JLEN offers attractive income despite Coronavirus crunch

Jamie Gordon
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JLEN offers attractive income despite Coronavirus crunch
Despite the rough end to the year caused by Coronavirus, renewables asset management company JLEN (LON:JLEN) reported on its ability to remain a dependable source of income for its investors, and on recent additions to its portfolio, in its full-year results published on Thursday. The company reported that power price forecasts had driven down its NAV per share from 104.7p on 31 March 2019, to 97.5p a share on the 31 March 2020. However, it managed to achieve its impressive dividend target of 6.66p per ordinary share for the year ended March 31 – up from 6.51p the previous year, and with a target of 6.76p per share for the year ended 31 March 2021. It added that it had a 54.6% share price total return for the period since its IPO, or 7.5% annualised. The JLEN portfolio looked similarly healthy as the year ended, with its overall valuation increasing from £523.6 million to £537.1 million for the full year.

This increase includes three new acquisitions and its first entries into the hydro, battery and food waste sectors, as well as a €25m commitment to FEIP, which JLEN described as a ‘ limited partnership investing in predominantly greenfield European energy infrastructure assets’.

The company noted that its overall portfolio performance was slightly above expectations, with its anaerobic digestion assets outperforming during the year and its wind portfolio generation above budget as a result of ‘particularly good’ wind resource in the last quarter. On the contrary, its solar assets were slightly below budget for the year, due to grid outages and repair works, and its food waste project was negatively impacted by Coronavirus.

Outside of these considerations, the company said its other projects were displaying resilience. Its portfolio is now comprised of 36% wind, 25% AD, 23% Solar, 15% waste and wastewater and 1% Hydro and battery by value.

Responding to the results, JLEN Chairman Richard Morse, commented,

“In an extraordinary year featuring falling power prices and the onset of the Covid-19 pandemic, JLEN has provided reliable income for investors while continuing to diversify its portfolio.”

JLEN moving past Coronavirus and onto future green opportunities

Noting that the renewables sector remains comparatively robust versus other sectors, the JLEN statement read:

“While the Covid-19 pandemic has introduced a significant level of uncertainty into the global economy, established environmental infrastructure assets such as those favoured by the Company have generally performed resiliently and continued to generate cash even as other asset classes and market sectors have struggled. Investors have noted this, and the listed renewables sector is expected to continue to see investor support.”

Remaining confident in the good sentiment for expansion of green initiatives and carbon neutral projects, it continued:

“In the UK, there were also positive signs that the government was becoming increasingly committed to tackling climate change. The UK became the first major economy to make a legally binding commitment to reaching “net zero” carbon emissions (compared to 1990 levels) during the period, and there have also been positive signals regarding the inclusion of onshore wind and solar in future government subsidy rounds.”

Investor insights

Following the update, the company’s share price rallied modestly by 0.43% or 0.50p to 115.50p per share 11/06/20 16:35 BST. Its dividend yield stands at a generous 5.77%

Trump claims Fed “wrong so often” in the face of dire 2020 forecast

Bronte Carvalho
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Trump claims Fed “wrong so often” in the face of dire 2020 forecast
On Thursday, American President Donald Trump characteristically took to Twitter to express his rejection of the Federal Reserve’s grim economic forecast, as the FTSE 100 sank 3% to 6,132 during afternoon trade amid concerns over the longer-term impact of the coronavirus pandemic. Claiming that the Federal Reserve is “wrong so often”, Trump’s tweet comes a day after the Fed concluded its June meeting with a disappointing projected 6.5% GDP decline for 2020 and zero interest rates for the next two years as the global economy staggers to recover from recession. Director of the White House National Economic Council, Larry Kudlow, also took issue with the tone of the Fed’s report, alleging that the pandemic has already “completely flattened out”.

Anxiety Mounts Across the Pond

However, fears continue to rise in the US that a second wave of coronavirus infections is imminent, following the relaxation of lockdown measures in a number of states. In response, Treasury Secretary Steven Mnuchin dismissed the possibility of closing businesses to keep virus cases under control, stating simply, “We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage.” Although the Federal Reserve initially resisted Trump’s calls to drastically slash rates, since March it has cut its short-term interest rates to nearly zero and has launched a number of initiatives – including a $2.3 trillion stimulus package – to prop up the economy. The Fed analysis published on Wednesday corroborates reports that the funds rate would stagnate near zero for some time, even as Trump maintains his stance that the economy will bounce back. Meanwhile, Chair of the Federal Reserve Jerome Powell remains cautious. He explains, “I think what you see is a very weak second quarter, historically weak, and an expansion that builds momentum over time”. According to the John Hopkins University tracker, coronavirus cases in the US have reached 2 million and a number of states, including Texas and Florida, have reported a rise in cases following relaxed lockdown measures.

