UK MARKET TALK ROUNDUP: BROKERS COMMENTS -3-

22nd Jun 2010 09:23

0609 GMT [Dow Jones] Stronger Aussie bond prices today reflect overreaction to yesterday's announcement China will allow greater flexibility for yuan, says Rory Robertson, interest rate strategist with Macquarie. Aussie 3-year recently up 6 ticks at 95.06, 10-year up 4 ticks at 94.585. "The Chinese announcement produced a very upbeat knee-jerk reaction in risk markets around the world and a down move in risk-free markets, but it has been quickly unwound today. Look at the bounce in U.S. equity markets yesterday, that lasted about an hour," says Robertson, who notes China announcement was already in the works "for a while." ([email protected]) 0657 GMT [Dow Jones] Whitbread's (WTB.LN) first-quarter performance is strong, says Credit Suisse. Premier Inn's sales growth of 10.5% beats expectations of a 7% rise, CS says. "Greater visibility on margins will likely only come at the 1H stage but we expect consensus numbers to increase today," CS says. Outperform rating, 1812p target. Shares closed Monday at 1478p. ([email protected]) 0650 GMT [Dow Jones] Chemring Group's (CHG.LN) 1H earnings are slightly below forecasts, says Execution Noble, with the operating profit at GBP52M versus the brokerage's forecast of GBP56M and revenues of GBP256M versus expectations of GBP259M. Says this leads to 1H EPS growth of 10%, compared with Execution's and consensus FY forecast of 20% EPS growth. But says the interim dividend increase of 21% should be seen as a sign of confidence. Given the brokerage's negative view of the outlook for calendar year '11, and with the stock still not far from its all time highs, maintains sell rating. Shares closed Monday at 3310p. ([email protected]) 0648 GMT [Dow Jones] Barclays Capital initiates coverage of Centrica (CNA.LN) at underweight, with 295p price target. Says Centrica has outperformed the utilities sector by around 25% over the last 12 months. Says the outperformance has been due to an improving outlook for the company's downstream business and a large increase in wholesale traded gas prices. However, BarCap notes UK and European spot gas prices are subject to a cap, which is now being approached, and Centrica's outperformance may stall as a result. Shares closed Monday at 303p. ([email protected]) 0648 GMT [Dow Jones] Whitbread's (WTB.LN) interim management statement is very strong with group like-for-like sales up 7.6% in the 13 weeks to June 3, says an analyst. The statement is 'exceptional' and risks lie to the upside. The analyst says management is going to remain vigilant on cost control and is planing to be broadly cash flow neutral this year. The analyst thinks it may be too early for changes to consensus forecasts and certainly does not expect any changes ahead of the UK budget, expected at 1130 GMT. However, the statement is extremely good, the analyst says. Seperately, a trader notes that the stock is trading at a discount to hotel peers. Shares closed Monday at 1478p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 22, 2010 04:23 ET (08:23 GMT)