AIM movers: Orosur Mining near to acquiring 100% of Anza gold project and Coro Energy returns from suspension

Andrew Hore
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AIM movers: Orosur Mining near to acquiring 100% of Anza gold project and Coro Energy returns from suspension

Orusur 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 49.1% to 3.95p.

Podcast platform operator Audioboom (LON: BOOM) increased year-on-year revenues by 35% to $6m in August. This is mainly down to the new Showcase offering for larger brands. There are no changes to full year forecasts of a move from loss to a pre-tax profit of £900,000. The share price rose 13.4% to 232.5p.

CyanConnode (LON: CYAN) raised £5.4m at 9p/share – a premium to the market price – following receipt of a letter of intent for the purchase of 6.5 million Omnimesh modules for smart meters. This underpins the £34.5m of revenues forecast for the year to March 2025. That would be enough to move the company into profit and earnings of 0.5p/share. The share price improved 5.29% to 8.95p, having been as high as 9.5p earlier in the day.

Gamma Communications (LON: GAMA) grew revenues 10% to £282.5m, although European revenues were flat. This puts it on course to improve full year pre-tax profit from £97.9m to £111.6m. The board is considering a move to the Main Market. The share price increased 7.86% to 1620p.

FALLERS

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. The share price slumped 43.6% to 0.0775p.

Semiconductor wafers manufacturer IQE (LON: IQE) reduced its loss on a 27% increase in revenues to £66m thanks to a recovery in wireless demand. The adjusted operating loss is still £7.2m. Net debt is £17m. Growth in revenues is expected to be slower in the second half and the outcome is likely to be at the lower end of expectations. The bottom of the range is £130m and the consensus was £139m, which would result in a £17m loss. The share price slipped 15.2% to 20.1p.

Woodbois (LON: WBI) is benefiting from the restructuring of its operations. The timber company has improved cash flow through negotiating new payment terms with customers. Acquisitions are being considered. Woodbois believes that Robert Skyrme has an undisclosed 5.26% shareholding. The share price fell 9.62% to 0.47p.

Cross-border currency payments services provider Finseta (LON: FIN) reported a sharp increase in first half profit, although investment in growing the business will hold back profit in the short-term. There was a £100,000 contribution from the final payment relating to the licencing agreement with Avila House. The loss of that income, a higher depreciation charge and additional overheads for new operations such as a corporate Mastercard and a Canadian office means that full year pre-tax profit could dip from £1.4m to £1.3m. The benefits of the investment will be seen next year with an expected jump in pre-tax profit to £2.5m. The share price is 8.33% lower at 38.5p.

FTSE 100 dips as AstraZeneca weighs, Centamin takeover lifts precious metals miners

UK Investor Magazine
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FTSE 100 dips as AstraZeneca weighs, Centamin takeover lifts precious metals miners

The FTSE 100 dipped on Tuesday as AstraZeneca weighed on the index after announcing disappointing developments for a lung cancer drug.

Due to the heavy weighting of AstraZeneca, the largest London-listed stock by market cap, its 4% drop offset the positivity in JD Sports, a jump in precious metals miners, and a mild rebound in the housebuilders. Weakness in diversified miners also dragged on the FTSE 100.

“The FTSE 100 went into reverse on Tuesday, despite some modest gains in the US overnight,” said AJ Bell investment director Russ Mould.

“The move hints at some lingering nervousness in the market after an up and down period for global stocks since the start of August.

The softer session in Europe follows an encouraging instalment from US equities overnight, where the S&P 500 broke a four-day losing streak.

“Last week was tough, with both the S&P 500 and Nasdaq down 4.25% and 5.89%, respectively, but given the lack of any real catalysts, investors are clearly seeing this weakness as an opportunity to buy the dip,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“US inflation data out on Wednesday is going to be the main focal point of the week, and probably the only thing that could shift the market view on how bold the Fed will be at next week’s rate meeting, where a 0.25% cut is the current best guess.”

Precious metals miners rally

After JD Sports, precious metals miners Fesnillo and Endeavour Mining were the top risers as investors jumped in on hopes that Centamin’s takeover could signal broader interest in London’s few major precious metals miners.