Greatland Gold shares bounce 8.70% on ‘outstanding’ drill results

Jamie Gordon
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Greatland Gold shares bounce 8.70% on ‘outstanding’ drill results
Precious metals exploration and development company Greatland Gold plc (AIM:GGP) published what it described as ‘outstanding’ drill results from Newcrest Mining‘s (ASX:NCM) drilling campaign at Greatland’s Havieron deposit in the Paterson region of Western Australia.

On the agreement between the two companies, Greatland’s statement read:

“Greatland and Newcrest have a Farm-in Agreement at Havieron, whereby Newcrest has the right to earn up to a 70% interest in Havieron by spending up to US$65m. The commencement of a decline at Havieron is targeted for by end of calendar year 2020 or early 2021 and the potential to achieve commercial production within two to three years from commencement of decline is also being investigated.” The results published on Thursday included ‘exceptional’ finds from infill drilling, with a 109m intersection at 6.3g/t of gold and 0.71% copper from 668 metres. Additionally, the company reported step out drilling intersects mineralisation 220m Northwest of previous intersections, with 82.1 m at 2.4g/t of gold and 0.08% copper from 557.6m. The company said that these results evidence the Havieron project’s position as a ‘game-changer’ in the Paterson region. Going forwards, Greatland said that its drilling activity continues towards its objective of delivering a maiden resource in the second half of the calendar year 2020. It added that it was continuing its step out drilling programme to test depth and lateral extent of mineralisation, and that Newcrest was planning approximately 80,000 metres of drilling at Havieron over the next 12 months. It continued, saying that, “environmental and baseline studies [were] progressing to support fast tracking of decline commencement at Havieron by end of calendar year 2020 or early 2021″, and that it was investigating the potemtial to achieve commercial production within two to three years from the commencement of decline.

Greatland Gold celebrates its results

Gervaise Heddle, Chief Executive Officer of of the company, commented,

“We are delighted to report the eighth consecutive set of excellent results from Newcrest’s drilling campaign at Havieron, including some of the best results to date.”

“The crescent zone of high-grade mineralisation has been extended and its continuity once again improved by outstanding infill results. Meanwhile, the extension drilling programme has now commenced and early results are very promising, with step out drill hole (HAD066) intersecting significant mineralisation 220 metres north west of previous high-grade results, and mineralisation remaining open to the north west and at depth.”

“These latest results, some of which are truly spectacular, sharpen our collective focus on the near-term objective of a maiden resource at Havieron, and further reinforce the potential to accelerate the timetable for commercial production.”

Investor insights

Following the update, the Greatland Gold share price rallied 8.70% or 1.00p to 12.50p per share 11/06/20 16:35 GMT. Newcrest followed suit, rallying 5.70% or 1.62 AUD to 30.04 AUD per share – UBS upgraded its guidance to a ‘Buy’ stance at the beginning of June.

Dow Jones dives 1,900 points as US unemployment claims hit 44 million

Jamie Gordon
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Dow Jones dives 1,900 points as US unemployment claims hit 44 million
After falling bellow 27,000 points on Wednesday, the Dow Jones followed the FTSE in making notable losses during Thursday trading. This followed a series of bleak Coronavirus updates and the painful Fed and OECD projections double-whammy.

During the Thursday session, the US market had to contend with the news that an additional 1.542 million Americans had filed for unemployment during the previous week. While this was both better than predicted and the lowest number since mid-March, it takes the total number of claims for the last three months to around 44 million – which completely dispels the glimmer of hope offered by non-farm gains last Friday.

In addition, the Dow is also having to take note of the possibility of a Coronavirus second peak, as US cases cross the two million mark. Leading the way in hospitalisations is Texas – little surprise, perhaps, given the resistance to lockdown measures.

With the grey outlook of Wednesday’s economic projections, alongside a dour employment and second wave situation, the Dow Jones dropped 1,862 points during trading. This took it down to 25,128 points, only days after hitting its 15-week high of 27,600.

Speaking on the reaction of Eurozone equities, Spreadex Financial Analyst Connor Campbell commented,

“With the US markets freaking out, the already hefty European losses levelled up. The DAX dropped 3.6% to hit 12100, with the CAC plunging a staggering 4% to just above 4850.”

“The FTSE, meanwhile, sank 200 points to 6125 – and it likely would’ve been even worse if the pound wasn’t also down 0.8% against dollar and euro alike. Sterling has hit the brakes on its recent rally, the currency bowing under the pressure of no-deal Brexit speculation.”

