Friday tips round-up: Hikma, African Barrick, Lenovo

17th Aug 2012 06:58

What a difference a year makes, Tempus in The Times proclaims. When the Arab Spring was in full flow, investors worried that Hikma Pharmaceuticals was too exposed to the unstable region. The company, based in Jordan, almost halved last year's sales growth forecast as governments fell. Now it looks well placed to benefit from the region's recovery ? and investors are grateful that it has largely escaped the eurozone crisis, which has seen governments slash healthcare spending. The company is gradually shifting production to the developing world, where costs are cheaper. Analysts say that Hikma has better growth prospects than its European rivals, a view confirmed by yesterday's results. Shares rose five per cent yesterday, but are still off the high reached before the Arab Spring unfolded. Now an Arab Spring premium should apply. Buy, says Tempus.Hold African Barrick Gold (ABG) until the bid situation becomes clear is the advice of Questor in the Daily Telegraph. Two state-owned companies have approached African Barrick Gold's (ABG) parent company Barrick Gold with a view to making an offer for part, or whole, of ABG. Barrick Gold is continuing talks with China National Gold, after it apparently rejected a low-ball bid from Zijin Mining Group. Questor thinks Barrick Gold is more likely to sell a portion of its stake rather than sell out completely. This latest move by China may or may not mark the start of a wave of mergers in gold miners. However, the sector certainly looks ripe for consolidation for companies with the financial muscle to buy quality assets. Questor last said ABG shares were a speculative buy on July 24th when they stood at 317p. They are now 34% above that level and because the bid situation is unclear, the rating is now cut to hold.Chinese companies know all about "zouchuqu" - going out and staking a claim in global markets whatever the cost, observes Lex, as the Financial Times's venerable column takes a look at the world's second largest PC maker, Lenovo. On Thursday, the PC maker said that in the past three months it increased revenues 35% from a year earlier, and widened its paper-thin margins enough to increase operating profit by nearly 50%. Good work, but there is more to be done. While Lenovo's share in the PC market is now just short of global leader Hewlett-Packard's, its operating margins are a quarter of HP's. Progress may take time, though. This month it announced a partnership with EMC, the US storage server group that once worked with Dell. Margins are fatter in the server market, but Lenovo will be up against tough competitors in HP, IBM and Dell, who control three-quarters of it. However, any Chinese company that has proved it can combine global ambition and improving profitability deserves the benefit of the doubt.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.JH