“A takeover of Centamin represents the end of an era for mid and large-cap gold miners on the UK stock market,” Russ Mould said.

“Centamin is one of the last pure-play gold producers remaining on the London Stock Exchange. While there are plenty of tiny exploration companies hoping to strike it rich, few have enjoyed Centamin’s level of success and built a large-scale operating mine.

“Over the years, gold producers of any notable scale have been snapped up by rivals or merged with others, leaving investors with limited options on the London Stock Exchange and effectively making them look at overseas stock markets for a broader range of gold miners.

“Names like Randgold Resources, once a FTSE 100 constituent, are now long gone from London and, if AngloGold Ashanti is successful in buying Centamin, it would leave Endeavour Mining as the only big primary gold producer left on the UK stock market, along with silver producer Fresnillo which also digs up gold.”

Venture Life Group – Vertical Integration Creates Better Margins In An Ever-Expanding Market – 45% Upside 

Mark Watson-Mitchell
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Venture Life Group – Vertical Integration Creates Better Margins In An Ever-Expanding Market – 45% Upside 

At the end of this month Venture Life Group (LON:VLG) will be announcing its Interim Results for the six months to end-June. 

I believe that they will show a significant advance for the year as a whole, while pointing to a very much better year in 2025. 

The Business 

Venture Life develops, manufactures and distributes products for the self-care market.  

These non-drug products can be bought by consumers, without prescription, to help lead a healthier life. 

This £59m capitalised business, which is based in Bracknell, Berkshire, has grown both organically and by strategic acquisition. 

It has either developed or acquired and built up its own range of self-care products and brands. 

Today it has two main manufacturing facilities – a 5,500 square metre plant in Milan, Italy, where it innovates, develops and manufactures in-house – as well as a 2,600 square metre facility in Gnesta, situated to the south of Stockholm, Sweden, where it has a fully automated filling production line. 

The group’s range of products are sold to a network of international partners and to key retailers in the UK market.  

It is also selling online through Amazon. 

With its vertically integrated model it is able to innovate, develop and manufacture self-care products globally. 

Within the UK and The Netherlands, the company has direct access to retail markets, including the key pharmacy and grocery multiples.  

That direct route creates higher revenues per unit. 

The group only invests money in UK consumer marketing to support the products.  

The Product Range 

The group’s portfolio includes some key products, such as the UltraDEX and Dentyl oral care ranges, the Balance Activ range in the area of women’s intimate healthcare, the Lift and Glucogel product ranges for hypoglycaemia, Gelclair and Pomi-T for oncology support, Earol for ear wax removal, products for fungal infections and proctology, and dermo-cosmetics for addressing the signs of ageing.  

The products, which are typically recommended by pharmacists or healthcare practitioners, are available primarily through pharmacies and grocery multiples.  

In the UK and The Netherlands, these are supplied direct by the company to retailers, elsewhere they are supplied by the group’s international distribution partners.  

Its products are now sold in over 90 countries globally. 

Trading Update 

Just over a month ago the company issued a Trading Update, reporting that sales were in line with expectations, while showing strong growth for the VLG brands in the UK market and through Amazon. 

It reported that revenues, as normal, will be weighted towards the second half, particularly in the case of its international partners.  

The group’s strong order book provides good visibility over current revenue guidance and continues to build, notably comprising a much greater apportionment of higher margin VLG Brands than compared to the same time last year.  

The company remains confident that trading for the full-year financial performance is on-course to be in line with market expectation. 

CEO Jerry Randall stated that:  

“I am thrilled by the performance of VLG’s Brands within the UK; we have launched some great new products over the last year and continued to grow our distribution points, most significantly across core brands, including Lift, Balance Activ and Earol.  

The increased investment in focused marketing activity, plus the strengthening of relationships with major retailers, is delivering evident results and has put us well placed to quickly build-out further, with exciting potential collaborations also under discussion within Europe.  

Further, we have taken steps to internalise production of the recently acquired Earol brand and have begun manufacturing these products from Biokosmes during H2 which will deliver further gross margin improvement.” 

