Warpaint London – Cosmetics Group, Profitable Since Its Start In 2002, Has Its Interims Out Tomorrow – Shares to 650p? 

Mark Watson-Mitchell
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Warpaint London – Cosmetics Group, Profitable Since Its Start In 2002, Has Its Interims Out Tomorrow – Shares to 650p? 

Tomorrow morning Warpaint London (LON:W7L) will be announcing its Interim Results for the six months to end-June. 

I hope that the accompanying statement will be bullish enough to get the shares, now 540p, running back up to the 650p level seen at the start of this year. 

The Business 

The company proudly declares that its mission is to ensure everyone has access to high-quality cosmetics at an affordable price. 

Warpaint sells branded cosmetics under the lead brand names of W7 and Technic.   

W7 is sold in the UK primarily to major retailers such as Tesco, Boots and Superdrug and internationally to local distributors or retail chains such as Five Below, Walmart, Normal (DK), Sally’s Beauty and CVS.   

W7 is also available online via its own website, Amazon (US), T mall and Xiaohongshu (China). 

The Technic brand is sold in the UK and continental Europe with a significant focus on the gifting market, principally for high street retailers and supermarkets.   

In addition, Warpaint supplies cosmetics under its other brand names of Man’stuff, Body Collection and Chit Chat, each targeting a different demographic. 

The company outsources manufacturing to ensure competitive pricing, rapid production and an asset light structure. 

The group has not undertaken mass-market TV or radio advertising, but instead, marketing initiatives are considered on a case-by-case, return-on-investment basis, through such activities as trade shows, in-store display furniture, print media/editorials, social media, and via genuine make-up influencers and brand ambassadors. 

The company’s operating expenses are relatively fixed, leverage with scale and evenly spread across the year, enabling its costs to be tightly controlled. 

The group’s warehouses and offices are leased, which means that capex remains low and mostly represents the in-store display furniture provided free of charge for business-to-business customers if they purchase sufficient inventory, and that cost is depreciated over three years. 

Warpaint operates in a growing sector and has been profitable since its inception in 2002, and it remains focused on gross margin, cash generation, and maintaining a strong, debt-free balance sheet. 

26th June AGM Trading Statement 

Chairman Clive Garston stated that: 

“The Group continues to trade strongly with sales for the six months to 30 June 2024 expected to be approximately £46 million (six months to 30 June 2023: £36.7 million), with margins continuing to be robust and ahead of those achieved in 2023.   

Consistent with previous years, due to Christmas gifting orders and the Group’s momentum, sales are expected to again be second half weighted. 

Further progress continues to be made with expanding the Group’s presence in larger retailers globally and the Group has significant further opportunities to grow sales, both with new and existing customers.   

The Group has a number of planned product roll outs to additional stores in the second half of the year and remains in active discussions with a number of UK and overseas retailers about stocking the Group’s products.” 

Analyst’s View 

There are two analysts that follow the company closely, both rate the shares as a Buy, with the average Price Objective of 590p. 

Analysts Darren Shirley and Clive Black, at the company’s brokers Shore Capital, are estimating that the current year, to end-December, will see revenues rise to £105.0m (£89.6m), while adjusted pre-tax profits will improve to £23.3m (18.5m), lifting earnings to 22.6p (18.5p) and the dividend to 11.3p (9.8p) per share. 

For 2025 they see sales of £116.5m, profits of £29.0m, with earnings of 25.8p and a 12.9p dividend. 

They do have some concerns about rising freight costs but consider that if the current trading momentum can be sustained then the implied H2 FY24F requirements are more than achievable, implying upgrade potential. 

In My View 

The Interims tomorrow should spell out just what impact the shipping charges will have incurred. 

But, as I see it, this group has tight controls and a growing cash balance. 

Its brokers believe that the group remains immature in all its geographies, with very modest market shares underpinning strong growth potential, stating that forecasts continue to look conservative. 

The group’s shares closed on Friday night, up 20p on the day at 540p – which could well prove to be an excellent buying level. 

Electrification startups attract greatest climate tech investment

UK Investor Magazine
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Electrification startups attract greatest climate tech investment

According to data released by Dealroom in conjunction with SAP, electrification startups are attracting the most venture capital investment in the climate tech sector.

Dealroom’s Electrification of Europe VC funding report reveals that 62% of climate tech funding between 2019 and 2024 was invested in electrification and clean energy start-ups.

