hVIVO wins new RSV testing contract amid strong trading performance, shares jump

UK Investor Magazine
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hVIVO wins new RSV testing contract amid strong trading performance, shares jump

hVIVO shares rose on Wednesday after the world leader in testing infectious and respiratory disease vaccines and therapeutics announced they had won a fresh contract with an existing client. In addition, hVIVO said they saw trading ahead of market prior expectations as EBITDA margins expand.

hVIVO has signed a £16.8m contract with a top 5 pharmaceutical client to test its respiratory syncytial virus (RSV) antiviral drug candidate using hVIVO’s RSV Human Challenge Study Model.

RSV impacts around 50 million people globally and is a leading cause of childhood lower respiratory infections.

The contract includes expedited manufacturing of the RSV challenge agent, a confirmatory challenge cohort, and a multiple cohort challenge trial to evaluate dosing and efficacy. Revenue will be recognised across 2023-2025, with most in 2024. hVIVO will immediately commence virus manufacturing to complete in H1 2024.

Subject to successful manufacturing and approvals, the challenge trial will start in H2 2024 at hVIVO’s new London facility.

hVIVO shares were over 7% higher at the time of writing on Wednesday.

“Our RSV (Memphis strain) challenge agent has played a significant role in the development of RSV vaccines and we are delighted that it is continuing to be used as the go-to model for our clients,” said Yamin ‘Mo’ Khan, Chief Executive Officer of hVIVO.

“We have built a world-leading portfolio of challenge agents and are working hard with our clients to add new models all the time. This contract is another example of the end-to-end full service offering that hVIVO has already successfully provided to several clients.”

Strong trading performance

hVIVO also announced trading is ahead of previous expectations, with EBITDA margins exceeding 20% in 2023 due to improved efficiencies and facilities funding benefitting 2023-2024.

The company has clear revenue visibility into 2024, and today’s RSV award demonstrates the calibre of contracts the company is winning.

“We are also delighted with the Company’s strong operational performance in 2023 and now expect to exceed the previous market guidance and look forward to updating the market further in the new year,” Yamin Khan said.

FTSE 100 gives up gains as US inflation increases

UK Investor Magazine
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FTSE 100 gives up gains as US inflation increases

London’s FTSE 100 perked up on Tuesday morning after tentative signs the Bank of England may cut rates in early 2024 after UK wage growth slowed.

However, these gains had evaporated by mid-afternoon as markets digested news US CPI increased 0.1% month-on-month in November. The year-on-year CPI reading came in at 3.1%.

US bond yields spiked immediately higher, and US futures sank. The FTSE 100 was trading at 7,552 after breaching 7,600 briefly earlier in the session.

US inflation 

Early gains in London were dashed after markets learned today’s US inflation would not support the dovish argument for rate cuts early next year.

Today’s inflation data leaves markets finely poised for this week’s slate of central bank action, kicking off with the Federal Reserve tomorrow evening.

Investors will watch keenly for any hints of rate cuts in early 202e and central bankers’ tone when discussing inflation. 

The Bank of England will decide on rates this Thursday and is widely considered to keep the base rate at 5.25%.

UK wage growth

Falling UK wage growth provided welcome support for UK-centric sectors on Tuesday.

The BoE has previously highlighted wage growth as an inflationary cause for concern. Should wage growth cool further, the case for rate cuts becomes more compelling.

“An easing in wage growth and a decline in job vacancies in the UK is something that will be closely watched by the Bank of England, particularly as the 7.2% growth in average earnings in the three months to October was considerably lower than the 7.7% consensus forecast,” said Danni Hewson, head of financial analysis at AJ Bell.

“Prior to this announcement, the Bank of England had been expected to hold rates at 5.25% when it next reports this Thursday. If we see a continuation of the wage growth trend then investors are likely to become more confident that the Bank of England will start to cut rates sooner rather than later in 2024.”

The FTSE 100’s rate-sensitive sectors made promising gains, with Rightmove rising 2.4% and house builders ticking gently higher. These gains were reduced after the US CPI reading.

Housebuilders desperately need mortgage rates to fall to reinvigorate the UK’s property market after an extended period of slowing activity. 

A rebound in miners helped the FTSE 100’s cause as Rio Tinto and Glencore bounced back from yesterday’s sell-off.