Analyst Views 

Chris Donnellan and Stuart Harris at Cavendish Capital Markets are bullish about the group, reckoning that: 

“Having exited 2023 in excellent shape it appears that H1 2024 continued similarly.  

The company is delivering on its strategy of organically growing revenues with targeted marketing on its core brands and steadily expanding the margins via product mix and manufacturing efficiencies.  

Good free cash flow generation is creating a stronger balance sheet and should allow the company to re-engage its M&A strategy in the future.” 

Their estimates for the current year to end-December are for £55.0m (£51.4m) sales, with adjusted pre-tax profits of £3.1m (£1.8m), and earnings of 5.5p (5.3p) per share. 

For 2025 they estimate £59.4m revenues, £5.5m profits and 6.9p earnings. 

The 2026 year could see £64.5m in group sales, £7.2m profits and 7.9p in earnings per share. 

They have a 68p a share Price Objective, compared to the current 46.5p. 

In My View 

I like the growth story of this totally vertical trading group. 

The Interim Results statement on Monday 30th September should make good reading, while further highlighting the attractions of its shares and their potential upside. 

Centamin agrees takeover by AngloGold Ashanti

UK Investor Magazine
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Centamin agrees takeover by AngloGold Ashanti

Centamin has announced it has agreed to the terms of a takeover by AngloGold Ashanti in a deal to be satisfied by shares in the enlarged group.

This is yet another example of a high-quality UK-listed company being taken over by a foreign player because it is valued below the average valuation of its overseas peers. This deal will be instantly accretive for AngloGold Ashanti.

The deal values Centamin at £1.9bn, a 36.7% premium to yesterday’s close.

Centamin is a textbook junior resource success story, and it will be a shame to see the gold miner disappear into a larger group. The company spent much of the noughties developing the world-class Sukari Egyptian gold project before beginning production at the asset, which is now Egypt’s largest modern gold mine.

Some investors will be pleased with the 36% premium, but the agreed valuation is still below Centamin’s recent highs.

Despite consistently breaking new highs, the gold price hasn’t filtered down into gold mining valuations, especially for London-listed groups. 

This has created an opportunity in Centamin shares, which AngloGold Ashanti, a dual US and South African-listed company, has not been able to overlook.

“This Transaction is an endorsement of Centamin’s achievement in re-establishing Sukari as a world-class operation and occurs as the Egyptian Government has taken important steps to attract foreign investment to develop the country’s significant geological potential,” said James Rutherford, the Chair of Centamin.

“The Centamin Board believes that the strategic merits of the Transaction are compelling and that the terms offer Centamin Shareholders participation in the continued growth of our operations under the stewardship of AngloGold Ashanti.

“Our Board is confident that the commitments given by AngloGold Ashanti will result in the continued support for our operations, communities, and our talented and committed people. Therefore, the Centamin Board intends to unanimously recommend this Transaction to Centamin Shareholders.”

Tesco shares: despite nearly doubling, shares are still not expensive

UK Investor Magazine
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Tesco shares: despite nearly doubling, shares are still not expensive

Despite nearly doubling from 2022 lows, Tesco shares are still not expensive and present good value for the long-term holder.

Tesco’s share price chart is something to behold. Notwithstanding the obligatory bouts of profit-taking that produced drawdowns of no more than 20%, Tesco shares have been grinding nicely higher since touching 200p in October 2022.

Although shares dipped during the volatility in early August, it has been one-way traffic to the upside since, with only two down days since the beginning of August.

The relative safety of Tesco’s reliable cash flows has proved to be a draw for investors, not only during the recent spate of volatility but also throughout the interest rate hiking cycle and high levels of inflation.

Tesco has managed to pass on higher input costs through a careful pricing strategy, which saw group revenues grow 7.4% from FY23 to FY24 while operating margins grew 42bps to 4.2%. This was no mean feat, given that inflation ran hot for most of that period.

Subsequent evidence of strong leadership can be found in the successful navigation of easing inflation and the growth of Tesco’s market shares.

