FTSE 100 dips as Melrose jumps

UK Investor Magazine
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FTSE 100 dips as Melrose jumps

The FTSE 100 traded in a tight range on Monday with little impetus to move UK stocks in either direction.

London’s leading index traded positively for most of the session, gently undulating between flat and up around 20 points. At the time of writing, the index was 0.1% lower at 8,054.

Directionless trade is a symptom of investor uncertainty around Donald Trump’s second and the ramifications for different asset classes and geographies.

Indeed, even US asset classes are sending mixed messages, with the initial rally in stocks easing back and the bond market appearing to chase its tail.

“The US government bond market does not seem quite sure what to make of the prospect of a second Trump presidency, but the US stock market seems happy and so does the US dollar, using the trade-weighted DXY (or ‘Dixie’) index as a guide,” said AJ Bell investment director Russ Mould. 

The market has also shifted focus back to interest rates after comments from US central bankers last week that shattered hopes of sustained cuts in interest rates.

This can explain the drop in US stocks, which is weighing on the global equity complex and taking some attention away from Donald Trump’s questionable cabinet appointments.

One would expect traders to hang on Fed officials’ every word in upcoming speeches for hints of whether borrowing costs will fall further or plateau.

Melrose

Melrose was the standout performer in an otherwise uninspiring trading session, with a 5% gain following the release of an encouraging trading statement.

“Melrose remains on the right flight path to meeting full-year guidance, which calls for underlying operating profits to rise around 33% to £560mn at the midpoint,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“In a short trading update, the aerospace business revealed that revenue in its Engines division continued to soar at double-digit rates over the four months ending 31 October. 

“The Structures division, which deals with building the body and wings of planes, took some shine off performance with revenue only edging 1% higher. This side of the business has been held back by the planned exit of non-core work and customer destocking in the period. Production troubles at Airbus and quality issues at Boeing have also dented timelines. There’s not a great deal Melrose can do about this – supply chain issues have been a challenge for the whole industry and the problem’s likely to persist for some time.”

The bull case for UK equities

UK Investor Magazine
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The bull case for UK equities

It’s very easy to be pessimistic about UK stocks. However, the bull case for UK equity is much stronger than many market commentators would have you believe.
The headline earnings multiples of UK equities convey deep value, but the bull case for UK equity runs a lot deeper than average price-to-earnings ratios. Several structural tailwinds are set to support the UK equity space in the years to come.
Indeed, there is a lot to look forward to for UK equity investors. Although the UK bull case is not as obvious as the AI-driven tech rally in the United States, there are many reasons to be positi...

AIM movers: China export controls for tungsten help Guardian Metal Resources and Celadon Pharmaceuticals still waiting for cash

Andrew Hore
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AIM movers: China export controls for tungsten help Guardian Metal Resources and Celadon Pharmaceuticals still waiting for cash

Guardian Metal Resources (LON: GMET) believes that the tightening of export controls by China enhances the potential for its tungsten project in Nevada. Drilling at the Pilot Mountain project is progressing well. This will support the pre-feasibility study, and the next batch of results should be available in the next few weeks. The share price jumped 19.2% to 28p.

TruFin (LON: TRU) says revenues and EBITDA are well ahead of expectations. Revenues will jump from £18m to £42m. The 2024 pre-tax loss will fall from £6.6m to £2.5m. Games company Playstack has been the main reason behind the upgrade. Net cash should be £6m at the end of 2024. The share price improved 14.8% to 73.5p.

MediaZest (LON: MDZ) has completed a proof of concept project to supply 50 digital currency boards to UK Post Office branches. The service agreement contract is with First Rate Exchange Services. There is a potential market of 1,500 Post Offices. The share price increased 13.3% to 0.085p.

ValiRx (LON: VAL) says that subsidiary Inaphaea BioLabs has confirmed shipment of the first batch of Patient Derived Cells, which are part of a new range of assay ready reagents. The share price rose 12.7% to 1.55p.

