IPOs, crypto mania, and signs of a market top?

UK Investor Magazine
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IPOs, crypto mania, and signs of a market top?

Alan Green joins the Podcast as we await trading in Coinbase, the cryptocurrency dealing platform which could be valued at $100bn.

The Coinbase IPO marks the move of cryptocurrencies to the mainstream and we question what it could mean for assets such as Bitcoin if investors view Coinbase’s listing as a ‘buy the rumour, sell the fact’ moment.

Major investment banks and institutional investors have changed their stance on Crypto with this IPO, many who warned against investing in the assets, or even called them a Ponzi scheme, are now showing interest and working them into their business models.

After the busiest quarter for IPOs on the London Stock Exchange since 2007, we touch on Mast Energy Developments who began trading today, changing hands at 15p having set an IPO price of IPO.

The three UK equities we explore in this episode are ECR Minerals (LON:ECR), Open Orphan (LON:ORPH) and Blencowe Resources (LON:BRES)

Foxtons revenue on the up as London property market bounces back

Liam Roche
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Foxtons revenue on the up as London property market bounces back

Foxtons benefit from takeover Douglas and Gordon

Foxtons (LON:FOXT) released a trading update on Wednesday which said the estate agency has begun 2021 with solid revenue growth.

For Q1, which ended on March 31, Foxtons reported a 24% increase in its revenue to £28.5m as volumes outweighed the pressure caused by rising rent prices in London, where the company conducts a large part of its business.

As lockdown restrictions were eased the estate agency saw the sales arm of its business rise by 60%, while its mortgage broking revenue Gaines 20% to £2.3m.

The update reserved a special mention for Foxton’s takeover of West London agent Douglas and Gordon which contributed approximately £1m in extra revenue.

Commenting on today’s announcement, Nic Budden, Group Chief Executive Officer said:

“I am delighted with the start we have made to the year, which is the best first quarter’s trading in some time. The acquisition of Douglas & Gordon, the largest acquisition in our history, represents an acceleration of the Group’s strategy and is a business with significant potential,” said Budden.

“Our recent investment in Boomin demonstrates our commitment to remain at the forefront of technology. As we look forward, the strong trading momentum is expected to continue through the second quarter and together with tight cost control gives us confidence that operating profit for the first half will be significantly higher than last year.”

Ironridge Resources: One Company with Two Happy Endings

UK Investor Magazine
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Ironridge Resources: One Company with Two Happy Endings

Ironridge Resources (LON: IRR) 22p Mkt Cap £100m
Gold edged Lithium
Yesterday’s drill results reported the highest ever grade of lithium from its Ghana prospect and is the third RNS announcement so far in April. IRR is a dual commodity exploration company and is also actively drilling for gold in the Cote d’Ivoire in West Africa. 
This is doubling the rate of news flow as IRR approaches its definitive development stage from exploration into bridge to production and the corporate team has been strengthened. The high-grade lithium reported is additional to the&...

Podcast surge during lockdown sees Audioboom confirm maiden profit

Liam Roche
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Podcast surge during lockdown sees Audioboom confirm maiden profit

Audioboom share price up 4% in morning session

Audioboom (LON:BOOM), the podcast company based Jersey, recorded its first ever profit during Q1 as demand has continued to grow during the pandemic.

The AIM-listed company has released its adjusted earnings before interest, tax, depreciation and amortisation of $30,000 during the first quarter of the year, a swing from a substantial $500,000 loss the year before.

Revenue over the period rose by nearly 50% to $9.5m.

The average number of downloads across the world grew by 37% from the year before to 87.1m, getting as high as 91.6m in March.

As well as being a platform for podcasts, Audioboom expanded its range of content by launching Relax! hosted by Colleen Ballinger and Erik Stocklin. The show made it to number one on the Apple US podcast chart.

Audioboom is expecting its revenue for the year to exceed its market expectations, as it has now signed 90% of its forecast advertising bookings.

Shares in the company are up by over 4% on early morning trading.

Stuart Last, CEO of Audioboom, commented: “Q1 2021 was a breakthrough period for Audioboom, reaching adjusted EBITDA profitability for the first time and demonstrating the strength of our business model. I am delighted with our revenue performance and continued cost control. It is important to note that the 49% year-on-year revenue growth we have delivered is benchmarked against the one quarter in 2020 that was not significantly impacted by Covid-19.”

