Tuesday newspaper share tips: Glimmer of hope for Petra Diamonds

Petra Diamonds has a glimmer of hope according to The Telegraph’s Questor.

The FTSE 250 company announced on Monday that its lender group has agreed to waive the measurements of the two covenant tests related to consolidated earnings before interest, taxes, depreciation and amortisation to and as at 31 December.

The group, which includes Absa Bank, FirstRand Bank, IFC and Nedbank, has advised Petra that it remains supportive of the company and its expansion plans.

Taking into account current trading conditions, together with the significant benefit of the weaker rand/US Dollar exchange rate, the company said it remains well financed for the completion of its capital expansion programmes.

Questor noted it came after falling diamond prices resulted in a 31% slump in pre-tax profits for the company last year.

However the company has dispelled this worry, and highlighted that the recent interest from an auction showed stable prices.

Questor also highlighted that once its expansion plans are complete, it intends to produce 5m carats of diamonds a year by 2019, up from 3.2m carats last year.

It said while it is a high-risk investment option, Petra has the support of its lenders as well as a clear strategy.

On top of this, recent bad news has been factored into the share price which is why Questor upgraded it to 'buy'.

Meanwhile in The Times, Tempus is playing a waiting game when it comes to Aberdeen Asset Management.

The investment house said on Monday that full year underlying pre-tax profits rose only slightly to £491m from £490m due to the slump in Asian and emerging market equities.

Assets under management slid to £283.7bn from £324.4bn as a result of investors fleeing the stock market in search of better returns in other asset classes.

Revenues were up 5% to £1.17bn, while cash at the end of the year was £531m, down from £567m.

Tempus said it has been an awful year for equities, with the company having 75% invested in the weak emerging markets, and that weakness could continue.

It noted that the firm is doing what it can by bearing down on costs as the risks of oil prices threaten money being pulled out.

However Tempus highlighted that it is diversifying, with the Scottish Widows Investment Partnership purchase now in for a full year as well as four smaller purchases.

“I would not be quite so negative, but would expect that dividend yield to provide some support at this level,” it said.

“Emerging markets will recover one day, but no one could claim to know when.”

For that reason, Tempus advised to 'hold for income'.