tinyBuild shares jumped on Friday as bargain hunters stepped in after a dramatic selloff yesterday.

The premium video games publisher lost around three-quarters of its value yesterday after warning performance was being detrimentally impacted by changes to games platforms and disappointing activity in two game titles.

“As CEO and a major shareholder, I am disappointed with the H1 performance. What fills me with confidence is that we have an incredibly strong pipeline of new games under development with the potential to create multiple new long-lasting franchises,” said Alex Nichiporchik, Chief Executive Officer of tinyBuild

“Our diverse portfolio, strong back catalogue and financial position will allow us to reposition the Company for growth and capture advantageous opportunities when peers may be forced to retrench. We are transforming the Company at speed to adapt to new industry trends.”

tinyBuild reduced their expectations for cash balances at the end of 2023 to $10-20m, a reduction of prior guidance of at least $26.5m.

With a current market of £14.9m, the company is trading at the value of predicted cash balances at the end of the year, completely discounting its operations and revenue generation capabilities.

tinyBuild shares were trading 16% higher at 8.5p at the time of writing.

tinyBuild released the results of their AGM on Friday, where all resolutions were passed apart from a resolution to allow their CEO to buy shares up to a 45% stake in the company without extending the offer to wider shareholders.

Belluscura, the developer of portable oxygen enrichment technology, announced a material increase in full-year revenue on Thursday and said they were confident about demand for the launch of DISCOV-R.

Belluscura, a Tekcapital portfolio company now listed on AIM, has developed portable oxygen devices that have the potential to improve the lives of millions of people with respiratory diseases.

Revenue for the full year surged to $1.54 million from $0.42 million the year prior and the company believes they are positioned to ‘deliver substantial growth.’

“The Group has made considerable progress in the year to 31 December 2022, during which it launched the next generation X-PLOR, built up significant distribution across the US and commenced an international roll out, established high quality manufacturing facilities and developed the DISCOV-R for a well-received launch in 2023,” said Robert Rauker, Chief Executive Officer, Belluscura.

“Trading in the first half of 2023 has continued in line with our expectations for the full year, with a significant second half weighting expected, as previously stated. Demand for X-PLOR, which is predominantly a Direct to Consumer unit, is growing, and we expect our affiliation with GoodRX, a leading digital healthcare platform that makes healthcare affordable and convenient for all Americans, will help it to continue to gain momentum over the coming months.

“The commercial launch of DISCOV-R will be transformational for the Group. Having received a positive reception at Medtrade, we are very encouraged by the fact that over 125 distributors have requested access to DISCOV-R, with the distributors indicating potentially significant demand for units.

“Following the recent fundraising, and as we are now utilising the Company’s previously high inventory levels, the Company is well positioned to deliver substantial growth in the coming years.  We look forward to the future with confidence.”

Tekcapital has a 12% stake in Belluscura.

At the start of this year the shares of the Bolton-based AO World (LON:AO.) were changing hands at just 52p.

After suffering some inevitable trading hurdles after Covid-19, the group had been looking to recover its momentum.

The company operates through online retailing of domestic appliances and ancillary services to customers in the UK, selling major and small domestic appliances and a range of mobile phones, audio visual, consumer electricals and laptops, delivering them through its in-house logistics business and selected third parties.

It also provides ancillary services, such as the installation of new products and recycling of old products, as well as offering product protection plans and customer finance.

Upping Its Profits Again and Again

On 10^th January, the recovering group issued a statement upping its profits guidance to the market.

At the end of February, it issued yet another update pointing the market towards higher expectations.

In March, both Odey Asset Management and JPMorgan Chase added to their holdings in the group, some 17.26% and 6.04% respectively.

Trading Update

By the middle of April, the group’s shares were over 50% better at 76p, which is when it published its Full Year Trading Update for the twelve months to end March 2023.

It noted that the company was continuing to see positive traction from its initiatives to reduce costs and improve margins.

Come the end of May the group’s shares had subsequently eased back to 63.85p on understandable profit-taking.

And then along came Mike Ashley’s Frasers Group

On Monday 12^th June the group announced that Frasers Group (LON:FRAS) had acquired an 18.9% strategic stake in AO with the purchase of 109,400,000 issued shares at a price of 68p totalling an investment of £75m. 

The group stated that the investment was the culmination of productive talks over the last two years about establishing a strategic partnership.

Frasers CEO Michael Murray commented that:

“Through this investment, Frasers will benefit from AO’s valuable know-how in electricals and two-man delivery, helping us to drive growth in our bulk equipment and homeware ranges. In turn, AO will have the opportunity to benefit from Frasers’ expertise and ecosystem.”

