Aferian plc has reported significant growth momentum in the second half of 2024, with revenue expected to be approximately 20% higher compared to the first half of the year.

This growth has been driven by new business wins and increased sales orders, primarily fueled by growing market demand for enhanced video streaming experiences across multiple sectors.

“We are encouraged by the strong performance in the second half of the year, with increased sales orders and new business wins across the Group. Combined with our cost reduction efforts and improved cash flow, we are well-positioned to close the year on a positive note and drive sustained growth into the future,” said Mark Carlisle, CEO of Aferian plc.

The company’s improved performance in H2 has translated into positive financial metrics, with adjusted EBITDA expected to reach approximately $2 million. This improvement reflects both the revenue growth and the successful implementation of cost reduction measures initiated earlier in the year.

Looking at the bigger picture, Aferian’s strategic focus on meeting consumer demand for improved video streaming solutions continues to drive business expansion. The company anticipates a reduction in net debt by year-end, supported by realized cost savings and enhanced working capital management, which have contributed to improved free cash flow generation in the second half of the year.

ASOS shares slipped in early trade on Tuesday despite the online fashion retailer announcing final results on Tuesday that demonstrated a year of progress and delivery on goals to reduce inventory and refocus on fashion.

ASOS has reported significant financial improvements in its latest results, with adjusted EBITDA reaching £80.1m in FY24, positioning at the upper end of market expectations.

The company achieved a remarkable turnaround in free cash flow, generating £37.7m, representing a £250.7m improvement compared to the previous year. This enhancement was supported by comprehensive refinancing and the establishment of a Topshop and Topman joint venture.

ASOS has completed a substantial stock clearance program, reducing inventory levels by approximately 50% since FY22 to £520m. This reduction included a £100m write-down as part of the transition to a new commercial model. The company has significantly improved its stock profile, with aged inventory reduced by 75% year-on-year and more than 80% of current stock less than six months old.

“Asos is executing its “back-to-fashion” strategy by shifting its focus from dresses to a more balanced mix of casual wear, athleisure, and everyday styles,” said Yanmei Tang, Analyst at Third Bridge.

“This change not only enhances profitability but also allows for a wider range of trends and storytelling in marketing. By refining its offerings, Asos aims to attract a diverse customer base, from aspiring teenagers to style-conscious thirty-somethings.

“Asos has shifted its focus from rapid sales growth to profitability, reducing stock and emphasizing products with higher contributions. While this may hurt short-term sales, our experts believe it’s a smart move for long-term sustainability, especially in challenging markets like the US and Germany, where returns can be high.”

Looking ahead to FY25, ASOS projects substantial margin improvements, forecasting at least a 300 basis point increase in gross margin to exceed 46%. The company expects adjusted EBITDA to grow by at least 60% to between £130m and £150m, despite an anticipated £10m to £20m negative impact from the Topshop and Topman joint venture in its first year. Free cash flow is expected to remain neutral, with capital expenditure projected at £130m and cash interest costs of £35m.

In the medium term, ASOS aims to achieve a gross margin of approximately 50% through increased full-price sales and flexible stock models. The company plans to reduce capital expenditure to 3-4% of sales and targets an adjusted EBITDA margin of around 8%.

Management expects these improvements, combined with enhanced profitability and cash flow, to contribute to reduced net debt and interest levels over time.

The ASOS share price was down over 49ers % at the time of writing.

The FTSE 100 was stronger ahead of the US election this week, with firmer oil prices helping lift the oil majors and hopes of further stimulus by China supporting interest in mining companies.

Banks were again higher as investors adjusted to the revised trajectory for UK interest rates after the budget. London’s leading index was 0.6% higher at 8,228 at the time of writing.

NatWest was the top riser with a gain of 3% with BT and Frasers Group not far behind.

“After a difficult few days, the FTSE 100 got off to a steady start on Monday as resources and China-linked stocks made progress,” says AJ Bell investment director Russ Mould.

“Lawmakers in Beijing are sitting down this week to thrash out a big stimulus package to accelerate an economy which has been spluttering since the pandemic. Top of the agenda is addressing the issue of local government debt but also providing support to households who, unlike those in the West, received precious little support during Covid.

