MARKET REPORT: Coal producer Bumi centre of power struggle
Boardroom shenanigans at Bumi, formally
known as Vallar, dragged shares of the
coal producer down to 727p before they
closed 55p off at 795p.
Indonesia’s powerful Bakrie family and
domestic mining mogul Samin Tan, who
jointly control just under 30 per cent of Bumi’s voting
rights and around 47 per cent of its total shares,
have called for a shareholders’ meeting to
consider a shake-up of the company’s board.
They want to see the back of multi-millionaire
co-chairman Nat Rothschild and chief
executive Ari Hudaya and want to appoint
Indra Bakrie and Samin Taman as chairman
in their place.
PT Borneo Lumbung Energy, which recently
acquired a major shareholding in Bumi,
apparently also wants to replace four other
Bumi directors with people better able to
support Bumi’s mining operations in Indonesia
and reduce net debt.
Bumi controls some of Indonesia’s prized
mining assets yet has been blighted not only
by heavy debts but persistent in-fighting.
Nomura yesterday cut its rating to neutral
from buy, citing a corporate governance risk.
‘A prolonged corporate governance dispute
could frustrate the group’s growth and refinancing
goals,’ an analyst said.
Nat Rothschild said only last month that
he had mended relations with Bakrie, whose
family are the equal-biggest shareholders
with PT Borneo Lumbung Energy. Relationships
had been frayed after Rothschild made
public a letter to chief executive Hudaya calling
for a ‘radical cleaning up’ of Bakrie’s PT
Bumi Resources.
The inability of Greece to conclude bailout
talks prompted light profit-taking in markets
after Friday’s good gains sparked by
better-than-expected US job numbers. The
Footsie traded 36 points lower before closing
only 8.87 points off at 5,892.2. Wall Street
traded 42 points lower in the early stages.
Mike Lenhoff, equity strategist at Brewin
Dolphin, is bullish. He believes another banking
crisis now seems less likely and the sovereign
debt crisis may at last be on the road
to resolution. The risks appear to have been
greatly diminished as has the degree of the
uncertainty in the outlook for earnings that
prevailed until now.
Philip Shaw, economist at Investec, pleases
the bulls too with his assumption that the
Bank of England’s Monetary Policy Committee
will on Thursday agree to sanction a further
50billion of quantitative easing purchases,
taking the total targeted stock of assets held
to 325billion. He expects UK interest rates to
be held at 0.5 per cent. Buying on the back of a Collins
Stewart recommendation lifted Cairn
Energy 56.1p to 344.9p.
Lloyds Banking Group, in which the UK taxpayer
owns 40 per cent-plus, firmed 0.91p to 35.3p.
Selling ahead of Friday’s figures left Bob Diamond’s
Barclays 6.05p cheaper at 231.4p.
Hyperactive buyers chased drugs group
Shire Pharmaceuticals 19p higher to 2129p on
hopes Thursday’s annual results will please.
Reckitt Benckiser lost 76p to 3411p following
a sell recommendation from Liberum
Capital. The broker believes fourth-quarter
earnings expectations are too high and is
10pc below market consensus forecasts.
Platinum miner Lonmin, in which Xstrata
(21.5p off at 1261.5p) still sits on 24.6 per cent of the
equity, shed 23p to 1080p. Optimists still
believe that Xstrata will eventually swallow
Lonmin after deciding not to climb into bed
with Glencore International.
A solid third-quarter trading update and
news of Jamie Hopkins promotion to chief
executive left Workspace unimpressed at
241p, down 3p. Oriel says buy and on Hopkins’
appointment said: ‘It is not what we expected
but an interesting choice and we look forward
to see if he will bring major new ideas to the
business’. Superdry fashion group Supergroup
jumped 41p to 703p on gossip that
tomorrow’s third-quarter update will please.
Broker Oriel Securities upgraded to buy from
hold and says the group is righting 2011’s
wrongs, re-establishing a growth profile.
Monitise, the global mobile banking and
payments company, rose 2.75p to 32.25p after
appointing Goldman Sachs and Canaccord
Genuity as nominated advisers. Coinciding
with its appointment, Canaccord advised
clients that Monitise is worth 43p a share
because of its position as an infrastructure
provider rather than a point solution provider
which allows it to participate in all
aspects of the mobile money market including
banking, payments and commerce.
Toy distributor Character Group danced 4.25p
higher to 132.5p after securing a multi-year toy
partnership with Bin Weevils Ltd to develop
and market under license a range of toys. Bin
Weevils is a 2011 BAFTA-winning children’s
online virtual world, targeting 6-11 year olds.
The toys will be launched in autumn 2012.
Merchant Securities’ target price is 202p.
- Small buying lifted technology group OMG
2.75p or 13 per cent to 23.5p. Dealers heard that its
Yotta DCL division, the UK’s leading highway
surveying company, has signed a four year
contract with the option to renew for a
further year with the Highways Agency. The
contract is expected to be worth 2.27million.
Yotta will perform a Traffic Speed Condition
Survey to determine the condition of the road
surface and which areas are in need of repair.
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