https://platform.twitter.com/widgets.js Responding to yesterday’s currency movement, the US Treasury stated, “China has a long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market. “In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past.” Through the course of trading yesterday, Chinese currency recovered to regular form at over 7 against the dollar, having dipped as low as 6.92 – the lowest rate seen in a decade. Today, US officials will go to the IMF to discuss potential reactionary and counteractive measures to China’s rehashed market mechanism. As it stands, any hope of a resolution to the drawn-out trade tensions seems as distant as it did some 18 months as the first round of – largely superficial – trade talks broke down.China is intent on continuing to receive the hundreds of Billions of Dollars they have been taking from the U.S. with unfair trade practices and currency manipulation. So one-sided, it should have been stopped many years ago!
— Donald J. Trump (@realDonaldTrump) August 5, 2019
US labels China ‘currency manipulator’ but receives little sympathy
Following yesterday’s currency war fears and Donald Trump’s verbal retort, Wall Street’s main stock market indexes saw their worst day of trading in 2019. Today, the market reacts to President Trump calling China ‘currency manipulators’, the first accusation of its kind from a US president since Bill Clinton’s administration in 1994.
Boohoo shares rally on potential Karen Millen acquisition
Online fashion retailer Boohoo Group PLC (LON: BOO) has seen its share price rally on Tuesday morning, following news of its potential acquisition of clothing brands Karen Millen and Coast.
The online retailer specialises in own-brand fashion, and has acquired Little Thing and Nasty Gal (2017) since its inception in Manchester in 2006. The Company currently has 13 million active customer accounts across its existing brands globally – and has potential to grow depending on its strategy following the prospective acquisition of Karen Millen.
The Karen Millen holding company saw losses of £5.7 million in the year ending February 2018, following losses of £11.9 million the previous year. In June, its Icelandic owners Kaupthing Bank put it up for sale.
Any potential deal for Karen Millen would see parts of Coast included in the deal, after the brand was acquired out of administration last autumn by Kaupthing.
However, as yet Boohoo have not made clear what they would do to the highstreet offerings of Karen Millen, or more specifically whether or not they would make any guarantees about the jobs of the Company’s existing staff members.
Combined, Karen Millen and Coast employ 1,100 people throughout 32 stores and 177 concessions in the UK, with Ocean also holding concessions in the Middle East, Singapore and Malaysia.
Sales proceedings have been going on for six weeks and are being led by Deloitte, through a process of pre-pack administration.
Comments on Boohoo acquisition of Karen Millen
Richard Lim, chief executive of Retail Economics, said pre-pack administration allows buyers, “to dispose of the parts of the business that they deem unprofitable”. “In the case of Boohoo, they are looking at value in the online proposition of Karen Millen, and they probably prefer to pick it up as a pre-pack, which will enable them to dispense of the physical stores,” He continued, “It is well known Karen Millen has been struggling in the past few years. But Boohoo will look at it and see another potential revenue stream. “Karen Millen is a different customer segmentation for them, but one that I think could flourish as an online-only proposition. Boohoo will use all the expertise they have acquired in recent years using social media, and bring the brand to a newer audience.”Investor notes
The Company’s shares are up 3.52% or 8.10p to 238.20p a share 06/08/19 12:22 BST. Analysts from Peel Hunt and Liberum Capital reiterated their respective ‘Buy’ stances on Boohoo stock. The Group’s p/e ratio is 54.40 and their dividend yield is currently not available. Elsewhere in retail and on the highstreet, there have been updates from; Burberry Group plc (LON: BRBY), Associated British Foods plc (LON: ABF), H&M (STO: HM-B), Sports Direct International Plc (LON: SPD), and Superdry (LON: SDRY).Jubilee Metals spike in H1 revenues and projects soon operational
Copper ores production company Jubilee Metals Group PLC (LON: JLP) booked bumper growth in revenues and profit during the first half.
The Company’s revenue grew 75% between H2 2018 and the end of H1 2019, up to £14.36 million. Operational earnings were also up by 47% to £5.64 million during the same period.
Across its operations, the Company’s volume of chrome concentrate rose ‘significantly’ to 164,636 tonnes during H1 2019. Jubilee Metals also announced that its DCM fine chrome and Windsor chrome operations became operational, with JV PGM recovery plant for the Windsor PGM project commencing in June and its grinding circuit becoming operational in July. The Windsor PGM project has yielded 212,616 tonnes of PGM rich material and is expected to produce saleable PGM concentrates in August.
Further, the Company’s Sable Zinc Kabwe Refinery became effective, it commenced the accelerated implementation of the upgrade zinc, vanadium and lead circuit and it aims to bring the copper refining line into operation in the second half.Jubilee Metals comments
Leon Coetzer, Chief Executive Officer, says,
“I am delighted to present Jubilee’s Six Monthly Operations Update which showcases the exceptional progress we continue to make across our portfolio of metals processing projects – delivering against our targeted performance and bringing new operations on-line.”
