Armadale Capital (LON: ACP) has rebounded following yesterday’s drop on the announcement of the proposed cancellation of the AIM quotation. The board believes that being a public company does not benefit the company because of the costs and lack of ability to raise money. Armadale Capital needs to reduce the cash burn and sell non-core assets. The resources company can be more flexible as a private company. The share price doubled to 0.08p.  

Strategic Minerals (LON: SML) generated revenues of $1.27m from the Cobre tailings project in September. This is treble the level last September. Full year revenues should be more than $4.5m. The remaining loan facilities have been repaid. The share price improved 13.6% to 0.25p.

Audioboom (LON: BOOM) grew third quarter revenues by one-third to $18.8mand full year EBITDA of more than $1m is now expected. September generated record revenues. The share price rose 7.14% to 225p.

Tatton Asset Management (LON: TAM) had stronger than expected net inflows averaging £305m/month in the past six months. Assets under management or influence are £19.9bn. The share price increased 7.08% to 711p.

Semiconductor designer EnSilica (LON: ENSI) has won a design and supply contract for a controller ASIC for automotive and industrial markets. The value should be more than $31m over seven years. The share price is 6.38% higher at 50p.

FALLERS

Technology investment company Tern (LON: TERN) is raising £625,000 at 1.25p/share. This cash will be investe4d in investee companies and cover working capital outflows. The share price slumped 42.3% to 1.275p.

Deltic Energy (LON: DELT) chief executive Graham Swindells has left the board and chief operating officer Andrew Nunn will replace him. The share price fell 23.8% to 4p.

PHSC (LON: PHSC) chair and chief executive Stephen King is stepping down in January. He has a 19.1% stake. A new chief executive is being sought. The share price dropped 6.45% to 29p.

Floorcoverings supplier Victoria (LON: VCP) says the market continues to be soft and EBITDA is likely to decline to £50m in the first half. Second half trading should be stronger. The share price declined 4.86% to 121.6p.

The FTSE 100 was weaker on Tuesday as commodity companies dragged the index lower despite a rally in UK-centric stocks on interest rate hopes.

London’s leading index was down 0.4% at the time of writing on Tuesday with oil majors shaving off a considerable number of points from the index. BP was the top faller, plunging over 4%, and Shell sank over 2%.

The catalyst was falling oil prices – Brent and WTI were both down more than 5% in midmorning trade in London.

“With the crude price failing to bounce through Asia, consolidation was the play, where we saw a tight range for much of trade, however, we’re now seeing sellers regain composure with price breaking through the US lows, with a mix of stops being taken out, and momentum-focused traders working in line with the flows,” said Chris Weston, Head of Research at Pepperstone.

“The demand side of the equation also seems to be in play with OPEC projecting weaker demand forecasts.”

Although the index was firmly in the red on Tuesday due to oil and mining shares, there was considerable positivity emanating from companies focused on the UK economy.

Hopes of lower interest rates provided support for house builders with Persimmon, Barratt Redrow and Taylor Wimpey all up more than 2%.

“Domestic-focused UK stocks were in the spotlight as the latest economic data strengthens the argument for a drop in the cost of borrowing,” says Russ Mould, investment director at AJ Bell.

“The Bank of England is carefully engineering a soft landing as the UK economy loses momentum. A decline in the unemployment rate suggests the labour market isn’t in trouble, yet lacklustre GDP figures for July and August, combined with a slowdown in the rate of pay growth, means a small interest rate cut might be warranted to help grease the wheels and get the country moving a little bit more.

“Markets are now pricing in an 83.5% chance of a quarter percentage point rate cut when the Bank of England’s monetary policy committee meets next month. Shares in housebuilders, banks and supermarkets responded favourably to the latest economic data and how it could lead to a rate cut, but not every consumer-facing stock got a bounce. Retailers Next and Currys were in the red which suggests some caution on behalf of investors, namely that another rate cut isn’t a guaranteed ticket to consumers splashing more cash.”

Easyjet was the top riser after Goldman Sachs after bumped their price target up to 600p.

The Cambridge-based 1Spatial (LON:SPA) yesterday announced its Interim Results for the six months to end-July. 

The £74.5m capitalised group, which is a global leader in Location Master Data Management software and solutions, reported a 5% increase in its first-half revenues to £16.2m (£15.5m) and an encouraging 60% fall in its pre-tax losses to £0.2m (£0.5m loss). 

The company, which not only has operations in the UK but also in Ireland, the USA, France, Belgium, Tunisia, and Australia, provides its LMDM software, solutions and business applications, primarily to the Government, Utilities and Transport sectors via the 1Spatial platform and its SaaS offerings.  

