Entain builds momentum in H2 amid US platform improvements

UK Investor Magazine
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Entain builds momentum in H2 amid US platform improvements

Ahead of investor meetings this week, Entain, the global sports betting and gaming group, has released an update on its strategic progress and trading performance for the second half of 2024.

Gavin Isaacs assumed the role of Chief Executive Officer on 2 September 2024 and will lead a series of investor meetings expected to deliver upbeat developments.

BetMGM, Entain’s US sports betting platform, is finally showing signs of positivity. The platform launched an enhanced experience ahead of the 2024 NFL season, including improved parlay and player prop options powered by Angstrom’s market pricing capabilities, as well as streamlined live betting and bet slip features. BetMGM’s betting experience is very different to the one typical of European platforms and could be considered cumbersome.

BetMGM has also become the first sports betting app to offer Nevada bettors seamless, nationwide connectivity through a single digital wallet.

Investors will be delighted to learn that Entain’s gaming performance in the second half of 2024 has surpassed expectations.

The company reported that the improving momentum observed during Q2 has continued, with Online Net Gaming Revenue (NGR) growth during H2 2024 to date exceeding anticipated levels.

The UK and Ireland Online segment, which has been a worry for investors recently, has returned to year-on-year growth earlier than expected.

International and Central and Eastern European regions continue to perform well, while retail performance across all regions remains in line with expectations.

Entain shares were 5% higher at the time of writing.

Design wins accelerating growth at Concurrent Technologies

Andrew Hore
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Design wins accelerating growth at Concurrent Technologies

Ruggedised plug-in cards and systems developer Concurrent Technologies (LON: CNC) is benefiting from recent capital investment and product development and profit growth is starting to accelerate.

Interim revenues were 38% ahead at £16.8m, while pre-tax profit jumped from £1m to £2.3m. There was a cash outflow in the first half because of a £4.5m purchase of end of life components. The business remains underlyingly cash generative, though.

Eight major design-in contracts have been won by Concurrent Technologies during the first half. The largest was worth $4.5m.

US business Philips Ae...

Director deals: Chairman shows long-term optimism for Genus

Andrew Hore
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Director deals: Chairman shows long-term optimism for Genus

The chairman of animal genetics company Genus (LON: GNS) and his wife have invested nearly £180,000 in share purchases since the publication of full year results at the beginning of September. The purchases are at prices well below his previous acquisitions of shares.

Catherine Ferguson bought 3,500 shares at 1763.626p each and a further 3,500 shares at 1801p each. Chairman Iain Ferguson bought 3,000 shares at 1800p each. This has more than doubled the total shareholding to 20,500.

In May 2023, Iain Ferguson bought 1,000 shares at 2479p each and in 2021 he was buying shares at prices be...

Aquis weekly movers: Good Life Plus partners with mobile company

Andrew Hore
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Aquis weekly movers: Good Life Plus partners with mobile company

Tennyson Securities has published research on Tap Global Group (LON: TAP). It is available via www.tennysonsecurities.co.uk. The share price jumped 28.6% to 0.9p.

Peninsula Yacht Services is adopting SulNOx Group (LON: SNOX) fuel additives for the fuel it supplies from its Gibraltar. The specialist pumping system is being installed following permission from the authorities. The share price improved 12.7% to 31p.

Cooks Coffee (LON: COOK) executive chairman Keith Jackson acquired 22,000 shares during July and sold 18,582 shares during August. This was via the Nikau Trust. His total stake is 19.96%. He also owns 500,000 non-voting shares. The share price moved up 8.33% to 6.5p.

Good Life Plus (LON: GDLF) raised £275,000 from a convertible loan note issue that expires on 31 August 2025 when it can be repaid at a 10% premium or converted into shares at a 10% discount to the weighted average price over the previous month. If there is £2m raised in a share issue, then the loan notes are immediately convertible at a 10% discount to the issue price. The coupon is 10%. Following this issue, a partnership was announced with a major UK mobile operator. Good Life Plus will offer promotions to help with engagement with tens of millions of subscribers. This will provide access to potential subscribers to the Good Life Plus platform. There should be other partnerships in the coming months. The share price increased 3.28% to 3.15p. This is a new high for the shar price.

