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Recovering Kingfisher divides opinion

Four blue-chip firms - Rolls-Royce, Smith & Nephew, Shell and Kingfisher - posted second-quarter figures comfortably outstripping analysts’ expectations yesterday, helping spread positive sentiment across the market. The FTSE 100 index ticked up 52.4 points to 5,929.5.
Kingfisher rose 8.25p to 244.75p, despite divided opinion on the stock among analysts. Some, including the research team at Merrill Lynch, suggested yesterday’s sales figures marked the end of the DIY retailer’s recent woes. In a note entitled “Inflection point”, they noted the strong performance of the Screwfix division and the slowing decline of B&Q’s comparable sales from 8.8% to 2.4%.

“The inflection of B&Q’s like-for-like sales supports our view that the chances of a recovery should increase dramatically over the next 12 months and drive a material appreciation of the share price,” Merrill analysts concluded, rating the stock a “buy” with a price target of 270p.
In the opposite camp was Kingfisher’s joint house broker Credit Suisse, which holds a “neutral” rating on shares and a target price of 210p. “We already have a reasonable second-half sales improvement factored into our estimates and as yet we feel signs of consumer recovery are at best slight … This leaves the valuation continuing to look exposed in our view,” it said.

Elsewhere, there were less ambiguously encouraging second-quarter figures from Smith & Nephew - up 30.75p at 462.75p and top of the FTSE 100 leader board. Positive investor sentiment is seeping back into the stock after a tough nine months as management reiterated its confidence that product launches in the second half would fuel sales growth.

The group has just won regulatory approval in the US for its hip resurfacing product, designed for younger patients. A lot of bears in the stock appeared yesterday to be covering short positions. Analysts at Dresdner Kleinwort said: “We suggest investors start buying into the stock with an eye on its recovery over the second half and through 2007.”

Mining stocks were also in demand, with copper plays Kazakhmys and Antofagasta up 76p to £12.61 and 19p to 416.5p respectively. Copper prices rose 3% after riots at the Chambishi mine in Zambia and before a strike vote today at the Escondida mine in Chile. Sector peer Xstrata rose 107p to £21.41 as investors backed its intention to buy up to 5% of Canadian nickel miner Falconbridge as part of its takeover efforts.

SIA in talks with Kingfisher Air

Singapore Airlines (SIA) is in talks for an interline agreement with Kingfisher Airlines, reports Business Standard.

This move is aimed at offering the international traveller of Singapore Airlines more routes on Kingfisher`s domestic network. At present, Singapore Airlines has a similar arrangement with Indian Airlines.

Singapore Airlines General Manager (India) B K Ong said that the airline`s passengers could be filled in Kingfisher at the destination where the airline does not fly. He further added that the airline was looking for special domestic fares from Kingfisher.

Singapore Airlines operates 47 weekly flights to eight destinations in India, including Mumbai, Delhi, Chennai, Bangalore, Kolkata, Hyderabad, Ahmedabad and Amritsar.

Kingfisher operates 86 flights a day covering 18 cities. The airline is keen on starting flights from more secondary cities of the country.

Broker tips: Kingfisher, A&L, Astra, Antofagasta, London Clubs

ING Financial has upped shares in DIY retailer Kingfisher to “hold” from “sell” following its second quarter figures released yesterday.

The broker noted that gross margin was flat, as opposed to falling while profits also appear to be stabilising. ING proposed a price a target of 220p from 180p previously.

Dutch broker ABN Amro started coverage on miner Antofagasta with a “buy” recommendation and a price target of 470p per share.

The broker advised it was taking a more conservative stance on Antofagasta than it peers as a result of its reliance on copper.

WestLB dropped AstraZeneca to “hold” from “add” citing concerns that second quarter results released yesterday could be the bets it has to offer this year.

The German broker also lifted its price target to 3,500p from 3,300p, citing increased revenue estimates by 1% and EPS by 8% for this year.