Its solutions ensure data governance, facilitating the efficient, effective and sustainable operation of customers around the world. It allows them to master their data on any device, anywhere, anytime and can be deployed as SaaS in the cloud, on-premise, or as a hybrid of both.  

The group’s global clients include national mapping and land management agencies, utility companies, transportation organisations, government and defence departments. 

Management Comment 

CEO Claire Milverton stated that: 

“We have enjoyed a positive first half of the year, successfully executing on our key strategic initiatives.  

Notable achievements include the timely deployment of 1Streetworks within UK Power Networks, strategic expansion into new US states and sectors and strategic hires to set the business up for further growth.  

Looking forward, our primary focus will be on accelerating the momentum of our SaaS offerings, converting our expanding pipeline and further penetrating the substantial US market.  

The notification of the award of a second major 1Streetworks deal for £1m (subject to contract), coupled with a growing NG9-1-1 pipeline, reinforces our confidence in continued progress throughout the remainder of the year.” 

Analyst Views 

At Panmure Liberum, its analysts Andrew Ripper and Harvey Robinson have upped their Buy rating on the group’s shares, looking for 90p (80p). 

They suggest that there is increasing evidence that the group is at an inflection point, especially following the recent contract wins announced by the company. 

They estimate that for the current year to end-January 2025, the group will see an increase in its sales to £37.0m (£32.3m), lifting its pre-tax profits to £2.2m (£2.1m) and its earnings to 1.9p (1.8p) per share. 

For next year they go for £40.0m sales, £3.9m profits and 3.0p per share in earnings. 

Andrew Darley and Michael Hill, at Cavendish Capital Markets, initiating their forecasts, have a punchier share Price Objective of 140p. 

This year they look for £36.1m revenues, and £2.2m adjusted pre-tax profits, but with earnings easing fractionally to 1.7p per share. 

While over at Edison Investment Research, analyst Dan Ridsdale considers that the group’s contract momentum underpins its growth prospects. 

On a discounted cash flow analysis, they indicate 100p a share being readily achievable. 

For the current year, he has estimates of £35.8m sales, £2.4m EBIT, with 1.4p earnings per share. 

Ridsdale goes for £38.7m in revenues in the 2026 year, with £3.8m EBIT, generating 2.6p in earnings per share. 

In My View 

I do like the basis of this group’s offerings both in the UK and globally, with an emphasis upon its potential in the US. 

On the face of it though, its shares, now at 66.50p, appear expensively rated, but as the group builds up its annual recurring revenues, I feel that the profits really will drop to the bottom line quite impressively. 

That gives credence to the Price Objectives put forward by the analysts. 

Finally, it is worth noting that yesterday, after the results announcement, CEO Claire Milverton added another 45,349 shares to her holding in the company, purchased at 66p, taking her stake up to 764,125 shares. 

Victoria Flooring has issued a particularly down beat assessment of the flooring market they operate in highlighting an extended period of decline that has forced them to take cost cutting measures.

The group said in expects EBITDA for the first half to be £50m, significantly lower than the £64.9m recorded in H2 2024.

Falling profitability is the result of slow sales across the industry. Victoria estimates volumes across the entire industry are down 20% – 25%.

To combat falling volumes, the company have implemented measures including streamlining procurement, relocating some manufacturing facilitate, and reorganising production of ceramics. 

Despite macro influences playing a heavy part in first half trade, the company is confident the second half should see signs of improvement driven by increased mortgage approvals and rising transactions.

“The flooring sector is experiencing the most severe and longest decline in demand in the last 30 years. During this period, we have focussed on optimising productivity and reducing operational costs whilst maintaining the same potential production capacity,” said Chief Executive, Philippe Hamers.

“These actions will have a very material positive impact on earnings and cash flow as demand normalises with the anticipated improvement in the macro-economic environment and increase in housing transactions, a key driver of demand. Clearly the recovery continues to draw closer, although it is difficult to pinpoint precisely when it will begin. However, we remain prepared for growth when the time arrives, which will be delivered without any significant capex spend.”

Victoria Flooring shares were down 2% at the time of writing.

The FTSE 100 traded in a tight range on Monday as weakness in gambling companies and miners offset gains in utility and pharmaceutical stocks.

Undulating between negative and positive territory, London’s leading index traded in a 30 point range for most of the session.

“Stocks are largely set to tread water at the start of the week as investors look for a sense of direction as US earnings season builds, and the latest stimulus plan from China comes under scrutiny,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

Mining companies were prominent in the top fallers as the China stimulus trade softened overnight and hit the high beta sector. Antofagasta, Glencore and Fresnillo all found themselves at the bottom of the leaderboard with losses between 2.1%-3.2%.