“Our record performance is driven by our content focused expansion strategy. New content partnerships and successful Audioboom Originals Network launches delivered strong growth in our Global Downloads key performance indicator, with more than 90 million downloads in March. As a result, Audioboom became the fourth largest podcast publisher by number of average weekly users in the US on the Triton Digital ranker.”

FTSE 100 in positive territory following record highs in America

Liam Roche
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FTSE 100 in positive territory following record highs in America

The FTSE 100 was up marginally by 0.24% in the morning session on Tuesday at around 6,906. “The index’s hopes of rebuilding momentum were in part harmed by Tesco, which fell more than 3% following its full year update,” according to Connor Campbell, financial analyst at Spreadex.

“The FTSE 100 was hampered also by a rebounding pound. Sterling added 0.3% against the dollar and 0.2% against the euro, as it continues to try and claw back its recent losses,” Campbell said.

Things were no more exciting in the Eurozone than they were in the UK. The DAX dropped 0.1% and the IBEX 0.2%, but with the CAC climbing 0.2% to a fresh all-time high of 6,200.

Closing lower following a higher than forecast set of inflation readings and news that the Johnson & Johnson vaccine rollout is to be paused, the Dow Jones still finds itself only 120 points off its all-time peak.

FTSE 100 Top Movers

The top risers early on Tuesday are miners Antofagasta (2.81%) and Glencore (2.6%), as well as Anglo American (2.09%).

While at the other end, Tesco (-2.38%), following its results, BT Group (-1.82%) and Ferguson (-1.43%) are the day’s biggest fallers so far.

Tesco

Tesco felt the impact of the pandemic as 20% was wiped off the supermarket’s full-year profits even though it achieved “exceptionally strong” sales growth. The FTSE 100 company confirmed it made a profit before tax of £825m for the year to 27 February, 19.7% low than the year before, despite its sales in the UK growing by 7.7% to £39.4bn.

“In many ways it was a banner 12-months for Britain’s biggest supermarket, its pandemic offerings wooing customers away from its rivals and leading group sales 8.8% higher to £53.4 billion. Yet covid-related costs were an unavoidable factor, causing profits to plummet 20% to £825 million, turning off investors in the process,” said Campbell.

Robert Walters forecasts annual profit to surpass market expectations

Liam Roche
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Robert Walters forecasts annual profit to surpass market expectations

Robert Walters reported an 11% fall in its group net fee income in Q1 to £77.3m

Robert Walters (LON:RWA), the recruitment company, has forecasted its yearly profit to be above expectations after a strong performance in Q1.

The FTSE All-share company disclosed an 11% drop in its net fee income in Q1 to £77.3m, while its fees fell by 24%, 31% and 33% respectively in the previous three quarters.

The recruitment industry has been particularly affected by the pandemic as companies stopped hiring although competitors PageGroup and Hays showed some recent signs of optimism.

Robert Walters said in a trading update released on Tuesday that its activity across permanent, contract, interim and recruitment process outsourcing had all seen an increase in activity during the period confirming that 78% of the firm’s net fee income now came from its international operations.

The group’s Asia Pacific division’s net fee income fell by 3% to £32.8m with green shoots in Japan, the group’s most profitable business.

New Zealand and China returned to growth increasing net fee income by 16% and 58% respectively.

Robert Walters, chief executive, commented on the results as well as his confidence in the company’s ability to exceed market expectations in the coming year.

“I am pleased to report that the positive momentum in the Group’s performance since quarter two 2020 has continued through the first quarter of 2021, with candidate and client confidence sequentially improving across most of the Group’s global footprint. As a reflection of the improving market sentiment, we increased headcount during the quarter, with hiring focused in those geographies and disciplines showing the strongest signs of growth.”

“The improvement in market conditions has already enabled the Group to benefit from operational gearing. Whilst it is still difficult to be certain that there will be no further globally disruptive events ahead, the Board is currently confident that profit for the year is likely to be comfortably ahead of market expectations.”