“This fiscal package is essentially what the market has been waiting for, ever since China fired the starting gun on stimulus in September. As ever, the devil is likely to be in the detail. 

“News that oil producers’ cartel OPEC+ would delay hikes in output through December helped give oil prices a lift and, in turn, provided a tailwind to heavyweight oil stocks Shell and BP.”

US Election

If anyone wasn’t aware, this week’s big risk event is the US election. A Trump victory is likely to be considered inflationary and damaging to international trade, ultimately culminating in a bearish tone for equities. A Harris victory and the avoidance of the risk presented by Donald Trump will almost certainly be seen as a positive and spark a relief rally.

However, while a consensus is building around the market playbook after the election, who actually wins is still anyone’s guess.

The Harris camp benefited from a favourable poll in a critical state over the weekend, but it is still too close to call.

“As Republicans and Democrats embark on a last-minute surge of campaigning, some of the big Trump ‘plays’ on the markets have lost ground. Investors are reassessing Donald Trump’s chances of re-entering the White House, given polls which emerged over the weekend, indicating Kamala Harris may have gained ground in key battle ground states,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The dollar has fallen back slightly, as the chances of Trump setting off a fresh tariff frenzy, pushing up inflation and interest rates, seem to have retreated a little. Bitcoin, which had also made strides of progress as markets priced in a Trump win, given his pro-crypto stance, has also continued to dip back. But this election is still far too close to call, so considerable swings in prices are likely as the results ebb in.”

The US will hit the polls tomorrow to vote in the 60th US election and end months of electoral razzmatazz and market uncertainty.

We have seen organisations, celebrities, and business leaders take sides as the election campaign heated up, but there is still no consensus on who will win on election day.

The Economist endorsed Kamala Harris, citing the untold risks of Trump winning a second term. Billionaire Elon Musk has become Trump’s chief cheerleader, presumably because Trump has promised tariffs that could increase Tesla’s competitiveness in the US.

There is a clear divide in opinion about who should win the election. This has been reflected in relatively benign market conditions in the run-up to the election. Traders have held off making big bets on financial markets, presumably because there isn’t a tradable indication of how it will go.

That said, traders will be all too aware of the potential market reaction as the election results are announced.

A Trump win will likely be bullish for the dollar due to his protectionist and inflationary policies. In contrast, a Harris win could spark a relief rally in stocks as investors cheer the removal of uncertainty around trade wars.

Who’s going to win the US election?

Calling which way this election will go is for either the very brave or very foolish. The polls have tightened over the past few weeks, putting Trump in the lead. However, shifts over the weekend could suggest Harris is now edging ahead. 

With an estimated 75 million people already thought to have cast their votes in the US, election watchers learned of possibly the most dramatic polling event of the election campaign over the weekend.

A poll by Des Moines Register showed Harris ahead of Trump in the critical state of Iowa, suggesting Harris could be set for a landslide.

Iowa is important because it’s historically been a stronghold for Trump, and he won the state even when he lost the overall election. It must be noted that it was a relatively small poll of over 800 people, but that hasn’t dampened the media or market reaction.

Iowa Poll: Kamala Harris leapfrogs Donald Trump to take lead near Election Day. Here's how https://t.co/4767zdTjyL via @DMRegister

— J. Ann Selzer (@jaselzer) November 2, 2024

Polls tend to be more accurate in the US than in the UK, where polling companies have lost credibility since the Brexit vote. However, there is still a degree of variability across the most recent US polls, leaving the race too tight to call.

Expected market reaction

The market reaction to the Iowa poll on Monday provides further evidence that a Harris victory would be a positive for stocks. US equity futures picked up from their worst levels following a sell-off late on Friday, with the Iowa poll dominating headlines.

“As Republicans and Democrats embark on a last-minute surge of campaigning, some of the big Trump ‘plays’ on the markets have lost ground. Investors are reassessing Donald Trump’s chances of re-entering the White House, given polls which emerged over the weekend, indicating Kamala Harris may have gained ground in key battle ground states,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The dollar has fallen back slightly, as the chances of Trump setting off a fresh tariff frenzy, pushing up inflation and interest rates, seem to have retreated a little. Bitcoin, which had also made strides of progress as markets priced in a Trump win, given his pro-crypto stance, has also continued to dip back. But this election is still far too close to call, so considerable swings in prices are likely as the results ebb in.”

