Tekcapital has issued an update on their portfolio companies including Belluscura’s $15m in orders, progress in the MicroSalt IPO and a summary of developments at Innovative Eyewear.

Tekcapital has a portfolio of four privately-held and publicly-listed companies including Belluscura, Innovative Eyewear, Guident and MicroSalt.

Each company was born of university technology identified by Tekcapital as having a significant commercial opportunity.

Tekcapital’s process, strategy and ability to select technologies with substantial market demand received a major endorsement this week after Belluscura received $15m in orders for their portable oxygen units.

Tekcapital founded Belluscura, raised seed capital, and filed patents to protect its intellectual property, before floating the company on AIM in 2021.

This week, Belluscura announced a step change in the adoption of their portable oxygen units with $15m worth of orders from retailers for their new DISCOV-R model. The company said they had received similar levels of interest from healthcare providers which suggest they expect further orders before long.

Should Belluscura secure further orders from healthcare providers to the tune of $15m, the total order flow could generate $30m revenue which would make the current £58m market cap very good value.

‘We are excited to see Belluscura gaining commercial traction with their announced orders for over 6,500 units for their next-generation DISCOV-R portable oxygen concentrator, with estimated potential revenues of $15 million,” said Dr Clifford Gross, CEO of Tekcapital.

“This underscores Tek’s investment thesis that commercialisation of advanced intellectual capital in the oxygen therapy space can result in the potential for better and significantly more affordable oxygen concentrators. As such, we believe Belluscura is now well placed to help improve the lives of a great number of people who require supplemental oxygen.”

Tekcapital has an 11.16% take in Belluscura.

MicroSalt

Tekcapital hope to replicate the success of Belluscura with its low-sodium food technology company, MicroSalt.

In today’s portfolio company update, Tekcapital provided an insight into the highly anticipated MicroSalt IPO saying the company was making steady progress and that they were hopeful that MicroSalt would list its shares this year. This is a key step in crystalising value for Tekcapital’s shareholders.

MicroSalt has developed a salt which contains 50% less sodium than traditional table salt, without sacrificing taste.

MicroSalt has two main consumer products in SaltMe! crisps and salt shakers which are stocked in thousands of stores across the United States and will now be available in the Philippines through two new partners.

However, it is the B2B market that could create the most shareholder value.

Earlier this year, MicroSalt signed a strategic partnership with US Salt to supply low-sodium salt in bulk for use in US Salt’s products. It’s these types of partnerships which could yield the highest revenue for MicroSalt.

US Salt, founded in 1893, gave MicroSalt their vote of confidence when the deal was announced.

“US Salt is looking forward to working with MicroSalt® to help with our low-sodium initiatives. Sodium is a worldwide concern in the food industry, and we believe Rick and his team are the industry leaders that can help propel our future growth,” said Bob Jordan, Vice President of Sales & Marketing of US Salt LLC.

Today’s update alluded to ongoing negotiations between MicroSalt and ‘key players in the snack food industry’. Although Tekcapital did not mention specific companies or potential order sizes, one would be forgiven for speculating that should these negotiations bear fruit, the resultant revenue for MicroSalt could be substantial.

Innovative Eyewear

The most interesting part of today’s update concerning Innovative Eyewear was news Nautica, Eddie Bauer and Reebok licensed smart eyewear is expected to launch by Q1 2024. When these products launch, it will dramatically increase Innovative Eyewear’s revenue generation capabilities.

In addition, Lucyd has launched its 2.0 Lucyd app which features an easy-to-use voice interface for ChatGPT.

BAE Systems is acquiring Ball Aerospace for $5.55 billion in a deal that will strengthen the defense contractor’s position in space, missile and surveillance technologies, the companies announced Thursday.

The all-cash purchase of the aerospace technology firm will expand BAE’s offerings to U.S. intelligence agencies and the military. BAE said it expects the deal to boost annual revenue growth to around 10% over the next five years.

BAE Systems shares were down around 3.5% at the time of writing on Thursday and are 20% higher year-to-date.