Tesco sees profits fall by 20% due to pandemic

Liam Roche
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Tesco sees profits fall by 20% due to pandemic

Tesco hires Thierry Garnier as non-executive director

Tesco (LON:TSCO) felt the impact of the pandemic as 20% was wiped off the supermarket’s full-year profits even though it achieved “exceptionally strong” sales growth.

The FTSE 100 company confirmed it made a profit before tax of £825m for the year to 27 February, 19.7% low than the year before, despite its sales in the UK growing by 7.7% to £39.4bn.

A major factor was the extra costs due to Covid-19, which included £892m worth of bonuses for staff, as well as the company returning £535m of business rates relief to the government.

The supermarket chain said it had taken customers from a number of its competitors as its sales grew significantly at the beginning of the first national lockdown and more recently when consumers were stockpiling goods.

Tesco said it was expecting the gains it made in extra sales to lessen as lockdown restrictions ease.

Ken Murphy, chief executive of Tesco, commented on the company’s results, as well as the decision to maintain its dividend:

“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business. We have strengthened our brand, increased customer satisfaction and improved value perception. We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform. Sustainability is now an integral part of our business strategy and we’re doubling down on our efforts to reach net zero,” Murphy said.

“Our decision to protect and hold the dividend flat for this financial year demonstrates our commitment to shareholders. We believe we can create significant further value for them and every stakeholder in our business by continuing to focus on value, loyalty and convenience for customers, underpinned by strong capital discipline.”

Tesco also announced that it has named Thierry Garnier, the chief executive of B&Q’s parent company, as a non-executive director.

Non-core opportunities for Open Orphan

Andrew Hore
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Non-core opportunities for Open Orphan

Open Orphan (LON: ORPH) is planning to demerge a non-core asset inherited from the merger with hVIVO and not even mentioned in the merger document published at the end of 2019. There are other non-core assets that could be worth even more.
Management of the contract research outfit wants to focus on the services business, and it plans to demerge the wholly owned development IP assets. The major asset is HVO-001, which is a small molecule, immunomodulator drug that could become a treatment for severe flu.
The last time hVIVO mentioned HVO-001 was in its announcement when it reported its 2017 fi...

Aquis reverse takeover: Apollon Formularies plc

Andrew Hore
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Aquis reverse takeover: Apollon Formularies plc

AfriAg Global has held a stake in Apollon Formularies Ltd for nearly two years and it has decided to acquire all the shares in the company. This reflects the strategy of becoming involved in the medicinal cannabis sector.
The main operations are carried out by the Jamaican associate company, which holds medicinal cannabis licences. The licences allow therapeutic services and cultivation of medicinal cannabis. Although, this company is an associate Apollon Formularies is entitled to 95% of profit.
The long-term strategy is to go from growing cannabis all the way through to developing cannabis-b...

US dollar falls as consumer prices jump

Liam Roche
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US dollar falls as consumer prices jump

US dollar index down to 92 as Consumer Price Index rises by 6%

Consumer prices jumped up in March on a robust economic recovery from a year ago when the coronavirus pandemic took a stranglehold of the US economy, the Labor Department said on Tuesday.

The consumer price index increased by 0.6% compared to the month before, while it was up by 2.6% from the same month a year prior. The year-on-year gain is the highest since August 2018 and was significantly higher than the 1.7% recorded in February.

According to estimates by Dow Jones, the index was anticipated to rise by 0.5% on a monthly basis and 2.5% from March 2020.

The report “is the clearest indication so far that the signs of mounting inflation evident in business surveys and producer prices are feeding through to stronger consumer prices,” wrote Michael Pearce, senior U.S. economist at Capital Economics. “For all the focus on supply disruptions pushing goods prices higher, the strongest upward pressure on prices is coming from the services sector.”

Gas prices were the biggest contributor to the monthly gain, surging 9.1% in March and responsible for about half the overall CPI increase. Gas is up 22.5% from a year ago, part of a 13.2% increase in energy prices.

The US Dollar Index fell to 92.00 on the back of both the inflation news and the pause of the Johnson and Johnson vaccine pending further investigation by authorities.

“As inflation was only slightly hotter than expected, the dollar, which was rising ahead of the data, eased back down to levels it was trading prior to the publication of data,” says Fawad Razaqzada, Market Analyst at ThinkMarkets.

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