Strategic Minerals (LON: SML) improved its interim profit from $40,000 to $670,000. That is due to higher demand for its magnetite tailings operations in New Mexico following the return of a major customer. There is $280,000 in the bank. The long-term focus is the Redmoor tin/tungsten project in Cornwall. The share price jumped 47.1% to 0.2p.

Clean Power Hydrogen (LON: CPH2) has completed the final stage of the Factory Acceptance Test for the MFE110 electrolyser. The customer is Northern Ireland Water, and it will deploy one unit. This should help to spark more serious interest from other potential customers. The share price rebounded 31.4% to 11.5p.

Gfinity (LON: GFIN) says David Halley is subscribing £30,000 at 0.015p/share, while £120,000 has been raised via convertible issue. Gfinity has cut costs and broke even at the operational level in the first half.  Management is assessing new opportunities that broaden the current digital media focus. The share price recovered 31.6% to 0.025p.

Neometals (LON: NMT) reported a reduction in the annual cash outflow from operations from $20.4m to $13.5m, while the investment spending fell from $14.9m to $12.1m. There was $9.1m in cash at the end of June 2024. Neometals is in discussions with potential partners. The share price rose 15.8% to 5.5p.

Transport analytics provider Cordel (LON: CRDL) is raising £1m at 6.5p/share and the majority of the cash will fund additional research and development. This should help to generate revenues from the positive train content market in the US. The investment in recruiting additional people means that a profit is not going to be achieved this year. The share price improved 14.3% to 6p.

FALLERS

Phoenix Copper (LON: PXC) increased its interim loss from $630,000 to $1.1m. Net debt is $4.1m. An $80m corporate copper bond issue was completed at the end of the period. That will finance the Empire copper, gold and silver open pit mine in Idaho. Initial capital requirements are $62.6m. The share price dived 35.9% to 10.25p.

Chronic illness management services provider Trellus Health (LON: TRLS) had net cash of $8m at the end of June 2024 and this is expected to last well into the third quarter of next year despite continued losses. Trellus Health has signed a contract with a US health plan that will make the Trellus Elevate product available for IBD patients. Two pharma companies have sold licensing deals. There are discussions with other potential partners. The share price fell 29.3% to 1.025p.

Fluid power products supplier Flowtech Fluidpower (LON: FLO) had already pre-empted the interims in its July trading statement, but trading got tougher in the third quarter. Interim sales fell 6% to £55.7m with customers deferring orders. A recovery was expected in the second half, but revenues are likely to be flat leading to a 2% decline in revenues to £110m. Pre-tax profit is forecast to slump from £4.3m to £1.7m before recovering next year. The share price dipped 20.8% to 87.1p.

Weak US demand continues to hold back the recovery of IG Design (LON: IGR). North American revenues are 14% lower so far this year and that has dragged overall revenues down. The cautious ordering patterns continue in the US because of uncertain consumer demand. Revenues are expected to fall this year. Canaccord Genuity has downgraded its full year pre-tax profit forecast from $36m to $32.7m, well up on the $25.9m made last year. This is because margins continue to improve. A dividend is still forecast for this year. The share price declined 25.4% to 127.5p.

Ex-dividends

Alumasc (LON: ALU) is paying a final dividend of 7.3p/share and the share price fell 7.5p to 283p.

Advanced Medical Solutions (LON: AMS) is paying an interim dividend of 0.77p/share and the share price rose 0.5p to 220.5p.

Braime (TF & JH) (LON: BMT) is paying an interim dividend of 5.25p/share and the share price is unchanged at 1250p.

Central Asia Metals (LON: CAML) is paying an interim dividend of 9p/share and the share price fell 8.5p to 192.5p.

Duke Capital (LON: DUKE) is paying a dividend of 0.7p/share and the share price dipped 0.5p to 32.5p.

Equals (LON: EQLS) is paying an interim dividend of 1p/share and the share price declined 0.5p to 117.25p.