Ball Aerospace makes space systems, sensors, antennae and other technologies used in national security and civil space programs. BAE said the acquisition will complement its military electronics operations with new space and geospatial intelligence capabilities.

The British defense giant said it expects the deal to lift profit margins and earnings per share starting in the first year after closing. Return on invested capital is forecast to top BAE’s weighted average cost of capital within five years.

BAE plans to fund the purchase using new debt and existing cash. It said the deal fits within its capital allocation policy and won’t prevent share repurchases.

The transaction is valued at $4.8 billion after factoring in expected tax benefits. BAE said it expects to close the acquisition following U.S. regulatory reviews.

Kin and Carta shares jumped on Thursday after the global digital transformation consultancy said profits will be ahead of current market expectations.

Kin and Carta shares were 13% higher at 8.35am on Thursday.

Kin and Carta expects flat revenue growth but higher profits for the fiscal year ending July 2023, the digital transformation consultancy said on Thursday.

The company predicts adjusted operating profit will be 10.5% to 14% ahead of market expectations thanks to a realigned operating model with lower costs. Adjusted operating profit margin is forecast at 9.3% to 9.6%.

Kin and Carta’s net revenue is projected to be around £192 million for the full fiscal year, roughly even with the prior year. Revenue in the fourth quarter hit £48 million, in line with expectations.

While client engagement remains strong, the company said it continues to manage the business cautiously amid ongoing sector headwinds.

Kin and Carta will announce full fiscal year results and its outlook for the new fiscal year in October. The company enters the new year with a healthy backlog and expects further sequential revenue growth in the first quarter.

“We executed through a challenging second half to return to modest quarterly growth with an improved cost base. While macro challenges remain across the sector, I am encouraged by the start to Q1 underpinned by a solid foundation of enterprise clients,” said Kin + Carta’s Chief Executive Officer, Kelly Manthey.

The FTSE 100 was firmly lower again on Wednesday amid inflation fears and ongoing concerns about the Chinese property sector.

The FTSE 100 was down 0.4% to 7,360 at the time of writing.

Despite UK inflation falling to 6.8% in July, record wage growth released yesterday suggests further downside in UK CPI could be limited. Sterling rose against the dollar as traders priced additional rate hikes by the Bank of England in their fight against inflation.

“The record wage growth revealed on Tuesday created fears that inflation is becoming increasingly entrenched in the UK economy and beyond the headline number there were signs rising prices are getting quite sticky in this latest CPI print,” said AJ Bell investment director Russ Mould.

“The Bank of England may be glad of the breathing space provided by the scheduling of its next meeting which does not come until late September. This will allow it to look at a few more data points before deciding its next move on interest rates. One thing is absolutely certain – the battle against inflation is far from over.

“Overnight US stocks were lower thanks to concerns about the banking sector, while Asian indices continued to suffer in the fall-out from a Chinese property market crisis.”

According to reports by Bloomberg, Chinese authorities have asked some asset managers to avoid being net sellers of Chinese equities to help contain volatility. Such a move highlights the concern China has about its equity market but begs the question of why they haven’t gone further to stimulate the economy.

Yesterday’s 15bps Chinese interest rate cut did nothing to boost sentiment, and investors continued to dump China-focused stocks on Wednesday.

The FTSE 100 has made a series of lower higher and, on a technical basis looks set to test support around 7,300.

FTSE 100 movers

Miners were again weaker on Wednesday but the most pronounced selling was in UK-focused sectors such as the banks and housebuilders.

With today’s inflation more or less nailing on another rate hike by the Bank of England, fears of higher mortgage rates for an extended period knocked the housebuilders. Barratt Developments, Taylor Wimpey and Persimmon were down between 0.6%-2%.

Admiral was the FTSE 100’s top riser on Wednesday after the insurer said it has successfully implemented price hikes to offset inflationary pressures. Admiral shares were over 4% higher at the time of writing.

