ProPhotonix illuminated by five year supply agreement

Jamie Gordon
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2
ProPhotonix illuminated by five year supply agreement
LED illuminations systems and laser diode module designer and manufacturer ProPhotonix Ltd (LON: PPIX) announced that it had won a five year supply agreement for custom LED illumantion devices, from a ‘Fortune 50 conglomerate’.

The agreement will run for five years unless terminated in accordance with provisions laid out in the Agreement. ProPhotonix anticipates $1 million per annum in revenue, though it noted the Agreement does not require the customer to make any purchases.

The Company said the ‘custom LED illumination devices’ described in the Agreement feature a ‘unique design’, which incorporate, “multiwavelength configurations and automated software to control spectral balance and the automated configuration of hardware deployment”.

ProPhotonix comments

Tim Losik, President and CEO of the Company, commented on the Supply Agreement,

“The Agreement is the culmination of nearly four years of work with our customer, ultimately delivering innovative solutions and capability that will provide them with a superior market solution. These solutions do more than just provide light – they communicate with the control features of the entire system through our custom software and design features. Every engineering discipline at ProPhotonix including optics, electronics, mechanics, materials, software and manufacturing, participated from concept to commercialization. With over 15 years’ experience in custom LED and laser module design, ProPhotonix delivers solutions across a wide range of industries including the dental, medical and pharmaceutical industries.”

Investor notes

The Company’s shares are down 2.29% or 0.040p to 1.71p per share 10/10/19 16:30 BST. The Group’s p/e ratio and dividend yield are unavailable, their market cap is £1.82 million. Elsewhere in the tech sector, there were updates from; Universe Group plc (LON: UNG), Microsaic Systems PLC (LON: MSYS), Petards Group plc (LON: PEG), SCISYS Group PLC (LON: SSY), Pebble Beach Systems Group PLC (LON: PEB), ULS Technology PLC (LON: ULS) and Midwich Group PLC (LON: MIDW).

Donald Trump trade war tweet: sign of progress or more clickbait?

Jamie Gordon
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3
Donald Trump trade war tweet: sign of progress or more clickbait?
I promise we’re as bored of this as you are. Its almost as if the political-macroeconomic record has buffered and keeps playing the same inconsequential monthly routine on repeat. Donald Trump tweeted on progress being made with China, following rumours that it was open to the idea of a ‘partial trade deal’. Though we’ve been here many times before, markets were happy to giddily ponder upwards on the president’s bluster. Closer to home, the pound waited tentatively following manageable GDP data, as the outcome of the Boris Johnson-Leo Varakar talks are yet to be made public. The likelihood is that little progress will have been made, and we’ll be in the same situation as before. A No-Deal Brexit looking more likely, followed by impassioned rebuttal in Commons, followed by more legislative buffers to anything happening – yawn. With most hoping the US will ease the uneasy sentiments in markets, Trump’s indifferent attitude was echoed by some US analysts who believe the current tariff situation is ‘good politics’ for Trump. Alas, markets were happy to chase the story of trade war progress today, and who can blame them? When there’s no actual news to be heard of – as we prepare for the rapturous finales of our various political stalemates – indices can do little but respond to empty words and mediocre fundamentals. For now, though, I’ll smugly lament the no-story stories and like my odds of being right: I look forward to being wrong. Speaking on the day’s modest activity, Spreadex Financial Analyst Connor Campbell, commented,

“As the latest trade talks between the US and China get underway, the markets started to heat up once again as they let a tentative form of optimism take hold. And yes, we’ve been here before.”

“Despite a gloomy start to the week, there have been enough titbits in the last couple of days to keep hopes of trade progress alive. First there was Wednesday’s claim from a Chinese official that Beijing is open to a ‘partial trade deal’ in order to limit the negative impact to the country’s economy.”

“And then, this Thursday, Donald Trump tweeted that he would be meeting with Vice Premier Liu He at the White House on Friday – a step up from Washington’s usual high level negotiating team of Robert Lighthizer and Stephen Mnuchin, and perhaps a sign that something more substantial could come out of the talks.”

“Without getting too ahead of themselves, the markets pushed higher after Trump’s comments. The Dow Jones neared a one-week high as it crossed 26500 following a 150 point increase, while the DAX added 0.4% to strike its own 8-day high. The FTSE climbed half a percent, allowing the UK index to once again tickle 7200, a level it has struggled with since the market’s October-opening bloodbath.”