FALLERS

Cannabis-based medicines developer Celadon Pharmaceuticals (LON: CEL) has received a further £200,000 drawdown from the committed credit facility and the lender is committed to providing the remaining £500,000. However, it has to sell an investment to provide the cash. There is still £400,000 outstanding from a share subscription. Celadon Pharmaceuticals has enough cash to get it to January. Talks with another lender continue. The share price slumped 30.4% to 19.5p.

Scientific instruments supplier Judges Scientific (LON: JDG) says order intake has reduced if the large Geotek contract is excluded. China is particularly weak, but other markets are also tough, and orders have been deferred. Zeus has cut its 2024 pre-tax profit forecast by 19% to £25m. Next year’s forecast has also been trimmed. The share price fell 12.8% to 8940p.

Autins Group (LON: AUTG) finance director Kamran Munir has resigned with immediate effect. The acoustic materials company will shortly commence the search for a replacement. The company year end is September. The share price slipped 11.8% to 7.5p.

Semiconductor wafers supplier IQE (LON: IQE) is discussing a potential £15m convertible loan note financing from Lombard Odier, its largest shareholder. The conversion price is 15p. There should be no current need for a share issue. There has been a slower than expected recovery in the main sectors because of weak consumer demand. A strategic review will b undertaken. The business in Taiwan was going to float on the local stockmarket, but IQE may consider an outright sale. The share price dipped 4.21% to 10.23p.

Mike Ashley – Certainly one of life’s ‘triers’ – but will he get it on? 

Mark Watson-Mitchell
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Mike Ashley – Certainly one of life’s ‘triers’ – but will he get it on? 

What is the expression?  
All the world likes a ‘trier’! 
And certainly, that is how I consider Mike Ashley, especially in his recent efforts to gain more retail sector dominance. 
Don’t get confused with the term ‘chancer’ because, unless you know differently, I do not believe Ashley to be such a person. 
Just like a footballer running around the field making tackles here, there and everywhere but, as yet, to really score – Ashley charges include N Brown, AO World, Currys, Mulberry, THG, ASOS, Hornby and boohoo Group. 
To Fight Or To Back Away 
Whatever he m...

Bevtech Startup Using TikTok to Take on Big Caffeine 

UK Investor Magazine
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Bevtech Startup Using TikTok to Take on Big Caffeine 

Irish bevtech start-up GoodBrew is successfully bucking the trend in the current slow FMCG investment environment. The maker of functional cold brew drinks has taken an unconventional approach to their current funding round; turning to social media platform TikTok to attract a younger demographic of investors to its Crowdcube campaign available here.  

The Enterprise Ireland High Potential Start-Up has already exceeded 50% of its fundraising target before the round even goes public on Crowdcube. Dee Schroeder, CEO of GoodBrew, says their target consumer is aged between 18 and 25, so using Gen Z’s favourite platform as a focal point of their fundraising campaign made sense. Their video seeking investment has garnered over 140,000 views to date.  

@lovegoodbrew ✨Here’s your chance to join the GoodBrew crew! ​​✨ 📈 Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.Take 2 mins to learn more: https://www.crowdcube.com/explore/risk-warning ✅ #irish #UK #fundraising #startup #coffee #business #investment ♬ original sound – lovegoodbrew

“Gen Z makes up about 20% of the population. They’re really smart and have disposable income but are largely ignored by traditional investment platforms so we meet them where they are; online. While we also have more traditional, big-ticket investors on board, it’s really important to us as a brand to build a strong community and stay connected to the people who buy our drinks. Reaching investors via TikTok is the perfect way for GoodBrew fans to own a piece of the action,” says Schroeder.  

GoodBrew makes flavoured cold brew coffee drinks fortified with its GoodGut(™) formula, which contains essential vitamins and gut-friendly fibre. The business has big ambitions to disrupt the £20b RTD cold caffeine market currently dominated by a few large players including Starbucks and Coca-Cola owned Costa.  

The business has rolled out an impressive number of listings with large retailers across Ireland this year, including Tesco, Centra, SuperValu and Dunnes Stores and revenue was up 250% year-over-year in the first half of 2024. The brand just made its first inroads into the UK market via a successful launch on Amazon UK. Industry stakeholders have taken notice of the scrappy newcomer too. GoodBrew has won two Great Taste awards, Best Functional Drink at the World Coffee Innovation Awards and is nominated in four categories in the upcoming World Beverage Innovation Awards.  

