Kingfisher shares surge as full year profit guidance increased

UK Investor Magazine
-
1
Kingfisher shares surge as full year profit guidance increased

Kingfisher shares jumped on Tuesday after the DIY specialist announced half-year results that weren’t as bad as expected.

Investors are becoming accustomed to Kingfisher’s poor updates, and any hint of positivity can have a material impact. 

That positivity came in the form of half-year results that beat expectations on Tuesday, although revenue still fell over the period. Sales were down 1.8% to £6.75bn.

Consumers still concerned about high interest rates and feeling the effects of inflation are holding off on big-ticket purchases, which is affecting B&Q owner’s sales. 

”Kingfisher has posted a somewhat flat set of results,” said Adam Vettese, market analyst at investment platform eToro.

“Whilst the top line numbers are slightly off, it does represent an improvement on their update earlier in the year which did flag some cause for concern that conditions were becoming quite tough.

“Tighter household budgets and higher interest rates have meant consumers have tended to repair and renovate as opposed to moving to a shiny new house. This in turn however has seen ‘big-ticket’ sales drag on the numbers for the same reason. Whilst the company seems to have stopped the rot and the market is now better than initially feared, it’s safe to say the B&Q and Screwfix parent company is no longer enjoying the pandemic DIY boom of a few years ago.”

However, investors are looking past revenue figures to the profit upgrade for the full year. Despite the group posting falling revenues for the recent six-month period, Kingfisher increased their profit guidance for the full year.

“The company is now expecting adjusted pretax profit to come in between £510 and £550 million, instead of in a range of £490 to £550 million. Investors had already expected a difficult reading for the first half, so the fall in profits by 0.5% didn’t knock sentiment further,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

The higher profit guidance is the result of the action on costs in recent periods starting to filter down to the bottom line. Its not lost on investors that if the action on costs is accompanied by growth of the top line, Kingfisher are set for stronger profit going into the future.

Kingfisher shares were over 6% higher at the time of writing.

Can education give Vietnam a semiconductor advantage? 

Vietnam Holding
-
2
Can education give Vietnam a semiconductor advantage? 

As Vietnam races to embrace its lofty semiconductor ambitions, human resources and education have emerged as two of the key pillars of its strategy. 

The country has long performed well when it comes to education, especially STEM (Science, Technology, Engineering, and Mathematics) subjects. For example, the most recent Programme for International Student Assessment (PISA) rankings placed Vietnam behind only Singapore among Southeast Asian countries. 

Overall, Vietnam ranked 34th out of 81 countries on the list, a particularly strong performance given its stage of economic development. 

Training students for the semiconductor industry, however, is an even bigger challenge – one the government has acknowledged by aiming to spend US$1 billion on 50,000 semiconductor engineers by 2030. Officials estimate that by that year, Vietnam’s chip industry will need 35,000 engineers and 13,500 chip designers.  

That figure will be extremely difficult to attain, but progress is being made. 

The National Innovation Center (NIC), which is taking the lead on this effort, has partnered with a number of high-profile international corporations and universities to create training programs.  

Thus far, the NIC has partnered with Qorvo, Cadence, Synopsys, ARM, and Marvell Technology. Other partners include Google, Samsung, the University of Arizona, and USAID. 

In early August, about 70 students completed Vietnam’s first in-depth chip design training course. This was organized by the NIC, FPT Corporation, Cadence, and Tresemi.  

The United States also recently launched the ITSI-CHIPS Workforce Accelerator Program in partnership with multiple government ministries and Arizona State University. Vietnam will receive US$4 million under the program and is one of eight countries globally taking part. 

Prime Minister Pham Minh Chinh, meanwhile, established a national steering committee to promote the development of the semiconductor industry, reiterating high-level support for the sector. This committee will help officials “direct and resolve important issues related to promoting the development of the semiconductor industry” in Vietnam.  

As discussed in our previous coverage of the chip sector, FPT is one of the leading domestic stakeholders in this industry. They are uniquely situated across both the tech education and manufacturing sectors, meaning they will play a key role in improving Vietnam’s human resources. 

In Vietnam Holding’s recent ‘Vietnam the Global Digital Race’ webinar, Nguyen Khai Hoan, Senior Executive Vice President, Chief Operating Officer and Chief Financial Officer at FPT Software – a subsidiary of FPT, explained some of the corporation’s initiatives in the AI and semiconductor spaces. 