The biggest faller was gambling company Entain who tumbled 7% on fear Labour would target the gambling industry as part of their tax raid in the Budget.

“Several names in the gambling space were underwater on speculation Labour is considering plans to double taxation on online casinos and bookies in the upcoming Budget,” said Russ Mould, investment director at AJ Bell.

“Labour is desperately looking for ways to raise revenue, having ruled out increasing taxes on ‘working people’. It’s notable that the speculation suggests so-called ‘lower harm’ activities like bingo and the lottery will be untouched by any tax changes.

“The betting industry will argue higher taxes could lead to an increase in illegal black-market gambling and ultimately firms may well pass on any extra costs they incur to punters, potentially doing more harm.

“Today’s news is a salient reminder of the strengthening headwinds the sector faces in terms of regulation and tax and that this remains a live risk for investors to consider.”

Vistry was the top gainer as the house building company started a slow recovery of the losses sustained after announcing cost miscalculations that recently sent shares into free fall. Vistry was 3% higher.

Strength in utility companies SSE, Severn Trent, and United Utilities suggested investors were leaning towards lower risk companies amid the ongoing macro uncertainty.

Innovative Eyewear, known for its ChatGPT-enabled smart eyewear brands, has unveiled the world’s first generative AI fashion show dedicated to eyewear.

The video released on Monday by the Tekcapital portfolio company showcases its latest smart eyewear collections, including collaborations with Reebok, Nautica, and Eddie Bauer.

The latest deployment of Generative AI by a Tekcapital portfolio company uses digitally created models and real Lucyd smart eyewear.

Tekcapital investors should be particularly interest to see the Reebok range due for release in the coming months featured. Digital avatars are seen strutting down a virtual runway, each sporting an actual pair of Lucyd glasses.

“We believe AI models are the future of product photography and marketing, and are an exciting leap forward in digital advertising,” said Harrison Gross, CEO and cofounder of Lucyd.

“With this technology, we can break free from content creation constraints and create vibrant, interactive experiences with impressive detail, that captivate audiences while slashing production costs and timelines.

“To bring the point home, a video using practical effects and real models would have easily cost 20x more than the creation of this digital event, and the final product would perhaps not be as exciting and unique as our first AI runway. This piece follows our longstanding mission to incorporate powerful emerging technologies into our smart eyewear offering, wherever it can support a more engaging user experience.”

I have met many, perhaps too many, company bosses that put in little effort into their businesses and expect it all to happen for them. 

However, I have never met Mike Ashley or his son-in-law Michael Murray but I have an immense admiration for their efforts to drive value for Frasers Group (LON:FRAS) shareholders, especially for Ashley with 73% of the £3.65bn group’s equity. 

A veritable myriad of interests lie within the Frasers portfolio, with brand names inside including Sports Direct, House of Fraser, Flannels, 18 Montrose, Amara Living, Evans Cycles, Everlast and Everlast Gyms, Frasers, Game & Belong, Gieves & Hawkes, I Saw It First, Jack Wills, Slazenger, Sofa.Com, Studio, USA Pro, USC, Agent Provocateur, Donnay, Camprio, Carlton, Game, karrimor, Firetrap, GUL, gelert, Lillywhites, Lonsdale, MuddyFox, LA Gear, scott, Nevica, Sondico, SoulCal & Co, Tessuiti and Van Mildert – the list seems endless. 

And all the above are just its direct retail interests – however, Ashley, through Frasers has investment stakes in AO World, Currys, Hugo Boss, THG, boohoo Group, ASOS, and more. 

Of late Mike Ashley has also been getting stuck into buying up shopping centres, just at a time when so many groups are closing down High Street shops all over the country. 

Frasers Group CEO Michael Murray has commented that the group is striving to re-invent and elevate retail for UK shoppers, bringing the very best brands, environments and experiences to all of Frasers’ customers across the country. 

It has recently purchased the 600,000 sq.ft. Princesshay Shopping Centre in Exeter, the Fremlin Walk Shopping Centre in Kent and the 65,000 sq.ft. Olympus Centre retail park in Gloucester. 

Murray stated that: 

“The acquisition of Princesshay, Fremlin Walk and The Olympus Centre reinforces our commitment to investing in physical retail. 

Securing properties which serve as the primary retail destination for the community remains a top priority for us.  

Such acquisitions unlock new growth opportunities for our retail concepts, while revitalising high streets and physical shopping locations up and down the country.” 

But just buying up properties across the UK is not enough for the dynamic duo. 

