(MENAFN- ProactiveInvestors) The Markets
Market opening: Markets are likely to open higher today. FTSE 100 futures were trading 3.30 points up at 7:00 am.
New York: Yesterday Wall Street was closed for a holiday.
Asia: Equities are trading mixed as Greece’s debt negotiation with its European creditors reached a stalemate adding uncertainty to the country’s future status in the Eurozone. Nikkei lost 0.1% while the Hang Seng was trading 0.2% up at 7:00 am.
Continental Europe: Markets ended in the red as the EU imposed additional sanctions on Russia over the Ukraine crisis. Moreover investors closely awaited the outcome of the talks over Greek debt. Germany’s DAX and France’s CAC 40 fell 0.4% and 0.2% respectively.
Crude Oil: Yesterday prices decreased 0.2%. The spread between the Brent and WTI stood at US$8.6 per barrel.
UK small caps: The FTSE AIM All-Share index closed 0.43% higher yesterday at 703.19. To read our latest research click here.
Today’s news
Greece debt talks collapse
The meeting in Brussels over Greek debt was inconclusive as Greece refused to accept the extension to the €240bn bailout programme due to expire on 28th February. The country’s newly elected leftist government is seeking to revamp the bailout terms that involve extreme austerity measures. The proposal for the new programme includes providing a bridge loan to repay €7bn of maturing bonds and refinance the remaining through growth-linked bonds. In the absence of any deal Greece is likely to soon run out of cash.
Company News
Infinis Energy ()
Yesterday Infinis Energy published its third quarter trading update for the period 1st October 2014 to 16th February 2015. Landfill Gas division’s power exports declined 1.6% to 1391 GWh (Gigawatt Hour) in the nine months to 31st December 2014 (2013: 1413 GWh). However the proportion of electricity exported improved to 89% from 76% and the average selling price (ASP) increased £4.32/MWh (megawatt hour) to £90.24/MWh. Exports from the Onshore Wind division contracted 80 GWh to 400 GWh for the nine month period with an ASP of £87.57/MWh (2013: £93.41/MWh). Construction of the A’Chruach wind farm (43MW) progressed as planned and the pre-construction work on the Galawhistle project (55MW) remains on track with turbine and balance of plant procurement underway. The company expects to achieve the target of new wind capacity of 130-150MW by March 2017 through its organic wind development pipeline. On 3rd February 2015 the company disposed of the Hydro portfolio for cash consideration of £20.5m. Infinis Energy has already contracted over 70% of the RO (Renewable Obligation) power sales at a fixed rate for 2015 and most of the remaining has also been contracted at unfixed/variable prices. Separately the company announced Q3 2014 results for the Infinis plc its wholly owned subsidiary. In the nine months revenues and EBITDA improved to £129.9m (£125.7m) and £73.2m (2013: £72.6m) respectively.
Our view: Infinis Energy’s ASP was impacted by the recent decline in the oil prices but the gas subsidiary reported growth in the top line. The future plans look promising with most of the sale contracts in place for the year 2015. The extensive plans for improving the existing capacity bode well for the company’s future targets. Moreover the company has also disposed of the hydro power portfolio to focus on the wind farms. Recently the company secured a significant financing facility with the and National Australia Bank to develop its A’Chruach Wind Farm. The company’s stable earnings growth and progressive dividend policy authenticate its operational excellence and commercial expertise. The company’s reasonable earnings visibility and commitment to the payment of a strong and progressive dividend suggests it is capable of paying a full year 2015/16 yield equivalent to over 9% based on the current share price. Thus in view of the above we recommend the shares for investors seeking income. We retain a Buy on the stock.
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Yesterday informed that the US District Court for the District of New Jersey ruled that the US Patent No. 7524834 (the 834 patent) protecting Pulmicort Respules in the US was invalid. The ruling is limited to the court and does not impact the validity of the patents related to Pulmicort Respules in other countries. The company disagrees with the ruling and would consider legal and other options including an appeal after assessing the complete court ruling. The court decision would not affect the revenue and earnings per share guidance for 2015.
Our view: The court decision comes at an unfavourable time when is already reeling under the impact of the patent loss for Nexium in 2014 and that of the cholesterol pill Crestor due in 2016. The patent for Pulmicort Respules the asthma medicine was originally set to expire in 2018 with the paediatric exclusivity lasting till 2019. The respiratory medicines form an important part of the company’s revenue stream but the latest court ruling is likely to create some problems as the competition would flood the markets with cheaper generics. The company had filed a lawsuit against Apotex Watson Laboratories and Breath Limited; and Sandoz for infringement of US patents related to Pulmicort Respule. In April 2013 the court had ruled in favour of the defendants declaring the company’s US Patent No. 6598603 (the 603 patent) as invalid. However we would like to view this as a small diversion for the company that sells an impressive portfolio of wide-ranging medicines. Recently the company’s promising cancer drugs attracted several investors and affiliates and the progress towards new medicines for psoriasis and opioid induced constipation has looked optimistic. We believe that the expiration of the patents on some medicines is a passing phase and the company’s strong R&D gives a great scope for development of innovative and critical medicines that may drive the revenue streams up. We would also like to consider the action takes against the ruling as the company is confident of the intellectual property rights protecting Pulmicort Repsules. Thus in view of the continued treat to the patents and moderate revenue guidance we would like to maintain a Hold for now.
Economic News
Eurozone trade surplus
The trade surplus of the Eurozone increased to €24.3bn y-o-y in December up from €13.6bn 2013 European Union’s statistics office Eurostat said yesterday. The exports expanded 8% y-o-y whereas the imports edged up 1%. On an annual basis the overall trade surplus stood at €194.8bn compared to €152.3bn in 2013.
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