GoodBrew’s founders have largely bootstrapped the business to date with support from Enterprise Ireland and founding investor Frank Gleeson, former head of Aramark Europe.   

“I’m thrilled to be part of an exciting journey for Goodbrew. Founders Jeff and Dee have developed an amazing new range of coffee based products. I’m so impressed with their entrepreneurial spirit and drive to give customers a healthy cold coffee alternative which is exactly on trend with consumers,” says Gleeson.  

GoodBrew’s founders say now is the right time for the business to raise to fuel accelerated growth. GoodBrew is using crowdfunding platform Crowdcube to host the public phase of its funding campaign. Those interested can sign up for access here.

Halma bolsters portfolio with medical device acquistion

UK Investor Magazine
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Halma bolsters portfolio with medical device acquistion

Halma has bolstered its portfolio of technology companies by acquiring a Paris-based medical device company.

Halma has acquired French medical device manufacturer Lamidey Noury Medical for €50 million in cash. Lamidey Noury, which produces electrosurgical devices for minimally invasive surgery with distribution in over 60 countries, reported unaudited revenue of €13.6 million (£11.4 million) for the year to October 2024, with an EBIT margin exceeding 23%.

Lamidey Noury Medical has developed specialist tools for various surgical applications, including urology and gynaecology. The Paris-based company will operate as a standalone entity within Halma’s Healthcare Sector under its existing management team.

“Lamidey Noury is an exciting acquisition which will bring new minimally invasive surgical product capabilities to our Healthcare Sector,” said Marc Ronchetti, Group Chief Executive of Halma.

“Its advanced products improve patient outcomes and the efficiency of healthcare providers in treating the increasing incidence of urological and gynaecological disease. It is adjacent to our existing presence in diagnosis and biopsy devices for these diseases through Rovers Medical Devices and IZI Medical. We are delighted to welcome Lamidey Noury to Halma and look forward to supporting its development as it continues to scale its business globally.” 

Decision intelligence provides efficiency and value growth

Andrew Hore
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Decision intelligence provides efficiency and value growth

It is increasingly important for companies to keep their costs as low as possible in tough economic times. Selling software to enable clients to do this is not as easy a sell as it might be expected to be. It takes time to gain new customers, but once they are signed up, there is generally an increasing trend in their spending as the software is rolled out in other parts of the business.
Decision intelligence software supplied by one AIM company provides an overall view of operating activities and helps to generate additional work from existing resources. It can also help with planning. There ...

Aquis weekly movers: Tap Global Group to appoint new chairman

Andrew Hore
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Aquis weekly movers: Tap Global Group to appoint new chairman

Crypto app developer Tap Global Group (LON: TAP) shares jumped 336% to 3.05p. The company has appointed Peter Wall as strategic adviser, and it is intended that he will become chairman. He used to be chief executive of Argo Blockchain. In the year to June 2024, unaudited revenues were £2.67m and they continue to rise. Chief executive Arsen Torosian will take on the same role at the Gibraltar-based subsidiary once regulatory approval is received.

Aquis Exchange (LON: AQX), which operates the Aquis Stock Exchange, is recommending a bid from rival exchange trading business SIX Exchange. SIX is mainly interested in the technology that Aquis has developed, but it suggests that there is potential to develop the Aquis Stock Exchange as a pan-European market. The offer for Aquis Exchange is 727p/share in cash, which values the company at £225m. There had been several previous proposals from SIX. The share price soared 112% to 710p, which is slightly higher than the price quoted on AIM.

Ananda Developments (LON: ANA) chief executive Melissa Sturgess bought 2.02 million shares at an average price of 0.32p each. She has a 9.92% shareholding. The share price rose 12.5% to 0.36p.

Marula Mining (LON: MARU) was the overall winner of the Aquis Showcase 2024 event. The share price improved 2.44% to 5.25p.