“Vietnam is becoming a very attractive destination for semiconductor companies, and by the end of 2024, the industry is forecast to pass US$6 billion in value, making it an important production center,” he said. 

“More than 50 semiconductor companies have a presence here, and FPT is working closely with the Vietnamese government on the 50,000 engineers target,” Hoan added. “We are fully integrating Vietnam into the global semiconductor system, and two years ago we founded FPT Semiconductor, an internal startup to become the first Vietnamese company to manufacture commercial chips.” 

“In parallel, FPT aims to develop a high-quality workforce for the industry, and we work with FPT University to design curriculum and launch a semiconductor circuit faculty providing comprehensive training to undergrad and postgrad students to support the government’s plan,” he said. 

All FPT employees, meanwhile, must now take mandatory AI training to better prepare the business for future innovations. “We position ourselves as an AI-defined corporation, supporting Vietnam’s aspiration of becoming an AI nation. In the last 10 years we have spent our efforts in AI research and development, and today we have more than 1,000 AI experts and engineers. AI will be embedded in our services and solutions, playing a crucial role in enabling new levels of performance for our clients,” he stated. 

While Vietnam has its work cut out given the highly competitive nature of the global chip industry, the opportunity is there. Nikkei Asia recently reported on the growing presence of semiconductor companies from the United States, Taiwan, and South Korea among others – drawn in part by Vietnam’s relatively low-cost, talented labor pool. 

All of the right chips (pun intended) are in place – it’s up to Vietnam to make the right bet.  

Writing credit Michael Tatarski

Three fund picks for falling interest rates by Hargreaves Lansdown

UK Investor Magazine
-
1
Three fund picks for falling interest rates by Hargreaves Lansdown

Hargreaves Lansdown analysts have picked out three funds to consider for falling interest rates.

Fund pickers at the UK’s largest retail brokerage hone in on falling interest rates and their impact on the wider market. Three selections cover a range of asset classes, including the UK mid-cap equity sector and fixed-income assets.

After the Bank of England began cutting rates in August, savings rates available from banks are starting to fall. Investing in equities or bonds is, of course, much higher risk than simply having cash in the bank, but they do offer the opportunity for greater returns over the long term for those willing to accept higher risk to their savings. 

Hal Cook, senior investment analyst at Hargreaves Lansdown, outlines the attractions of the three funds in his own words:

Invesco Tactical Bond

“Invesco Tactical Bond is very well placed to take advantage of a rate cutting cycle. They’ve been altering their investments to benefit from rate cuts more recently. This is best illustrated by their duration position which, at around 7 years, is close to the highest it has been over the last ten years in the fund. Duration is a measure of how sensitive an investment is to interest rate changes and is measured in years. The higher the duration value, the more sensitive the investment is to interest rate changes. 

FTF Martin Currie UK Mid Cap fund 

If it’s shares you’re looking at, then smaller companies present an interesting opportunity in a rate cutting environment. Smaller companies have generally struggled during the period of rising rates. This is partly because their revenues can be more linked to the health of the economy and partly because their cost of borrowing is often not fixed. The opposite is true as rates come back down, making them an interesting investment. 

Smaller companies in the UK could be a good place to invest, especially with this part of the UK market trading on a significant discount to their larger counterparts. The FTF Martin Currie UK Mid Cap fund is a good option in this space. Richard Bullas has managed the fund since 2013 and is a UK smaller companies’ expert that we hold in high regard. 

Baillie Gifford Sustainable Income fund

Finally, for more cautious investors, multi-asset funds might be appealing – particularly those with investments in bonds and investment trusts. Investment trusts have struggled during the rate rising cycle, especially those that invest in property and infrastructure. This is largely because one of the key attractions of these trusts is the income that they pay. As interest rates and bond yields have increased, the demand for these types of trusts has fallen because the level of income they pay is not much more than cash or bonds now. This has resulted in a number of them trading at a discount to their net asset value. On a forward-looking basis, this has the potential to reverse and add to the returns of these trusts, however, there are no guarantees.

The Baillie Gifford Sustainable Income fund is a good option in this environment. It’s neutral asset allocation includes around a third invested in infrastructure and property and a further a third invested in bonds. The remainder is usually invested in shares and cash. It’s managed by a number of experienced individuals at Baillie Gifford and the diversified nature of the fund means that even if rate cuts have differing impacts on different regions and asset classes, the fund has potential to benefit from them.”