Fevertree Drinks (LON: FEVR) is paying an interim dividend of 5.85p/share and the share price improved 17.75p to 810.25p.

FIH Group (LON: FIH) is paying a final dividend of 5.5p/share and the share price slid 10p to 265p.

Fletcher King (LON: FLK) is paying a final dividend of 2.25p/share and the share price dipped 3.5p to 42.5p.

Fintel (LONL FNTL) is paying an interim dividend of 1.2p/share and the share price declined 8.5p to 258.5p.

FRP Advisory (LON: FRP) is paying a final dividend of 2.3p/share and the share price fell 1.5p to 144p.

Good Energy (LON: GOOD) is paying an interim dividend of 1.1p/share and the share price is 3p lower at 247.5p.

Hargreaves Services (LON: HSP) is paying a dividend of 18p/share and the share price slipped 15p to 559p.

Public Policy Holding (LON: PPHC) is paying an interim dividend of 4.7 cents/share and the share price dipped 0.5p to 131p.

System1 (LON: SYS) is paying a dividend of 5p/share and the share price is unchanged at 690p.

Wynnstay Group (LON: WYN) is paying an interim dividend of 5.6p/share and the share price is unchanged at 330p.

The FTSE 100 was higher on Thursday as investor sentiment picked up amid a number of positive trading updates from London’s leading companies. 

Optimism around China also helped support the index after the world’s second-largest economy moved to support the property sector earlier this week and provided additional support for banks.

“The FTSE 100 has opened 0.65% higher this morning as investors digest a string of trading updates and try to assess the global economic outlook in light of China’s major stimulus package,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

After months without any intervention by the Chinese authorities, equity bulls have enjoyed a broad easing of the Chinese economy through the reduction of its Repo rate and sector-specific action targeted at the housing market and banking system.

“Fresh from big stimulus measures earlier in the week, all eyes remained focused on China amid talk that Beijing might inject up to 1 trillion yuan of capital into its top banks and to support the economy through interest rate cuts,” said Russ Mould, investment director at AJ Bell.

“The SSE Composite index is now up 9.5% since the start of the week, delivering a repeat of the stellar rally we saw in early February. It’s been a while since China was the talk of the town among investors, but it has certainly turned heads this week.

“Naturally, London-listed miners have revelled in China’s rich menu of initiatives to drive economic growth with their shares rising higher on the expectation of greater metals demand.”

We published an article this week highlighting Antofagasta as a share to position for improving sentiment around China. The additional stimulus hopes overnight from China has played into our suggestion and ANTO was over 5% higher at the time of writing. The rest of the mining sector was also higher with Anglo American and Glencore gaining more than 4%.

Prudential was the top riser, gaining 6% due to its exposure to the Chinese financial system.

Aside from the mining sector and other China-focused sectors, Halma was having a good session after announcing an upbeat trading statement.

“Safety conglomerate Halma spoke of varied conditions across its many end markets in a trading update this morning but still expects strong cash generation and improving margins,” Matt Britzman said.

“The strong run-up in Sterling is set to continue acting as a headwind, but stripping currency impacts out, top-line growth is expected in line with comments earlier in the year. The acquisition pipeline looks to be healthy too, which is key for Halma given how well-placed it is to capitalise on fragmented end markets.”

“One eye will also be on tomorrow’s US PCE numbers, the Fed’s preferred measure of inflation, which will be key for gauging the interest rate path across the pond which has global impacts.”

We have already had a pointer that the coloured stones group was facing some challenging markets with lower auction prices received and expected for its gemstones. 

However, I believe that the shares of the Gemfields Group (LON:GEM) are substantially undervalued, so if they come back in price after this Friday’s Interim Results announcement, I suggest that risk-tolerant investors should be ready to pick up some cheap stock. 

The Business 

The group, which is also listed on the Johannesburg Stock Exchange, describes itself as a world-leading responsible miner and marketer of coloured gemstones.  