“Such a marked increase in combined revenue – 75% against H2 2018 – reflects our sustained focus on increasing and diversifying our earnings base and maintaining strong margins. This has been achieved through a considerable uplift in production figures across our portfolio, both in chrome and PGMs. Notably our chrome performance has seen significant growth which is attributable to our ground-breaking DCM fine chrome operation and Windsor chrome operation being brought online during the period. Replicating this success, we expect to see a step-up in PGM production following the Windsor PGM project being brought into operation during July 2019.”
“With the acquisition of Sable Zinc Kabwe Refinery for the processing of the Kabwe material fully completed, our technical and operational teams are focussed on bringing the project on-line against accelerated timelines. This means we will soon be adding zinc, vanadium, lead and copper to our commodity basket, an important element of our on-going development strategy to diversify our earnings through additional jurisdictions and increased metal exposure.”
Investor notes
The Company’s shares have rallied 1.09% or 0.035p to 3.24p a share 05/08/19 16:26 GMT. Neither a p/e ratio nor a dividend yield are available on this stock, Jubilee Metals has a market cap of £59.37 million. Elsewhere in the mining and minerals sector, recent updates have come from; Cora Gold Limited (LON: CORA), Serabi Gold PLC (LON: SRB), Kavango Resources PLC (LON: KAV), Ariana Resources plc (LON: AUU), Rio Tinto plc (LON: RIO) and Bushveld Minerals Limited (LON: BMN).Yuan drops to lowest dollar comparison in a decade, trade war re-escalates
Its not over because the fat president sung. With one hand probing the coffers of the US Fed and his other fist shaking at Xi Jinping, you couldn’t accuse President Trump of being docile last week. Today, Yuan devaluation saw China play its first hand in what appears to be the re-opening of the Sino-US royal rumble, but this was in response to Donald Trump’s provocation last Friday.
As told by Connor Campbell, financial analyst for Spreadex,
“The financial markets got a Trump thumping on Friday morning, the European indices left reeling by the President’s shock – but not that shocking – escalation of the trade war with China.”
“Investors probably should have been prepared for this kind of move from the US considering Trump’s negotiations-tanking Twitter rant earlier in the week. The bellicose leader announced that, if a deal can’t be struck between the two superpowers, a fresh $300 billion of Chinese imports would be slapped with a 10% tariff as of September 1st. This on top of those goods already being penalised.”
“Just as it had picked itself up after its post-Fed overreaction, the Dow Jones received a swift kick to the gut, dropping around 300 points to sit at its worst price in over 2 months. Of course, this sparked a round of losses in Asia, including a 2%-plus slide from the Nikkei and a 1.4% drop from the Shanghai Composite, and set the stage for a gory European open.”
Following a week with the Dow diving and the Fed failing to properly address the bond market’s inverted yield curve, China compounded the woes of the global market sentiment with its first salvo. The People’s Bank of China set its daily reference rate for the Yuan at 6.92 (against the dollar), with the bracket for movement being only 2%. This is symbolic, as the 7 threshold hadn’t been passed since the crash in 2008, and the currency only moved over the threshold to 7.03 around midday on Monday. China said the ‘weakness’ was a direct result of trade protectionism and new tariffs placed on Chinese goods. Chris Weston, head of research at Pepperstone Group, said that the move was a ‘statement of intent’ from China, and would prompt fears about capital flight from China, alongside potential further financial restrictions in the Chinese economy.The Yuan suicide mission
Perhaps what is significant to note, though, is that this game of macroeconomic chicken isn’t one in which the US has no option but to back down. Whereas the Chinese state has centralised power and economic influence, the diaspora of US mega firms mean that for anyone wishing to damage the US economy, do so while damaging the performance of US companies benefiting the economies of the countries they operate in. As stated by senior China economist at Capital Economics, Julian Evans-Pritchard, “In terms of directly hitting back at the US, it’s quite difficult to do it without hurting themselves.” “China’s less reliant on foreign investment than it used to be, but it still is keen not to see multinationals shift out of the country en masse,” “If you make life very hard for US firms operating in China then there’s the risk you’re shooting yourself in the foot to some degree.”The Clash of Civilizations
Contrary to Samuel Huntington’s suggestion that different ideas would war outside of the boundaries of nation-states, these two economies and ideological creeds appear locked in a recurring battle for cultural supremacy (culture in regard to how they impose their own image on the rest of the world). As far as this trade war is concerned, Trump will tell the world that today’s currency movement was a malicious act carried out by China, which will damage many countries other than the US. Looking forwards, financial advisor at Vanguard Capital AG, Imran Lakha, says we can expect further and prolonged escalation in tensions after President Trump’s actions last Friday, and that today’s news won’t be conducive to any improvement in the weak market fundamentals witnessed within the last year. Other market and macro financial news has come from; the London Stock Exchange Group (LON: LSE) and Sterling.Mosman Oil and Gas spuds Stanley-3 well as part of Strategic Alliance
Oil exploration and production company Mosman Oil and Gas Limited (AIM: MSMN) today announced the spud of the Stanley-3 well in Texas.