Expansion plans for Sosandar despite dip into loss

Andrew Hore
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Expansion plans for Sosandar despite dip into loss

Online fashion retailer Sosandar (LON: SOS) reported slower growth in the first half, but there are signs that momentum is rebuilding in the second half. The share price recovered 3.15% to 14.75p, which is well below the February placing and retail offer price of 22p.

AIM-quoted Sosandar increased its interim revenues by 6%, but it swung from a pre-tax profit of £77,000 to a loss of £1.35m as it gears up for further growth. Gross margin edged up due to a reduction in price promotions activity, but overheads increased due to higher commissions to partners. This reflects higher sales through Next and other high street retailers.

There was £7m in the bank at the end of September 2023, even though inventories were increased. This is enough to finance the expansion plans.

Sosandar is broadening its strategy to include its first high street shops, plus expansion in additional regions. The sales via other retailers have made management believe that it is the right time to move into the high street. There is no indication where the stores will be, but the first should open in the spring.

Deals have been signed with The Bay in Canada and The Iconic in Australia, which will sell Sosandar clothing online before the end of March 2024. Sainsbury’s fashion concept stores launched in October with a range of Sosandar’s products.

In October and November revenues were £10.2m, which is a 16% increase on the same period last year, and gross margin continues to improve. Singer is sticking to its full year forecast of revenues of £46.8m and a £100,000 profit, which could increase to £1m next year.

The strategy is to achieve £100m in revenues and £10m in pre-tax profit in the medium-term, helped by higher store margins.

Solar car parks, connecting to the grid, and EV charging with 3ti

UK Investor Magazine
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Solar car parks, connecting to the grid, and EV charging with 3ti

The UK Investor Magazine was thrilled to be joined Tim Evans, CEO and Founder of 3ti, an award-winning B Corp specialising in solar power generation, storage and EV charging.

Find out more on Crowdcube here.

Their mission is to ‘Leave Something Better Behind’.

3ti has established solar car park facilities for partners including Bentley, JPMorgan, NHS and MoD. The company has over 900 sales enquiries and is raising funds to meet this demand.

The business’s economics are compelling. On average, 3ti’s solar car park produces £1,000 in energy cost savings per year per car parking space. A 100-space car park harnessing 3ti’s solar technology can save up to £100,000 in energy bills.

In addition to its core services, the company is developing new vehicle-to-grid (V-to-G) technology. V-to-G enables power stored in electric vehicles to be supplied to the wider network, generating grid management fees.

Tim explains the favourable regulatory environment and market opportunity for 3ti. The company is exploring expansion into the United States to meet burgeoning demand.

3ti will be holding a series of webinars and investor open days.

Register for 3ti’s Open Days and Webinars here.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more

UK wage growth slows ahead of Bank of England meeting

Eve Katz
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UK wage growth slows ahead of Bank of England meeting

The growth in UK wages has slowed in October but continues to outpace inflation, which currently stands at 4.6%.

The October decline in wages was the most significant since the period up to November 2021, according to the Office for National Statistics (ONS).

Average weekly earnings slowed from 7.8% in September to 7.3%, slightly exceeding predictions.

The pound also experienced a slight decline in response to these figures. The GBP now trades at 1.26 USD.

“While annual growth in earnings remains high in cash terms, there are some signs that wage pressure might be easing overall,” said Darren Morgan, director of economic statistics at the ONS.

Wage growth will likely play a part in the Bank of England’s decision on interest rates in its upcoming Monetary Policy Committee meeting later this week.

Inflation has decreased after a series of interest rate hikes by the Bank of England, leading some financial markets and economists to speculate that the Bank might reduce interest rates from the current 5.25%.

However, despite inflation easing to 4.6%, it still exceeds the bank’s 2% target. Moreover, regular pay outpaced inflation in the three months leading up to October.

However, “the numbers are still very high historically and still well north of the 2% inflation target. We should also remember that at the last meeting, three members voted for a 25-bps rate hike due to concerns over high wage and service inflation,” stated Michael Hewson, Chief Market Analyst at CMC Markets UK.

“These three are unlikely to have shifted materially on that position because of today’s numbers, given that we are still well above 7%, and Bank of England Chief Economist Huw Pill said that inflation was starting to become ‘challenging to squeeze out of the system,'” further commented Michael Hewson.

Unemployment rates are steady at 4.2%.

On Thursday, the bank is expected to announce its decision to hold interest rates further.

However, “the reality is that while the Bank of England was the first central bank to start raising rates, it doesn’t necessarily follow that they will be the first to start cutting,” said Michael Hewson.