The leading segments within the electrification sector include EV batteries, solar energy, green hydrogen, and battery recycling.

In 2023/2024, EV batteries segment attracted the most investment in the sector, with funding hitting $9.1bn.

Dealroom highlighted notable startups in the EV sector, including Northvolt, Nyobolt, and Electra. Swedish battery maker Northvolt raised $5 billion in early 2024 to fund the expansion of its gigafactory and is working on the development of sodium-ion batteries.

The key driver of electrification theme is the replacement of fossil fuels. The growth of EVs is an obvious example of innovation that directly replaces fossil fuels, while there are more nuanced examples in building and building efficiencies. VCs are particularly keen to invest in heat pump startups.

Marine and wave energy generation has attracted the least investment in recent years.

Nonetheless, while public market equity and other mainstream investments in the energy transition seem to be slowing down, private and venture funding remains buoyant, and there is no shortage of cash for innovations in the sector from VCs.

MicroSalt sees fivefold increase in demand from B2B customers, shares jump

UK Investor Magazine
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MicroSalt sees fivefold increase in demand from B2B customers, shares jump

MicroSalt has experienced a nearly fivefold increase in demand for its low-sodium salt from B2B customers, according to a business update released on Monday.

MicroSalt previously said it had received orders for 29 metric tonnes of its patented salt from one of the world’s largest food companies. However, the company’s business update released on Monday suggests that additional orders have followed those initial orders in much larger quantities.

Demand surged in Q3 of 2024, with commitments for orders of 350,000 lbs of MicroSalt’s salt, the equivalent of around 160 metric tonnes. It’s unclear whether this demand is from one customer or several customers, but MicroSalt is confident the momentum will continue into Q4.

The quantities outlined by MicroSalt would only be required by food manufacturers concerned with the production of millions of units of any given product line. 

MicroSalt has been unable to name the companies it deals with due to the commercial sensitivities of integrating their salt into client products. We do, however, know that it is one of the world’s latest snack food companies, which narrows it down to a handful of household names. 

MicroSalt said they will provide further updates in due course. These could well be the names of the food manufacturing giants they are working with, something investors are surely looking forward to learning about. It could also be further updates on orders.

In addition to the positive update on the B2B business, we learned of further expansion of the consumer business across the United States through a series of new placements in major retailers. 

New placements include 350 Winn Dixie stores and 70 Fesh Thyme stores. MicroSalt’s low-sodium shakers can now be found in over 1,000 stores across the US.

“We are very excited about the placement of our MicroSalt products and the consequential growth in distribution within UNFI, Kehe and Ingredients Online,” said Rick Guiney, CEO of MicroSalt.

“All of these retailers have strong presence in their respective markets, and this continues our efforts to have MicroSalt in every kitchen pantry across the US and beyond.”

Director deals: Jet2 prospects rebounding

Andrew Hore
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Director deals: Jet2 prospects rebounding

Founder Philip Meeson sold five million shares in airline and tour operator Jet2 (LON: JET2) following the AGM earlier in the month. This reduces his stake by 2.3% to 15.4%. That is still the largest shareholding in the company. He stepped down from the board one year ago.
Non-exec director Rachel Kentleton bought 1,801 shares in at 1403p each, but it is not clear whether these shares come from the disposal, but the purchase is dated the day after the announced disposal. She join3ed the board in March.
Business
Jet2 offers a range of holiday options around Europe and other destinations. It als...

Aquis weekly movers: Successful study for SulNOx

Andrew Hore
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Aquis weekly movers: Successful study for SulNOx

There was strong buying activity in Valereum (LON: VLRM) shares even though there was no news. There were around 3.5 million shares traded during the week with Thursday the most active day. The share price jumped 108% to 6.75p.

SulNOx Group (LON: SNOX) increased revenues from £203,000 to £544,000, but the loss was still around £1.9m. Cash was £2.15m at the end of June 2024. A generator-based study for the SulNOxEco fuel additive shows fuel savings of 15%. The share price rose 17.7% to 36.5p.

The increase in the value of the 15% stake held by Global Connectivity (LON: GCON) lead to the July 2024 rising from £7.8m to £17.2m in a six-month period. That is 4.25p/share. The share price improved 10.2% to 1.625p.

Investment company EPE Special Opportunities Ltd (LON: EO.P) reported a reduced loss because there was a gain on fair value movements on investments compared with a loss last time.  There was cash of £18.4m at the end of July 2024. NAV was 319p/share at the end of July and it fell back to 314p/share by the end of August. The share price edged up 3.23% to 160p.