LBG Media – Looking For A Favourable Guidance For The Balance Of Its Trading Period 

Mark Watson-Mitchell
-
1
LBG Media – Looking For A Favourable Guidance For The Balance Of Its Trading Period 

Tomorrow morning will see the largest publisher on Facebook, LBG Media (LON:LBG), declare its Interim Results for the six months to end-June – they are expected to be showing good figures and a positive statement. 

The Business 

LBG Media is a global digital entertainment business with a focus on young adults and a leading disrupter in the digital media and social publishing sectors.  

It produces and distributes digital content across a range of mediums including video, editorial, image, audio, and experience (virtual and augmented reality).  

Since its inception in 2012, the group has curated a diverse collection of specialist brands using social media platforms (primarily Facebook, Instagram, Snapchat, X, YouTube and TikTok) and has built multiple websites to reach new audiences and drive engagement.  

Each brand is dedicated to a distinct popular interest point (e.g. sport, gaming etc.), which is designed to achieve broader engagement, increase relevance and ultimately build a loyal community of followers. 

The group operates two core routes to market:  

  • Direct revenue, which is principally generated from the provision of content marketing services to corporates, brand owners, marketing agencies and other entities such as government bodies and where the relationship with the client is held directly by LBG Media; and  
  • Indirect revenue, which is generated via a third-party, such as a social media platform or via a programmatic advertising exchange / online marketplace, which holds the relationship with the brand owner or agency. 

Recent Trading Update 

On Wednesday 24th July, the group announced that it expected first-half revenues to be up 55% to £42.3m (£27.2m). 

The group’s direct revenues were up 92% at £22.0m (£11.5m), while its indirect revenues were just 28% better at £19.7m (£15.3m). 

Overall, the group’s global audience expanded to a significant 493m, which compared to 452m last December and just 410m in June 2023. 

CEO Solly Solomou stated that: 

“It has been a strong start to the year as the business continues to make good progress along the line of sight to £200m of revenue.  

Performance in Direct and Web highlight the strength of our diverse revenue model and the operational changes in ANZ are delivering planned benefits, with further expansion of our partnership within the APAC region.  

We have continued the integration of our US commercial teams to leverage early customer wins by presenting a ‘one stop shop’ for brands wanting to reach a diverse young adult audience.  

I am extremely excited by the opportunities ahead as our diverse revenue model and strong momentum position us well for continued success.” 

Change Of Year-End 

The group has announced that it plans to change its financial year-end from 31st December to 30th September.  

That move will mean that the seasonal peak in advertising spend now in the Q4 period, will instead fall into the first half of the financial year, enabling a better planning ability for its management. 

Analyst View 

Rachel Birkett at Zeus Capital has estimates out for the year to end-December, showing total revenues of £89.7m (£67.5m), with adjusted pre-tax profits of £19.6m (£14.0m), generating 6.7p (4.9p) of earnings per share. 

Prior to the recent news that the group is changing its year-end, the analyst was looking for 2025 to produce £98.7m in sales, £22.2m in profits, with 7.7p of earnings per share. 

Zeus considers that the shares are trading on an undemanding rating for such a profitable and highly cash-generative business that is well-positioned in fast-growing digital media niches. 

In My View 

With its shares, at 136.5p, having more than doubled since mid-April, they are currently trading near their year’s High, which values the group at £290m. 

This is a total growth situation stock, backed by some £23m of cash in the bank. 

It would be good if tomorrow’s results will issue a favourable updating of guidance, which could well help to push the shares even higher still. 

Zephyr Energy addresses equity fundraise fears

UK Investor Magazine
-
0
Zephyr Energy addresses equity fundraise fears

According to a statement released on Tuesday, Zephyr Energy is not in the process of or planning to undertake an equity fundraise.

Zephyr has released a statement clearly designed to stem the drop in shares, which have lost around 40% of their value in recent weeks.

The company has a portfolio of producing oil assets in North America and is also undergoing exploration activities targeting both oil and helium.

In a recent update on production activities at their non-operated assets in Williston Basin, North Dakota, Zephyr announced increasing production and looked forward to reporting revenues to investors.

“We look forward to reporting H1 2024 sales, revenues and income figures when our interim statements are published, at which point full non-operated sales information will have been received from our operating partners,” said Colin Harrington, Chief Executive of Zephyr.

Helium One Global submits mining license, Colorado acquisition progressing

UK Investor Magazine
-
0
Helium One Global submits mining license, Colorado acquisition progressing

Helium One released a general company update on Tuesday, providing insight into the submission of a mining licence to Tanzanian authorities and the acquisition of a stake in a US-based helium project.