The shares were purchased from both Odey and JPMorgan, with the latter going below the reporting minimum threshold in the process.

Subsequently Frasers has been adding to its stake and taking the shares a great deal higher in price as it did so – now up to 22.20% of the AO World equity, some 128m shares.

As a matter of interest AO founder and CEO John Roberts owns almost 106m shares, representing 18.35% of the AO equity.

Analyst Opinion – mixed views

A consensus of analysts that follow the recovering group closely suggest that the year to end March 2023 saw revenues of £1.13bn (£1.56bn), with EBITDA of £41.0m and earnings of 1.3p per share.

For the current year now underway the average view is for sales to rise to £1.15bn, while the EBITDA figure shows a big improvement to £54.0m, with 3.3p of earnings per share.

The house analysts, Simon Bowler at Numis Securities, and Andy Wade at Jefferies International, both rate the shares as a Buy.

Sector analyst Tony Shiret at Panmure rates them as a Hold, while David Reynolds at Davy Group has a Neutral rating on the group’s shares.

Both Bradley Hughes at Shore Capital and John Stevenson at Peel Hunt have not rated the shares.

Conclusion – has Ashley other ideas?

Next Wednesday will see the group declare its results for the year to end March 2023, together with an Update on current trading and prospects.

The group’s shares, which touched 96.18p on Wednesday of last week, are currently 82p, valuing the company at £503m.

The big question is just how Mike Ashley and John Roberts will be faring after next week’s results statement, will they have big smiles on their faces (similar to the AO World logo)?

Will it be a ‘partnership made in heaven’ or has Ashley other ideas, especially as he has now built up a 10.39% stake in Currys (LON:CURY)?

After shaking off initial concerns about interest rates after yesterday’s Sintra central bank panel, the FTSE 100 reacted to the prospect of higher rates for longer on Thursday.

The Sintra panel included the heads of the Federal Reserve, ECB, Bank of England and Bank of Japan. The general message was to expect additional rate hikes in the near term and not to expect interest rates to fall anytime soon.

The FTSE 100 was down 0.16% to 7,488 at the time of writing.

“The FTSE 100 was on the back foot on Thursday as central bankers used a conference in Portugal to ram home the message that more rate hikes could be coming and rates could stay higher for longer than the market thinks,” said AJ Bell investment director Russ Mould.

“The next set of central bank meetings in late July and early August will provide the proof in the pudding and until then markets may continue to hedge their bets.

“Monetary policymakers must balance the need to show their commitment to fighting inflation, while also having some awareness that there will be a lag before their actions take full effect in the economy and not creating so much stress in the financial system that something breaks. It’s not an easy task.”

FTSE 100 movers

Ocado continued to be the most volatile FTSE 100 constituent with a 2% after trading down as much as 10% intraday yesterday. Ocado has a Beta of 2.37, meaning the company’s shares move 2.37x the rate of the benchmark FTSE 100 index.

B&M European Value was the FTSE 100’s top faller after releasing a trading update for the 13 weeks from 26 March 2023 to 24 June 2023. By all accounts, it was a positive trading period in which B&M’s like-for-like sales rose 9.2%, and total revenue jumped 13.5%.

Nonetheless, B&M shares were down 6% at the time of writing.

“B&M is the ultimate play on the cost-of-living crisis, offering a range of goods at cheap prices. Chief executive Alex Russo says the business has ‘strong trading momentum’ which is no wonder when interest rates keep going up,” said Russ Mould.

“So why has the share price fallen 6% on the news? It could be the lack of full-year guidance which implies no upgrades to earnings expectations. The shares have already had a strong run this year, up more than 30%, so perhaps some investors are banking profits while the going is good.”

Premier African Minerals have received a termination notice from Canmax after failure to deliver the required lithium offtake detailed in their offtake agreement.

Under the terms of the agreement, Premier African Minerals are now required to repay the $34.6m offtake prepayment plus interest within a 90-day period.

However, Premier African Minerals claims the agreement is subject to Force Majeure due to problems with their production plant, and their requirement to repay the prepayment is suspended.

“The Company has been advised that this notice of termination has no force or effect. Premier has repeatedly extended an invitation to Canmax to attempt to resolve this situation as set out in the Agreement, and does so again, now, and publicly,” said George Roach, CEO of Premier African Minerals.

Premier African Minerals shares were up 13% at the time of writing on Thursday but are down 53% over the past five trading sessions.

The FTSE 100 was buoyant on Wednesday as investors enjoyed improving sentiment around the US economy. Many economists are shifting their forecast for US growth, and recession predictions are receding.

