Stock News: Japan Gaming; Ireland Betting; Canada Mining; Mexico REIT; Israel, Belgium Biotech

The wolves of Wall Street are not necessarily in New York City or Long Island like the movie says. In fact there are wolves in Spanish boiler-rooms preying on British investors, especially seniors who are not savvy about investing. They behave just like the film crooks, blowing their huge profits on fast cars, gold watches, drugs, and sex.

Meanwhile wolves in India prey on bond-buyers who are lured in with high interest on their supposed holdings, but can never cash in on the principal. Britain and Spain have cracked down on the Marbella gangs and India may nab the fellow behind the bum bonds.

And Bloomberg reports that 7200 sales of stock by SEC staffers seem to indicate that they are insiders, acting on knowledge of SEC settlements before they became public. So our Washington DC government regulators may also have wolves.

More for follows from a Canada mine, a Mexican REIT, Irish and Japanese gaming sites, and Israeli and Belgian biotech startups plus other news:

*Mexico's Fibra Uno REIT published unaudited 2013 results showing revenues rose 152% y/o/y to NMP 1.183 bn. Net operating income rose 146% to NMP 967 mn thanks to boosted rental revenues, mostly from factory sites which are a FBASF specialty. Its portfolio of properties rose 226% in the year in footage.

In Q4, revenues rose 4.7% and 6% not including new holdings, to NMP 1.184 bn. Occupancy was a whopping 95% overall, and 97.6% in industrial sites. Q4 net profit hit NMP6.968 bn, including value adjustments of investment properties which are requited under IFRS accounting, a total of NMP6.299. In Q4, Fibra Uno closed the largest Mexican real estate acquisition ever with the buy of the Mexico Retail Properties portfolio and did some other major deals as well.

The negative is that it issued lost of bonds and notes to finance the buying spree: NMP 4.35 bn in 5.5% notes; 2 bn in 10 yr 8.4% bonds; and 2.15 bn in 15-yr 5.09 UDI bonds, all rated AAA. The bonds have covenants which require that the fund debt be backed 314% by unencumbered assets (which we shareholder own). Then it launched two tranches of US$ bonds, $600 mn at 5.25% 10-yr bonds and $400 mn of 6.95% 30-yr bonds, with Baa2 rating from Moody's and BBB from Fitch. Net operating marginal was slightly nipped by the 50% increase in the size of the property portfolio in late 2013 but remains an impressive 81.7%

As a REIT it must distribute 95% of its net taxable income and on Feb. 13 for 2013 we were paid 0.48 pesos of which 0.242 corresponded to taxable income and 0.238 to return of capital (not taxed in the US or Mexico). This is up 6.6% from the distribution in Q3 2013. The total payout in the year was 1.7104 pesos/sh, up 30% from 2012.

Sour note: Fibra Uno labels its pending projects using US state names but wisely doesn't only use states that were snatched from Mexico. There will be a conference call not mañana, but Monday afternoon.

*Cameco reported 2013 revenues grew 29% to C$2.439 bn, a sign that the uranium market is picking up post- Fukushima. Its IFRS earnings attributable to shareholders rose 26% to C$318 mn, up 26%, boosted by production and price. U3O8 production rose 8% in the year, to 23.6 mn oz, and the realized price was $48.35/lb or C$49.81/lb, up 1% or 3% depending on currency.

Cameco also reported adjusted earnings after taking out its former stake in a nuclear power plant that were not so brilliant, earnings at C$4.5 mn up only 3%, an example of Canadian "eh" accounting.

What is significant I think is that its produced a whopping 6.2% return on equity in 2013.

*Compugen kicked its long-term shareholders in the teeth overnight by an issue of 6 mn common shares at $10.50 per, a 26% discount to yesterday's close. During Thursday after-hours session, when the shelf-registered share issue, for which Jefferies Brokerage will be sole book-runner, was revealed without the price, CGEN actually rose. This morning it fell 20% from the regulator Thursday closing price of $14.20/sh. Jeffreries also gets a green shoe option to acquire a further 900,000 shares under a green shoe option.