After positive early results from activities at the southern Rukwa Helium Project, Helium One is pushing forward with further development plans.

Helium One has submitted a mining license for the Itumbula-Tai area in southern Rukwa. The license contains a detailed feasibility study covering the evaluation work Helium One has completed to date. The company now awaits a response from the Tanzanian Ministry of Minerals and Mining Commission.

The company also plans to allow a number of their prospecting licenses to expire, saving around $170k per year.

“This is yet another major milestone in the Company’s history,” said Lorna Blaisse, Chief Executive Officer of Helium One.

“The last 12 months have been a very significant chapter for Helium One in which we have made a successful helium discovery, completed a detailed feasibility study, established a commercial development plan and successfully applied for a ML. An extraordinary achievement within that timeframe and I am very grateful to the efforts of everybody involved.

“We very much look forward to progressing the project in Tanzania through to production, as well as remaining opportunistic on further opportunities in-country and elsewhere.

“We are also entering a very busy period with our joint venture with Blue Star Helium in Colorado where we look forward to completing the acquisition and starting the drilling phase of the upcoming development wells on the Galactica-Pegasus project. We look forward to providing updates on the progress of the drilling programme in due course.

“The Company would like to thank the Ministry of Minerals and the Mining Commission for their continued support and their engagement with the recent success in southern Rukwa and looks forward to their positive response and to developing a partnership with the Government of Tanzania upon the granting of the ML, in order to develop a flagship helium sector in Tanzania.”

Touching on the acquisition of a 50% stake in the Galactica-Pegasus project in Colorado, Helium One said the partnership with Blue Star Helium is ‘progressing’.

MP Evans raises dividend by one-fifth

Andrew Hore
-
2
MP Evans raises dividend by one-fifth

Oil palm plantations operator MP Evans (LON: MPE) increased its interim dividend by 20% to 15p/share on the back of better than expected interim figures. Higher crop production and prices meant that the Indonesia-focused oil palm plantations operator did especially well in the first half. The July and August production was more disappointing, but full year expectations for AIM-quoted MP Evans have been upgraded.

In the six months to June 2024, revenues increased from $134.5m to $163.7m, while pre-tax profit jumped from $23.4m to $41.6m.

There was a 5% increase in crop processed to 759,700 tonnes, while crude palm oil production was 6% higher at 177,000 tonnes. The mill-gate price improved from $755/tonne to $771/tonne.

There was also a reduction costs to produce the palm oil from $535/tonne to $458/tonne. That is a major factor behind the rise in profit.  

The crude palm oil price has been less volatile in recent times, and it appears that it will stay around the current level. Cavendish is basing its expectations for 2025 and 2026 on a price of $700/tonne.

In June, the 5% minority stake in nearly all its Indonesian subsidiary was acquired for $6m. That valued the land at $9,000/hectare, which compares with Cavendish’s estimate of the overall value of land holdings of $18,400/hectare.

Net cash is expected to be $18.1m at the end of 2024 and without land acquisitions this cash pile will rise significantly over the next two years. Even though, earnings growth is expected to be slower than in 2024.

Earnings forecasts have been raised by 11% to 122.6 cents/share. At 890p, the shares are trading on less than ten times 2024 earnings, while the forecast yield is 5.5%.

FTSE 100 treads water ahead of Fed rate decision

UK Investor Magazine
-
0
FTSE 100 treads water ahead of Fed rate decision

The FTSE 100 was fairly flat on Monday as investors adopted a tentative approach to equities ahead of the Federal Reserve’s rate cut decision later this week.

Traders also took the latest assassination attempt on Donald Trump in its stride, with very little movement in European stocks or US futures on Monday.

“Markets have not shown any panic after yesterday’s apparent assassination attempt on Donald Trump,” said Russ Mould, investment director at AJ Bell.

“Futures prices imply a fairly muted session when Wall Street opens on Monday, while there were only minimal changes to the major equity indices in Asia and Europe.

“The key focus for investors this week is the scale of any interest rate cuts by the Federal Reserve. A quarter percentage point would be seen as the Fed starting a ‘softly, slowly’ path to easing monetary policy in light of concerns about a weaker jobs market. However, traders are increasingly focused on a bigger cut, with a 59% probability of a half-percentage point reduction at the meeting.”

