Edison Investment Research

Facebook – Yard Sale

Something new needed to make this work.

Facebook has decided to have another go at classifieds but the fact that it is doing nothing new means that it is very unlikely to disrupt the current status quo in classifieds.

Twitter – Exit strategy.

Bid frenzy offers a great exit point.

Without big success in media consumption, Twitter offers very poor value to potential acquirers at $23 per share (EV $14bn) giving holders every excuse to get out.

Market Commentary - Housing, Infrastructure, Construction and Services 3rd October 2016

It promises to be a quiet week but today Renew Holdings has issued an update, Interserve has told us of a £7.5m contract win and Morgan Sindall has got a new Chairman. Travis Perkins was the leader on Friday last, rising 1.8% to 1543p. It was a positive move but not enough to lift it from the bottom of the FTSE100 table of companies by market capitalisation. We attended the Atkins CMD on Friday. The technology presentation and the news of a $320m contract in nuclear in the US were impressive.
The Services sector fell 2.2% last week as Capita was smashed by the market and several stocks were hit with collateral damage.

AI Partnership – Fluff and stuff

The ecosystem leaders have announced an artificial intelligence (AI) partnership aimed at benefiting society but the fact these players are also fierce competitors will ensure that real trust and co-operation will be difficult to achieve.

Market Commentary - Housing, Infrastructure, Construction and Services 30th September 2016

Speedy Hire has issued an update today for the half year to end September and tell us that revenue is a bit ahead of expectations and last year and more importantly that full year PBT will be well ahead of previous expectations and that debt will be much lower, given the sale of the mechanical plant fleet. No surprise that yesterday we saw Atkins lead the field with a 2.5% rise to 1592p, it highest level this year, though it closed last year at 1626. The company has a CMD today which we shall attend.

BlackBerry – Cold Turkey

BlackBerry finally breaks its addiction to hardware. BlackBerry reported poor Q2 17A results, but the decision to stop internal handset development buoyed sentiment allowing the shares to rise 5%.

Market Commentary - Housing, Infrastructure, Construction and Services 29th September 2016

A scheduled update from Atkins this morning and an unscheduled one from Capita. Capita tell us that underlying PBT will be £535-£555m and not the £614m the consensus is pointing towards. They tell us that what has gone wrong is a slow down in some trading businesses, delays in certain areas and one-off costs with the TfL congestion charge contract which was re-won last year The update from Atkins is a tad more positive than might be expected reading between the lines, we believe, though the company is quite cautious so the tone is quite moderate.

Mexico shale potential

Mexico’s Secretary of Energy, Pedro Joaquin Coldwell, indicated in a speech in Houston last week that the country’s first auction for its northern shale fields, delayed because of low oil prices, could now take place as early as Q2 2017.

According to an EIA assessment report carried out in 2013, Mexico holds technically recoverable resources of 545TCF of shale gas and 13.1blnbbls of shale oil and condensate. The bulk of this sits in the Eagle Ford Shale of the Burgos Basin which is estimated to contain 343TCF and 6.3bnbbls. Since the reservoir in Burgos is an extension of its commercially successful equivalent in South Texas there are hopes that the US fracking successes can be repeated here. In the basins to the south and east of Burgos the shale geology becomes more complex and shale development potential is less certain.

GoPro vs. DJI – Autonomous gambit

DJI is making a big gamble with the Mavic Pro. Hot on the heels of GoPro’s Karma launch, DJI has launched a similar drone but Edison see it taking a big risk by using autonomous features as a major selling point.

Barents Sea - frontier drilling in 2017

The Barents Sea to the north of Norway is estimated to contain almost half of the recoverable undiscovered resources remaining in the Norwegian Continental Shelf (NCS). At present only two fields, Statoil’s Snøhvit and Eni’s Goliat, are in production but a number of discoveries since 2011 have the potential to be stand-alone developments and are currently being appraised. The recent 23rd licensing round awarded acreage exclusively in the Barents and for the first time included the frontier South East Barents. Statoil has already indicated that it plans to drill the high-risk/high-reward Korpfjell prospect located in PL859 in this frontier area as part of a five to seven well Barents exploration programme in 2017.