Daniel Stewart analyst Richard Nolan talked to Proactive Investors about Dominion Petroleum’s (LON:DPL) exploration update.
“Dominion is benefiting from two things ... the successful completion of the survey and growing momentum in East Africa,” Nolan said.
“We are seeing a lot more activity on this side of Africa.”
The analyst highlighted that major oil companies - BG Group (LON:BG) and Anadarko (NYSE:APC) - have made significant discoveries in the area and this has boosted some of the junior explorers like Dominion.
“The success in the region has been sparking investor interest.”
Indeed Dominion emphasised that BG’s discovery was ‘very significant’ as it proved the existence of a working hydrocarbon system in deep-water Tanzania.
Last month, BG Group (LON:BG) and Orphir Energy struck oil in the Pweza-1 well. It was the first discovery of its kind in Tanzania. Crucially it proved the existence of a working hydrocarbon system in deep-water Tanzania.
“[BG’s discovery] justifies the increased levels of interest shown by major industry players in deepwater East Africa,” Dominion chief executive Andrew Cochran said.
Atlantic Coal’s (LON:ATC) new excavator at the Stockton mine in Pennsylvania has enabled it to increase the amount of raw coal mined in each quarter this year, and this is expected to continue into the fourth quarter, according to Fox-Davies analyst Peter Rose.
Rose noted that the new excavator is performing well and it is meeting expectations. Consequently productivity has increased significantly since its introduction.
The analyst highlighted that this piece of good news is backed up by improving demand for coal in Pennsylvania.
“The other piece of very positive news is that due to the closure of a neighboring mine, the market for anthracite in Pennsylvania has tightened up considerably and Atlantic Coal are now struggling to meet demand,” Rose said.
“This situation is expected to continue for at least 18 months, and this is placing upward pressure on anthracite prices.”
The new excavator was deployed in April as part of a new mine plan.
Atlantic Coal’s Stockton mine currently has a reserve of 4.2 million tons of run-of-mine (ROM) coal, equating to approximately 2.1 million tons of washed anthracite.
Telit Communications (LON:TCM) has demonstrated much greater revenue velocity than the market and it has secured a larger percentage of design wins than its market share, according to Northland Capital analyst David Johnson.
The brokerage, formerly known as Astaire Securities, published research on the company that centred on the recent spate of mergers and acquisitions in the Machine-to-Machine communications sector.
Most recently Novatel Wireless (NASDAQ:NVTL) bought privately-held Enfora for up to US$70 million.
Northland highlighted that Enfora was ranked as the 4th largest player in the sector in 2009, with 5 percent of the market - behind Telit with 12.4 percent, Sierra Wireless (NASDAQ:SWIR) with 26.3 percent and Gemalto’s (EPA:GTO) Cinterion unit, which leads the sector with 28 percent.
“The M2M market has undergone a period of considerable consolidation with three of the four largest suppliers having now changed hands and there is scope for further activity,” Johnson said.
“This reflects the realisation by early providers that came from a consumer networking background that dynamics of M2M are different but also an attempt by network module providers to access a less commoditised market.”
The analyst highlighted that the Novatel-Enfora deal has an acquisition multiple of around 1.1x historic revenues, which is in line with earlier transactions.
He noted that this is a significant premium to Telit’s current rating - 0.8x enterprise value / trailing 12 month revenues.
“Applying a 1.0x revenue multiple to Telit’s FY11 revenues would suggest a share price 125p, equivalent to FY11 PER of 16.3x,” Johnson said.
Furthermore the analyst believes that Telit’s business could command a premium rating, compared to Enfora.
“There are significant differences in Enfora’s operations, however, that would suggest Telit would support a premium rating.”
A large proportion of Enfora’s revenues relate to device sales plus software ... these offer better gross margins but arguably these revenues are less scalable.”
“Telit has demonstrated much greater revenue velocity than the market and secured a larger percentage of design wins than its market share .... This suggests it will continue to grow revenues faster than the market over the next three to four years.”
Nomura analyst Samir Devani maintained his ‘buy’ rating and 15p fair value estimate for Silence Therapeutics (LON:SLN), after research on its lead cancer drug was published in scientific journal.
The research demonstrated that ‘Atu027’ prevents the formation of pulmonary metastasis in various animal models.
“While we are always encouraged by peer-reviewed publication of results, the data relates to early research findings.”
“Our focus continues to be on the Company’s ability to execute deals for its technology platform and the outcome of ongoing M&A discussions.”