FALLERS

Aquaculture technology developer OTAQ (LON: OTAQ) says delays in orders mean that 2024 revenues will be lower than expected. Dowgate forecasts a drop from £4.4m to £3.1m (previously £4.2m) this year and a £1.8m loss, up from £1.2m in 2023. There should still be net cash of £100,000 by the end of the year. The orders should fall into 2025. Costs continue to be reduced and annualised savings of £500,000 have been made. The board is seeking shareholder approval to leave Aquis. The share price slumped by three-quarters to 0.75p.

Mendell Helium (LON: MDH) has completed the sale of health business. M3 Helium, which Mendell Helium has an option to acquire, says the potential flow rates from the Rost 1-26 well in Kansas could exceed previous expectations.  Th share price declined 18.7% to 3.25p.

Valereum (LON: VLR) won the Retail Choice award at the 2024 Aquis Showcase event. It outlined the tokenisation of markets and development of technology to transform global finance. There has been a positive result of the frack on the Nilson well and production has steadily risen. The share price fell 10.4% to 10.75p.

Transport electrification technology developer Equipmake (LON: EQIP) says Tony Ratcliffe will leave his role of finance director at the end of the month. The share price weakened 4.55% to 2.625p.

Pubs operator Daniel Thwaites (LON: THW) increased interim revenues by 5% to £63.5m and although pre-tax profit declined, excluding gains on interest rate swaps and property disposals or income on pension assets, it improved from £6m to £6.7m. Net debt was £71.2m at the end of September 2024 and it continues to invest in its pubs and hotels. The dividend was raised from 0.85p/share to 0.9p/share. There has been weaker consumer confidence since the summer. The National Living Wage and National Insurance hikes, along with the reduction in business rate relief, will hit the business and there is limited scope to increase prices. That is a problem for the next financial year. The share price dipped 2.86% to 85p.

Director deals: EnSilica purchases help shares to recover

Andrew Hore
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0
Director deals: EnSilica purchases help shares to recover

Fabless silicon chip designer and manufacturer EnSilica (LON: ENSI) was hit by a share price decline after its recent its recent full year results. That sparked buying by directors.

Executive chairman Mark Hodgkins acquired 115,000 shares at 44.1p each. He owns 666,000 shares.

Non-executive director David Tilston bought 55,000 shares at 42p each. That takes its stake to 124,000 shares.

Both men bought 10,000 shares at 45p/share in the placing in May.  Three other directors also bought shares in the placing.

Business

EnSilica designs application specific integrated circuits (ASICs), which are in increasing demand in areas, such as Internet of Things, satellite communications, wearable health devices and 5G. There are four areas of focus: communications, industrial, automotive and healthcare. EnSilica can design and supply complex mixed signal ASICs that combine analogue and digital functions

Designing a new ASIC takes years. There are revenues earned in this design phase. It can take two years or more for chip supply to begin and then production is built up to its peak, so there is built in growth for many years. The supply is where the major profit will be earned.

EnSilica slipped into loss in the year to May 2024, but the long-term outlook is positive. Chip supply revenues should start to build up from this year and that will sharply boost profitability.

New contracts have been won this year and these will contribute in the future. Since the results, EnSilica has gained a contract to design and supply an ASIC for Oriole Networks, which will use it as part of developing AI that can operate much faster and use less electricity. This starts in November.

Singer forecasts a 2024-25 pre-tax profit of £2.7m, doubling to £5.5m next year. This should enable EnSilica move from net debt of £1.14m to net cash of £2.75m at the end of May 2025.

Conclusion

Last week, the share price bounced back 19% to 47p, but it is still below the level prior to the recent results. The shares are trading on nine times prospective earnings for this year, falling to six next year.

There is still some investor caution, but the balance sheet appears strong enough after the recent placing and there are good prospects for the contracts that have already been won. There are another two potential contracts that are well advanced.

There could be some risk in terms of timing of business and level of demand for the chips, but they are worth buying if a long-term perspective is taken.  