The spud is the next step before the Company drills Stanley-3 as part of its Strategic Alliance with privately owned Baja Oil and Gas.
The well will be drilled to 5,100 feet, with the goal of reaching the Yegua sands at a similar depth to that encountered at Stanley-1 and Stanley-2. The total cost will be US $325,000, and an additional $165,000 for completion and tie operations should the well prove commercially viable.
Mosman Oil and Gas will have a minimum 14.85% interest in the well operation, with the project being funded out of the Company’s existing cash facilities.
Mosman Oil and Gas comments
John W Barr, Chairman, said,
“Given the significant results of Stanley-1 and 2, the operator has quickly moved to Stanley-3 with the assistance of Mosman consultants and Baja. It is anticipated the well will be completed in a short period of time and the Initial Oil production will be seen by mid September.”
“Mosman’s clear intention is to increase production and thus cashflows as quickly as possible whilst taking into account operational and legislative requirements.”
Investor notes
The Company’s shares have rallied modestly by 0.58% or 0.0015p to 0.26p 05/08/19 12:38 BST. Neither a p/e ratio nor a dividend yield are available, the Group’s market cap is £2.30 million. Elsewhere in the oil and gas sector, there have been updates from; Nostrum Oil and Gas PLC (LON: NOG), Reabold Resources PLC (LON: RBD), Trinity Exploration and Production PLC (LON: TRIN) and Union Jack Oil PLC (LON: UJO).Belvoir to meet expectations with profits ahead of H1 2018
UK property franchise Belvoir Group PLC (AIM: BLV) booked positive trading performance in the first half, despite challenging market conditions and legislation change.
The Company noted that Management Service Fees rose 5% at their 300 high street lettings and estate agency offices, despite a backdrop of falling sales activity and a ban on tenant fees introduced in June 2019. The Board noted that profits and sales were both ahead of results for the first half of 2018, and that the Group benefitted from the acquisition of financial services network, MAB, in November 2018.
Net banked commission was also up 23% on-year. In turn, the Board were confident of meeting market expectations for the full year.
Belvoir comments
Dorian Gonsalves, CEO, commented,
“The Board was very encouraged by trading during the first half of 2019 with our franchise model proving to be resilient to changes in the sector and our diversification into financial services providing an additional revenue stream for both our franchisees and the Group. We have seen positive results both from our property franchise and our financial services networks, and are confident that the Group is well positioned to take advantage of the opportunities arising from a more challenging market.”
Investor notes
Despite what could have perhaps have been seen as a positive update, the Company’s shares were down 3.96% or 4.50p to 109.00p a share. The Group’s p/e ratio is 9.15 and their dividend yield stands at 6.61%. Elsewhere in property development and estate agency news, there have been updates from; Intu Properties plc (LON: INTU), LSL Property Services plc (LON: LSL), Countryside Properties PLC (LON: CSP) and Ashley House Plc (LON: ASH).Lord Rothschild’s RIT Capital reports £3bn net assets and NAV growth
British based investment trust RIT Capital Partners plc (LON: RCP) books bumper NAV returns and growth in assets during the first half.
The Company recorded all-time-high net assets of £3 billion on 30 June 2019, with growth before distributions of £241 million. Further, the Company’s net asset value yielded a total return of 8.5% during the first half, with NAV per share at 1,958 pence as of 30 June.
RIT Capital also noted their share price increased 10.1% on a total return basis and average premium of 7.1%.
The Company stressed a diverse and cautious approach to portfolio management, based on a capital preservative approach with strong focus on gold.
RIT Capital also stated that net assets had grown by £1.1 billion over the last five years (before dividends), and that £10,000 invested in the Company in 1988 would now be worth £360,000.RIT Capital comments from Lord Rothschild
Commenting on the update, Company Chairman Lord Rothschild noted,“The last decade has seen a confluence of factors which have benefitted companies’ earnings to an unprecedented extent. Lower cost of capital, reduced taxes, stagnant wages and the influence of globalisation contributed to record profit margins. These positive factors are, however, unlikely to be sustained. Trade wars, the weakening of economic growth and the risk of recession are of concern, particularly at a time when stock markets have reached all-time highs.”