It is the operator and 75% owner of both the Kagem emerald mine in Zambia (believed to be the world’s single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world).  

Additionally, the group also holds controlling interests in various other gemstone mining and prospecting licences in Zambia, Mozambique, Ethiopia and Madagascar. 

The company has developed a proprietary grading system and a pioneering auction platform to provide a consistent supply of coloured gemstones to downstream markets, which is a key component of its business model that has played an important role in the growth of the global coloured gemstone sector. 

Faberge 

The group has outright ownership of Fabergé – which is an iconic and prestigious brand of exceptional heritage. 

That ownership enables the company to optimise positioning, perception and consumer awareness of coloured gemstones through Fabergé designs, advancing the wider group’s ‘mine and market’ vision. 

Latest Auction Results 

Earlier this month the group participated in an auction of predominantly commercial quality sapphire, corundum and commercial-quality ruby, which covered three days. 

There was a strong attendance and good demand, with auction revenues of $2.3m ($1.5m), some 5.7m carats were offered in ten lots, with the average sales price of $0.41 per carat. 

The period from 27^th August to 13^th September saw an auction of commercial-quality rough emeralds. 

Some 46 lots were put up for sale, but just 28 were sold, creating total auction revenues of $10.8m, with the average price of $4.47 per carat. 

At the beginning of last week, the company stated that: 

“The luxury-good, diamond and gemstone markets are experiencing distinct headwinds as conflicts, elections, economic uncertainty in China and broader economic turbulence take their toll. 

Today’s overall result is weaker than expected, exacerbated in part by a competing emerald producer scheduling their own auction to finish in early September 2024, in the middle of ours, and selling through their emeralds at what customers reported as low prices. 

Gemfields remains committed to acting responsibly by withholding auction lots when fair market prices are not achieved, as is demonstrated by the lots we withdrew from our auction which comprised both considerable volume and value. 

We hope that market conditions improve as we work towards the auction of higher-quality emeralds scheduled for November 2024.” 

Analyst’s Views 

In reaction to that news, Panmure Liberum analysts Ben Davis, Tom Price and Yuen Low, published a note on the group flagging market headwinds for the company. 

They concluded that the latest auction results for commercial-quality emeralds were weaker than expected, with total revenues of $10.8m and 61% of lots sold, although importantly, an emerald producing competitor unusually scheduled their auction to overlap with GEM’s, likely impacting prices. 

For the current-year to end-December they estimate group revenues to be steady at $261m, but with pre-tax profits of $55.7m ($16.6m), generating earnings of $0.02 (loss of $0.01), while paying out a dividend of 0.74p (0.69p) per share. 

For the coming year they estimate $366m sales, $111.0m profits, $0.05 in earnings and a 0.81p dividend per share. 

The broker’s have a Price Objective of 23p on the group’s shares. 

In My View 

We have the £136m capitalised group’s Interim Results being published on Friday morning, due to the weakening in the latest auction results they may well have something of a dampening effect on the group’s share price, now 11.65p. 

Even so investors, prepared to sit patiently when taking a view, may well use any rapid price drops as opportunities to load up on positions in what I consider to be a very undervalued situation. 

GenIP has issued an update to its Schedule One form filed with the London Stock Exchange, revealing the Generative AI company enjoyed strong investor demand during its IPO fundraise.

The company is set to be one of very few Generative AI-dedicated companies listed in London, which was reflected in the strong demand for shares during the fundraising process.

After initially setting out to raise £1.5m, the company has raised £1.75m, according to a stock exchange announcement released on Thursday.

“We believe that GenIP’s unique business model offers investors a valuable opportunity to engage with the rapidly expanding Generative AI analytics market and the research institutions and technology companies that fuel much of the world’s innovation,” said Melissa Cruz, CEO of GenIP.

