Today I am looking at the investment prospects of three London-listed newsmakers.
Horizonte Minerals
Mining play Horizonte Minerals (LSE: HZM) failed to ignite the market in Friday following its latest results, and the company was last dealing flat on the day. The business, which focusses on nickel production in Brazil, announced that it had made “good progress” on its Araguaia project in the country during January-June.
The business completed an infill resource drilling programme to convert the initial 7-8 years of the mine’s life to the measured resource category, while it also received encouraging results from first stage testing of its Rotary Kiln Electric Furnace pilot plant. Still, a lack of revenues forced Horizonte to swallow a pre-tax loss of £1.16m, worsening from the £304,054 loss printed in the corresponding 2014 period.
And I believe too much uncertainty continues to swirl around the business to make it a viable stock selection. Not only is Horizonte still awaiting a preliminary licence for work at Araguaia, but a worsening supply/demand imbalance in the nickel market is casting doubts on the economic viability of the project should the necessary paperwork be received.
Mytrah Energy
Unlike Horizonte Minerals, I believe Mytrah Energy (LSE: MYT) could provide substantial gains for investors despite the release of a mixed report in Friday’s session. Although revenues ticked 10.7% higher during the first six months of 2015, to $32.59m, the business swung to an underlying pre-tax loss of $2.46m from a profit of $5.91m in the same 2014 period.
The company put this bottom-line deterioration down to higher depreciation and financing costs, while a slower start to the windy season in India also contributed to its performance in January-June. However, the company advised that “the power industry in India continues to develop favourably for Mytrah,” supported by the government’s rising focus towards renewable energy sources.
And the operator’s bubbly pipeline puts it in the box seat to enjoy strong returns in the coming years, in my opinion. Mytrah — which currently controls 543 MW of wind assets in India — has a further 200 MW worth of assets due to come online in time for next year’s storm season at its Vajrakarur, Viswa, and Viraj projects. With wind power demand in the country ticking steadily higher I expect revenues to explode in the years ahead.
Lamprell
I am not so bullish over the investment prospects of oil services provider Lamprell (LSE: LAM), however, owing to the worsening outlook of the world’s major fossil fuel producers. The company made headlines in Friday trade by announcing chief executive James Moffat would be standing down from next year, sending shares in the business 2.8% lower on the day.
The stock has seen its value tick lower again since July as Brent prices have resumed their familiar downtrend, while negative messages from the world’s major oil and gas producers has done nothing to shore up confidence in the sector — just yesterday Glencore slashed its capex target for this year to $6bn from $6.5bn-$6.8bn thanks to sagging black gold prices, while it also swallowed a $790m writedown on the value of its Caracal Energy division in Africa.
With demand for Lamprell’s rigs looking increasingly perilous, the City expects the firm to endure a 42% earnings decline in 2015, resulting in a P/E ratio of 12.9 times. Although by no means a poor reading, I reckon the firm could still be considered too expensive given that the poor newsflow emanating from the oil industry shows no signs of slowing, a situation that could drive the company’s shares still lower.