“Against this backdrop we are seeking to invest in situations that either give us a degree of protection in potentially deteriorating conditions or in areas where structural growth rates are sufficiently high for valuations to hold their own or indeed prosper. This approach shapes our asset allocation and security selection. We seek to identify and to invest in companies with strong balance sheets, attractively low valuations and which are likely to exceed GDP growth rates. Many of our recent private investments are designed to benefit from some structural protection. Outside of equities, we look for uncorrelated strategies which are not dependent on economic growth and which we expect to produce positive returns.”
Investor notes
The Company’s share price has dipped 1.44% or 30.00p to 2,050.00p a share 05/08/19 12:40 BST. The Group’s dividend yield is 1.61%. Elsewhere in large financial player and investment trust news, there have been updates from; London Stock Exchange Group (LON: LSE), F&C Investment Trust PLC (LON: FCIT), River and Mercantile Group PLC (LON: RIV), Brewin Dolphin Holdings plc (LON: BRW) and Hansard Global plc (LON: HSD).Dialight shares down with H1 loss
Industrially focused LED lighting manufacturer Dialight Plc (LON: DIA) have seen their share price dip in morning trade, after swinging to a loss for the first half of the year 2019.
The Company’s revenues were down from £77.7 million to £76.1 million on a year-on-year basis for the first half, which the Group owed to softening end markets and delayed market share recovery.
Concurrently, the Company reported that it had swung to a loss, from £2.0 million for H1 2018, to a loss of £1.6 million for H1 2019. Dialight underlying profits were down from £2.8 million to £0.9 million and underlying basic EPS fell 1.5p, from 6.4p on-year. Further, underlying costs rose from nil to £2.7 million between the two first halves.
Dialight comments
Marty Rapp, Group Chief Executive, said,
“Our H1 2019 financial results were disappointing. Lighting revenues were impacted by some softening of end markets and delayed market share recovery. However, we did make good operational and strategic progress in the first half, with the physical separation from our contract manufacturer now complete. Operational performance from our Mexico facilities is now significantly better than it was before the move to the contract manufacturer. Our new Penang facility is expected to be fully operational within the next two months.”
“Progress on increasing our output of new products is on track. We have launched two of the three new platform-level products planned for 2019, and the third one will be launched shortly. There are additional new products in the development pipeline – a combination of upgrades to our existing products and new products to enable to us to participate in a larger market.”
“We remain confident that the combination of the reputation of Dialight products as the best in the market, our improved operational performance, and the launch of our exciting new products will result in significant long-term growth in revenue and profit. We are taking all appropriate actions to convert these to improved financial results as quickly as possible. Our full year outlook for 2019 remains unchanged.”
Investor notes
The Company’s shares dipped 6.41% or 25.00p to 365.00p a share 05/08/19 12:17 BST. Analysts from Peel Hunt have reiterated their ‘Hold’ stance on Dialight stock. The Group’s p/e ratio is 22.54 and their market cap is £119.4 million. Elsewhere in the tech sector, there were updates from; Seeing Machines (LON: SEE), Bidstack Group PLC (AIM: BIDS), Nektan PLC (LON: NKTN), Keywords Studios PLC (LON: KWS), Biome Technologies plc (LON: BIOM).
Bluerock Diamonds shares dip despite Kareevlei Mine upgrade
After presenting at the UK Investor Magazine Summer Investor Evening, South African-focused diamond mining company Bluerock Diamonds PLC (LON: BRD) today announced an upgrade to the crushing circuit at the Kareevlei Diamond Mine.
The Company told investors that the installation of a larger cone crusher had been completed, and further upgrades had been made to the circuit. The circuit can now operate both the existing and new crushers simultaneously, and is able to manage what the Group sees as a likely increase in material flows.
Bluerock Diamonds said the new crusher began work yesterday and that it would be fully operational shortly.
Bluerock Diamonds comments
Mike Houston, Executive Chairman commented,
“We are pleased that the upgrade of the crushing circuit has been completed. We have taken the opportunity to make a number of improvements to the processing plant during the crusher shut down period and are confident that these improvements will have the desired effect in achieving our targeted level of production in the second half of the year. Our volume guidance for the year remains at 280,000 tonnes to 335,000 tonnes and, as previously
announced, we will refine our guidance following the end of Q3 after the reconfigured plant has been operational for two months.”
Investor notes
The Company’s shares have dipped 9.77% or 6.50p to 60.00p a share 02/08/19 14:47 BST. The Group’s p/e ratio and dividend yield are not available, their market cap is £2.04 million.
Elsewhere in the mining and minerals sector, recent updates have come from; Cora Gold Limited (LON: CORA), Serabi Gold PLC (LON: SRB), Kavango Resources PLC (LON: KAV), Ariana Resources plc (LON: AUU), Rio Tinto plc (LON: RIO) and Bushveld Minerals Limited (LON: BMN).