JD Sports shares were weaker on Tuesday after the sportswear giant said they saw a ‘moderation in the growth’ as trade normalised.

The company said they were experiencing softening in their North American business after a period of strong growth. The North American business accounted for 31% of group revenue in the 2023 full year.

JD Sports are still confident of achieving headline profit before tax of £1.04 billion in the full year to 3rd February 2024.

While the market was disappointed with the moderation of growth rates, the company continues laying the foundations for future growth with 32 net new JD stores in the first four months of the year and is on track for 150 new stores for the full year.

“JD Sports has put in a solid performance showing the benefit of having a big footprint in diverse geographies. Although its US earnings veered off track in June, revenues ran ahead of expectations in other markets,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“A moderating of sales in May in all regions was expected with sales slowing to 8% but it means the group is still on track to meet its full year profits expectations. Brand power is still a powerful force, and even as belts are tightened elsewhere, the desire for the latest must-have trainers or kit isn’t showing signs of slowing down dramatically.”

JD Sports shares were trading down around 5% at the time of writing.

FTSE 100 stocks dodged a bullet on Monday as a Russian mutiny was wrapped up in 24 hours over the weekend, avoiding any major gyrations in equities.

The FTSE 100 was down 0.25% at the time of writing on Monday while the German DAX dipped 0.2%.

“The uprising in Russia could have sent shockwaves across equity and commodity markets but an apparent U-turn has meant only marginal volatility rather than a full-blown correction,” said Russ Mould, investment director at AJ Bell.

“Brent Crude had fallen by more than 4% over the past five days on fears about global economic weakness and how that would negatively impact demand. However, the oil price jumped 0.8% to $74.41 per barrel on Monday as markets contemplated a new period of uncertainty for supply.

“With more twists and turns to the Wagner mutiny than a theme park rollercoaster, markets aren’t ready to accept the drama is over, even though the rebel fighters have been stood down.”

FTSE 100 movers

Moves in individual FTSE 100 constituents were relatively moderate on Monday, with the top movers driven by broker ratings.

Lloyds was the FTSE 100’s top faller after being cut to underweight by analysts at JP Morgan. They gave Lloyds a 42p price target. Lloyds shares were down 1.8% to 41.5p at the time of writing.

JP Morgan also slashed their target on NatWest and Barclays to 260p and 180p, respectively.

Barclays raised their Whitbread price target to 4,200p from 4,075p, helping the leisure group’s shares 2% higher to 3,334p.

Premier African Minerals shares were in freefall on Monday as the Zimbabwe-focused lithium miner issued an update on their Offtake and Prepayment Agreement with Canmax.

Premier African Minerals have missed certain production deadlines and are now in the hands of Canmax, who have the ability to terminate the agreement and request funds be returned. This would be disastrous for Premier African Minerals, who are supposedly working with Canmax on possible alternatives.

According to the update released by Premier African Minerals on Monday, Canmax is taking full advantage of its position by proposing unfavourable terms to avoid termination.

Premier African Minerals outlined two suggestions proposed by Canmax; converting the prepayment amount into convertible debt or issuing equity in their Zulu lithium project, and the sale of all offtake to Canmax at fixed prices.

The amendments would severely erode shareholder value, and Premier African Minerals said the proposed terms are unacceptable.

Premier African Minerals shares were down 33% at the time of writing and had been much lower earlier in the session.

“The issues at Zulu have been acknowledged by the plant contractor to be beyond the control of Premier, and could not have been foreseen by Premier. Whilst I am deeply upset and committed to finding an equitable way forward with Canmax, that solution should strive to be fair and reasonable and in the best interests of all Premier shareholders as whole,” said George Roach, Premier African Minerals CEO.

“Whilst my focus is squarely on resolution of the plant issues during this period of FM and production at Zulu, I will diligently strive to resolve the issues with Canmax and will actively pursue alternative strategies.”

Tekcapital has issued an update on the commercial progress at MicroSalt as the food technology company gears up for its London IPO.

MicroSalt appointed Zeus Capital as their NOMAD last year and Tekcapital has alluded to their portfolio company listing in 2023. A specific date is yet to be confirmed.

Tekcapital owns 97% of the share capital of MicroSalt Ltd and 78% of MicroSalt Inc, its U.S. subsidiary.