UK lender Alliance & Leicester came off lows following its second quarter results after DKW stuck with its “add” advice on the shares noting that profit was ahead of forecasts.

The broker set a price target of 1,050p on the shares, which it said includes 100p takeover premium on the basis that Santander could bid in 2008. Conversely WestLB stuck with its ’sell’ recommendation and 850p price target.

HSBC started coverage on London Clubs International with a “neutral” stance advising that the disposal of its Les Ambassadeurs casino should help to smooth out earnings.

The broker also set a price target of 107p on London Clubs, adding that the more relaxed gambling legislation and a move towards a more mass market audience should help underpin growth.

Kingfisher To Open Broadly Flat- Trader

Kingfisher (KGF.LN) is expected to open broadly flat or slightly lower following 2Q sales trading update, says a trader. As expected, Kingfisher reported a poor performance by its core UK business B&Q while the group’s sales operations booked good numbers. However, a trader notes company comments about “early signs of progress at B&Q in the UK,” but says it’s still too early to call a recovery. Kingfisher closed at 236.50p Wednesday

India Inc on renaming spree

Indian companies seem to have realised that there is a lot in a name after all — and even more so in a brand name — if the spate of name changes in recent times is anything to go by.

In many of these attempts at an image make-over, the brand has become the corporate identity or been added to the existing name of the company.

The latest to join the rank is Satnam Overseas Ltd, which sells and exports rice under the Kohinoor brand name. Come September, the company will start calling itself Kohinoor Foods Ltd.

Earlier this year, millions of Airtel subscribers realised that their service provider was no longer Bharti Tele-ventures but Bharti Airtel. Airtel, of course, is the brand that is more easily recognised than Bharti in several pockets.

Vijay Mallya’s Kingfisher Airlines had its origin in air-taxi operator UB Air, branded after the parent company, liquor-maker United Breweries.

But somewhere along the runway, perhaps as an acknowledgement of the brand loyalty to his best known beer, Mallya opted for the name of Kingfisher Air when the time came to take off.

Similarly, Asahi India Glass Ltd, the country’s largest glass company, identifies itself as AIS, the same as its flagship brand. “We want the brand identity and the corporate identity to be the same,” sources close to the company said.

Much before this spree, seeking a more dynamic image than suggested by the unwieldy Birla-AT&T-Tata, the cellular service provider renamed itself as Idea, which is also its brand.

Calling Satnam Overseas’ plan sensible, Jagdeep Kapoor, chairman and managing director of Samsika Marketing, said, “What is the point in having a solid asset in a trusted brand and not incorporating that in the corporate name.”

Broker snap: Kingfisher stabilises

ING Financial has upped shares in DIY retailer Kingfisher to “hold” from “sell” following its second quarter figures released yesterday.

Coast Guard Rescue: How They Train To Save Your Life

OFF THE FIRST COAST — The same Coast Guard crews that plucked survivors from rooftops after Hurricane Katrina hit are now protecting the First Coast. And they took First Coast News along for hours of intensive training.

In so many disasters, it’s the U.S. Coast Guard that comes to the rescue. Becoming rescue-ready takes strength, determination, and guts.

The same guys who swarmed the skies after Hurricane Katrina now stand guard here — watching over your family on the First Coast.

This week, we headed out to sea aboard a Coast Guard Dolphin helicopter. It was an exclusive trip on a training mission just miles off Atlantic Beach.

AST2 Brian Goodbody, a veteran rescue swimmer, leapt out of the helo’s open door as the craft hovered about 10 feet above the water. Fighting the waves and wash he swam to a stand-in victim. He linked himself to the practice victim, then snapped them both onto a metal cable strung down from the helicopter above.

With a single signal, the careful dance of hoisting began. A pair of pilots held the helo in the perfect place above the swells. A flight mechanic confidently — but cautiously — controlled a winch, reeling in the cable as it swung below in the wind.