FALLERS

It is taking longer than anticipated Invinity Energy Systems (LON: IES) even though the long duration energy storage market is growing. More time is required to develop the Mistral next-gen product to reduce costs. There is uncertainty about the timing of the recognition of revenues. The 2024 revenues were expected to be £36.3m, but it is likely to be lower. Jonathan Marren is replacing Larry Zulch as chief executive. There was £49.2m in the bank at the end of June 2024. The share price is 47.1% lower at 11.25p. That is a slightly larger fall than for the price on AIM, although both prices are now the same.

Quantum Exponential Group (LON: QBIT) says discussions continue with potential investors that have proposed a minimum investment of £1m at 1p/share. The investors also agreed to pay the investment company £100,000 to cover costs since incurred since the proposed cancelation was announced. This will be repayable out of the proceeds of the investment when it is completed. The general meeting has been postponed again, this time to 3 October. The share price fell by one-fifth to 0.4p.

Wishbone Gold (LON: WSBN) has appointed Tavira Financial to replace SP Angel as corporate broker. A new investor relations strategy will be announced shortly. The share price declined 7.41% to 0.625p.

Oscillate (LON: MUSH) is progressing the proposed acquisition of Quantum Hydrogen Inc. Regulatory approval of the documentation is being awaited and a general meeting should be announced this month. The share price is 7.14% lower at 1.3p.

ProBiotix Health (LON: PBX) is raising £1.2m at 3.36p/share. OptiBiotix Health (LON: OPTI) is unhappy with the latest fundraise by ProBiotix Health and claims a typo in the AGM notice means that it should not be allowed to issue more shares except on a pre-emptive basis. The company previously said that it had enough cash. ProBiotix Health believes that the error is not relevant.  The underlying problem seems to be the high discount of the fundraising price to the market price. However, the share price held up, dipping 5.56% to 4.25p.

AIM weekly movers: Next Fifteen loses one-eighth of next year’s revenues

Andrew Hore
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AIM weekly movers: Next Fifteen loses one-eighth of next year’s revenues

Gaming content provider Mobile Streams (LON: MOS) says the Mexican casino and sports book business, where it has a 22.7% stake, has completed the beta phase and onboarding of VIP clients will begin. Chairman Bob Moore has left the company. John Baker will be interim chairman. The share price soared 46.3% to 0.1075p – the highest level for nearly 12 months.

Rockfire Resources (LON: ROCK) has increased the size of the resource at the Molaoi zinc lead silver germanium deposit in Greece by 500%. The JORC 2012 compliant mineral resource estimate is 15 million tonnes at an average grade of 9.96% zinc equivalent. Allenby estimates that it is one of the top 20 undeveloped zinc prospects. There is also 4.8mt of germanium. There are high recovery rates. Only 2.1km of the 7km potential strike has been tested so far. Allenby estimates a fair value of 2.6p/share. The share price is 34.4% higher at 0.215p.

Industrial investment company CEPS (LON: CEPS) improved interim pre-tax profit from £977,000 to £1.23m. All three businesses made an improved profit contribution. CEPS is keen to recommence paying dividends, but share buy backs are currently the favoured option for spare cash once revenue reserves are built up. The share price jumped 32.4% to 24.5p.

Real-time financial data provider Arcontech (LON: ARC) increased full year revenues by 7% to £2.9m and pre-tax profit improved from £1m to £1.1m. More than 90% of revenues are recurring. Net cash was £7.2m at the end of June 2024. The dividend has been raised to 3.75p/share. Pre-tax profit is set to fall this year because of investment in sales. The share price rose 26.5% to 124p, which is the highest share price since late 2021.