In November, Governor Andrew Bailey of the Bank of England stated that it was “much too early to be thinking about rate cuts”.

AIM movers: SmartSpace Software offer RWS declines

Andrew Hore
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AIM movers: SmartSpace Software offer RWS declines

Venue management software supplier Skedda Inc has proposed an 82p/share offer to SmartSpace Software (LON: SMRT) valuing it at £25m. The share price has not been that high since 2021 and it jumped 94% to 65p, still well short of the bid level. JO Hambro, which owns 8.3% of the software developer, is supportive of the offer. Skedda believes that it can provide the financial backing that SmartSpace Software requires. The SmartSpace Software board does not support the offer. The company is currently loss-making.

Powerhouse Energy (LON: PHE) finance director Ben brier has acquired 6.53 million shares at an average price of 0.306p each. This followschief executive Paul Emmitt’s purchase of an initial 3.57 million shares at 0.2797p each. The share price recovered a further 16.9% to 0.43p.

Mkango Resources (LON: MKA) says that its Birmingham-based HydroMag subsidiary has produced its first recycled rare earth magnets. Commercial production could start next summer. Other countries are likely to roll out sites for the recycling technology. The share price rose 12.2% to 12.625p.

Rockfire Resources (LON: ROCK) has been told by the Office of Financial Sanctions Implementation in the UK that it is entitled to have the $2m it paid for 10% stakes in Emirates Gold and Emperesse Bullion returned. This has not happened yet, but the cash will be invested in the Molaoi zinc lead silver germanium deposit in Greece. Assay results from four holes are expected. The share price increased 7.32% to 0.22p.

Defence and forgings company MS International (LON: MSI) more than doubled interim pre-tax profit from £3.46m to £7.72m. Revenues improved from £42m to £57m. The defence business returned to profit and generated all the revenue growth. That offset lower contributions from other divisions. Net cash is £50m. There are £57.5m of contract liabilities on long-term contracts and NAV is £43.4m. Deliveries for US navy contracts begin in the second half. The share price is 4.36% higher at 897.5p and it is 35% ahead this year.

FALLERS

Language and IP services provider RWS (LON: RWS) is continuing its share price decline this year. It fell a further 9.85% to 223.2p and it is down by two-fifths in 2023. Impairment charges meant that RWS slumped into loss, although the underlying pre-tax profit was 11% lower at £120m. The total dividend is 4% higher at 11.75p/share and that is covered nearly two times by earnings. Reduced costs will benefit this year. The prospective multiple is less than ten.

Anglo Asian Mining (LON: AAZ) has received the delivery of Caterpillar equipment for the Gedabek mine and production could commence by the middle of next year.  The Azerbaijan gold miner will use the equipment at the Gilar site, which has gold, copper and zinc mineralisation. Even so, the share price declined 10.2% to 57.5p

Image Scan (LON: IGE) returned to profit in the year to September 2023 as revenues were 50% ahead at £3m. A further improvement is expected this year. The order book is worth £650,000 with a pipeline of potential work that underpins further growth. At 1.725p, down 6.76%, the shares are trading on less than 12 times prospective earnings.

Character Group (LON: CCT) chairman Richard King is stepping down after 33 years. Trading was tough, but there was a strong second half. Full year figures from the toys and games supplier were better than expected even though pre-tax profit more than halved from £11.4m to £5.2m on a 31% reduction in revenues. There should be a recovery this year. The share price slipped 3.51% to 275p.

Google loses anti-monopoly battle with Fortnite-operator Epic Games

Eve Katz
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Google loses anti-monopoly battle with Fortnite-operator Epic Games

On Tuesday, the creator of the Fortnite game won its San Francisco-based trial against Google.

The lawsuit, filed three years ago, claimed that Google sought to stifle competition by imposing up to 30% fees on app developers.

It also accused Google of engaging in an illegal practice by linking its Play Store and billing service. This meant that in order for a developer’s app to appear in the Play Store, they needed to use both.

The penalty will decided next year.

Alphabet, the owner of Google, saw its shares drop 1.20% in premarket trading on Tuesday. Epic Games is privately held, although Chinese tech giant Tencent has a 40% stake.

On their website, Epic Games commented on the legal victor, saying that it was proof that “Google’s app store practices are illegal, and they abuse their monopoly to extract exorbitant fees, stifle competition, and reduce innovation.”.