FTSE 100 sinks on fears of a second wave and warnings from the Federal Reserve

UK Investor Magazine
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2
FTSE 100 sinks on fears of a second wave and warnings from the Federal Reserve
The FTSE 100 sank on Thursday as the recent rally began to unwind on fears of a second wave of coronavirus and poor economic forecasts from the Federal Reserve. The FTSE 100 was down over 3% to 6,132 in afternoon trade on Thursday. The selling added to a poor week for the FTSE 100 which has seen the index retreat from 6,500 amid concerns the market has not properly understood the longer term impact of coronavirus. “There was no shaking the atmosphere of anxiety that has come to grip the markets this week, with Europe’s losses remaining at the nasty end of the spectrum,’ said Connor Campbell, Analyst at Spreadex. “With dire forecasts from both the OECD and the Federal Reserve, and fears that a second wave of coronavirus cases is emerging in the USA, the markets have spent the week being dealt one reality check after another.” These concerns were amplified by the news an number of US states had experienced an increase in the number of coronavirus cases. Texas and Florida were among those that had seen a rise in the number of cases, however, commentators pointed out that these were states that had never really taken the lockdown seriously. “The market has been rallying because they’re looking to 2021 and saying we’re going to get past this and then things will get sort of back to normal,” said Sean O’Hara, president of Pacer ETF Distributors to Reuters. “One thing that really could change the trajectory here would be if we have a big bounce in a second wave. That’s the big fear.” In London, the travel shares led the way down with Carnival and International Consolidated Airlines falling 15% and 9% respectively. The travel shares were the strongest performers in the recent equity market as investors bought into the beaten up sector on plans for the resumption of travel. Ocado was also weaker after it raised a £1 billion war chest to exploit the shift in grocery shopping habits during the coronavirus lockdown. The online delivery services said the funds would be allocated to their partner programme and an increase in capacity. Ocado shares were down 5.5% in mid afternoon trade.

Lloyds faces £64m fine over mortgage failures

Safiya Bashir
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Lloyds faces £64m fine over mortgage failures
Lloyds Banking Group has been fined £64m by Financial Conduct Authority (FCA) over its treatment of mortgage customers who are suffering payment difficulties. According to the City regulator, the banking group’s three brands did not provide support to customers in arrears between 2011 and 2015. Mark Steward, from the FCA, said: “By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. In some cases, customers were treated unfairly, including vulnerable customers.” The fine received by Lloyds Bank, Bank of Scotland, and The Mortgage Business is the biggest given by the FCA for mortgage failures. A Lloyds Banking Group spokeswoman said: “We have contacted all customers who were affected between 2011 and 2015 to apologise and have already reimbursed all who were charged fees at the time.” “Customers do not need to take any action. We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty, including investing in colleague training and procedures.” The banking group must pay the fine on top of £300m in compensation to the 526,000 customers affected. According to the FCA, all customers affected had already been contacted and reimbursed. Shares in Lloyds Banking Group (LON: LLOY) are trading -6.48% at 32.75 (1310GMT).

Centrica to cut 5,000 jobs – shares fall

Safiya Bashir
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1
Centrica to cut 5,000 jobs – shares fall
In plans to simplify its business structure, Centrica has said it will be cutting 5,000 jobs. The British Gas owner has a global workforce of 26,000, with about 80% of staff based in the UK. Chris O’Shea, Centrica’s chief executive, said that a simplified business structure will help the company grow. “I truly regret that these difficult decisions will have to be made and understand the impact on the colleagues who will leave us.” “However, the changes we are proposing to make are designed to arrest our decline, allow us to focus on our customers and create a sustainable company,” he added. Around half of the jobs lost will be from the corporate, management and leadership teams. Justin Bowden, National Secretary of the GMB Union, has criticized the move. He said: “A combination of the SVT cap and too little too late management decisions have left a once proud brand crippled and weak. Slashing thousands more jobs is not the answer. You cannot just cut your way out of a crisis.” Centrica is one of many companies to announce job losses this week. Mulberry and Lookers have also said they will be carrying out redundancies this year. Shares in the group (LON: CNA) are trading down 3.43% at 40.39 (1047GMT).  