Sales grew 3.4% in the group’s first quarter as Tesco’s market shares grew 52bps to 27.6%. Tesco are locked into a bitter war of attrition on price with discounters Aldi and Lidl, which threatened Tesco’s market share as shoppers sought out value options amid the cost of living crisis.

However, the deployment budget ranges to rival the discounters have been a big success for Tesco and the mix of premium and budget options all under one roof has ensured market share gains and the maintenance of margins.

With pressures on households now easing with the cutting of interest rates, Tesco may see an opportunity in its Finest range, and households may find a little more cash in their pockets.

The positive environment for Tescos has been reflected in its share price, which is now up 26% year-to-date. However, this year’s gains don’t mean the stock hasn’t got further to run.

Tesco trades at 14.4x forward earnings. This isn’t particularly good value, but it’s certainly not expensive and doesn’t reflect the quality of the stock.

For a capital-intensive business such as Tesco, a Return on Capital Employed of 10 demonstrates its efficient operations. The 3.3% dividend yield is covered 1.9x by earnings, and Tesco is a cash-generating machine with free cash flow remaining in the $2bn range.

We wouldn’t suggest jumping straight into shares at current levels, but they are certainly one for the watchlist.

Vistry Group is emerging as the top FTSE 350 housebuilder pick

UK Investor Magazine
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Vistry Group is emerging as the top FTSE 350 housebuilder pick

After releasing its half-year report, it’s clear Vistry’s shift in approach in 2023 is starting to pay off, and shareholders are set to see the rewards.

Vistry Group believes they are on course to deliver 18,000 completions this year, significantly ahead of last year’s 16,118 completions. That is a big jump, especially in this market.

The company’s success ultimately lies in its decision to focus on areas of the housing market where they saw the highest demand and some level of support for the end occupier. 

Vistry’s ’partnerships’ model involves the group working closely with local authorities to provide housing to both not-for-profit and for-profit local authorities, and the private rented sector. The company will still sell to the consumer market through consumer-facing brands Bovis Homes, Linden Homes and Countryside Homes. The group said it’s targeting 35% of its homes to be sold on the open market.

There is a huge undersupply of social and affordable housing in the UK. By working on a tender basis with local authorities, Vistry is completely sidestepping the problems many buyers face with affordability and higher interest rates to deliver to ready, willing, and able buyers in councils and local authorities.

The private rented sector is particularly interesting area given that more people are renting for longer.

It’s very likely Vistry’s success was manifested long before Keir Starmer entered Number 10 Downing Street, but his victory and subsequent pledges have really fired up the afterburners for Vistry.

In its half year report, Vistry CEO Greg Fitzgerald, said;

“The Group’s growth strategy and greater delivery of affordable housing is well aligned to the new Government’s ambitions to address the country’s housing crisis, and uniquely positions Vistry to play a key role in delivering the Government’s new housing targets.”

You shouldn’t underestimate the tailwinds the Labour government will provide Vistry.

The private housebuilding sector has been slow to build houses and has been nowhere near delivering the number of homes the UK needs. Sure, more traditional homebuilders will play an important part in meeting Labour’s 1.5 million new homes target, but the major opportunity lies in low-cost, affordable homes, many of which will be put out to tender by councils.

In this scenario, Vistry doesn’t have to worry too much about finding buyers for the homes; all they have to do is simply build what they are instructed to. This has helped them achieve their growth in completions and is likely to continue to do so.

In addition, Vistry’s developments provide them with homes for private sale through their brands, such as Bovis Homes, allowing them to pursue greater margins from the houses not allocated to local authorities.

The potential to scale this model is material and is core to Vistry’s investment case. 

Vistry’s merit lies not only in its customer base and political events, which play straight into their hands, but also in the valuation the company offers compared to its peers.

With shares at 1,345p, Vistry trades at 15x forward earnings, significantly below Persimmon (19.4x), Barratt Developments (18.3x), and Taylor Wimpey (18.9x). This seems an unfair discount to its peers.

JP Morgan analysts seem to agree and have recently increased its Vistry share price target to 1,550p.