FALLERS

Marketing services provider Next Fifteen Group (LON: NFG) says subsidiary Mach49’s largest customer has not renewed its three-year contract. This was expected to contribute more than £80m to 2025-26 revenues to the marketing services group, That is one-eighth of the previously forecast revenues for that year. The contract loss will also hit the second half of the year to January 2025. There is general weakness in spending by technology customers. Full year pre-tax profit will be well below expectations. The interim figures will be published on 17 September. The share price slumped 49.5% to 429.5p, which is the lowest level since 2020.

It is taking longer than anticipated Invinity Energy Systems (LON: IES) even though the long duration energy storage market is growing. More time is required to develop the Mistral next-gen product to reduce costs. There is uncertainty about the timing of the recognition of revenues. The 2024 revenues were expected to be £36.3m, but it is likely to be lower. Jonathan Marren is replacing Larry Zulch as chief executive. There was £49.2m in the bank at the end of June 2024. The share price is 45.8% lower at 11.25p.

Signing up Donlim Group for a filtration technology licence did not offset the weaker trading news at laundry filtration technology developer Xeros Technology (LON: XSG). Indian licensee IFB has delayed the launch of new 9kg washing machine until next year and French environmental standards for microplastics have not been clarified. Donlim owns the Morphy Richards brand, and it will manufacture the XF3 external filter under licence from the middle of next year. The 2024 pre-tax loss estimate has been raised from £2.7m to £4.3m. William Black and Armstrong Investments have increased their stake from 6.34% to 7.3%. The share price dived 40.8% to 0.725p.

IoT technology investment company Tern (LON: TERN) has launched a one-for-nine open offer to raise up to £601,000 at 1.25p/share to make further investments and provide working capital. The share price fell 31.6% to 1.3p. The open offer closes on 20 September. NAV was 2.5p/share at the end of June 2024, but the share issue will be dilutive.

FTSE 100 drops after Non Farm Payrolls miss estimates

UK Investor Magazine
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FTSE 100 drops after Non Farm Payrolls miss estimates

The FTSE 100 was lower heading into the weekend after the US jobs report missed expectations, almost confirming a rate cut by the Federal Reserve later this month.

One thing is certain: the US economy is slowing. But the slowdown is showing signs of a soft landing—just what equity markets want. However, the 1.4% drop in the S&P 500 today and 0.8% decline in the FTSE 100 indicate that investors are concerned about the growth outlook.

The reduction of borrowing costs later this month is likely to provide the support the economy needs to avoid a recession. It’s very unlikely we will see mass job losses that could harm company earnings materially. Yet, a slowing economy will not be favourable for company outlooks in the next round of earning season.

“All eyes are on the US this afternoon, where August data for non-farm payrolls has revealed 142,000 new jobs were added last month. Unemployment dropped, however, from 4.3% to 4.2%,” said Emma Wall, head of investment analysis and research, Hargreaves Lansdown.

“This mixed data has had a mixed reaction from markets. Bond market yields dropped slightly in anticipation of a potential rate cut from the Federal Reserve, who may see this data as a sign of economic weakness.”

One would expect heightened volatility throughout the rest of the US session, and many will fear the selling will spill into Monday’s European open.

When futures open on Sunday evening, traders will be watching closely for any signs of the sell-off that rocked the equity market globally at the beginning of August.

Most FTSE 100 components were in the red on Friday, although there was some strength in defensive sectors. Airtel Africa, bounced after heavy selling yesterday and was the top riser with a gain of 1.3%.

After topping the FTSE 100 leaderboard yesterday, homebuilder Vistry dropped 5% on Friday to the bottom of the leaderboard, despite JP Morgan raising their price target for the stock.

AIM movers: Next Fifteen loses large client and CEPS profit improvement

Andrew Hore
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AIM movers: Next Fifteen loses large client and CEPS profit improvement

Industrial investment company CEPS (LON: CEPS) improved interim pre-tax profit from £977,000 to £1.23m. All three businesses made an improved profit contribution. CEPS is keen to recommence paying dividends, but share buy backs are currently the favoured option once revenue reserves are built up. The share price jumped 32.4% to 24.5p.