“It’s a tough time to be a UK motor insurer as claims cost inflation continues to run hot. To its credit though, Admiral is managing the challenging backdrop well with some pretty serious price hikes now starting to feed through to improved performance,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

“The bad news for consumers is that car insurance is now another inflated cost to try and manage as part of the ever-increasing pressures on income. Some customers have had enough, and Admiral saw a 7% dip in customer numbers over the quarter. But for Admiral, that’s a loss worth taking as maintaining profitable insurance contracts is key, even if it means losing a few customers along the way.”

GENinCode (LON: GENI) has filed its premarket notification (510k) with the US FDA for the CARDIO inCode-Score polygenic test for the risk assessment and prevention of heart disease. The test uses data collated over 15 years. The company’s US laboratory has gained accreditation from the College of American Pathologists. The share price steadily improved during the morning and is up 17.4% to 13.5p.

Belluscura (LON: BELL) has orders for 6,500 DISCOV-R portable oxygen concentrators and received 1,500 X-PLOR units to sell. The DISCOV-R order is worth $15m – 2022 revenues were $1.5m – with production beginning in the third quarter. The share price increased 16.2% to 43p, which is the highest since March.

Chaarat Gold (LON: CGH) has agreed a bonding conditional sale of its subsidiary that owns the Kapan mine in Armeina to Gold Mining Company, which owns the nearby Lichkvaz mine. The deal is worth $55.4m. Kapan needs significant investment and exchange rates had hit profitability. Chaarat will focus on the Xiwang project. The share price rose 8.52% to 7.325p.

Staffing firm Gattaca (LON: GATC) expects net fee income to be below forecasts, but the pre-tax profit is likely to be higher than expected because of cost control. Liberum has upped its estimate from £1.8m to £2.5m. However, it has cut its 2023-24 estimate by one-quarter to £3m. The share price is 9.84% ahead at 106p.

Eden Research (LON: EDEN) has received its first commercial order for seed treatment Ecovelex from partner Corteva Agriscience. This treatment replaces chemicals that may be banned. Full authorisations have yet to be received, but it can be sold under emergency use authorisations.  The share price is 6.52% ahead at 6.125p.

Technology investment company Tern (LON:TERN) reported a decline in NAV from 6.4p/share to 5.7p/share over the six months to June 2023. The 12.5% decline in the share price to 5.25p probably has more to do with continued profit-taking following the rise after investee company Wyld Networks said it was exploring potential areas of collaboration with SpaceX. Tern owns 27% of Wyld Networks.

Serinus Energy (LON: SENX) shares continue to decline following its announcement on Monday that lower oil and gas prices mean that interim revenues slumped from $29.3m to $8.9m. Net cash was $2.5m at the end of June 2023, but a full year loss is forecast. Chief executive Jeffrey Auld bought 250,000 shares at 1.95p each. The share price fell a further 7.5% to 1.85p.

Alba Mineral Resources (LON: ALBA) says that the workings at the Clogau gold mine have reflooded and it is waiting for an extension to the higher abstraction rate permit. The share price declined 6.25% to 0.1125p. Investee company GreenRoc Mining (LON: GROC) an operating loss of £415,000 for the six months to May 2023. The focus is larger scale bulk test work at the Amitsoq Lower graphite layer orebody, which will provide more graphite for testing and supplying samples to potential off-takers. The share price rose 2.35% to 4.35p.

Premier African Minerals shares were weaker on Wednesday as investors continued to digest the terms of the new lithium offtake agreement with Canmax.

Premier African Minerals shares closed down 12% yesterday and were down a further 8% at the time of writing on Wednesday.

The new agreement avoids the worst-case scenario after Canmax issued a termination notice, but the terms of the new agreement put significant pressure on Zulu’s production.

Premier African Minerals have agreed to a series of production targets that, if not met, could see Premier African Minerals make penalty payments of up to $4m per month from June 2024.

Should Premier African Minerals not meet production targets of 1,000 tonnes per month on a monthly average rolling basis, Canmax is entitled to charge interest of up to 12% and be issued new shares in Premier African Minerals.

If the production targets are not met, or Premier African Minerals fails to make settlement payments by the long stop date of 1st April 2025, Canmax has the right to take a direct interest in the Zulu project at a valuation of $200m, should Canmax not elect to take to new shares in Premier African Minerals.