Although markets were flat on Monday, one would expect volatility to pick up as we approach Wednesday’s rate decision.

The Bank of England will follow the Federal Reserve on Thursday with a decision on UK interest rates, although the BoE is thought to be taking a more measured approach to rate cutting after reducing borrowing costs by 25bps in August.

Marks & Spencer

Marks & Spencer was the top riser after RBC Markets analysts upgraded their price target to 400p, sending MKS shares 2% higher. Marks & Spencer, like the other FTSE 100 food retailers, have been on a steady yet convincing rally in 2024, and shares in the premium retailer are at the highest levels since 2017.

Phoenix Group’s uninspiring interim results sent shares down 2% and to the bottom of the leaderboard.

AIM movers: Synectics upgrade and more disappointment from Chariot

Andrew Hore
-
0
AIM movers: Synectics upgrade and more disappointment from Chariot

Security systems provider Synectics (LON: SNX) is trading more strongly than anticipated and the pre-tax profit forecast has been significantly upgraded. Oil and gas demand is strong and new casino projects are being won. Shore has raised its pre-tax profit forecast from £3.5m to £3.9m and earnings have been raised more substantially from 16.8p/share to 18.6p/share. The share price improved 16.8% to 237p.

Neometals (LON: NMT) subsidiary Recycling Industries Scandinavia, where it owns 88%, has signed an agreement with EIT RawMaterials to support the development of the vanadium recovery project in Finland. It will provide a €500,000 in grant funding to the project and will take a 1.1% stake in Recycling Industries Scandinavia, which values it at €50m. That means that the Neometals stake is worth more than its market capitalisation. EIT has an option to subscribe up to €10m more. The Neometals share price is 12.5% higher at 4.5p.

Despite UK government changes and the disruption that has caused Made Tech (LON: MTEC) has been awarded a £13.2m contract with the Department of Education. This is a four-year contract to provide digital, data and managed services for the Standards and Testing Agency, which is being launched to perform National curriculum assessments for primary school pupils. This underpins forecasts. The share price recovered 7.09% to 17p.

Kinovo (LON: KINO) has won an 18-month contract with Hackney council. It is worth up to £12m and covers a range of decarbonisation works on 300 properties. The work should start in the fourth quarter of 2024. There is also another contract with Hackney worth £400,000. This work replaces another contract that is being retendered. The share price increased 2.99% to 69p.

FALLERS

Africa-focused energy company Chariot Ltd (LON: CHAR) has completed the drilling of the Anchois-3 main hole. It encountered gas, but gas pays are thinner than pre-drill estimates. The well will be abandoned. The next step for the project is being discussed with joint venture partners. The share price dived 51.5% to 1.535p and it has fallen by three-quarters in the past week.

Rockfire Resources (LON: ROCK) raised £450,000 at 0.1p/share to continue the development of Molaoi zinc silver lead project in Greece. Earlier in the month, the JORC resource was raised by 500% to 1.09 million tonnes of zinc, 260,000 tonnes of lead and 19.1 million ounces of silver. A retail offer to existing shareholders of up to £250,000 closes at 5pm on 18 September. The share price is one-third lower at 0.1p.

Mosman Oil & Gas (LON: MSMN) has raised £1.5m at 0.035p/share to pursue helium projects in the US. It will fund technical due diligence on potential helium opportunities. Mosman Oil & Gas has a 20% interest in the Vecta helium project in Colorado, which has approvals for exploration wells on five prospects. There is a confidentiality agreement with an unnamed ASX-listed company that has leased areas in the US. The share price slipped 19.3% to 0.0355p.

Cavendish Financial (LON: CAV) says it has a solid pipeline of public and private transactions and this includes possible flotations. Market conditions have not improved since the General Election, but the broker and M&A adviser is in a strong position to benefit from a recovery. The share price fell 8.89% to 10.25p.

Facilities by ADF set to bounce back in the second half

Andrew Hore
-
1
Facilities by ADF set to bounce back in the second half

Business started to recover in the first half for Facilities by ADF (LON: ADF), which provides trailers and other services to film and TV sets, following the ending of Hollywood strikes last year. The second half will show a much greater bounce back in trading as US productions get up and running again.
First half revenues were dominated by BBC productions rather than big budget productions by US studios. That will change in the second half and margins will improve. There will also be an initial contribution from recent acquisition Autotrak Portable Roadways, which hires portable roadways to f...

1...220221222...1,761Page 221 of 1,761