AIM movers: Aquis Exchange doubles on agreed bid

Andrew Hore
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1
AIM movers: Aquis Exchange doubles on agreed bid

Aquis Exchange (LON: AQX) is recommending a bid from rival exchange trading business SIX Exchange. The offer is 727p/share in cash, which values the company at £225m. There had been several previous proposals from SIX. The combined business will have greater pan-European scale and be able to expand internationally. SIX is particularly interested in the Aquis technology and there is also potential to develop the Aquis Stock Exchange a pan-European market. The share price jumped 114% to 705p. The company joined AIM in June 2018 at 269p/share.

Deltic Energy (LON: DELT) says Shell has provided an updated total well cost estimate of $48m for the Selene well site in the North Sea. Deltic Energy is carried for costs of up to $49m. There are plans for a second licence term as the partners move towards a final investment decision. This news and the full inclusion of tax losses has led Canaccord Genuity to increase its NPV10 share price target from 30p to 38p. The share price increased 42.4% to 6.55p.  

There has been plenty of news from cancer diagnostics developer Angle (LON: AGL) this week. The DNA analysis of circulating tumour cells using Parsortix has been shown to identify EGFR-mutated non-small cell lung cancer patients that are developing resistance to treatment with AstraZeneca drug Osimertinib.  Uses of the Parsortix technology are being showcased at an American Association for Cancer Research special conference. Angle is presenting a talk on PD-L1 status in circulating tumour cells isolated by its Parsortix diagnostics technology from blood samples of lung cancer patients. Data produced has high analytical sensitivity and specificity and suggests that this technology can be used for personalised treatment of lung cancer patients. Additionally, there is a report on progress of developing a system to classify HER2 protein expression for breast cancer. This is being developed with BioView. Parsortix-based assays were showcased at the European Association for Cancer Research (EACR) Liquid Biopsies Conference in France. The share price is 39.4% higher at 11.5p.

Star Energy (LON: STAR) is selling land at Alton for £6.3m. This used to be the site of the Holybourne oil terminal. The sale depends on planning permission and that should happen in the middle of 2025. Perpetual increased its stake from 4.93% to 6.95%. The share price rose by one-third to 9.01p.

FALLERS

Oracle Power (LON: ORCP) says the latest drilling at the Northern Zone intrusive hosted gold project in Western Australia has completed and samples submitted to the laboratory. Oracle Power has raised £150,000 at 0.013p/share. Th cash will be spent on projects in Australia and Pakistan. The share price slid 38.5% to 0.0123p.

Film vehicles and services provider Facilities by ADF (LON: ADF) has been hit by filming delays and the cancelation of projects. It had appeared that there would a strong recovery in the second half following the Hollywood writers’ strike. Revenues have been reduced from £48.6m to £35.1m and margins have been hit by competition for limited contracts. This means that Facilities by ADF will not do much better than breakeven in 2024. There should be a recovery in 2025, but revenues have been cut from £67.3m to £56.8m – including a 12-month contribution from Autotrak. Rockwood Strategic has a 3.7% stake and related investment entities have a further 7.6%, while Octopus has taken a 6.49% stake. Downing and Otus have reduced their holdings. Chairman John Richards bought 200,000 shares at 30.5p each. The share price dived 35.5% to 34p.

Mongolia-focused oil producer Petro Matad (LON: MATD) is having mixed fortunes with the Heron-1 well outperforming, but Heron-2 disappointing. Heron-1 is producing 200-300 barrels/day, and this could be quadrupled. Heron-2 production reached 30 barrels/day and has been suspended. Shore has cut its NAV estimate from 7.2p/share to 6.8p/share – mainly down to foreign exchange and changes in the oil price. The share price declined 35.4% to 1.6p.

Delays to defence orders have hit Solid State (LON: SOLI) and profit will be much lower than expected this year. Cavendish has downgraded 2024-25 earnings by 58% to 5.5p/share and next year’s by 48% to 7.9p/share because it is uncertain when the order will come through. The UK government has paused spending on a major defence order ahead of a strategic defence review next summer. The dividend could be maintained at 4.3p/share. The share price dived 35.3% to 137.5p.

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