“Elsewhere the pound had another mixed session as it awaited the outcome of talks between Boris Johnson and Leo Varadkar. It clung onto a 0.1% rise against the dollar all day, but saw its losses against the euro widen following an unexpectedly negative August GDP reading, a 0.3% slide sending it to a fresh 5-week low.”

Elsewhere in political and macro economic news, there have been updates from; UK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategy, the Supreme Court’s ruling, the collapse of Thomas Cook (LON: TCP), ECB stimulus, the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).

Belgium’s UCB set to purchase RA Pharmaceuticals

Ishen Patel
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10
Belgium’s UCB set to purchase RA Pharmaceuticals
One of Belgium’s flagship companies UCB is set to purchase US based RA Pharmaceuticals in a $2.1 billion cash deal, as reported earlier today. Early on Thursday morning, reports suggested that both parties had formalized a fee for RA which enables the Belgian Pharmaceutical giant access to new treatment opportunities in neurology and immunology. UCB’s Chief Executive Officer Jean-Christophe Tellier expressed his optimism in this statement “Ra Pharma is an excellent strategic fit addressing multiple areas of UCB’s patient value growth strategy” Tellier also added “Upon closing, the acquisition will add to our strong internal growth opportunities – six potential product launches in the next five years, strengthening our neurology and immunology franchises with late and early-stage pipeline projects. In addition, the combination will provide us with the opportunity to become a leader in treating people living with myasthenia gravis” The newly formed acquisition is expected to give UBS access to US markets and contacts, whilst driving UCB’s earnings per share (EBR: UCB), and increasing profit from 2024 onwards. As a result, shareholders of RA Pharma (NASDAQ: RARX) will receive $48 per share held, as reported in a joint statement from both parties. This figure represents a 93% premium based on the average closing stock price of RA prior to finalizing the takeover. As the news came in of this deal, the price of RA Pharmaceuticals saw a premarket appreciation of 102.03% which shows the optimism from traders to invest into this merger. The stock price leveled during the course of the day at $22.80. UCB have also benefitted today, seeing a small rise in their share price with a 1.46% increment. The takeover presents a new challenge for UBS, with an attempt to integrate into a foreign markets. UBS look to have a long term plan in place, similar to Dechra Pharmaceuticals However, this takeover comes at no surprise as UBS announced back in January their new strategic growth plan. As a result, UBS will strengthen their presence in the innovation sector of pharmaceuticals in Massachusetts. The takeover will be funded by both existing cash resources and new term bank loans handled by Bank of America Merrill Lynch (NYSE: BAC) and BNP Paribas Fortis (EPA: BNP).

Dunelm face crashes in stock prices despite revenue increase

Ishen Patel
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10
Dunelm face crashes in stock prices despite revenue increase
Dunelm (LON: DNLM) have seen a drastic downturn in their share prices as sales and revenues fell in their most recent financial report. In Thursday trade, the stock price of Dunelm fell by 14.23% after opening lower 793.5p this morning, eventually crashing to lows of 700.2p In Dunelm’s most recent trading update, reports suggested that sales grew more than 6% in the past three months. However, in the previous quarterly report this fell way short of the estimated 11% increase. As many firms still await the outcome of the Brexit saga, Dunelm in a press report alluded to the uncertainty of Brexit mounting political tensions leading to poor performance. Dunelm was founded in 1979 as a market stall selling curtains and subsequently opened its first office in Leicester in 1984. With over 170 stores nationally, Dunelm have a market cap of £1.4 billion and are looking to increase digital exposure through website sales. Steve Miley from Ask Traders commented “‘Expectations for sales were in the region of 11 per cent, so the increase reported is a little disappointing. After a strong end to the previous year, expectations were riding high. Brexit uncertainty, consumers reining in spending and shopping habits changing are challenges which appear to be starting to catch up with the homeware retailer” In the previous quarter, sales grew by over 10% hence the recent reports published show both underperformance and distance between projections and outcomes. Dunelm have build a strong brand reputation in the furniture industry, and certainly have the recent figures to back this up, however this shows a slow period after a while. Russs Mould from AJ Bell said the numbers “would still be the envy of many retailers, but arguably not enough to sustain the excitement behind the Dunelm story”. Mould also added “Dunelm’s first quarter trading update didn’t receive the kind of reception management may have expected. The home furnishings chain defied retail gloom to post a series of positive trading updates earlier in 2019 but the stalling share price suggests the strong performance has already been priced in by the market.” Higher authorities from Dunelm have attributed a few factors to the crash in share prices noting the weakening pound, political uncertainty with Brexit and a soft market. Looking at other news in retail, there have been updates on McColl’s Retail Group PLC (LON: MCLS), Boohoo Group PLC (LON: BOO), N Brown Group PLC (LON: BWNG)

