Broker tips: Ferrexpo, Acacia Mining, OneSavings Bank

Analysts at HSBC initiated coverage of Ferrexpo with a recommendation to 'buy' and a 210.0p target price.

The broker highlighted how the iron ore pellet producer's unit costs had more than halved during 2014 to 2016, helped by a weaker currency (the Ukrainian hryvnia), ramp-up at its Yeristovo mine and lower energy costs.

Country risk was "manageable", HSBC added, given how the the company's sales and borrowings were largely priced in US dollars and therefore not impacted by chanegs in the value of the currency.

Its mining operations were located far from the conflict area too, HSBC said.

Yet the broker still applied a 20% discount to its discounted cash flow valuation for the shares, due to geopolitical risk.

On a more positive note, HSBC commented: "We believe this is a conservative assumption as the majority of the borrowing/ sales are USD denominated, operations are located away from the conflict area and the shares are listed on the LSE.

With shares in Acacia Mining down by more than a third since Tanzania's accusation that the company is grossly underreporting the value of its gold exports, Investec said the company was more of a "binary investment" as it "may not be dealing with a rational administration".

After an investigation of containers held at Dar Es Salaam port by a presidential committee, the FTSE 250 gold miner, which is 63.9%-owned by Toronto-based Barrick Gold, was accused of reporting only a tenth of the true gold content.

The committee claimed to have found gold content of 7.8 tonnes, or 250,000 ounces, which compared to the 26,000oz declared by the company and the 254,552 oz produced in the calendar year of 2016.

"We had expected the concentrate ban to be resolved, anticipating perhaps some penalty in the form of increased tax prepayments," said Investec on Tuesday, keeping its 'hold' rating and setting a 'binary' target price outcome of 512p or 235p.

Investec upgraded OneSavings Bank to 'buy' from 'hold', keeping the price target at 455p.

It said the drop in the share price, which is down 9.2% since 23 May, has coincided with a share placing and fresh crop of headlines anticipating the demise of the buy-to-let market, or claims that the demise is already well underway.

"We suggest that this all rather misses the wood from the trees - OneSavings’ own experience points to record originations in H1 2017, improving margins and (of course) the not-so-thorny 'problem' of an expanding 'capital surplus' to deploy or return. We have no option but to upgrade back to buy."

The brokerage pointed out that since the 1 April 2016 stamp duty changes, industry-wide buy-to-let lending for new purchases has fallen to £0.8-1.0bn per month, while the re-mortgage flow of £1.8-2.2bn per month has remained steady. However, this decline conceals an emerging redistribution of flow towards "professional” or “complex” buy-to-let, which specialist lenders are best-placed to meet, it said.

In addition, it noted that against a backdrop of increasingly competitive asset pricing in much of the UK mortgage market, OneSavings has been selectively increasing its pricing, at least in the short term, to contain flows.