GenIP is the latest IPO from Tekcapital, the technology incubator listed on AIM. Tekcapital’s most recent IPO was low-sodium food technology company MicroSalt, whose shares triple within six months of listing on AIM.

GenIP’s first day of dealing is scheduled for 2nd October.

Novacyt is still loss-making, but half-year results show the company has turned a corner and is now well placed for growth in the coming periods.

Novacyt reported H1 2024 revenue of £10.3m, of which £7.8m was from the recently acquired Yourgene Health.

The company saw encouraging growth in Reproductive Health, which jumped 34% year-on-year, and Non-Invasive Prenatal Testing with a more modest 5% increase.

Despite an EBITDA loss of £5.6m and a loss after tax of £17.7m, largely due to exceptional costs related to the DHSC settlement, Novacyt made progress in integrating Yourgene, delivering £5.0m in annualised cost savings.

The company maintains a strong cash position of £32.9m as of 30 June 2024.

Looking ahead, Novacyt aims to continue reducing its cost base, rationalise its product offering, and develop new products over the next three years.

Management expects full-year revenue to remain at a similar run-rate and is focused on positioning the company for long-term growth through its comprehensive strategy for the combined group, which they say will be detailed in H1 2025.

“We made good progress during first half of 2024, which saw encouraging growth in our Reproductive Health and NIPT businesses and the delivery of £5.0m of annualised cost savings. Whilst the continued reduction of our cost base remains our core priority, we are also investing for the future and bolstering our R&D team who are developing an exciting pipeline of new products, to expand our capabilities and meet the needs of our growing customer base, which we expect to bring to market over the next three years,” said Lyn Rees, CEO of Novacyt.

“The conclusion of the DHSC dispute has enabled the management to focus on driving the growth of the combined business and with our robust product portfolio, first-class team and strong cash position we are well placed to deliver future growth.”

Recent growth in Ocado’s retail food delivery arm and joint venture with Marks & Spencer is making Ocado shares attractive again after a period of share price underperformance compared to the wider market.

Ocado has been the fastest-growing food retailer for seven months in a row. 

However, the company still sits just above ‘other retailers’ in Kantar’s list of supermarkets’ market share. Ocado had a market share of 1.8% in the 12 weeks to 1 September. Iceland is just above them with a market share of 2.3%.

Although they are probably no more of an annoyance to the likes of Tesco and Sainsbury’s than a major threat, Ocado is building momentum.

Investors who may have discounted the food business and focused on Ocado’s technology solutions may be having a rethink. Ocado Retail’s sales surged around 15% in the 13 weeks to 1 September. That is no small increase, and it is all the more remarkable given the pressure the UK consumer is under.

A recent trading update unveiled a 10% increase in active customers to just over 1 million who are now shopping with Ocado more frequently. Ocado shares surged in early trade on the morning of the release as investors cheered the offering’s traction.

For many, the key interest in Ocado sits with their fulfilment centres. And rightly so. Ocado are working with the world’s largest grocers and establishing distribution channels that may provide Ocado revenues long into the future. 

That said, investors consider the opportunity in Ocado Retail’s aspirational attractions and the potential to steal more market share.

“Our strategy remains focused on giving our customers unbeatable choice, unrivalled service and reassuringly good value. We’re seeing the momentum of this, with more customers shopping with us more often, getting even better service at better value,” said Hannah Gibson, Ocado Retail’s Chief Executive Officer in a comment attached to the recent trading statement.

If more people can get the bulk of their shopping at reasonable prices from Ocado and treat themselves with the odd indulgence, Ocado’s food delivery service could become a viable option for millions more people in the UK. As interest rates fall and discretionary budgets grow, the middle classes may even aspire to switch to doing their weekly shopping at Ocado. 

As we’ve outline above, many people already are switching to Ocado. A mixed approach to pricing is drawing people in. If the momentum continues, Ocado may be more than an annoyance to Tesco and Sainsbury’s. 

Ocado shares will benefit in such a scenario.