Last week alone Frasers added to its holding in the Mulberry Group (LON:MUL), as I featured on Monday of last week, despite having been rejected in its 130p a share proposed offer for the handbag company. 

Hours after the market closed on Friday night, it put out a statement with reference to making a Possible Cash Offer for the Somerset-based leathergoods company. 

It has stated that it is considering making a 150p a share cash offer for the balance of the Mulberry equity that it does not already own, but it needs acceptance of the proposal first of all from Ong Beng Seng’s Challice Limited, which controls 56% of the stock, against Frasers’ 37% stake. 

Frasers stated that it believes that the £10m recent Subscription for the group will not be enough, it is Frasers’ belief that this will likely lead to another capitalisation event within the medium-term timeframe unless there is immediate and very real change at the company. 

Emphasising its intentions, Frasers stated that despite Mulberry’s catastrophic results, its necessity for emergency funding, and difficult market backdrop, Frasers strongly believes it can provide the appropriate insulation and investment to support a much-loved British brand.  

As part of the Frasers portfolio, the Mulberry brand would be provided with the platform to ensure its long-term survival and success. 

We will await the response from Challice to see how the situation plays out. 

Frasers Group shares are trading at around 811p, valuing it at £3.65bn, while Mulberry Group closed at 112.5p on Friday night, capitalising it at £78.8m. 

On another front, last Thursday, Frasers declared that it was making a £10m strategic investment in Matt Moulding’s THG scheme to spin-off its Ingenuity technology arm. 

Earlier this month Good Energy Group (LON:GOOD), the 100% renewable electricity supplier and leading innovator in clean energy services, announced that it was paying up to £6m for the acquisition of Amelio Enterprises. 

Trading as Amelio Solar, it is a Lincolnshire-based solar installation company with a strong presence in the commercial solar sector and extensive experience in education and public sector projects. 

This deal looks like a strategic fit into Good Energy, which has a vision of powering a cleaner, greener future by making it simple to generate, use and share clean energy, as it looks to expand its capability in decentralised energy services by significantly widening its geographical presence in the solar installation market. 

In its year to end-December 2023, Amelio Solar reported revenue of £7.1m and a pre-tax profit of £1.4m. 

On making the Amelio acquisition CEO Nigel Pocklington stated that: 

“Amelio Solar is a perfect fit for Good Energy as we continue to grow our clean energy service offerings, especially in the commercial and public sectors where demand for solar installations remains strong and less susceptible to the cyclical fluctuations seen in the domestic market.   

Amelio Solar’s proven ability to deliver large, complex solar projects will enable us to better support businesses and public sector bodies in cutting their carbon emissions, while positioning Good Energy as a leader in commercial solar solutions.” 

Management Comment 

In mid-September, when announcing the group’s unaudited results for the six months to end-June, Pocklington stated that: 

“As the energy supply market has normalised, we have shown strong profitability in the first half of the year, whilst our expansion into energy services is showing promise as we consolidate our offer to customers. 

Having completed three acquisitions in the clean energy installation services space we are now offering solar, storage, heat pumps and EV charging across the South - a trusted, truly green brand offering whole greener home and business solutions.  

Good Energy is established as the microgeneration specialist, with a significant market share of rooftop solar customers, leading export tariff rates and premium installation services. 

In a favourable policy environment promising an imminent ‘rooftop revolution’ as the new government accelerates the clean energy transition, Good Energy is well placed for growth.” 

Analyst’s Views 

At Canaccord Genuity Capital Markets, analyst Alex Brooks likes the Amelio acquisition and rates the group’s shares as a Buy, with a 500p ‘sum of the parts’ Price Objective. 

His current year estimates to end-December are for revenues of £203.5m (£254.7m) but with pre-tax profits of £6.7m (£5.7m), lifting earnings to 26.1p (17.0p) and upping its dividend to 3.6p (3.3p) per share. 

For 2025 Brooks goes for £213.3m sales, £10.8m profits, and 45.8p earnings, with just a 3.9p dividend per share. 

At Panmure Liberum, analyst Joe Brent has estimates for current year sales of £197m, £6.3m profits, 25.8p earnings and paying a 3.4p dividend. 

For 2025, he looks for £197m in sales, £10.1m in profits, 41.1p earnings, and a dividend of 3.8p per share. 

He rates the Amelio deal as attractive and consistent with Good Energy’s strategy for its Energy-as-a-Service (EaaS) policy. 

Panmure’s Price objective is 550p a share. 

In My View 

Based upon the broker’s estimates, this group’s shares, at just 264p, look to be a cracking one-year investment, which could well see them put on 50% in price and, even then, still look cheap.