The FTSE 100 was 0.6% higher at the time of writing on Wednesday after a strong session in US stocks overnight lifted the mood in Europe. US stocks opened lower on Wednesday.

“Upbeat sentiment about signs of resilience for the mighty American economy is over-riding worries about China’s flagging recovery,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown

“Hopes for resilience in the world’s largest economy are off-setting concerns about China’s lacklustre performance. Chinese industrial profits have slid sharply since the start of the year as the recovery has lost steam.”

Investors were also closely watching the Sintra panel of Central Banks, including the Federal Reserve, ECB, and Bank of England, for hints of the next move in monetary policy. The panel was getting underway at the time this article was published.

Lower-than-expected Eurozone inflation data released this week helped support European equities as investors looked forward to slowing rate hikes.

FTSE 100 movers

The FTSE 100 rally was broad on Wednesday, with only 85 of the 100 constituents trading in positive territory.

Sage was the top riser after being placed on JP Morgan’s ‘analyst focus list’ and was raised to overweight from neutral. JP Morgan has a 1,100p price target for Sage Group, which traded at 916p at the time of writing.

Bargain hunters were out in force and picking up shares recently beaten down by macroeconomics.

UK banks NatWest and Barclays were over 1% higher, while Land Securities and Vodafone rebounded from recent lows.

Innovative Eyewear is ramping up its distribution with a new retail partnership with PRIVATO Duty Free.

The agreement will see Innovative Eyewear’s Lucyd smart eyewear displayed across seven airport-based locations in Lucyd’s new display units.

Innovative Eyewear says the displays will act as an always-on salesperson for their ChatGPT-enabled smart eyewear.

“Lucyd Eyewear makes an excellent product for travelers, since it allows you to hear music, audio content and notifications in an open-ear format, while maintaining full awareness. Additionally, the ability to use ChatGPT through Lucyd Eyewear via the Lucyd app provides powerful AI assistance which many travelers need, including real-time translations and the ability to learn about significant points of interest in any city worldwide,” said Harrison Gross, CEO of Innovative Eyewear.

“Any vacation or business trip can be made a bit more convenient and enjoyable with Lucyd Eyewear, and we are pleased to offer it through our new partner PRIVATO at several leading airports.”

Innovative Eyewear recorded a world-first in integrating a voice interface for ChatGPT in smart eyewear.

“We are always seeking to bring our clients the latest innovations in travel goods and luxury retail. Lucyd smart eyewear is an exciting new product and new category of sunglasses that we think our customers will love to use,” said Marco Arilli, Managing Director of PRIVATO Duty Free.”

BT shares have been nothing but a headache for investors over the past five years – a period in which the BT share price is down over 40%.

Yes, there have been trading opportunities where some would have played the 100p-200p range in the BT share price, but this would have been a successful swing trade, not a long-term investment. BT’s time above 200p has been sporadic and brief since 2019

BT does pay a 6% dividend, but the prospect for capital appreciation from current levels is questionable.

In BT’s annual report, the headline message from the CEO was, “Much done, much more to do.” An understatement, to say the least.

Illusive growth

BT has produced little or no top-line growth over the past five years and isn’t offering much in the way of a plan to do so.

The company has undergone a makeover of their Enterprise and Global Customer Facing Units (CFUs) to paper over the cracks. Combining the Enterprise and Global units to form BT Business joins two underperforming units into one new unit that will share costs to achieve higher efficiencies.

This is arguably an evasive manoeuvre likely made to avoid disappointing performance in the coming periods. The combined revenue for the Global and Business units fell in the 2023 full year. There is little prospect for significant top-line growth and the best BT can do is chip away at costs.

BT Business operates in an increasingly competitive landscape and lacks any clear competitive advantage. The same goes for their Consumer business, where adjusted revenues fell from £9,775m in 2022 to £9,680m, although adjusted EBITDA for the segment rose by around 50%.

Openreach is an attractive business with an undeniable MOAT. The fibre rollout has been a capital-intensive undertaking that will reward shareholders in the future.

Unfortunately, its benefits to the group will be muddied by poor performance elsewhere – as was the case in 2023.

BT gave itself a slap on the back for producing adjusted EBITDA growth for the first time in six years in 2023, but profit before tax and operating profit fell.

Lower cash generation

Investors will be concerned that normalised fee cash flow dropped by 5%. For all the changes in strategy and cost-cutting measures, BT is generating lower amounts of cash. If left unchecked, this will hinder further investment and shareholder distributions.

Yesterday, equity analysts at UBS downgraded BT shares to a sell. It’s hard to disagree.