Wednesday tips round-up: Centamin, Michael Page, Melrose Resources

11th Jul 2012 07:28

Gold miner Centamin's operations are running better than anyone expected, but the political backdrop in Egypt has sunk the group's share price. Centamin has confirmed that this report is false, as did the chairman of the Egypt Mineral Resource Authority. The worries the report caused however saw the share price fall on Monday as Centamin is essentially a single asset company operating in Egypt, which is currently perceived as a high risk country. However, Centamin's production figures, released yesterday, speak for themselves. The company has smashed its own guidance and market expectations in the second quarter by producing a record 67,422 ounces over the period. This is 12 per cent ahead of consensus and 40 per cent ahead of its production in the equivalent quarter last year. This week Numis named Centamin as the top pick in its universe of gold companies. Numis said it believes "that the balance of risks to Centamin are to the upside", although it did concede: "It will clearly still take some time for a fully-functioning democracy to take root in Egypt, and the Muslim Brotherhood has much to deliver to a population which remains impatient for political stability and real economic growth." Questor maintains a hold rating but any investors wishing to take a position in the more speculative part of the portfolio could tuck away some more shares ready to reap the expected rise when the political backdrop improves.Recruitment specialists such as Michael Page International are very useful indicators of economic trends and the confidence of their clients, but they are not a lot of use in discerning economic courses in the future. There is almost no forward visibility of earnings. As one analyst says of Michael Page, at the end of the first half: "The outcome for the full year remains anybody's guess." Steve Ingham, the chief executive, says that the market for recruitment at present is stable, static and flat, outside Asia Pacific at least. Europe, particularly the southern half, is difficult; Britain is tough, especially in banking. This suggests, and Mr Ingham concedes, that the third quarter, traditionally a quiet one, is going to be challenging. As the graph shows, the shares have come back from almost £5 in March and, down 13¾p to 360p last night, are back to where they were at the start of the year. They sell on a hefty 20 times' earnings. As I have suggested before, the time to invest in recruiters, because they are such cyclical businesses, is when they are at their lowest ebb. I am not sure we are there yet, Tempus writes.Yesterday's warning from Centamin about reports of a rift with the Egyptian Government, later denied, only highlights the perils of investing in a country where the political situation is so fluid. Melrose Resources´ main producing asset is a field in the Nile Delta. Traditionally the company has carried high debts and the gas and oil from this is being used to pay these down. The shares have been largely friendless, falling from almost £3 in May last year to 124p last night, a level at which they could almost be regarded as cheap. The founder Robert Adair holds 52%. That political risk in Egypt, though, and the lack of much more than hope value elsewhere does not suggest a purchase save by the very brave, Tempus says. 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.