. A merger of the two fashion sportswear retailers, if approved by competition authorities, would create an 800-strong chain. JJB is under financial pressure to raise cash to pay off a £20m loan from Icelandic bank Kaupthing. It is understood that Wigan-based JJB has already received an offer, believed to be from JD, for its Qube and Original Shoe Company lifestyle divisions. Shares closed at 233p.
Stocks Focus: SSL International
DUREX condoms and Scholl footwear owner SSL International saw pre-tax profit for the six months to September 30 rise by 46% to £32.5 million. The London-based manufacturer said that sales of Durex alone increased 10% to £126.4m. Its Durex Play range, which includes personal lubricants and vibrators, grew 27.3% to £21m in the first half with particularly good growth in Italy, France and Poland. Chief executive Garry Watts attributed much of this robust performance to increased investment in innovation and marketing, and hinted at future acquisitions. Shares closed at 477.75p
JOHN PHELPS' PORTFOLIO: SHARES UPDATE
We shared the general relief over last week's stock-market rally as three out of our four investment portfolios recorded useful increases when we conducted our usual review on Wednesday morning.
The one exception was the flagship 2005 list, which was hit by a sudden sharp slide in shares of Dundee-registered Low & Bonar, which slumped to a new low of 23.5p against our initial purchase price of 100p.
Those close to the company believe the fall was largely down to a programmed trade by an institutional investor who decided to dump shares in a number of small companies at any price in a deck-clearing operation ahead of the end of the year.
We took the view that this provided a good buying opportunity and invested another £1000 in the floor- coverings group at the new level on Wednesday, reducing our average price to 37.5p.
At the latest price, the whole business is valued at just £34m even though directors raised £123m a couple of months ago with the sale of their Bonar subsidiary and funding requirements are in place until 2011 at the earliest.
A number of other tips moved in the opposite direction to score sharp gains over the week.
Those to record double-digit percentage rises included Wolfson Microelectronics in the 2008 list and catering group Compass, after its results, in the 2006 portfolio.
The disappointing 2007 selections managed to claw back more than £200 of recent losses as a result of a good showing by Standard Life although Scottish coal miner ATH Resources gave up more ground in front of this week's trading bulletin.
Royal Bank of Scotland bounced 30% over the week to 54.8p, still well below terms of its new share offering, although Exane BNP Paribas believe the shares could rally further to 90p in the medium-term.
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