Ocado raises £1 billion to fund accelerated expansion

UK Investor Magazine
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Ocado raises £1 billion to fund accelerated expansion
Online grocery delivery service Ocado (LON:OCDO) has raised in excess of £1 billion to fund the expansion of its services as demand for food delivery booms during the coronavirus lockdown. “Online grocery is experiencing an inflection point. The current crisis is proving a catalyst for permanent and significant acceleration in channel shift globally which we believe will redraw the landscape for the grocery industry worldwide,” said Tim Steiner, CEO and Founder of Ocado. The £1,007 million capital raise was made through an institutional placing, retail offer and convertible bond offering. The placing and retail offer was made at 1,960p representing a discount of 5.7% to the closing share price of 2,079p 10th June 2020. The majority of the £657 million raised from the issue of new shares was made by institutions. PrimaryBid facilitated the retail offer which amounted to 362,000 new ordinary shares. The convertible loan offer of £350 million had a 35% conversion premium to £19.60 and provides a 0.75% coupon. The Ocado capital raise will be used to grow capacity and expand their partner programme in the face of surging demand. Ocado estimates their target market is worth £2.8 trillion globally. “Ocado’s model is proven, providing a flexible platform with the best customer offer and economics, and we are already the partner of choice for nine of the world’s largest grocery retailers. The significant acceleration in online grocery provides us with greater opportunities than ever before,” Tim Steiner said. “As we emerge from this crisis Ocado has the opportunity to help our Ocado Solutions partners in the UK, and around the world grow faster, to welcome more partners in new markets, to innovate more and more quickly, and to further strengthen our leadership position. This Capital Raise gives Ocado Group the opportunity to accelerate our role in creating sustainable change in the industry, allowing us the flexibility to move at increased pace and capitalise on the full opportunity set over the medium term.” Ocado shares fell 6% to 1,950p on the results of the placing but are up 52% in 2020 and are the FTSE 100’s top performing stock this year.

Just Eat acquires Grubhub in $7.3bn deal

Safiya Bashir
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2
Just Eat acquires Grubhub in $7.3bn deal
Just Eat has announced plans to buy US-based app Grubhub in a $7.3bn (£5.8bn). When the merge is completed, Just Eat will become the world’s biggest food delivery company outside China. The announcement comes after the talks between Grubhub and Uber fell through due to antitrust concerns. “Like ridesharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants. That doesn’t mean we are interested in doing any deal, at any price, with any player,” said a spokesperson from Uber. In after-hours trading, shares in Grubhub spiked 7%. The deal will need approval from shareholders and is expected to be completed in the first quarter of 2021. Matt Maloney, the CEO and founder of Grubhub, will join the Just Eat’s board and will lead the combined group’s businesses in the states. “Supported by Just Eat Takeaway.com, we intend to accelerate our mission to be the fastest, best and most rewarding way to order food from your favourite local restaurants in North America and around the world. We could not be more excited,” said Maloney. Just Eat’s chief executive, Jitse Groen, said: “Matt and I are the two remaining food delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents.” “Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector. I am excited that we can create the world’s largest food delivery business outside China. We look forward to welcoming Matt and his team to our company and working with them in the future,” he added. When the deal is completed, Just Eat will have 70 million combined active customers globally. Shares in Just Eat (LON: JET) are trading at 7,644.00 (0937GMT). Shares in Grubhub (NYSE: GRUB) are up 1.95% at 59.05 (0937GMT).      

Somero Enterprises to cut costs in light of Coronavirus

Jamie Gordon
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1
Somero Enterprises to cut costs in light of Coronavirus
Florida focused building technology and concrete levelling specialist Somero Enterprises Inc (LON: SOM) announced on Wednesday that it would be implementing a series of cost-cutting measures to conserve cash, as it works to ascertain to implications of the Coronavirus pandemic. In spite of the move, the company said that it remains in a strong financial position, and remains confident in long-term growth prospects.

As per the actions management said it would undertake to protect the company’s financial position, Somero Enterprises said it would furlough approximately 20% of its workforce, as well as cancelling all 2020 bonus and profit-sharing payments for all employees.

The company continued, saying that it would curtail ‘discretionary spending’ across all of its departments, as well as further capital expenditure (excluding commitments to ongoing building expansion projects).

Somero predicted that the annualised pre-tax impact of these efficiencies would equate to a saving of approximately $5.0 million.

Somero Enterprises speaks on its financial position

The company’s statement read, “Somero entered this period of uncertainty with a strong balance sheet and good liquidity and its financial position has been strengthened further by these additional financial and cost saving measures. On 30 March, the Company indicated its net cash position exceeded US$ 24.0m. Management expects its net cash position at the end of 30 June will continue to exceed US$ 24.0m and the Company continues to have access to substantial additional liquidity through its US$ 10.0m line of credit. In addition, the Company will continue to closely monitor, and pursue as applicable, all US government funding opportunities for which the Company may be eligible. ”

Investor Insight

Following the update, the company’s shares booked a notable 4.77% or 10.50p rally, to 230.50p per share 17:08 BST 10/06/20. The company’s p/e ratio is 7.56, their dividend yield is generous at 6.37%.
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