The rare loss for a major US tech company in a US court marks a setback, as recent rulings have generally favoured big tech, dismissing allegations of misusing market dominance or operating illegal monopolies.

Google is currently also facing legal challenges in a federal court in Washington, where officials from the Justice Department allege that the company engaged in illegal practices to maintain the dominance of its globally leading search engine.

The case is related to Google’s substantial revenue-sharing agreements, where Apple receives a significant portion of the ad revenue generated by Google as the default search engine on Apple devices.

Tekcapital’s Innovative Eyewear launches Nautica branded ChatGPT-enabled Smart Eyewear

UK Investor Magazine
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Tekcapital’s Innovative Eyewear launches Nautica branded ChatGPT-enabled Smart Eyewear

Tekcapital shares ticked higher on Tuesday after announcing their portfolio company Innovative Eyewear will launch Nautica branded ChatGPT-enabled Smart Eyewear in January.

The launch of Nautica-licensed smart eyewear is one of three licensing agreements with leading global lifestyle brands, including Reebok and Eddie Bauer.

Nautica will launch a line of smart eyewear with eight styles of sunglasses, two of which will also come with blue-light filtering lenses for indoor use.

All of the frames will be compatible with prescription lenses.

The collection marks Nautica’s first “Global Fit” frame designed for consumers with lower nose bridges, allowing for expanded availability in more regions.

Additional features include Bluetooth 5.2 for high-fidelity audio, up to 12 hours of music playback per charge, packaging made from 99% post-consumer recycled materials, patent-pending auto-adjusting hinges, and branded accessories such as a power brick, cleaning cloth and sail logo slipcase.

“Smart eyewear was once firmly in the remit of early adopters and tech enthusiasts alone. We are changing that forever by producing smart eyewear that is not only a functional Bluetooth accessory, but a fun and trendy fashion statement,” said Harrison Gross, CEO of Innovative Eyewear Inc.

“Combining our technology with the popular and storied Nautica brand is sure to delight consumers worldwide, and further advance our mission to make the future of eyewear smart. We look forward to launching the line via our optical store partners in January, as well as on Nautica.com soon after.”

Tekcapital has a 40% stake in NASDAQ-listed Innovative Eyewear.

Tekcapital shares were 5.1% higher, trading at 7.88p at the time of writing.

Spectris completes disposals and commencing £150m buy back

Andrew Hore
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Spectris completes disposals and commencing £150m buy back

Spectris (LON: SXS) has completed its divestment plans by selling Red Lion Controls for $345m. This cash enables the precision management technology developer to launch a share buy back of up to £150m.

Spectris has raised £1.2bn from disposals. There are now two divisions – Spectris Scientific and Spectris Dynamics.  

Sweden-based HMS Networks is acquiring Red Lion, which provides software and hardware to connect and access assets that enables visualisation of valuable data. In 2022, revenues were £91.3m and underling operating profit was £16m. After tax, the net proceeds will be $275m (£228m).

The initial £50m of the buy back will start before the end of the year. The rest of the disposal proceeds will be invested in research and development and other areas to promote organic growth. There could also be acquisitions.

Spectris will report its 2023 figures on 29 February. A pre-tax profit of £261m is forecast and the total dividend is expected to be 81.5p/share.

Today, the share price improved 10p to £35.14, which capitalises the company at £3.57bn. However, the announcement was not made until 5pm.

Rolls Royce shares gain after broker price target upgrade

UK Investor Magazine
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Rolls Royce shares gain after broker price target upgrade

Rolls Royce shares gained on Monday after the engineering firm enjoyed another broker price target increase.

Analysts at Deutsche Bank increased their price target to 400p from 310p and currently have a ‘buy’ rating on the stock.

The Rolls Royce share price was up 2.5% on Monday, trading at 296p. Shares in the jet engine maker are the FTSE 100’s best-performing of 2023 so far, gaining a whopping 218%.

Rolls Royce has left every other FTSE 100 stock in the dust, with the second-highest share, Marks and Spencer, gaining only 110%. The FTSE 100 index is up less than 1% year-to-date.

Today’s price target increase follows JP Morgan’s upgrading of Rolls Royce to ‘overweight’ from ‘neutral’ last week. JP Morgan also has a 400p price target.

Rolls Royce recently outlined a medium-term strategy to boost operating profits to £2.5bn-£2.8bn and free cashflow to £2.8bn-£3.1bn.

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