Under the revenue-sharing terms of the new agreement, Canmax shall receive 25% of gross lithium sales from 1st November 2023 until 30th May 2024. From 1st June 2023 and until the Advance Purchase Amount plus accrued interest has been settled, Canmax will receive 50% of all lithium sale gross proceeds due to Premier.

The long and short of it is should Premier African Minerals fail to meet production targets, Canmax can impose crippling penalties on Premier African Minerals, which will erode shareholder value.

Canmax could take $1.5m in new shares in Premier African Minerals from November this year if they do not produce 1,000 tonnes monthly.

The move lower in Premier African Minerals shares over the past two trading sessions may represent investor confidence in their ability to meet the required production targets.

The Zulu plant is currently being upgraded and the company says it should be ready to meet the November deadline.

Premier African Minerals have bought themselves time, but long-term shareholder value creation hinges on ramping up production in the short term. The pressure is on.

Belluscura shares jumped in early trade on Wednesday after announcing they had received orders for 6,500 DISCOV-R portable oxygen units worth in the region of $15m.

Belluscura shares were 20% higher at 44.5p at the time of writing after hitting highs of 49.75p. This is a significant update for Belluscura and represents a step change in order flow and revenue generation.

Belluscura’s revenue for the year to 31st December 2022 was $1.5m. Today’s announcement suggests Belluscura’s revenue could grow to many mutliples of this given the 6,500 orders worth $15m were from online retail sellers and medical equipment distributors only.

Belluscura said they have received similar interest from healthcare providers. Should this interest convert into orders, it could represent orders worth and additional $15m.

“We are very excited about the overwhelming interest in the DISCOV-R by online retail sellers and other medical equipment providers. Following the pre-market launch of the product and the patient usability study in June, initial feedback suggests we will receive the same or greater level of interest from leading home healthcare providers once it is launched commercially,” said Bob Fary. Sr Vice President of Global Sales, Belluscura.

In addition to announcing $15m worth of DISCOV-R orders, Belluscura annnounced ‘substantial’ progress on X-PLOR distribution and proprietary NOMAD biometric app.

Belluscura notes progress in acheiving CE and UKCA registration mark application for its X-PLOR® portable oxygen concentrator and that 1,500 X-PLOR units were on the way to the US from China.

The company is also working on the next generation of their proprietary NOMAD biometric app to drive innovation in telemedicine by utilising artificial intelligence. The NOMAD app will allow users of the DISCOV-R to track performance data on their concentrator and through devices such as an Apple Watch or FitBit.

“We believe the DISCOV-R, combined with our proprietary NOMAD app, will be transformational to the portable oxygen industry and patient outcomes,” said Bob Rauker, Chief Executive Officer, Belluscura.

“This is reflected by early demand for the product prior to its full commercial launch, which is expected to take place later this year. The significant number of orders received demonstrates the substantial appetite for this product and we anticipate adding several more of these providers to our distribution network as we balance the high demand with production expectations over the next twelve months.”

Belluscura was founded by Tekcapital before listing on AIM in 2021 raising £17.5m. Tekcapital holds an 11.16% stake in Belluscura.

Markets have been waiting for China to take action to support their economy, which was finally delivered last night in the form of a 15 bps cut to interest rates.

Investors, however, are not impressed.

Historically, Chinese stimulus has been bullish for risk assets, including cyclical equities and you’d expect a rally immediately after China announced stimulative measures.

Not only did the rate cut fail to buoy London’s-leading index heavily weighted to China-focused stocks, but investors also continued to offload miners and financials, including Standard Chartered, HSBC and Prudential, with substantial operations in Asia.

There is a feeling the rate cut did not go far enough, and China’s economy would continue to slow. The FTSE 100 was down over 100 points to 7,404 at the time of writing.

The FTSE 100’s descending triangle technical formation we discussed yesterday remains intact and the index looks set to test 7,300.

UK wages

Piling pressure on UK equities on Tuesday, UK wages grew at the fastest pace since records began in 2001 in July. Faster wage growth is not conducive to falling inflation, and futures markets quickly priced in higher UK interest rates.