A Harris win will likely create a bullish reaction for risk assets, primarily because it will alleviate risk around damaging trade policies promised by Trump.

Should there be any bullish reaction to the election, critical technical levels in the 5,773 regions must be overcome to open the doors back to all-time highs.

The level held after the Non-Farm Payrolls and the S&P 500 fell away from the level after the release on Friday.

#SPX500 testing THIS resistance after NFP bounce. Will it resume lower ahead of weekend/election risk?

More 👉 https://t.co/GpYTF58VEz pic.twitter.com/3AuH0pkAGY

— Fawad Razaqzada (@Trader_F_R) November 1, 2024

However, overcoming this first barrier shouldn’t be difficult post-election, considering some analysts predict a 200-point swing for the S&P 500 after the election.

$SPX is trading in a volatile range as the election approaches. The “election bump” in implied vol indicates about a 200-point $SPX move post-election. https://t.co/kbZzZqowG3 #StockMarkets #stockmarketupdate #optionstrading $VIX $SPY pic.twitter.com/MyaZH3loht

— Lawrence G. McMillan (@optstrategist) November 1, 2024

A Harris win could be a double-edged sword for UK large-cap stocks. Of course, the improvement in risk sentiment would be bullish for the FTSE 100; however, a weakening in the dollar and a strong pound may spark the inverse relationship between the FTSE 100 and the pound and cap any gains.

The FTSE 100 is dominated by dollar earners that are typically hit when the pound rallies.

Chemring has announced two significant contracts for its Norwegian subsidiary, Chemring Nobel. The company has secured a substantial twelve-year framework agreement with Diehl Defence GmbH & Co. KG for the supply of MCX energetic material.

The initial purchase order under this agreement is valued at €231 million, with deliveries scheduled over five years beginning in late 2026.

“These significant contract wins illustrate the deep long-term relationships that we have built with our customers.  It is further evidence of the sustained and growing demand for our products and supports our investment decisions to increase the capacity of our three energetics businesses, and reinforces Chemring’s position as a key supplier to NATO,” said Michael Ord, Chief Executive of Chemring.

The agreement follows the successful collaboration between Diehl Defence and Nammo AS, who established an industrial working group in 2023 to supply 155mm munitions to the German Armed Forces and their allies.

In addition to the Diehl Defence deal, Chemring’s US subsidiary, Chemring Energetic Devices, has been awarded a significant contract worth $106 million to supply critical components for an undisclosed US missile programme. This five-year contract will commence deliveries in 2026.

Chemring took today’s contract win statement as an opportunity to reconfirm adjusted operating profit guidance for the year ended 31 October 2024, which is expected to be £70.9 million.

Helium One Global has successfully completed the farm-in agreement with Blue Star Helium for the Galactica-Pegasus project in Colorado, USA. The arrangement sees Helium One securing a 50% stake in the promising helium development project for a cash consideration of $1.5 million, alongside a commitment to fund six development wells.

The Galactica-Pegasus field, initially discovered by Blue Star in 2022, has holds gas columns of up to 230 feet containing between 2% and 6% helium. Recent developments will be particularly encouraging for investors, with the State-16 development well drilled in June 2024, achieving a flow rate of 285 Mcf/d with 1.9% helium content.

Looking ahead, independent reservoir engineering suggests future development wells could achieve initial production flow rates ranging from 250 to 615 Mcf/d. The development programme is progressing well, having secured approval from the Colorado Energy and Carbon Management Commission for the oil and gas development plan. Drilling operations are scheduled to commence in Q4 2024, with first helium production anticipated in the first half of 2025.

“We’re very pleased to have completed this agreement with Blue Star and anticipate positive results from the upcoming development wells as the project advances into the production phase. This project provides Helium One with the opportunity to diversify its helium portfolio and benefit from production and revenue from first helium gas in H1 2025,” said Lorna Blaisse, Chief Executive Officer, Helium One.

“In Tanzania we await the official approval from the Ministry of Minerals having submitted our comprehensive Mining Licence application for Helium One’s southern Rukwa Helium Project, encompassing the Itumbula and Tai areas for commercial development. We look forward to updating our shareholders and stake holders in due course.”