Empresaria cautious on second half

Andrew Hore
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Empresaria cautious on second half

Staffing company Empresaria (LON: EMR) warns that trading will continue to be difficult in the second half. The weak IT recruitment market is a major factor, and the demise of Silicon Valley Bank has not helped.

The decline in the AIM company’s net fee income happened in all the regions, so the international spread of the business has not helped during this period. The bright spot was the outsourcing services division, which continues to grow rapidly.  

Outsourcing services increased net fee income from £6.1m to £7m and the profit contribution was higher even though costs have been increased ahead of growth. The growth came from the Indian operations because the Philippines base is focused on the US where demand was flat.

In the six months to June 2023, net fee income fell 9% to £29.7m and operational gearing meant that underlying pre-tax profit slumped from £4m to £500,000. There was a loss per share because of the minority interest in the better performing outsourcing services business.

Net debt rose slightly to £8.7m after paying dividends and tax. A decision on this year’s dividend will be made when the full year results are reported. There is still plenty of headroom in the invoice discounting facilities, so Empresaria is comfortable financially.

Empresaria has launched a US professional services business to broaden the scope of the US business. Empresaria Solutions, which will operate in the managed services sector, will be launched in the second half. This shows that management is still thinking in terms of growth.  

Cost cutting should help the second half outcome. Cenkos forecasts a full year profit decline from £9m to £5m. The share price has fallen by one-quarter during 2023. At 40.5p, the shares are trading on less than 14 times prospective earnings.

AIM movers: Increased Plexus contract and Powerhouse Energy placing

Andrew Hore
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AIM movers: Increased Plexus contract and Powerhouse Energy placing

Wellhead equipment supplier Plexus Holdings (LON: POS) reveals that a £5m contract announced in March has been increased in value to £8m. This technology helps to reduce methane emissions. The share price is two-fifths higher at 5.25p.  

On Monday afternoon, Galileo Resources (LON: GLR) reported that drilling at the Kamativi licence in Zimbabwe has intersected around 111 metres downhole width of pegmatites with the potential for lithium mineralisation. This is better than expected. The share price rose 15.6% to 1.3p.

RUA Life Sciences (LON: RUA) has reduced its costs by one-fifth and cash is better than anticipated. The development of heart and vascular products is progressing. The contract manufacturing business is working on a customer funded development that could provide significant volumes in the future. The share price is 16.4% ahead at 19.2p.

Cake Box (LON: CBOX) reported like-for-like sales growth of 6.8% in the first 17 weeks of the financial year. That represents an acceleration of growth in recent weeks as marketing is stepped up. There are 212 outlets with scope for more. After paying the final dividend there is £6m in the bank. The share price rose 6.33% to 159.5p, which is 15 times prospective earnings.

Neometals (LON: NMT) says battery recycling joint venture Primobius has received an order for 10 tonne/day of lithium-ion battery recycling spoke with Mercedes. The facility will recover lithium, cobalt, nickel, manganese and other materials and feed them back into production of 50,000 batteries for new Mercedes vehicles. This is important because it will help the joint venture to gain credibility and win more business. The share price improved 5.77% to 27.5p.

FALLERS

Waste to energy technology company Powerhouse Energy (LON: PHE) is raising £1m at 0.5p/share. The share price dived 17.2% to 0.625p. This will be spent on the building of the technology centre in Bridgend. Broker Turner Pope is receiving 8 million shares as payment for expenses.

Marechale Capital (LON: MAC) fell back into loss in the year to April 2023. That is because there was a £2.72m gain on investments in the previous year. The corporate finance adviser has exited its Future Biogas investment and another investment, Burgh Island, is for sale. Corporate finance revenues were also lower. Net cash was £250,000 and £236,000 was subsequently raised at 2.25p/share. The share price has fallen 7.69% to 1.8p.

Great Western Mining (LON: GWMO) has made progress setting up a mill at Sodaville, in the Mineral County licence area in Nevada, but regulatory approval is likely to be delayed for two months. The project is within budget. The share price slipped 5% to 0.0475p.