AIM movers: Andrada Mining secures Chilean partner and Eurasia Mining returns from suspension

Andrew Hore
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AIM movers: Andrada Mining secures Chilean partner and Eurasia Mining returns from suspension

Chilean lithium producer SQM is earning an initial 40% interest in the Lithium Ridge project in Namibia, which is operated by Andrada Mining (LON: ATM). There will be a $500,000 participation fee and an additional $1.5m with an option to invest $20m over less than four years to earn the 40% interest. The stake could be increased to 50%. A one-off success fee will be payable to Andrada Mining once a JORC compliant mineral resource estimate exceeds 40 million tonnes. The share price increased 18.1% to 3.75p.

Autoantibody profiling company Oncimmune (LON: ONC) says revenues will grow substantially following recent contract gains. Revenues for the year to August 2024 were £3m and growth this year should enable the company to achieve profitability. The share price rose 16.5% to 22.6p.

Katoro Gold (LON: KAT) has bought White Pine, a Canadian uranium exploration project. There is “an intense radiometric signature over the project, extending at least 14km”. This is the first exposure of the company to uranium exploration. The share price improved 15% to 0.115p.

Trading in Eurasia Mining (LON: EUA) shares has resumed following the publication of 2023 accounts late on Friday. Net cash was £1.1m at the end of 2023. The company has also agreed a one year working capital facility for up to £2.5m. The loan lasts until next August and is convertible at 2.7p/share. There are five tranches with around £1m of the loan dependent on a term sheet to sell the Russian asset. The lender will receive a payment of 12.5% of the facility, plus 5% of any draw downs, in shares at 2.3p each. The share price gained 12.8% to 2.6p.

FALLERS

Armadale Capital (LON: ACP) plans to open historic workings at the Canyon silver project in Idaho by widening the tunnels. The conditions have been more difficult than expected and this has caused delays. The share price dived 15.4% to 0.275p.

Oil and gas explorer Bowleven (LON: BLVN) is declining ahead of its departure from AIM on 24 September. The share price fell 11.1% to 0.2p, although it is still above its 2024 low.

Rockfire Resources (LON: ROCK) reported interim figures showing cash of £510,000 at the end of June 2024. The Molai zinc project in Greece has increased its resource to 15 million inferred tonnes at an average grade of 9.96% zinc equivalent. The farm-in partner for the Lighthouse and Kookaburra precious metals project in Australia failed to spend the minimum required. The share price lost some of last week’s gains and is down 6.98% to 0.2p.

Lupus treatment developer ImmuPharma (LON: IMM) had £1.1m in cash at the end of June 2024. There was a reduced loss in the first half, mainly due to lower R&D spending. Management is concentrating on partnership and commercial deals. Warrants held 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 dipped 2.77% to 1.4925p.

FTSE 100 bounces as economic concerns subside

UK Investor Magazine
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FTSE 100 bounces as economic concerns subside

The FTSE 100 gained on Monday after investors used the weekend to reflect on the economic outlook and evidently concluded that last week’s soft jobs report didn’t warrant selling to the extent that was witnessed after the last jobs report in early August.

“The FTSE 100 got off to a strong start on Monday, helped by strength in the resources space as oil prices bounced from their recent lows,” said AJ Bell investment director Russ Mould.

“The index had endured some weakness last Friday as US non-farm payrolls came in below expectations. The outcome seemed to cause the market concern that the US economy is headed for a hard landing after all, as the Federal Reserve readies its first interest rate cut of the current cycle.

After two years of inflation and monetary policy dominating the macro narrative, growth is firmly at the forefront of investor thinking.

Investors were able to take high inflation and rising interest rates in their stride because, despite persistent predictions to the contrary, growth remained robust over the past two years. 

Job creation in the US was strong, and the economy ticked along very nicely. However, this looks set to change, and the potential implications for company earnings have sparked a wave of concern through markets. 

The doomsayers will highlight slowing job creation and historical correlations with growth rates, while the more optimistic market participant will look to the Federal Reserve, Bank of England, ECB, and current interest rates and conclude major central banks have plenty of space to ease policy and support their respective economies. 

These are the factors markets will tussle over in the coming weeks. 