FALLERS

Warrants held by lupus treatment developer ImmuPharma (LON: IMM) to subscribe for shares in Incanthera (LON: INC) at 9.5p each have been extended to the end of March 2025 in return for a £75,0000 payment by ImmuPharma. The share price declined 15.8% to 24p.

Exchange services provider Aquis Exchange (LON: AQX), which is also quoted on the Aquis Stock Exchange, has already warned that the loss of a software contract will hit revenues this year. Net interim revenues were still 4% ahead at £10m. Pre-tax profit was 8% lower at £1.1m. There was a small dip in revenues of the core exchange division. Net cash was £14.5m at the end of June 2024. There are plans to increase investment in technology to increase the addressable market, so year-end cash will be slightly lower than expected at £15.1m.  The share price fell a further 1.28% to 385p.

AIM weekly movers: Orosur Mining moves towards buying minority holding in Anza gold project

Andrew Hore
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AIM weekly movers: Orosur Mining moves towards buying minority holding in Anza gold project

Orosur Mining Inc (LON: OMI) has signed a share purchase agreement to acquire the rest of the shares in the Anza gold project in Colombia. This deal is subject to regulatory approval. The consideration is based on commercial production. It is NSR royalties of 1.5% and fixed royalties of $75/ounce for the first 20,000 gold equivalent ounces. The share price jumped 32.5% to 3.65p.

Video editing technology developer Blackbird (LON: BIRD) continues to rebounded 26.3% to 6p following the interims earlier in the week. Revenues fell 30% to £692,000 because of the ending of the A+E deal and lower operating costs meant that the loss was reduced. Cash burn was similar at £1.9m, leaving net cash of £5.6m. The elevate.io product was released in March and monetisation starts in early 2025.  

Arkle Resources (LON: ARK) says Group Eleven has commenced drilling on the Stonepark licence block in Limerick, where it has a 23.4% stake. This will test the potential for zinc at the southern margin of the block. The share price improved 18.4% to 0.225p.

Shore Capital upgraded animal feed additives supplier Anpario (LON: ANP) after it reported an 11% increase in interim revenues of £17m on the back of a much greater rise in volumes and slightly lower pricing. Raw material costs have stabilised. Full year revenues expectations have been raised from £33m to £34m, while the pre-tax profit estimate is increased from £3.9m to £4.4m, up from £3.5m in 2023. The share price increased 17.3% to 322.5p.

FALLERS

Property finance provider Vector Capital (LON: VCAP) slumped 62.3% to 10p ahead of trading being cancelled on Monday. The company spent £3.5m on a tender offer at 33p/share. This mopped up most of the minority shareholders.

Trading recommenced in the shares of south east Asia-focused energy company Coro Energy (LON: CORO) following publication of 2023 accounts. The loss was reduced from $8.2m to $5m, partly due to a gain on disposals of $1.3m. A consolidated cash flow forecast up until the end of 2025 shows that additional funds will be required in order to pay creditors and invest in renewables assets. Disposals and/or a share issue are possible. The share price declined 58.2% to 0.0575p.  

Chariot (LON: CHAR) says work at a pilot hole to evaluate the Anchois Footwall prospect was abandoned due to it being water bearing. The presence of gas is indicated in the area. Drilling of the main hole has started. Further details are expected next week. Chariot has a 30% interest. The share price dipped 50.6% to 3.165p.

Fulcrum Metals (LON: FMET) is raising £643,500 at 8p/share and directors will subscribe for an additional £114,500 once the interims are published. The cash will be invested in the Teck-Hughes and Sylvanite gold tailings projects in Canada. This should enable nearer-term revenues Management will also review opportunities for exploration drilling on the Tully and Big Bear prospects and a potential technology testing facility in Ontario. The share price fell 36% to 9.5p.

FTSE 100 set for higher close ahead of next week’s interest rate decisions

UK Investor Magazine
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FTSE 100 set for higher close ahead of next week’s interest rate decisions

The FTSE 100 has navigated a potentially precarious week of inflation data and interest rate decisions and has come out stronger, though only by small margins.

Dramatic swings in US stocks throughout the week didn’t translate into much in the way of volatility for the FTSE 100, which was 0.5% higher going into the weekend. 

“The FTSE 100 ticked higher on Friday, putting the index on course for a solid if unspectacular week of gains,” said AJ Bell investment director, Russ Mould.