In-content advertising company Mirriad Advertising (LON: MIRI) reported a £7m cash outflow from activities in the first half, including cash costs of closing the China operations. That is more than the cash raised during the period. There was £9.79m in the bank at the end of June 2023. Management says this will last until August 2024 following cost cutting. Interim revenues edged up to £592,000. The share price is 3.7% lower at 1.3p.

Wood Group delivering on growth strategy, increases full-year earnings guidance 

UK Investor Magazine
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Wood Group delivering on growth strategy, increases full-year earnings guidance 

Wood Group shares ticked higher on Tuesday after releasing an upbeat first half-year report that reflects favourable trading conditions.

Revenue rose 16% to $3bn and adjusted EBITDA rose 8.5% to $202m. Wood Group enjoyed growth across all business units including their sustainable business which saw revenue jump 20%.

The strong performance in the first half of the year gave Wood Group the confidence to increase their guidance for EBITDA and profit for the full year. 

“After a bid from private equity firm Apollo collapsed earlier this year Wood Group has been under pressure to deliver, and these results go some way towards doing that as it pulls the rabbit of slightly improved full year guidance out of its hat,” said AJ Bell investment director Russ Mould.

“The energy services firm has endured a difficult few years after the 2017 acquisition of Amec Foster Wheeler brought with it a whole deal of problems which the company is still addressing. These continue to act as a drag on cash flow although the situation is starting to improve.

“The main driver of the better first half performance was tight control of costs, no mean feat given how volatile the backdrop has been. Wood Group, which is a big provider of services to North Sea oil and gas firms, has a longer-term challenge of adapting to the energy transition.

“Get it right and there could be big opportunities for the company to help its client base through this process, but it needs to put its legacy problems behind it first.”

Navigating risk in trading: seven questions to ask yourself when getting started

OANDA
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Navigating risk in trading: seven questions to ask yourself when getting started

By Craig Erlam

Trading has become more accessible than ever. Getting started is exciting, but it’s also the time when you’re most likely to make mistakes.

The worst thing a new trader can do is hide from these mistakes. When things go wrong, it’s tempting to convince ourselves that our approach is correct, and that we were just unlucky or something is conspiring against us – but learning and adapting are part of the process of becoming a better trader and must be embraced.

Here are seven questions you can ask yourself to get started. You can also revisit these on your journey if you feel you’re going off track.

  1.  How much risk do I want to take?

Get to know your risk tolerance before you define your trading approach. Your personality type can play a significant role here – it’s important to stay true to yourself and not attempt to be someone you’re not. By aligning your risk profile with your strategy, you can create a comfortable and less stressful trading environment. There is no fixed monetary value to allocate for each trade – one person might be willing to risk 5% of their account, whereas another might only be prepared to risk 1% or less. A demo account can enable you to focus on other aspects of your learning or test a new strategy without putting any money at risk. Take it slowly, and don’t expect to have the answers on day one: defining your risk appetite is a trial-and-error process that evolves over time.

  1. Should I make multiple trades per day or invest over the longer term?

The frequency of your trades depends on various factors, including your personality and how much time you have to devote to doing your analysis and trading. If you have limited time, you may opt for fewer trades per day or focus on longer-term investments. Understanding the dynamics of the instruments you trade, such as stocks, currencies, or cryptocurrencies, can guide your decision-making process. Overtrading out of boredom or a lack of clear opportunities that align with your strategy is something many traders have been guilty of at some time or another. Establish a trading routine that suits your goals and circumstances.

  1. Am I using technicals, fundamentals or a hybrid approach?

There are many different analytical methods – find out which works for you. Technical analysis involves using charts and indicators to identify patterns and trends, while fundamental analysis focuses on evaluating the intrinsic value of an asset based on economic factors. Your trading background and preference can guide you towards using one or a combination of these approaches. It’s important to educate yourself and find something that resonates with your understanding of the market. You can read more about the differences between trading strategies here.

