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May 2014
Aiming to dominate Europe

Following the successful transfer from IDSX to AIM and fund-raising, Sprue Aegis (Sprue) will now focus on delivering on the profit opportunities in continental Europe (especially France), the launch of a UK Trade range and the new carbon monoxide sensor, the Nano. With the full benefits of these initiatives expected to be realised in 2015, our 300p target price (previously 250p) assumes FY2015E multiples of 15.0x P/E, 11.1x EV/EBITDA and a dividend yield of 3.3%. We resume coverage with a Buy recommendation.

May 2014
Building scale and momentum

We upgrade our recommendation on IGas Energy from Add to Buy and increase our target price from 150p to 174p following the announcement of the agreed acquisition of Dart Energy. We think that the deal makes strategic sense, consolidating interests in acreage that TOTAL has farmed into and adding acreage that GDF has farmed into. The enlarged entity, with over 1m acres, has the scale to attract the interest of the oil majors, while we think that growing political support should ensure swifter progress on the ground.

May 2014
Able to recover

Unsurprisingly given the previously announced 19% QoQ drop in production to 74.2koz, Centamin’s Q1 results were weak as the lower production led to higher cash costs (US$744 vs. US$711 in Q4 2013). However, throughput levels were up 6% on Q4 without Stage 4 and we believe that as grades increase, and Stage 4 commissioning continues, Centamin will be able to recover the shortfall and meet its FY2014 guidance of 420koz at US$700/oz. We have raised our target price to 60p (vs. 55p) but remain Neutral for now.

May 2014
Share price overreaction

We were encouraged by the momentum and robust outlook comments within ITV’s Q1 IMS and we have upgraded our EPS forecasts to reflect strong NAR growth and the acquisition of Leftfield Entertainment (+2.0%/+2.5% for FY2014E and FY2015E, respectively). We remain positive on the group’s underlying fundamentals and believe the 6% share price fall post the IMS was unwarranted. As our 220p target suggests c.28% total return upside, we have upgraded our recommendation from Add to Buy.

May 2014
Further delay on Stella

Following a further delay to production start at the Greater Stella Area (GSA) project, which is now planned for mid-2015, we adjust our estimates and, as a result, our target price decreases from 200p/share to 190p/share. We maintain our Buy recommendation as the delay is not related to any major problem in particular and is more of a scheduling issue. Since our initiation in April last year, we have had a positive outlook on GSA's performance and the first two test results have demonstrated that the asset can deliv

May 2014
Solid H1 but captain planning to walk off pitch

Sage has delivered a solid if slightly uninspiring H1. The figures were generally in line with expectations, and the trading performance contained the usual mixture of geographic and product-line ups and downs. Cloud delivery saw strong progress in the UK but not in North America. The key talking point, however, will be the CEO transition, announced with the report but with the potential to drag on for months as the process has only just begun. On balance, we retain our Add stance and 467p target price.

May 2014
Strong foundations

Steppe Cement (Steppe) delivered FY2013 results above our expectations, including EBIT margin expansion (+292bps), EBITDA of US$30.3m (+16.4% YoY) and ROE of c.7%. Strong cash generation and capacity expansion to 2.8Mt pa from 1.6Mt is further evidence that the right strategic choices continue to be made. In our view this is not reflected in an FY2014E EV/EBITDA peer group discount of 32%. We only trim our target price to 50p (from 54p) to reflect the lower EV/tonne valuations attracted by its emerging market peers.

Apr 2014
Transformation still primed

Kazakhmys produced 69.5kt of copper during Q1 2014, down 4.5% from 72.8kt in Q1 2013 and 12.1% from 79.1kt in Q4 2013. The lower production was due to reduced output from higher cost areas. However, management expects output to increase as the year progresses, and has maintained its guidance of 285-295kt for the full-year. As expected, there was no update on the planned restructuring, but given the upside it offers if all goes to plan, and the recent share price weakness, we upgrade to Buy from Add.

Apr 2014
FY2013 results and Q1 2014 production

With POG’s FY2013 results and Q1 2014 production broadly in-line both with our expectations and with consensus, the story inevitably remains the company’s debt covenants and convertible debt repayment. Although no new information was provided, the Directors have retained POG’s going concern accounting status as they have reasonable expectations of a successful refinancing. However, until these debt issues are resolved, we retain our Neutral recommendation and 75p target price.

Apr 2014
Monetising the millions

Sage has been perceived, for some time, as a pedestrian provider of accounting software to SMEs. The last ten years have arguably seen the group stagnate, rest on its laurels, and live to regret a disruptive US Healthcare foray. We believe that the next five years could see Sage deliver on its massive opportunity by monetising better the six million customers using its products, through the provision of a Cloud-based offering, and possibly trade financing. We initiate coverage with an Add rating and 467p target price.

Apr 2014
Continuing to deliver on improvements

ABG has delivered another strong quarter; production and costs were better than consensus and in-line with our FY2014 forecasts. The company has also made progress at Bulyanhulu, with commissioning commencing at the CIL expansion and acceleration of the Upper East Zone. Consistent operational performance and a reinvigorated growth pipeline mean ABG is well-positioned, but given our FY2014 gold price assumption of US$1,250/oz we remain Neutral, although more bullish investors may feel more positive.

Apr 2014
Is the darkest hour right before the dawn?

Balfour Beatty is Britain’s premier construction group by sales and an international figure in the privately-funded infrastructure space. However, it has endured a series of set-backs in the past two years, some outwith and some under its control. It has attempted to tighten its operational, financial and risk controls and there are early signs of improvement in the troubled UK construction sector. That said, we believe the current share price is fair for now and we initiate coverage with a Neutral rating.

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