Entain

In London, Entain led the FTSE 100 higher with a 5% gain after the betting company alluded to improving trading conditions in the second half of the year as the new CEO takes charge.

“Gavin Isaacs has only been chief executive of gambling group Entain for a week and he’s already managed to issue a trading update that’s put a rocket underneath the share price,” Russ Mould said.

“Trading has been good in recent months, helping to restore market confidence in the company’s ability to bounce back after a patchy few years.

“Isaacs will certainly welcome a more positive backdrop as there was a big risk he was wading immediately into quicksand on the first day of the job, having to fight hard to stop the business sinking further into the ground.

Burberry was the top faller, shedding 5%, as it was confirmed that the luxury label will exit the FTSE 100 effective 23rd September. Barclays analysts added to the group’s woes by cutting Burberry to underweight with a new price target of 540p.

Burberry now trades at the lowest levels since 2009 amid a broad decline in luxury fashion brands globally.

ASA International – Shares On 6 Times Current Year And 4.5 Times Prospective, Offering 50% Upside 

Mark Watson-Mitchell
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ASA International – Shares On 6 Times Current Year And 4.5 Times Prospective, Offering 50% Upside 

You have to admit that Bill Gates is no fool. 

Having made absolute fortunes out of identifying and then developing Microsoft, with his wife he started to use part of their joint wealth to help the world’s needy. 

Way back in 2007, the Bill and Melinda Gates Foundation made a $20m loan to the thennewly formed ASA International Group (LON:ASAI). 

Today that company is one of the world’s largest international microfinance institutions, with a strong commitment to financial inclusion and socio-economic progress. 

Towards the end of this month, on Friday 27th September, it will be declaring its Interim Results for the period to end-June, which I believe will show a useful advance in the group’s activities. 

What Is Microfinance? 

Microfinance is the provision of financial services to the poor.  

This involves small amounts of savings, credit, insurance and money transfer services.  

There is significant net demand for such financial services in many areas of the developing world, especially in rural areas.  

The Business 

Through its heritage and close association with ASA, the Association of Social Advancement, based in Bangladesh, the group has a long heritage in the microfinance industry.  

From inception, it benefited from early access to ASA NGO Bangladesh’s know-how, industry technical expertise and experts.  

The company was founded to adapt the ASA Model to fit the diverse countries in Asia and Africa in which it has established its microfinance institutions. 

The ASA operating (lending) model is focused on six distinctive features, emphasising the group’s social responsibility commitment to clients and staff:  

  • Loans with market-based interest rates.  
  • Group selection without joint liability.  
  • Collateral-free loans with a moratorium on loan repayments in emergency situations.  
  • Loans for income-generating activity only.  
  • Full repayment before qualifying for new loans and repeat loan cycles with set limits.  
  • Training and development of operating staff in-house and no bonus incentive. 

The company provides small, socially responsible loans to low-income, financially underserved entrepreneurs, predominantly women, across South Asia, Southeast Asia, West and East Africa.  

It provides small socially responsible loans, bank accounts, savings and other financial services to start or grow businesses.  

Managing credit risk is an integral part of the group’s operating model.  

Its loan officers foster close client relationships, quickly identifying repayment or other issues, as well as disbursing new, higher loans to qualified clients.  

The client assessment and admission process takes up to 14 days for a first cycle loan, ensuring only clients committed and able to grow their businesses are accepted and protecting clients from being over-leveraged.  

The credit methodology results in low credit costs, which in combination with the low cost of operations, leads to attractive financial returns.  

The company maintains a favourable maturity profile with the average tenor of all funding from third parties being substantially longer than the average tenor at issuance of loans to customers, which ranges from 6-12 months. 

Today it has over 2,016 branches, across 13 countries, handling its 2.3m clients.  

It operates in Pakistan, India, Sri Lanka, The Philippines, Myanmar, Ghana, Nigeria, Sierra Leone, Tanzania, Kenya, Uganda, Rwanda and Zambia. 

The impact of principal risks on its business is different from country-to-country, which benefits the group.  

The group’s risk profile is diversified across those thirteen markets in Asia and Africa.  