Sterling rose against the dollar, further dragging UK equities.

“Alarm bells are ringing on UK inflation once more as the latest figures from the Office for National Statistics show record wage growth,” said AJ Bell investment director Russ Mould.

“This builds pressure on the Bank of England and has prompted an increase in sterling and gilt yields, as well as a big fall in UK stocks, as it suggests inflation is becoming increasingly entrenched in the economy. However, it is a fine balance. Other elements of the ONS data show signs the labour market could be cooling, with an increase in unemployment and a drop in the number of vacancies.

“Previous rate hikes are likely to have a lagged impact and this data covers an April to June period which is very much in the rear-view mirror now. It all adds up to a very tricky situation for the brains trust in Threadneedle Street which might only be further complicated by the CPI release tomorrow.”

FTSE 100 movers

The aforementioned China-focused financials and miners were among the biggest losers on Tuesday. Still, the selling was broad, with only two of the FTSE 100’s constituents trading positively at the time of writing.

Investors sold Legal & General shares after the group reported lower operating profit and a sharp drop in assets under management. This is a problem experienced throughout the sector, and Schroders, abrdn and Pheonix Group were also weaker on the day in sympathy.

The prospect of more interest rates as wages soar hit the housebuilders, and the recent rally in the sector continued to break down.

PHSC (LON: PHSC) has commenced a further share buy back of up to 1.18 million shares for up to £200,000. The share price jumped 32.4% to 24.5p. If the share price held at this level then not all the shares could be acquired.

Abingdon Health (LON: ABDX) is launching the Salistick saliva pregnancy test in 298 Tesco stores. It is already sold in 400 Superdrug stores. Abingdon Health has the UK and Ireland distribution rights to Salistick, which was developed by Salignostics, and is also contract manufacturer. The share price increased 25.7% to 11p.

Verditek (LON: VDTK) has signed a memorandum of understanding with Net Zero Valley and this will form the basis of a 50/50 joint venture agreement that will invest in a 1GW ultra-lightweight solar panel manufacturing plant in Southern Italy. Verditek will source machinery, provide know-how and set up and operate the plant. The share price is one-fifth higher at 1.2p.

Evgen Pharma (LON: EVG) has revealed final data from a Phase 1b healthy volunteer study showing that the enteric coated tablet formation for SFX-01 is safe and well tolerated. Along with partner Stalica, Evgen Pharma will work on a regulatory submission for a Phase 2 trial in autism spectrum disorder, which would trigger a $5m milestone payment. The share price is 10.4% ahead at 2.65p.

FALLERS

Amur Minerals Corporation (LON: AMC) has reminded investors that trading in the shares will be suspended on 7 September if it does not secure a reverse takeover. The share price fell by one-fifth to 0.12p.

The full year figures of Victoria (LON: VCP) have been delayed, but the floorcoverings manufacturer has published a comprehensive set of unaudited figures. EBITDA was at the bottom end of expectations at £196m, up from £162.8m. The inclusion of rug maker Balta reduced margins, but restructuring will improve these. The period was hit by higher polypropylene and gas prices, but these have subsequently eased. There was capital spending on restructuring the business that should pay off this year, although it is not likely to be until the second half. Although net debt is £658.3m, the major capital investment has been made and around £100m of cash could be generated this year. The share price is 7.31% lower at 596p, although it is still nearly 24% ahead so far this year.

MTI Wireless Edge (LON: MWE) had a mixed first with delayed defence contracts offsetting improved contributions from the antennas and Mottech water management divisions. Interim pre-tax profit was flat at $2.1m, but Allenby still expects full year pre-tax profit to improve from $4.32m to $4.79m. One of the delayed contracts has already been completed and the other should be finished this year. The outlook for defence is still positive, while 5G demand from India is difficult to predict. The share price is 3.53% lower at 41p.

Instem (LON: INS) annualised recurring revenues were 27% ahead at £41m. The pharma software company is trading in line with expectations. Interim revenues are expected to be around 10% higher at £29.7m. Cash is £8.4m. The share price dropped 2.82% to 602.5p.