Avesoro Resources guidance under review as it struggles to strike gold

Jamie Gordon
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1
Avesoro Resources guidance under review as it struggles to strike gold
Precious metals mining company Avesoro Resources Inc (LON: ASO) has said its full-year guidance remains under review as operational difficulties weigh on gold production volumes. Following a switch to contactor mining at its Youga and New Liberty contracts, the Company said its production quantities had been adversely affected during the quarter. Third quarter production at it New Liberty venture dived 57% compared to Q2, down to 8,059 ounces – though its also attributed this dip to ‘heavy rainfall flooding the main pit’. Similarly, its Youga prospect’s output dropped by 6%, to 14,619 ounces. It said a degree of this drop owed to a security issue which ‘hampered mining fleet availability’. Total gold production of 22,678 ounces during Q3 brings the year-to-date volume to 102,113 ounces. Total material movement of 10.6Mt during Q3 represents a 14% decrease on the previous quarter.

Avesoro Resources comments

Company CEO Serhan Umurhan added the following insights to the update,

“Following the transition to contractor mining at New Liberty and Youga earlier this year, both mines have experienced operational issues that adversely affected our mining rates and gold production performance in the Quarter.”

“However, I am confident that operational performance will improve at both mines during Q4, with the end of the wet season allowing New Liberty to materially enhance productivity in the near term despite the recent pit-wall failure. Meanwhile, an additional 15 trucks, 6 excavators, a rock drill and further auxiliary equipment will be available at Youga later this week at the mining contractors cost, and we expect that this will result in an uplift in production during Q4.”

“Given a number of operational uncertainties our full year production guidance remains under review. The Company intends to provide updated guidance once operational performance has stabilised for a sustained period of time.”

Investor notes

The Company’s shares have dipped by 2.75% or 2.54p to 89.96p per share 10/10/19 14:08 BST. Analysts from finnCap reiterated their ‘Corporate’ stance on Avesoro Resources stock. The Group’s p/e ratio and dividend yield are unavailable, their market cap is £72.60 million. Elsewhere in the mining and minerals sector, recent updates have come from; Griffin Mining Ltd (LON: GFM), Alien Metals Ltd (LON: UFO), Highland Gold Mining Ltd (LON: HGM), Kavango Resources PLC (LON: KAV), URU Metals Ltd (LON: URU), Resolute Mining Limited (LON: RSG) and Bisichi Mining PLC (LON: BISI).

N Brown swings to profit with online retail focus

Jamie Gordon
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3
N Brown swings to profit with online retail focus
Clothing retail conglomerate N Brown Group plc (LON: BWNG) shares bounced on Thursday following the publication of its half-year results, which revealed a positive turnaround in the Company’s fundamentals. The Group, which owns Jacamo, Simply Be and JD Williams, saw its profits surge on the back of a hike in online sales, which now comprise 84% of product revenue. Despite a 5.4% contraction in Group revenue, the Company swung from a £23.8 million loss to a £14.7 million profit, in a year-on-year comparison of the six month period ended 31 August. Similarly, adjusted EBITDA rose 4.0% to £54.1 million and adjusted profit before tax grew 3.9% to £38.1 million. N Brown shareholders also enjoyed some progress, with adjusted EPS bouncing 6.0% to 8.87p, while the Group’s interim dividend for the period remained flat at 2.83%.

N Brown comments

Steve Johnson, Chief Executive, said,

“We announced our new strategy in May to return N Brown to sustainable profit growth and we have made good progress over the first half of the year.”

“In particular, we have delivered on our strategy of growing digital revenue across Simply Be, JD Williams, Jacamo and Ambrose Wilson. This has been achieved by taking a more targeted approach to marketing and customer recruitment. The retail environment remains heavily promotional, but we are concentrating on continuing to improve our customer proposition and ensuring we operate as efficiently as possible, which has led to an increase of 4% in adjusted EBITDA for the period. We remain focussed on implementing our plans and the Board’s full year expectations are unchanged.”