CGEN is not exactly a sophisticated Wall Street player, headed by a lady Israeli scientist. Surely there are some smarter people in Tel Aviv who could have advised her and the female CFO to price the new shares more closely to the old? Moreover the deal was closed overnight after Tel Aviv closed Thursday and will not resume trading until Sunday. Then the Israelis will sell the stock down closer to the new issue price.

Since I have been kicking myself for 8 months for taking some CGEN profits, I am happy now that I can buy them back more cheaply. But at seekingalpha.com where the Israeli biotech startup has been boosted by many recent articles, I wonder if the writers will take their responsibility.

*Galapagos nv reported on how its clinical trials with GlaxoSmithKline for GSK 2596184 against psoriasis, lupus, and ulcerative colitis are going. The JAK1 inhibitor GLPYY discovered and licensed to GSK two years ago, has completed phase 2 psoriasis dosing with 64 patients for 12 weeks, and results are expected later in H1 and may result in a milestone payment. The lupus trials was discontinued because the drug isn't working. GSK put the colitis trial (in phase 1-2) on hold. More bad biotech news.

*Separately, CEO Andrew Witty may have suffered a cut of GBP 1.88 mn or so in his bonus from GSK because of the scandal over bribery in China to doctors and hospitals for prescribing its drugs despite his saying these were rogue locals not following the UK company guidelines. A matter for Sherlock Holmes, methinks.

*Cosan stock is down now that the market realizes it has essentially taken over the Brazilian railroad from America Latina Logistica SA, paying $3 bn now and collecting for earlier payments of $1.7 bn. CZZ is a conglomerate which mainly refines sugar and produces ethanol fuel and foods.

*Barron's on-line today tipped Schlumberger for its double-digit earnings growth an market dominance and its clean balance sheet. It is at a discount to the market an can rise 28% wrote Teresa Rivas. SLB is Dutch and sells wellhead tech and services to oil and gas drillers, now relying on its prowess in extracting tight gas and shale oil. She estimates that SLB trades at 16x this year's earnings of $5.70 (estimated) and 13.5x next year's. However she warns that despite being global, SLB will suffer if WTI (West Texas Intermediate) prices fall because of glut exceeding US refining capacity. Luckily there is always higher-priced Brent crude to be sought in Europe.

*Gaming analyst Michael Campbell of brokerage DanielStewart.co.uk writes about Paddy Power plc at my request, PAY for him, PLS in Dublin, and PDYPF for us. PAY rose to euros 60.46 this morning in Ireland, up 2.6%:

I have had the stock under review for a while on the back of the profit warning back end of last year. Stock is on a punchy double digit EBITDA multiple – though has significant firepower to keep growing the brand and has industry leading positions in the UK and Australia. The punchy multiple relates to growth expectations which the business had been beating for a while prior to the profit warning and also expectations of a return of capital to shareholders given the significant cash pile.

Sports results have short-term impact on margin.Profits tend to correct or mean revert so should be regarded as anomalies to some degree.

Though under review at the moment, the FY13A results are due 4 March and we’ll get a flavour for trading on the 1Q14 as well. Bookies have had a tough Jan 2014 so far with sports results favouring punters once again.

Key for me though is to look at the YoY growth in online sports wagers in the current trading statement – we know the sports margin will be weak [as] seen with both WMH [William Hill] and LAD [Ladbroke, two rival British bookies], but growth in wagers is still sign of healthy growth.


*Chris Loew updates the on-line game-maker DeNA Co whose Tokyo shares, JP:2432, hit a new low in Tokyo Feb. 6 (at Y1775, not followed by DNACF in the US because the yen is higher than last year.) Now it is Y2200.

[The drop] followed announced lowered earnings and estimates the day before. For the Dec. Q3 DeNa reported revenue down 20% y/oy and operating profit 42% lower. Sales for the FY [to end Mar. 2014] are now expected to decline 9.8% and profits to fall by 30.9%. The dividend was cut from Y50 to 37.

Subsequent rebounds in the stock were because of release of two new games with good prospects: Shingeki no Kyojin (Attack on Titan), a city-building and battle game based on a popular manga and anime TV show; and Battle Quest, an iPad running and shooting game.

This business is hit or miss, but DeNA is churning out games for the iPhone and Android operating systems to add to its existing line of browser games on which it built its early success.

Vivian adds: I am dropping this stock to the speculative portfolio because of the wild fluctuations.

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