September has traditionally been a choppy week for stocks, so the fairly flat performance of the month so far is encouraging. However, investors will be gearing up for a potentially bumpier ride for UK stocks next week when the Bank of England and Federal Reserve will decide on interest rates. 

The big question will be how much the Federal Reserve cuts by. They have indicated they will cut rates, but whether that is by 25bps or 50bps will be the overriding factor influencing equities. 

A 25bps cut will signal the Fed is happy with the state of the economy, while a 50bps cut would suggest they see weakness and have ramifications for stocks. 

In terms of individual movers on Friday, Endeavour Mining and Fresnillo were again at the top of the leaderboard as investors reacted to gold breaking to fresh record highs.

“Precious metals miners led the way as gold reached new heights, while bargain hunters seemingly took advantage of the recent sell-offs at Burberry and Rentokil,” Russ Mould said.

Burberry is set to leave the FTSE 100 later in September after being demoted. Sainsbury’s was the top faller, slipping 2%. 

AIM movers: Volvere profit jump and Proteome boss to leave

Andrew Hore
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AIM movers: Volvere profit jump and Proteome boss to leave

Property finance provider Vector Capital (LON: VCAP) shares have recovered 7.14% to 15p even though trading will be cancelled on Monday. The company spent £3.5m on a tender offer at 33p/share.

A strong performance from Shire Foods meant that revenues improved from £19.1m to £22.2m at Volvere (LON: VLE). Pre-tax profit jumped from £440,000 to £1.78m. Net assets excluding non-controlling interests are 1585p. Cash is £24.3m. Further investments are being sought. The share price rose 6.38% to 1500p.

Berenberg cut its target price for Pan African Resources (LON: PAF) from 38p to 33p, but the share price improved 4.05% to 32.1p.

Iodine producer Iofina (LON: IOF) has commissioned its latest IOsorb plant in Oklahoma. The IO#10 plant is being tested and is the production will ramp up over the next few weeks. This is the seventh plant that is in production. There should be a material contribution to production this year.

FALLERS

Proteome Sciences (LON: PRM) reports a decline in interim revenues from £3.21m to £2.22m due to reduced and delayed R&D by biotech companies and almost quadrupled it loss to £2.15m. Chief executive Dr Mariola Soehngen will step down in January. The share price slumped 26.9% to 2.55p.

Premier African Minerals (LON: PREM) says that progress is being made towards the restarting of operations at the flotation plant at the Zulu lithium and tantalum project. The company will need further funding. The share price fell 9.73% to 0.051p.

Energy optimisation services provider Inspired (LON: INSE) shares continue to fall following interim results showing revenues edged up from £44.6m to £45m and pre-tax profit dipped from £6.2m to £5.7m. That was lower than forecast. The share price declined 8.4% to 54.5p.

Transense Technologies (LON: TRT) shares dipped 2.86% to 170p ahead of full year results on 23 September. They are expected to show an underlying pre-tax profit of £1.3m. The share price has risen 64% this year.

THG – Surely There Is No Need To Rush Into The Shares Before Next Week’s Interims 

Mark Watson-Mitchell
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THG – Surely There Is No Need To Rush Into The Shares Before Next Week’s Interims 

Four years ago, Matt Moulding brought his loss-making The Hut Group to the market, raising a total of £1.88bn in the process, valuing the business at £5.4bn. 

The 376.27m shares were offered at 500p each, with some £920m worth of new money going into the group’s coffers, and the balance paid to vending shareholders, including Moulding. 

The group’s shares went up to 818p early in 2021 – just a couple of months before Covid struck. 

That was the good part. 

And The Business Now 

The group was renamed as THG plc, with its shares quoted on the Main Market (LON:THG). 

The group describes itself as a leading vertically integrated, global ecommerce technology group and brand owner, powered by its proprietary technology platform, Ingenuity, through which it also provides end-to-end e-commerce solutions for brands to reach a global e-commerce consumer base. 

It operates under three core businesses – THG Beauty, THG Nutrition and THG Ingenuity – each operating in resilient, growing markets and each scaled from the UK to hold global leading positions in their respective sectors. 

THG Beauty is a digital-first brand owner, retailer and manufacturer in the prestige beauty market, with a portfolio of own-brands across skincare, haircare and cosmetics. 