  1. What technical indicators should I use?

Your choice of indicators will depend on your trading strategy and personal preferences. There is a wide array of indicators and tools available, such as moving averages, support and resistance levels, oscillators like RSI and stochastic, and Fibonacci retracement levels. Exploring these and finding ones that align with your trading approach may take time. Try to avoid overwhelming your charts with too many indicators and focus on finding indicators that complement each other and work for you.

  1. What should I trade?

Start by thinking about what interests you and what your goals are. Whether it’s stocks, currencies, commodities, or cryptocurrencies, finding an asset that you are genuinely passionate about can enhance your trading experience, because your familiarity with an instrument and its market dynamics can contribute to better decision-making. Aligning your trading with your interests can make the learning process more enjoyable and fulfilling.

  1. What risk management should I use?

Using risk management tools can help you protect yourself from substantial losses. Stop-loss and take-profit orders are the most common risk management tools, and they can enable you to define your entry and exit points. Setting these parameters before entering a trade, based on your analysis, risk tolerance, and trade ambitions, can help you make more objective decisions. Make sure you are clear on the amount of money you are comfortable losing and manage your margin usage too.

  1. How should I monitor my trading and improve?

Keep a trading journal to help you continually analyse and try to improve on your performance. Documenting your trades – such as entry and exit points, reasons for entering a trade, risk management and outcomes –  allows you to analyse your performance as objectively as possible. It helps you identify patterns, strengths, weaknesses, and areas for improvement. By learning from your mistakes and refining your strategies, you can develop a more systematic and less emotionally driven trading approach.

Take your time and keep your cool

Learning to trade takes time and effort. It’s not something that will happen overnight. Don’t fool yourself into thinking it will be easy or that you’ll start making money right away.

It’s a process – one that requires passion and dedication, and ultimately isn’t for everyone. But these steps will help you to get started, and there are plenty of other educational tools available online to help you become a better trader.

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You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Plexus Holdings shares soar after major contract increased

UK Investor Magazine
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Plexus Holdings shares soar after major contract increased

Plexus Holdings shares were flying on Tuesday after the oil and gas engineering firm said the value of a major contract rose from £5m to £8m.

Plexus Holdings were 40% higher at the time of writing on Tuesday.

Plexus is providing its POS-GRIP “HG” wellhead equipment on a rental basis for use in a subsea environment.

“I am pleased to be able to announce the additional revenue attributable to this important bespoke solution contract,” said Ben van Bilderbeek Plexus’ CEO.

“Using innovative technologies, like ours, oil and gas companies and operators can transform the industry for the better, particularly in relation to reducing methane emissions and meeting Net Zero goals as part of the global energy transition cycle.  This is pivotal as governments across the world strive for energy independence, and more recently in the UK, with the news that hundreds of new oil and gas licenses will be granted in the North Sea.

“Common sense seems to have finally arrived with the realisation that it is far more damaging to the environment to ship oil, and in particular LNG, across the world by tankers than it is to produce local pipeline gas and oil. Indeed, it is reported that LNG sourced from afar is up to x10 more CO2 intensive than local North Sea gas. We are encouraged by the increased interest in our POS-GRIP technology and look forward to updating shareholders on our continued progress.”

New AIM admission: Tan Delta Systems senses global potential

Andrew Hore
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0
New AIM admission: Tan Delta Systems senses global potential

Real-time oil condition analysis company Tan Delta Systems can gain a portion of the $200bn global sensor market. Of course, it is not addressing the whole of that market, but the addressable market is significant. Shell, Aggreko and Schlumberger are already customers.
Tan Delta Systems says that its sensor can help to reduce oil consumption by 30%, reduce breakdowns and improve the performance of the equipment. The cash raised in the placing and offer will be used to boost sales and marketing. It will also help to increase capacity.
There are big competitors, including Poseidon, Parker Hannif...

FTSE 100 hangs on to gains ahead of key growth data

UK Investor Magazine
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FTSE 100 hangs on to gains ahead of key growth data

The FTSE 100 was hanging on to gains on Monday afternoon after a rambunctious start to the trading week. The FTSE 100 surged in early trade before the rally faded into the afternoon.