Addressable Market 

According to the World Bank, the addressable market is estimated at 378m prospects in existing countries of operation.  

The group is well placed to capture this significant breadth of market opportunity by continuing to increase its penetration in current as well as in future markets in Asia and Africa.  

Latest Trading Update 

On Wednesday 17th July the company updated investors that it had seen sustained momentum in its business performance in its first half year, along with continued improvement in its operating environment, and that it expects that momentum to continue in H2 2024. 

The outlook for 2024 remains positive with continued improved business performance expected for its operations on the back of the momentum and from the continuing high demand for loans from its clients. 

It is now expected to result in an improved trading performance for 2024, which should be ahead of the current market consensus for the current financial year.  

Analyst Views 

At Stifel Nicolaus Europe, analyst Hugo Cruz has 106p Price Objective out on the group’s shares. 

While Nidhesh Jain and Sri Karthik Velamakanni at Investec Bank rate the shares as a Buy, with a 116p Price Objective, estimating the year to end-December will show revenues of $159.0m ($148.2m) and pre-tax profits of $41.9m ($38.0m), lifting earnings up to 19.3c (15.0c) per share. 

For 2025 they see $181.7m revenues, $50.3m profits and 25.6c per share earnings. 

Stephen Barrett at Cavendish Capital Markets looks for $161.2m revenues this year, with $46.4m in adjusted pre-tax profits, earnings of 18.2c or 14.3p per share, and a 3.6p (nil) dividend. 

For the coming year he goes for $180.8m revenues, $54.9m profits,24.8c or 19.4p earnings and a 5.4p dividend per share. 

Barrett has a Price Objective of 136p on the shares. 

In My View 

This is a massively scalable business that offers significant growth potential. 

In addition to its branch model, the group is looking to introduce a digital channel via mobile devices, market-by-market over the coming years.  

Furthermore, in due course the group aims to offer deposits more widely and other digital financial services in all operations, on a country-by-country basis, depending on local demand and starting in the operations with deposit-taking licenses.  

At the current 87p, this £87m capitalised group’s shares are a ‘giveaway’ trading on 6 times current year and just 4.5 times prospective earnings. 

I see at least a 50% appreciation in the near-term. 

Xeros Technology Group hits all time low as investors opt out of long wait for profit

UK Investor Magazine
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Xeros Technology Group hits all time low as investors opt out of long wait for profit

Xeros Technology Group shares hit a fresh all-time mid-price low on Monday as investors continued to exit the stock after the company pushed out its timeline for profitability.

In a sobering trading update released last week, Xeros Technology Group plc has announced significant setbacks to its revenue and earnings outlook for the near future.

The company, known for its technologies aimed at reducing the environmental impact of clothing, faces delays in key markets and regulatory uncertainties that have forced a downward revision of its financial projections.

The update paints a grim picture of the company’s short-term prospects. Xeros has dramatically reduced its revenue expectations for FY24 and FY25 to £0.5m and £3.8m, respectively. A substantial decrease from previous forecasts.

Moreover, the adjusted EBITDA loss is now anticipated to be £4.2m for FY24 and £1.0m for FY25, indicating investors are in for a long wait for profitability.

Two major factors contribute to this negative outlook. Firstly, Xeros’s Indian domestic laundry licensee, IFB Industries Limited, has postponed the mass market launch of a 9kg washing machine incorporating Xeros technology from 2024 to 2025. This delay, coupled with a leadership change in IFB’s Home Appliances Division, has pushed back the timeline for Xeros to realise its first royalty revenues in the Indian market.

Secondly, the company has been impacted by regulatory uncertainties in France. While legislation for microfibre filtration in washing machines is in place, the standards and efficacies remain unclarified. This lack of clarity has stalled the anticipated demand for Xeros’s XF3 technology in the short term, further dampening revenue prospects.

The company projects cash balances of £2.9m at 31 December 2024, with current cash standing at £4.0m as of 30 August 2024. While the board expects this to be sufficient to finance operations until achieving month-on-month cash flow break-even in late 2025, the margin for error appears slim.

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