Investor notes

Following the announcement, the Company’s shares have rallied 9.10% or 9.10p to 109.10p per share 10/10/19 14:18 BST. Peel Hunt analysts reiterated their ‘Buy’ stance on N Brown stock, the Group’s p/e ratio stands at 4.68 and their dividend yield is enticing at 6.59%. Elsewhere in retail and on the highstreet, there have been updates from; ScS Group PLC (LON: SCS), McColl’s Retail Group PLC (LON: MCLS), Boohoo Group PLC (LON: BOO), Burberry Group plc (LON: BRBY), Associated British Foods plc (LON: ABF), H&M (STO: HM-B) and Sports Direct International Plc (LON: SPD).

Real Estate Investors switches to Fixed Rate Loan with Lloyds

Jamie Gordon
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1
Real Estate Investors switches to Fixed Rate Loan with Lloyds
REIT Real Estate Investors plc (LON: RLE) announced that it had changed its variable interest rate facility to a fixed rate loan facility. The loan sum amounts to £10.0 million and will be fixed at an annual interest rate of 3.129% per annum until 30 November 2023. Following completion of the new facility, the Company noted that 77% of its debt will be in fixed interest rate form, without increasing the average cost of its overall debt, which remains at 3.7%. Real Estate Investors added that its new facility with Lloyds is secured against a portfolio of the Group’s properties. Currently, the Company holds a total portfolio of 1.53 million sq ft of commercial property across all sectors in the Midlands.

Real Estate Investors comments

Responding to the update, Company CEO Paul Bassi stated,

“In line with our stated strategy, we have taken advantage of the low interest environment to fix this facility with Lloyds Bank which has given us increased certainty over our cost of borrowings without raising our overall costs.”

“We are well placed, given our existing cash and banking facilities, to maintain our opportunistic approach to acquiring further criteria compliant assets and we anticipate concluding some of our pipeline acquisitions in the near future.”

Investor notes

The Company’s shares have rallied 1.89% or 1.00p following the news, up to 54.00p per share 10/10/19 12:58 BST. Liberum analysts reiterated their ‘Buy’ rating on Real Estate Investors stock, their p/e ratio is 13.77 and their dividend yield is inviting at 6.72%. Elsewhere in property development and estate agency news, there have been updates from; Shaftesbury plc (LON: SHB), Rightmove Plc (LON: RMV), Berkeley Group Holdings Ltd (LON: BKG), Redrow plc (LON: RDW), U+I Group PLC (LON: UAI), Hunters Property PLC (LON: HUNT) and GCP Student Living plc (LON: DIGS).

Castleton Technology shares sink 40% after poor trading update

Ishen Patel
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5
Castleton Technology shares sink 40% after poor trading update
Castleton Technology PLC (LON: CTP) have announced their six month trading figures. Performance has slipped since the last update as stock prices fall drastically. They provide software and managed services to the public and not for profit sectors. Working alongside 600 social housing providers in the UK, Australia and Ireland, the shares of Castleton have seen a decline of 40.86%. The company reported revenues of not less that £11.6 million in six months to September 30th, significantly less than sales of £12.9 million in the same period in 2018. Adjusted EBITDA of not less than £2.9 million and cash generation of of not less than 79% EBITDA. Dean Dickinson, CEO of Castleton said “The second quarter of the financial year has been significantly weaker than we expected particularly compared to the strong comparable period last year. This is primarily due to revenues of a one -off nature. Whilst this is difficult in the short term it highlights the importance of transitioning away from one – off revenues and focusing our efforts on growing our recurring revenues. In the first quarter of the year we reorganised the Group to streamline our sales and delivery functions . Embedding this has both taken longer and been more disruptive than we anticipated, however it positions the Group well for the longer term. Despite these short term challenges, we are confident that the move to ‘One Castleton’ will enable us to offer customers better service and drive future growth.
Recurring revenue has accounted for 65% of total revenue in the period, which shows little progression in the 6 month term.
Trading in HY2019 has fallen below expectations, due to both product and professional services being lower than expected.
However, the with the increase in recurring revenue this has still not been enough to offset the loss of one of revenue. As a result EBITDA and operating cash are lower than the strong results of the same period last year.
Castleton are still confident in the companies ability to show stronger progress in the second quarter, despite poor performance reports.
The Castleton board of directors have long term strategy plans which need to be formalized. These include the merger of the Company’s managed services and software divisions.
The next set of results are being published on 5th November 2019 where the next update will be scrutinized by board members.
In the technology sector, there have been updates to Facebook (NASDAQ: FB), Blue Star LTD (LON: NMCN), Facebook (NASDAQ: FB) Xeros Technology (LON: XSG).