The index was 0.15% higher at 7,270 shortly after 2pm in London. The FTSE 100 had touched highs of 7,317 earlier in the session.

Investors will be preparing for a raft of PMI manufacturing data and the Jackson Hole Symposium later this week.

“The FTSE 100 ticked higher on Monday despite an initially lukewarm reaction to Chinese policy measures aimed at righting a listing economy,” said AJ Bell investment director Russ Mould.

“Rate cuts did not go as far as anticipated but nonetheless oil and gas stocks were among the risers in London on the potential implications for demand of easier monetary policy in China.

“Later this week a flood of PMI data from Europe, the UK and US should provide some insight into the current economic trajectory in the West and serve as an hors d’oeuvre to the main course provided by the Jackson Hole symposium which starts at the end of the week.

“This meeting of finance ministers and central bankers will provide some insight into the thinking of the Bank of England, Federal Reserve and European Central Bank ahead of their next set of meetings this autumn.”

Global equity indices sank last week and if the FTSE 100 fails to hold on to gains today it will sap further confidence from traders.

Housebuilders sink

Housebuilders were facing the pressure of a profit warning from Crest Nicholson with Persimmon, Taylor Wimpey and Berkeley Group among the FTSE 100’s top fallers.

“Weak house price data is hardly a surprise. Economic uncertainty is elevated, mortgage costs have gone through the roof and the Help to Buy scheme has come to an end. However, Crest Nicholson’s profit warning has laid bare the scale of the impact of a housing slowdown on the housebuilding sector.

“Sales of new homes have plunged alarmingly and, while not all developers in the space are created equal, the news, allied to Rightmove’s latest reading on the property market, has had a knock-on effect on share prices in the rest of the sector this morning,” said Russ Mould

“The £7,000 drop in the average asking price observed by Rightmove in the last month, allied to a big drop in transaction volumes,  is the kind of statistic to make estate agents distinctly uneasy.

“The scale of Crest Nicholson’s warning may come as a shock to investors given it reported its first half results just a couple of months ago and this hints at the speed and scale of the deterioration in the market.”

InterContinental Hotels was the FTSE 100 top gainer, up 2%.

Ferro-Alloy Resources hit by supply delays

Andrew Hore
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0
Ferro-Alloy Resources hit by supply delays

Ferro-Alloy Resources (LON: FAR) is the worst performing full listed company today after it warned that problems with the delivery of concentrate material to its secondary processing facility will hit third quarter results. This follows record second quarter vanadium, molybdenum and nickel production. The share price is 16.3% lower at 9p. That is the lowest since 2021.

Second quarter production was 141.4mt V2O5 equivalent following investment in increasing capacity. A further improvement had been expected in the third quarter.

Shore Capital has put its forecasts under review, although it believes that the processing plant could reach full capacity in the fourth quarter. Supply contracts are in place to prevent the problems happening again.

Liberum has reduced its second half production forecast from 500t V2O5 equivalent to 313t V2O5 equivalent. Even so, full year production and results are likely to be better than for 2022.  

Ferro-Alloy Resources is generating cash from the processing to invest in the development of the Balasausqandiq project in Kazakhstan. The feasibility study is expected in the fourth quarter of 2023, although it could be delayed to the first quarter of 2024. The updated mineral resource estimate is 32.9mt grading 0.62% V2O5 for the first ore body.

Vanadium prices have fallen from a high of $10.2bn/lb to $7.4/lb, which is more in line with long-term expectations. Demand for batteries will underpin demand.

AIM movers: Redx Pharma orphan designation and Fulcrum Utility leaving AIM

Andrew Hore
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AIM movers: Redx Pharma orphan designation and Fulcrum Utility leaving AIM

Redx Pharma (LON: REDX) says zelasudil (RXC007), an oral, selective Rho Associated Coiled-Coil Containing Protein Kinase 2 (ROCK2) inhibitor, has received Orphan Drug Designation from the FDA for the potential treatment of Idiopathic Pulmonary Fibrosis (IPF). The treatment is being used in a phase 2a clinical study for IPF and data is expected in the first quarter of next year. IPF is a disease of the lungs which progressively causes scarring and a reduction in lung function. The share price is 12.8% ahead at 26.5p. This is a recovery from the recent low.

