Asiamet Resources receives upgrade following process change at BKM
Asiamet given a buy recommendation with a price target of 8.9p per share from Optiva
Asiamet Resources (LON:ARS) could be set to gain from a change at the BKM copper project to a concentrate tank operation from heap leach.
That is according to broker Optiva.
Asiamet said in March that it would soon begin a thorough review of the flowsheet for the new process at the deposit in Kalimantan.
Altering the processing method could enhance copper findings by 40% or more through substantially faster production rates of copper cathode, Optiva has said.
In addition, production could be maintained at 25,000t per year for the full eight years of the mine’s initial lifespan, extending the life of the mine before the conversion of resources from existing reserves.
Optiva heaped further praise on the Asiamet board which brought an end to the Indokal Limited SPA and secured further funds to consolidate the AIM-listed company’s balance sheet.
Optiva gave a buy recommendation with a price target of 8.9p per share.
FTSE and pound drift lower despite fresh all-time highs on Wall Street
The FTSE 100 closed at a 13-month high yesterday – its best price since just before the UK’s first lockdown – before following up on Friday by falling 0.36% to 6,917.21. While it is “not enough to properly endanger its recent rise”, it is “still a knock to any momentum the index had been building this week”, said Connor Campbell, financial analyst at Spreadex.
“What makes the FTSE’s minor dip more interesting was that it came alongside another slip from sterling, which was down 0.3% against the dollar and 0.1% against the euro,” Campbell added.
In the same way that concerns over vaccines and a third wave impacted the pound this week, concerns may now be spreading to the blue-chip index. “This in light of the WHO’s warning on Thursday that it is the lockdown measures in place since Christmas, and not the vaccine rollout, that has supressed covid-19 cases in the UK – a worry given the recent easing, and daily case numbers that, whilst falling, still number in the thousands,” said Campbell.
The tone was similarly muted in the Eurozone. The DAX remained the wrong side of 15,200 as it fell 0.2%, with the CAC flat a few points short of 6,170.
The Dow Jones, on the other hand, is looking to add 50 or so points this afternoon, an increase that would lift it to 33,550, and put it back in all-time high territory.
FTSE 100 Top Movers
Spirax-Sarco Engineering (2.34%), Compass Group (1.87%) and JD Sports (1.82%) are the top risers on early morning trading as the week draws to a close.
British American Tobacco (-2.48%), BAE Systems (-2.41%) and Glencore (-1.94%) are the bottom end of the FTSE 100 so far on Friday.
Boohoo secures new UK warehouse deal
Boohoo (LON:BOO), the online fashion brand, confirmed on Friday that it has signed a long-term lease for a warehouse in Daventry in a move that will improve its storage capacity.
The deal will bring 500 new jobs when the new warehouse opens for business, which could rise by a further 1,000 jobs as things develop.
The site, formerly belonging to Arcadia, will provide net sales capacity in excess of £4 billion, according to the fast-fashion brand.
The news comes as Boohoo strives to improve its public perception by improving its standards across its supply chains. This is following the firm facing backlash last year over how much the group paid its staff and poor working conditions.
The AIM-listed firm also said the new warehouse is scalable and as such it is expecting to invest in excess of £50m of the coming years to further increase its capacity.
The warehouse will start being used in Q2 of the current financial year which began on March 1.
Johnson Matthey considers selling £2bn health arm
Johnson Matthey conducting a ‘strategic review’ ahead of possible sale
Johnson Matthey (LON:JMAT), the speciality chemicals and sustainable technologies company, announced on Friday that it is considering offloading its health division, as the firm seeks to focus on other areas of the business.
The FTSE 100 company confirmed that it will be conducting a “strategic review” of the health arm, which chief executive Robert MacLeod says will be aimed at maximising value for shareholders.
“We have commenced a strategic review of Health, as we continue to focus resources to maximise value for our shareholders. As the world builds back greener following the pandemic, we have an important role to play in helping society address climate change through our sustainable technologies, and we remain focused on commercialising these and delivering our growth ambitions,” said McLeod.
Johnson Matthey’s health business is said to be valued at £2bn.
The firm will post its results of the financial year in May and is expecting them to meet the top end of their expectations.
Forecasts for Johnson Matthey’s underlying profit are at £469m, which would be a fall in the same figure from a year before, however that is down in large part to disruptions caused by the pandemic.
Robert McLeod made further comments on the company’s performance throughout the year:
“In what has been an extraordinary year, I would like to thank all of our employees for their dedication and efforts throughout this time. I am very pleased with the progress we made, particularly in the second half. As a result, group operating performance for the year is expected to be around the top end of market expectations, alongside continued strong management of working capital.”
“In the year, we continued to execute our growth strategy at pace. We are driving cashflow from our more established businesses to invest in our suite of exciting sustainable technologies that will enable decarbonisation and enhance circularity, including our portfolio of eLNO battery materials and hydrogen technologies.”
IMF lifts growth forecast for China in 2021
IMF now forecasting China to grow by 8.4% in 2021
China’s economic growth rate for this year has been raised by the International Monetary Fund (IMF) as the organisation says the route out of the pandemic-induced economic crisis is “increasingly visible”.
The IMF, based in Washington DC, increased its forecast for economic growth for China in 2021 to 8.4%, 0.3% higher than its prediction earlier in the year.
The Chinese economy grew by 2.3% despite the coronavirus pandemic in 2020, while the government set its own target of 6%, which many economists expect will be exceeded.
The renewed optimism around China appears to be a response to the anticipated global recovery.
“With global growth being stronger, you have more exports. The US rescue plan also will increase demand for China’s goods,” said Gita Gopinath, the IMF’s chief economist and director of research.