Oil and gas company Zephyr Energy (LON: ZPHR) says the production test on the State 36-2R LNW-CC well in the Paradox Basin in Utah. Peak production rates were 2,100 barrels of oil equivalent/day, which is high for an onshore US well. Options are being considered. The share price improved 13.2% to 4.3p.

Daniel Holliday has increased his shareholding in eEnergy Group (LON: EAAS) to 6.2%. The share price rose 3.25% to 6.35p.

Canaccord Genuity has reduced its stake in womenswear retailer Sosandar (LON: SOS) from 5.15% to 2.36%. Schroders raised its stake from 8.18% to 12.2%. The share price increased 2.63% to 9.75p.

FALLERS

Next Fifteen Group (LON: NFG) subsidiary Mach49’s largest customer has not renewed its three-year contract. This was expected to contribute more than £80m to 2025-26 revenues to the marketing services group, That is one-eighth of the previously forecast revenues for that year. It will also hit the second half of the year to January 2025. There is general weakness in spending by technology customers. Full year pre-tax profit will be well below expectations. The interim figures will be published on 17 September. The share price dived 49.2% to 420.75p, which is the lowest level since 2020.

It is taking longer than anticipated Invinity Energy Systems (LON: IES) even though the long duration energy storage market is growing. More time is required to develop the Mistral next-gen product to reduce costs. There is uncertainty about the timing of the recognition of revenues. The 2024 revenues were expected to be £36.3m, but it is likely to be lower. Jonathan Marren is replacing Larry Zulch as chief executive. There was £49.2m in the bank at the end of June 2024. The share price slumped 39.7% to 11.75p.

Galileo Resources (LON: GLR) says the mine design and optimisation model for the 75%-owned Luansobe copper project in Zambia is being calculated to enable talks with potential partners. Optimisation scenarios for open pit mining include extending pit depth to 220 metres using a 0.25% copper cut-off for open pit production of 70,000 tonnes or reducing pit depth to 160 metres using a 0.5% cut-off for production of 40,000 tonnes of copper. There is potential to add to the resource. The share price dipped 9.52% to 0.95p.

Agricultural products supplier Camellia (LON: CAM) says trading conditions eased slightly in the first half of 2024, but they are still difficult. Revenues improved 7% to £105.1m and the loss was reduced from £15.1m to £9.7m. There is no interim dividend. The loss from tea fell, while nuts and fruits profit more than trebled to £3.2m. The engineering business returned to profit. Net cash is £24.1m and there is an investment portfolio worth £37.6m. The full year loss should be between £10m and £12m. The share price slipped 4.27% to 4260p.

UK house prices surge to within touching distance of 2022 high

UK Investor Magazine
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UK house prices surge to within touching distance of 2022 high

UK house prices rose 0.3% in August, and according to new Halifax data, the average is now within £1,000 of November 2022’s peak £292,505.

UK house prices are up 4.2% over the past year after the reduction in mortgage rates spurred market activity.

“We are continuing to see a month-on-month rise in house prices, which is hopefully the sign of an upward trend developing for the rest of the year. The market certainly appears to be showing signs of resilience,” said Daniel Austin, CEO and co-founder at ASK Partners.

Interestingly, London’s house price appreciation lagged the wider UK market with just a 1.5% rise in prices over the last year.

Homeowners happy with a strong housing market could have further good news if Labour’s proposed plans to boost the housing market have the desired effect.

“Everyone is waiting in anticipation of what the new government will do to drive construction of new homes and unlock the planning system, and it is likely that initiatives announced in the coming months will give the market a further boost,” Daniel Austin said.

Although the market is improving, a number of factors are weighing on it, preventing an out-and-out bonanza.

“There are still some headwinds to navigate,” said Sarah Coles, head of personal finance, Hargreaves Lansdown.