Within five minutes of Goodbody’s splashdown, both he and his victim were safe, back onboard the Dolphin.

They used old skills, honed over years of Coast Guard hoists. But evident there, as well, were new ideas — picked up in the flooded streets of New Orleans last year.

“I think there was a lot of learning from there… just the experience for years — that we’ll take out of that. Just us talking in the shop,” Goodbody said.

“Something that stood out in my mind is seeing a swimmer on the roof with a crash axe,” he said, remembering video of a Coast Guard rescue swimmer at work that was broadcast in the days after Katrina hit. “He grabbed the crash axe on his way out — just thinking outside the box — went down there, and cut them out with this,” he said, holding up the small axe that helicopter crews carry onboard their aircraft.

AST3 Matt Laub and his crew saved 151 lives that week — darting like a dragonfly between rooftops. “Pilots were learning new techniques of hovering near power lines. And flight mechs got great training, trying to put some swimmers down in different precarious places,” he said.

In all, helicopters from Air Station Savannah — the same air station that protects the First Coast — saved 351 lives after Hurricane Katrina.

In a flooded city, or near a fishing boat, out on a mission, every move is made a certain way. The Coast Guard put me in their training pool in Savannah to show you why.

“Petty Officer McConnell is going to demonstrate a front head-hold release,” Goodbody said, providing my only warning that I was about to get jostled and flung around until I cooperated.

Floating in the pool, I played a typical victim desperate for dry land.

“The first thing they want to do is grab you. You’re their life preserver,” Goodbody said. So I followed those orders. As swimmer Stu McConnell swam toward me, I latched on to him and wouldn’t let go. McConnell slipped under the surface.

Moments later, in a single motion, he spun around, gained an advantage over me, and twisted my entire body. I swirled, face-first, underwater. In an instant, I was upside-down and below the surface. I let go — exactly what McConnell intended.

“Nine times out of ten, the victim is going to let go as soon as you take him underwater,” Goodbody explained.

And at the air station, we got a rare look at a rescuers’ tradition. Hung high along the shop wall are life vests from countless sinking boats and stranded victims. Each is marked with the rescue crew’s names, a description of the crisis they jumped in to solve, and how many lives they saved.

“I always try to think — what if this was my family? You’ve got to be the best scanner, you’ve got to be out there searching nonstop. You can’t look away. I mean, it’s tough,” Goodbody said.

After Hurricane Katrina, it wasn’t just the helicopters that got a workout. Including all the boats and other assets the Coast Guard has, they saved more than 30,000 people. Imagine that — in small groups, rescuing three times the population of Fernandina Beach.

Boats are the Coast Guard’s bread and butter. Based in Jacksonville is almost a small fleet, and each vessel has its own rescue role.

Expert pilots and spotters in 25-foot small boats will pull you right from a river, or from your flooded neighborhood. The person at the helm steers the boat to just the right spot where the engines’ idling brings the victim right alongside. A pair of rescuers reach in and pull the person onto the deck.

They turn to bigger craft for bigger emergencies. On their 47-footer, rescuers train constantly for a critical throw. They can heave a line — with just a know at the end — within arm’s reach of a victim 100 feet away from their boat.

Rough seas call for the cutter — the Kingfisher. She can work 150 miles off the First Coast. “We’ll go out routinely for four to five days straight… we’ll run, obviously, during the day. And then at night, we’ll have our searchlight on,” said LTJG Gavin Garcia, the Kingfisher’s Commanding Officer.

When the Kingfisher runs a rescue, it’s quite a ride. A small boat slides out the back and rushes over for a hands-on recovery.

With the exception of helicopter carriers, every Coast Guard vessel is built to save your life. And every one of the men and women in the service wakes up each morning with that same goal.

“It’s not always the big hero stuff — jumping out of a helicopter and saving people. But when it happens, it’s just the greatest feeling,” Goodbody said.