Deltic Energy (LON: DELT) says that Shell has commenced site survey works on the Selene exploration well in the southern North Sea. Seismic data will be acquired and used to determine the exact location and placement of the drilling rig. Drilling is expected to start in mid-2024. Deltic Energy holds 50% of the licence but will be carried on 75% of costs up to $25m. The share price increased 6.14% to 30.25p.

Oracle Power (LON: ORCP) says Riversgold has completed maiden drilling programme on the Northern Zone gold project in Kalgoorlie. Oracle Power is farming-in to the licence. Drill cores are being taken to Perth for cutting and assay. The share price rose 5.71% to 0.0925p.

Shares in Itaconix (LON: ITX) improved 5.06% to 4.15p ahead of the 50-for-one share consolidation on Tuesday.

FALLERS

Fulcrum Utility Services (LON: FCRM) intends to leave AIM and the share price dived by two-thirds to 0.275p. This announcement followed the release of full year figures showing an increased loss. The utility infrastructure business reported a £25.7m loss on a 18% decrease in revenues to £50.6m. Even excluding write-downs and restructuring charges there was a loss.

Fire Angel Technology (LON: FA.) has awarded chief executive Neil Radley options over 7.26 million shares and finance director Zoe Fox options over 4.26 million shares. The share price has to be greater than 15p for all the share options to be taken up. If there is an acquisition, then the share price has to be above 8p for 100% to be taken up. The share price fell 5.03% to 3.4p.

Audioboom (LON: BOOM) has been ranked as the fifth largest US podcast publisher based on audience reach and average weekly downloads. There were recently 135 million downloads in one month. The share price declined 3.75% to 192.5p.

Crest Nicholson shares tank on profit warning

UK Investor Magazine
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Crest Nicholson shares tank on profit warning

Crest Nicholson Holdings today warned that full-year adjusted profit before tax is now expected to be around £50.0m, a significant downgrade from previous guidance.

Crest Nicholson shares were down 10% at the time of writing on Monday.

The housebuilder cited a “poor trading environment” and further legacy costs at its Brightwells Yard development as negatively impacting performance.

The profit warning comes amidst a backdrop of high inflation, rising interest rates, and weakening housing market activity. Transaction levels have deteriorated in recent weeks, with the sales rate per outlet per week falling to just 0.25 in the 7 weeks to August 18, down from 0.50 in the first half.

First-time buyers and those looking to upgrade are being deterred by the rising cost of mortgages and lack of government support schemes. The company does not expect trading conditions to improve materially before year-end on 31st October.

Crest Nicholson revealed it is negotiating several bulk land deals to support future delivery volumes. However, management is taking action to reduce overheads and scale back divisional growth plans to reflect the tougher market.

The company remains committed to its full-year dividend but warned that land investment will be “significantly” lower going forward.

Despite the near-term challenges, Crest Nicholson stated it has a strong financial position and experienced leadership to navigate the downturn. It believes inflation will eventually abate and mortgage rates reduce.

The profit warning indicates the UK housing market continues to face major headwinds. While Crest Nicholson retains a positive medium-term outlook, investors should brace for further downgrades if conditions do not improve.

“Today’s profit warning from Crest Nicholson suggests rising interest rates and higher mortgage costs are really starting to bite,” said Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club.

“Crest Nicholson has seen trading conditions worsen significantly over the summer months. This means group pre-tax profit for the year is expected to come in around a third lower than previous expectations.

“The cost of borrowing has rocketed, and this has led to fewer homebuyers upsizing and to fewer first-time buyers. The end of the Help to Buy scheme has compounded these pressures, making it even harder for first-time buyers to get onto the housing ladder.

“The housing market is on very shaky foundations. Although inflation appears to be moderating, the Bank of England is expected to tighten the screw further in the coming months. As such, it seems unlikely that trading conditions for Crest Nicholson or its peers will improve any time soon.”

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