“The fact that prices are so high will mean some people are simply priced out of the market. This is particularly the case while mortgage rates remain higher than we’ve seen for years. We’re not expecting any immediate dramatic movements from the Bank of England, so this could endure for months to come. There’s also likely to be a slackening in demand from buy-to-let investors, who may take fright over Budget-related speculation that capital gains tax could be set to rise”

Investing in high-quality Indian equities with the abrdn New India Investment Trust

UK Investor Magazine
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Investing in high-quality Indian equities with the abrdn New India Investment Trust

The UK Investor Magazine was thrilled to welcome James Thom, lead manager of the abrdn New India Investment Trust, to the Podcast for a deep dive into the portfolio and the opportunity in India.

Although the trust is managed on a bottom-up basis, we start by looking at the macro environment and the strength of the Indian economy. We explore the composition of the economy and the main factors behind India’s robust economic expansion. James highlights that India is the world’s fastest-growing large economy.

abrdn New India Investment Trust is managed on a bottom-up basis and targets high-quality Indian equities through a high-conviction, concentrated stock selection strategy.

James provides an overview of the trust’s holdings, touching on individual companies and portfolio construction.

Find out more about abrdn New India Investment Trust here.

Renold – Buying Opportunity Ahead Of Next Tuesday’s AGM Trading Update, 30% Early Upside 

Mark Watson-Mitchell
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Renold – Buying Opportunity Ahead Of Next Tuesday’s AGM Trading Update, 30% Early Upside 

Next Tuesday will see the Wythenshawe, Manchester-based Renold (LON:RNO), hold its AGM – which should also see a Trading Update being issued ahead of the meeting. 

It is an engineering group delivering engineering products and solutions, manufacturing and selling power transmission and conveyor chain, as well as selling torque transmission products. 

I am a big fan of this £114m-capitalised company, reckoning that its shares at just 57p are too conservatively rated. 

The Business 

With an unsurpassed reputation for innovation, design and manufacturing skill, Renold is the world’s leading manufacturer of industrial transmission chains, gearboxes and couplings 

Tackling thousands of demanding operating environments, its ranges are specified for use in power transmission, lifting, conveying and processing applications on a global basis. 

The group has operations in some 20 countries and an international network of distribution partners. 

Its market-leading products can be seen in diverse applications from cement making to chocolate manufacturing, subway trains to power stations, escalators to quarries; in fact, anywhere something needs to be lifted, moved, rotated or conveyed. 

Performance 

In the last five years, to end-March, its group revenues have risen from £189.4m to £241.4m in 2024. 

In the same period its pre-tax profits have more than quadrupled from £4.9m to £22.9m, while its earnings have risen from 2.9p to 7.8p per share. 

In the mid-July Final Results announcement CEO Robert Purcell informed shareholders that: 

“I am pleased that the Group continued to perform strongly throughout the year reflecting the hard work, strategically, commercially and operationally that has been undertaken over recent years by our employees across the world.  

The business is now at an inflection point where we are starting to see the compounding impact of the many recent exciting initiatives as they come to fruition.  

We have a very clear strategy and are executing it diligently.  

Our continuous improvement initiatives are building an increasingly efficient, productive and resilient business and are providing an ever improving platform to support our commercial initiatives.” 

Analyst View 

At Cavendish Capital Markets, analyst David Buxton increased his Price Objective from 65p to 75p for the group’s shares. 

His current year estimates, to end-March 2025, are for revenues of £243.2m and £22.8m of adjusted pre-tax profits, generating earnings of 7.1p and paying a 0.5p dividend per share. 

Looking forward to the 2026 year he sees £248.5m sales, £23.8m profits, 7.3p earnings and maintaining its 0.5p dividend. 

His 2025 end-year net-debt could drop from £24.9m to £20.1m, leading on to a significant reduction in the 2026 year to £10.9m net-debt. 

In My View 

I am looking forward to next Tuesday’s AGM Trading Update to help to spark some interest in this undervalued, but quality group. 

Its shares have been up to 66.80p in the last year and as low as 26.50p. 

Now at 57.50p, I consider that they are capable of a notable price rise very soon. 

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