THG Nutrition is a group of digital-first Nutrition brands, which includes the world’s largest online sports nutrition brand Myprotein and its family of brands, with a vertically integrated business model supported by global THG production facilities. 

THG Ingenuity provides a complete digital commerce solution for consumer brand owners across its three pillars of technology, digital marketing and operations.  

Why Invest In THG? 

When asked the question ‘why invest in THG?’ the group responds by stating that: 

“We are a global digital innovator revolutionising how brands connect to a worldwide consumer base.  

We are transforming how consumer brands go to market in the digital age. 

Through our proprietary platform Ingenuity, we are providing a simpler, integrated and frictionless retail experience for consumers and brand owners.  

We are democratising online retail – overcoming its structural technology barriers by enabling brands and retailers to have direct relationships with consumers, improving accessibility.” 

Recent Performance 

The group is still loss-making. 

In the last five years, it has turned over some £9,218m in revenues and recorded losses of £1,565m. 

Results Due Next Week 

Today the whole group is capitalised at just £801m, with its shares trading at around the 61.5p level. 

They rose 4.5p yesterday, ahead of the group announcing its Interim Results, for the six months to end-June, next Tuesday morning, 17th September.  

Toward the end of June, the group issued an AGM Trading Statement which declared that: 

“The group has made further progress in H1 2024 in line with previous revenue guidance, and Q2 will represent the third consecutive quarter of year-on-year revenue growth.  

The group’s performance is underpinned by positive trading within the Beauty, external Ingenuity and offline Nutrition businesses, which have helped offset continuing FX headwinds within Asia.” 

At that time, the group stated that its guidance to the market for 2024 remained unchanged, with adjusted EBITDA expected to range in the £133.8m to £156.5m range. 

In My View 

It will be very interesting to see just what publicity is built up before and after the Interims are revealed – will they point the way to the group breaking into profitability and, if so, by how much? 

There are some 10 analysts that follow the group, with an average consensus for a 110.6p Price Objective on the shares. 

In my opinion, this group’s shares, which bottomed at around 35p two years ago, and are now trading at 61.5p, will take quite some time to break back up through the 100p level again – it really would take a string of good corporate news items to bolster to such an equity value. 

Stand back and just watch before making a move. 

hVIVO – Institutional Holdings Building Up After This Week’s Strong First Half Report 

Mark Watson-Mitchell
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hVIVO – Institutional Holdings Building Up After This Week’s Strong First Half Report 

Earlier this week hVIVO (LON:HVO) reported its Interim Results to end-June, they showed a 30.6% first-half growth in revenues to £35.6m, while its EBITDA was 67.6% higher at £8.7m, with end-period cash up at £37.1m (£1.3m). 

The group is a fast-growing specialist contract research organisation and the world leader in testing infectious and respiratory disease vaccines and therapeutics using human challenge clinical trials.  

Management Comment 

CEO Yamin ‘Mo’ Khan stated that: 

“After an exceptionally strong first half with record revenues and margins, hVIVO enters the remainder of the year with FY24 revenue guidance fully contracted and good visibility into 2025.  

We continue to expand our pipeline, not only in human challenge trials but also in our new revenue streams including clinical site studies, standalone laboratory services, and volunteer / patient recruitment.  

Operational efficiencies are set to continue to improve with the expansion of our services, improved automation, and the move to our new facility in Canary Wharf. 

We are pleased to reaffirm our full-year revenue guidance of £62 million and expect EBITDA margins to be at the upper end of market expectations.  

We are targeting Group revenue of £100 million by 2028 – this growth will be underpinned by the increased capacity of our facilities, our strong cash position, and our long-term sustainable growth model.” 

Institutional Buying 

As I have detailed previously, the City investing institutions are becoming ever more aware of this group’s potential and have been gradually building up positions in the group’s equity. 

Investors like Canaccord Genuity Wealth Management (3.19%), Rathbones Investment Management (5.01%), and JP Morgan Asset Management (UK) (7.03%) each have taken stakes in the growing business. 

However, the one professional investor really showing its faith in hVIVO’s prospects is Octopus Investments, which in the middle of July held just 3.1% of the HVO equity. 

Within that month, it had more than doubled its holding to 7.61%. 

At the start of August, it was up to 8.0%. 

This morning it has been announced that on Tuesday of this week (10th) it upped its stake to 9.08%, some 61,801,224 shares. 

The group’s shares are currently trading at around the 29p level, whilst City analysts have Price Objectives ranging from 36p to 42p for its shares. 

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