MicroSalt Expands US Retail Network

MicroSalt has bolstered its US footprint with placements in 51 Fine Fare stores, 8 Trade Fair stores and 72 Big Y stores. The placements were facilitated through MicroSalt’s agreement with US Salt.

“We are proud of our partnership with US Salt to build product distribution as it underscores the retail need for full flavor, low-sodium products. Excess sodium consumption is one of the leading contributors to hypertension, and partnerships like this are the best way to provide consumers with great tasting products with less sodium,” said Rick Guiney, CEO of MicroSalt.

Despite having a contracted order book of some £900m, extending over the next seven years, Harland & Wolff Group Holdings (LON:HARL) the Belfast-based infrastructure facilities group is reckoned to have only turned over £28m in the year to end December 2022.

Surprisingly, perhaps worryingly, the company is still in the process of completing its audit but expects to issue its annual report for that financial year before the end of this week.

The market is now being guided that the unaudited revenues for the group for last year were £27.96m, producing a loss of £70.35m.

Further details will be declared in annual report.

However, the company has clearly stated that it remains on track to meet its current year guidance.

The Business

The group operates through five markets: commercial, cruise and ferry, defence, energy and renewables and six services: technical services, fabrication and construction, decommissioning, repair and maintenance, in-service support and conversion.

Its Belfast yard is one of Europe’s largest heavy engineering facilities, with deep water access, two of Europe’s largest drydocks, ample quayside and vast fabrication halls. 

The group also has two Scottish-based yards, focused upon work for the renewables, energy and defence sectors.

In addition, it also has a sizeable undercover drydock at Appledore.

The group also owns the Islandmagee gas storage project which is expected to provide 25% of the UK’s natural gas storage capacity.

Massive Order Backlog

It has a backlog of confirmed contract revenue of some £900m, extending over the next seven years.

It also has a weighted pipeline of new business opportunities reckoned to be in excess of £3.6bn in revenues over the next five years.

Working Capital and Borrowings

The company reported that it has made significant progress on its group refinancing, now looking to close the transaction in the early autumn.

We will expect to be given further details in due course however the company is anticipating reducing the cost of capital substantially.

With the massive amount of contract work now on hand the group will need to increase significantly its working capital levels to be able to cope with the slew of new business.

I understand from the group’s brokers that the term sheet with Astra Asset Management to refinance the group’s $100m Riverstone credit facility, has now been upsized to £200m.

Importantly the group and Astra are hoping that the UK Export Finance Development Guarantee will cover up to 80% of the loan amount.

Analyst Opinion – rated as a Buy

Michael Renton at Cenkos Securities, the group’s NOMAD and Joint Broker, still rates the shares as a Buy.

He looks for revenues this year to more than treble to around £100m, while his pre-tax profits figure was last published at £34.1m loss.

Previously he has forecast £200m sales next year, easing the loss down to around £20.0m.

After the results come the end of this week it is likely that Renton will be revising his figures.

Conclusion – await the report at the end of this week

The £24.5m group’s shares, which dipped to 12.70p on Friday afternoon, closed that night at 13.50p. This morning they are trading at around 3% lower.

Wildcat Petroleum has entered into a landmark Memorandum of Understanding (MoU) with a third party for funding up to $25 million into energy projects sourced by Wildcat Petroleum.

The agreement will initially focus on Sudan, but there is scope to expand to other African countries. The MoU is not legally binding, and neither party has an obligation to proceed with any proposed investment.

The MoU has potentially game-changing implications for Wildcat Petroleum which is seeking to close on its first transaction.

“This MOU is a significant step forward for Wildcat as we aim to complete our first transaction in Sudan. Now that we have a party that is interested in the same geographies, we are focused on closing a deal as soon as possible,” said Mandhir Singh, Chairman, Wildcat Petroleum.

“Last October the company signed an MOU with the Sudanese over 4 producing oil Blocks (*) and efforts will be concentrated in signing a Production Sharing Agreement (PSA) over at least one of them. If the on-going political situation prevents travel to Khartoum then the Company will endeavour to negotiate a deal remotely.”

Today’s announcement saw Wildcat Petroleum shares soar 37.5% in early trade as investors positioned for further developments.