Each year, the Coast Guard works around 500 cases off Northeast Florida. On average, those missions end up saving more than 100 lives a year

MAXjet denies reports about acquisition by Kingfisher

American low-fare carrier MAXjet on Thursday refuted reports about talks on its acquisition by Kingfisher Airlines as “unfounded” and said no such discussions were on.

There is “no truth” in reports in the Indian media that liquor baron Vijay Mallya’s Kingfisher is in advanced talks with MAXjet for outright acquisition, the Washington Dulles-based carrier said in a statement.

“We never were, and currently are not, in any such discussion to sell MAXjet,” the airline’s CEO Gary Rogliano said.

The US airline currently operates three Boeing 767s within the US and to the UK and is in negotiations to acquire two more aircraft.

Encouraging Signs At Kingfisher’s B&Q

Encouraging signs at Kingfisher’s (KGF.LN) core B&Q unit should raise the retailer’s share price, says Investec. The 2.4% fall in 2Q comparable sales is 2% better than forecast, more importantly gross margins are flat, against a 100bp forecast decline, broker adds. “Some slightly slower growth in France than in 1Q takes a little steam out of the update, but overall this underlines our trading buy stance,” Investec says. Broker has a hold rating on Kingfisher. Kingfisher +3.6% at 245p. (LEV)

Blue chip results lift FTSE’s mood

Four blue chip firms - Rolls Royce, Smith & Nephew, Shell and Kingfisher - posted results comfortably outstripping analysts expectations, helping spread positive sentiment across the market this morning. By lunchtime the FTSE 100 index had ticked up 37.3 points to 5,914.4.
Shares in Royal Dutch Shell B rose 58p to £19.98 after pleasantly surprising the market with a 26% jump in second quarter profits. The group’s performance looked particularly strong set against recent disappointing numbers from sector peers BP and BG.

Investors also took cheer from Shell’s insistence that it would meet production targets for next year despite persistent attacks on its facilities in Nigeria by separatist rebels. The largest oil producer in Nigeria, Shell warned it would pump only 3.4m barrels of oil equivalent this year.
There were gains across the wider oil and gas sector after it emerged that US government figures showed stockpiles of petrol were depleting at a rate much faster than anticipated. This comes on top of heightened supply disruption concerns due to diplomatic tensions with Iran over its nuclear programme as well as the ongoing conflict between Israel and Hezbollah in Lebanon. BP rose 14.5p to 649p while BG gained 12.5p to 712.5p.

Jet engine maker Rolls Royce, up 24.25p to 445.75p, impressed investors with strong aftermarket sales growth - a trend the company is confident will continue. Shares in the group, which has made much progress on cost cutting, led the FTSE leaderboard for much of the morning, until it was overtaken by Smith & Nephew.

At Kingfisher, up 8p to 250p, there were finally some signs of hope as the rate at which comparable sales were declining slowed to 2.4%. This 11-week performance, which came with a flat gross margin, was much better than analysts had expected and a big improvement on the 8.8% decline in like-for-like sales in the first quarter.

Analysts at Panmure Gordon, reiterating their “sell” recommendation, said: “While there may be relief that the situation appears to be stabilising … we believe … the returns in the core business will continue under pressure and that the business is becoming more capital intensive.”

Even the group’s joint house broker Credit Suisse said: “Thus far, we feel there are no real signs that UK demand is firming up and underlying margin pressure remains. This leaves the valuation continuing to look exposed in our view but we can see that the improved UK sales performance here may encourage investors to look through current conditions.” The brokerage retained its “neutral” rating on Kingfisher.

There were encouraging second quarter figures also from Smith & Nephew, up 27.75p to 459.75p. Management said it was confident of product launches in the second half fuelling sales growth.

AstraZeneca also posted strong second quarter figures, but shares lost ground, down 120p to £32.00, on what some analysts suggested might be concern at the group’s full-year guidance.

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