Stanley Johnson lauds Extinction Rebellion ‘crusties’

Jamie Gordon
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0
Stanley Johnson lauds Extinction Rebellion ‘crusties’
Stanley Johnson, former Conservative MEP and father of the current prime minister, stated that the work being done by the Extinction Rebellion is “extremely important”. Speaking at an event hosted by the organisation at Trafalgar Square, Stanley Johnson showed solidarity with their cause, as well as speaking in defence of his son’s remarks about the protesters. Speaking at a book launch on Monday prime minister Boris Johnson stated, “I am afraid that the security people didn’t want me to come along tonight because they said the road was full of uncooperative crusties and protesters of all kinds littering the road. “They said there was some risk that I would be egged.” In response, the prime minister’s father stated that the comments were made in jest, and that the entirety of the Johnson family understood the importance of environmental preservation. “I’m showing up here because I think what they [Extinction Rebellion] are doing is extremely important.” Said Stanley Johnson. “From tiny acorns, big movements spring. We have been moving far too slowly on the climate change issue.” “I regard it as a tremendous compliment to be called an uncooperative crusty, that was a remark made in humour.” “I don’t believe there is a single dissenting voice in the family.” He said. “Don’t forget we grew up in the country, we grew up on Exmoor, nature is in our blood.” “I don’t think you need to say ‘will he [Boris] listen [to the protests]’. If you listen to what he said on the steps of Downing Street that very first day, he ended with an appeal for movement on the environment and animal welfare, and that is a very, very good sign.” During the protests in April, some 1,130 arrests were made during the 11 day duration of the protests. In this round of demonstrations, 600 arrests have been made thus far and 500 additional police officers will be sent to London from around England and Wales. In response to the arrests, organisers have called upon protesters in custody to refuse bail conditions, in attempt to fill London’s police cell capacity. “By not co-operating we fill police cells for longer which means arrested individuals will be sent further and further afield.” Said one of the organisers. The Met responded by saying it had capacity for 650 people in police cells, and added, “contingency plans are in place, should custody suites become full”. Following a letter from Metropolitan Police Commissioner Cressida Dick, the Home Office said it would review police powers. For now, the police and politicians alike will have to deal with what they’ll view as an inconvenience that won’t go away – and to that extent the protests are serving their purpose. Elsewhere in political and macro economic news, there have been updates from; Hong Kong protester shooting and China’s strategy, the Supreme Court’s ruling, the collapse of Thomas Cook (LON: TCP), ECB stimulus, the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Hilary Benn’s Brexit delay bill, Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).

Dollar hits one week low following sour China negotiations

Ishen Patel
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1
Dollar hits one week low following sour China negotiations
The US Dollar has hit a one week low this morning as negotiations in Washington commenced between US and China. Yesterday, it was reported that Trump had made the controversial decision to limit China visa issuance, escalating the situation. The move to ban Chinese Nationals entering the USA followed the stance by the US President against the treatment of Muslims in the Xinjiang region. The prospects of a trade agreement between the two nations kept market traders on edge as the dollar slipped. However, if China were to change its stance and move to give compromise to the United States, this may add to the weakening of the Chinese Yen. As trade talks commenced, the US Dollar fell by 0.3% to 9,884 representing a one week low. Stuart Oakley, global head of flow FX at Nomura drew attention to Chinese Yen fix as he said “The USD/CNY fix (by China’s central bank) will be key to watch over the next 4-5 sessions. It’s been pegged around 7.0730 for several weeks. A move away from that level will give us a clear signal as to how the trade negotiations have gone.” In the latest news from Washington, it seems that negotiations have reached a stalemate. China have refused to discuss forced technology transfers or the use of artificial intelligence. If this continues to be the trend for negotiation talks, then negotiations may end earlier than scheduled for both Thursday and Friday. However, Bloomberg have reported that Trump is willing to give concessions. This involves a currency deal in an attempt to gain electoral success. Furthermore, investors and traders have also been waiting for further information. The updates to the Federal Reserves latest policy will dictate whether the Central Bank will cut rates or not. Negotiations between China & US constantly ebb and flow, as China have been reported to accept a trade deal. How these talks commence will dictate the changes in the Dollar, and as more information is released traders will be quick to pounce on short term fluctuations.
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