However, Gopinath did also say that Chinese growth was unbalanced and somewhat reliant government spending.
“It’s still very heavily reliant on public investment. And private consumption has not recovered as fast as we would have hoped.”
On order for it to be “a durable recovery, our hope is that fiscal measures and other support measures would work in the direction of supporting the recovery coming from the private sector, as opposed to the public sector”, she added.
The IMF raised its overall global 2021 growth estimate by 0.5% to 6%, while its projection for 2022 was lifted by 0.2% to 4.4%.
UK construction sector PMI reaches six-year high
PMI for the construction sector comes in at 61.7 in March
The lockdown restrictions across the UK have not heeded construction according to data that has emerged.
Data published on Thursday has revealed that construction activity is at its highest point in over six years.
IHS Markit‘s purchasing managers’ index (PMI) for the construction sector has come in at 61.7 for March. The recorded figure is a steep rise on February’s number of 53.3 and well above a previous forecast.
IHS Markit said there had been “robust growth” in all sub-sectors of construction, as well as finding that the most jobs have been created in the sector for over two years.
Tim Moore, Economics Director at IHS Markit, which compiles the survey, commented on the march data:
“March data revealed a surge in UK construction output as the recovery broadened out from house building to commercial work and civil engineering. Total activity expanded to the greatest extent for six-and-a-half years as residential spending remained robust, commercial projects restarted and infrastructure contract awards moved ahead,” Moore said.
“Improving confidence among clients in the commercial segment was a key driver of growth, with development activity rebounding in sectors of the economy set to benefit the most from the improving pandemic situation. The increasingly optimistic UK economic outlook has created a halo effect on construction demand and the perceived viability of new projects.”
“Constrained supplier capacity and stretched transport availability continued to pose challenges for the construction sector in March. Short supply of products and materials pushed up purchase prices at the fastest rate since August 2008.”
“Continued pressures on supply chains are expected in the near-term, but these concerns did little to dampen confidence about the business outlook. The latest survey pointed to the strongest growth projections across the UK construction sector since those reported during a post-election bounce back in June 2015.”
Will a change of leadership impact the Scottish Mortgage Investment Trust share price?
Scottish Mortgage Investment Trust Share Price
In February shares in Baillie Gifford’s flagship investment trust fell sharply due to a US tech sell-off, rising bond yields and a dip in Asia. However, Scottish Mortgage Investment Trust now appears to be at the early stages of a recovery. In just over a month shares in the trust are up by 19%. While since the beginning of the year, its share price remains down by just over 1%.
Change of Leadership
UK Investor Magazine reported in March that James Anderson, who manages the trust alongside Tom Slater, will step down in April 2022 after nearly 40 years at Baillie Gifford. This could raise concerns for investors over the long-term performance of the fund as it changes hands in a year’s time. After all, when one buys into an actively managed trust or fund, it is the manager’s expertise that offers value.
In the case of the Scottish Mortgage Investment Trust, its recent success can certainly be put down to the competence of Anderson, who generated impressive profits through well timed acquisitions of Tesla, Amazon and Alibaba, among others.
Investors are sometimes made nervous by such a change in leadership. Ryan Hughes, head of active portfolios at AJ Bell, discussed investors’ concerns and looked towards the future of the Scottish Mortgage Investment Trust without Anderson.
“News that James Anderson is stepping down as joint portfolio manager on the Scottish Mortgage investment trust will potentially cause some worry to the thousands of investors who have made fantastic returns over many years,” says Hughes.
“However, it’s important to remember how Baillie Gifford work with the investment process being firmly embedded in the team-based approach and experienced investor Tom Slater remaining at the helm. With Anderson not stepping back for over a year, this has been well planned with a clear handover process for Lawrence Burns to become deputy manager on the trust to support Slater.”
The continuation of leadership at the helm, along with the current team culture, could mean that there are no radical changes to the company’s portfolio when Anderson does leave. This could go some way to quelling investors who will be keeping an eye on the Scottish Mortgage Investment Trust share price.
musicMagpie float to boost Northern VCTs
musicMagpie, the UK’s largest mobile phone recycler, is planning an AIM flotation. There are no financial details in the announcement, but the company’s VCT backers placed a value of well over £90m on the company at the end of September 2020 and the float valuation is likely to be much higher.
Northern Venture Trust (LON: NVT) says in its accounts that it has a 9.8% equity stake in the technology reseller valued at £10.4m. That suggests a valuation for marketMagpie of £106m. However, there was a mixture of ordinary and preference shares, plus £1.39m of loan stock included in the valuation but it is not clear if the loan stock is taken into account in the equity stake. Excluding loan stock, the valuation would be £92m.
Stockport-based musicMagpie, which is the new holding company for Entertainment Magpie Group, started out as buyer and seller of used CDs and DVDs and it branched out into recycling and reselling technology, including smartphones and tablets. It operates a business in the US under the Decluttr brand – non-European revenues were nearly one-third of the group total.
In the 18 months to November 2019, revenues were £191.6m and the reported loss was £2.98m. There was a £3.3m cash inflow from operating activities.
Subsequent trading has been good as the company benefits from its online focus and greater awareness of environmental concerns. The 2019-20 performance is likely to have been better than the previous results.
VCTs
AIM-quoted Mercia Asset Management (LON:MERC) owns Northern Venture Managers, which has three VCTs with stakes in Entertainment Magpie Group: Northern Venture Trust, Northern 2 VCT (LON: NTV) and Northern 3 VCT (LON: NTN). Northern Venture Managers funds owned 36.7% of the company at the end of September 2020.
Entertainment Magpie Group generated a significant amount of uplift in portfolio value of the Northern Venture Trust in the year to September 2020. The flotation of the new holding company musicMagpie should provide a further uplift in valuation.