Entain shares rose on Tuesday after the betting company reported an 11% gain in net gaming revenue for the first quarter. Entain shares were over 2% higher at the time of writing.
A 76% jump in revenue from their US joint venture, BetMGM, will be particularly pleasing for investors looking to North America for growth.
The BetMGM JV has guided for up to $2bn net gaming revenue in the full year.
Overall online gaming revenue was helped higher by record user numbers, despite the ongoing cost of living concerns.
“The cost-of-living crisis can’t deter punters from enjoying a flutter across Entain’s suit of brands, including Ladbrokes and partypoker to name a couple. First quarter performance was strong, albeit mainly in line with market expectations, with active customer numbers reaching record levels,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
“BetMGM, the US joint venture, continues to perform well and remains on track to deliver positive cash profit in the second half of this year.”
Britzman continued to explain the potential challenges for Entain’s UK business as the government finalises their new regulations.
“Back in the UK, the gambling industry waits patiently for news on what the new gambling regulation will look like. The white paper promised to shake up the current regulatory regime has been persistently delayed for almost three years now. Still, we could be closer to seeing something tangible toward the second half of this year.
“The delays mean the industry has had plenty of time to prepare, albeit the scope of changes to come are unknown, and Entain’s global presence makes it less exposed to potential issues than more UK-focused peers.”
A clampdown on UK betting advertising, including the recent ban on football clubs advertising betting firms, will likely curtail UK revenue growth in the coming years.
Thor Explorations Ltd (LON: THX) produced 20,629 ounces of gold from the Segilola mine in Nigeria during the first quarter 2023. A new high grade quartz vein system has been identified.
The production was 5% below planned levels and lower than the first quarter of 2022 because of large boulders in the area mined. The mining has nearly finished in the lower grade area.
There will be additional drilling at the Segilola mine to increase the resources level. This will indicate the potential for a move to underground mining.
Nigeria is an underexploited gold mining region and there should be further opportunities on existing licences, as well as additional ones. Debt has been reduced from $28.4m to $27.9m by the end of March 2023.
There was a recent update to the mineral resource estimate in the Douta project that increased the figure by 144% to 1.78 million ounces of gold. This includes the recently discovered Sambara prospects. A further 40,000 metres of drilling is set to be completed by the end of the year. The preliminary feasibility study for Douta should be completed in the fourth quarter.
Full year production guidance for the Segilola mine is between 85,000 and 95,000 ounces of gold. Last year’s figure was 98,006 ounces of gold. The grades are set to improve later in the year after investment in additional production drilling rigs.
The share price improved 0.25p to 19.5p. This is the highest level it has reached for nearly one year. When Thor Explorations was introduced to AIM in June 2021, the introduction price was 22p – it also has a quotation on the Toronto Venture Exchange.
The FTSE 100 rose on Monday as M&A activity and optimism around the banking sector helped ignite optimism in UK equities.
The FTSE 100 was 0.1% higher at the time of writing, having traded as high as 7,916 earlier in the session.
Upbeat results from US banks on Friday improved the mood early on Monday as the banking crisis saga faded into the rearview mirror.
In addition to banking optimism, several M&A stories suggested business leaders were once more becoming confident enough to take additional risks.
“The FTSE 100 made brisk progress on Monday as a solid start to the US reporting season and a sprinkling of M&A activity helped buoy sentiment,” said AJ Bell investment director Russ Mould.
“Given all the drama around the sector in recent weeks it felt important that the big American banks which reported last Friday beat market expectations.
“While corporate announcements from the US are likely to continue to grab the headlines, a lot of the spotlight in macroeconomic terms is likely to be drawn by China with a raft of data set to be published imminently. For a FTSE 100 index teeming with resources stocks, this could have a big bearing given China is such a rapacious consumer of commodities.”
M&A
Two M&A stories had tongues wagging on Monday; Apollo’s approach for THG and the attempt by Sega to takeover Rovio and bring gaming titles such as Sonic and Angry Birds under one roof.
THG shares flew on the news, gaining more than 38% to 87p at the time of writing. However, THG shares are down substantially since their 500p IPO in 2020, and private equity group Apollo clearly feels they can do a better job taking the company private.
Sega’s approach for Rovio has little implications for UK markets apart from raising hopes some of the UK’s well-valued prospects may soon receive approaches from interested parties.
Although Sega’s move comes at a time the Angry Birds title moves into maturity, Rovio’s revenue has grown over the past two years representing a loyal customer base.
“Sega Sammy Entertainment clearly believe there is life in the old birds yet, and are confident that there could be more eggs nesting at Rovio which are yet to hatch. Angry Birds flew onto the gaming scene 14 years ago, attracting swarms of mobile gamers who became obsessed with the catapult characters, including the then UK Prime Minister David Cameron,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
FTSE 100 top risers
Ocado was the FTSE 100’s top riser as the online retailer bounced off support at 500p. Ocado shares were up 2.7% at the time of writing.
RS Group was not far behind, adding 2.2% to 867p, after RBC analysts upgraded the electronics group to ‘outperform’ with 1,000p target.
FTSE 100 top fallers
After a strong rally on Friday, FTSE 100 banks were weaker on Monday and the Barclays was the top faller, down 2.5%. Hargreaves Lansdown fell 0.5% after Barclays analysts cut their price target to 1,170p from 1,240p.
The UK Investor Magazine Podcast was thrilled to be joined by Michael Stroev COO and Head of Product at Nebeus.
Nebeus is the banking alternative for Web 3.0, bridging traditional banking and digital assets in one app. Since 2020, Nebeus have doubled their users, reaching over 130K, and processed over €49M worth of money and digital asset transactions in 2022.
The Nebeus app allows seamless transactions in crypto as well as offering an everyday Euro or GBP account. The company plans to launch financial market trading facilities in the future.
Michael outlines their plans for the future and details the progress the company has made to date.
We discuss their crowdfunding round and how the funds will be deployed in order to achieve their long-term plans.
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.
By Nick Greenwood, Fund Manager – MIGO Opportunities plc
A major headwind for the MIGO Opportunities Trust (MIGO) portfolio in recent months has been the rapid widening in investment trust discounts. Numis recently published their widest average discount figure for the sector since the Global Financial Crisis at 17.2%. The figure is much wider for trusts with alternative mandates where there has been a vast issuance of shares in recent years leaving the market oversupplied with unwanted shares. Well known trusts such Hipgnosis Songs, Taylor Maritime and Tritax Eurobox trade on extreme discounts. The sharp rise in interest rates has triggered a rapid move out of these trusts causing some former favourites to see their share prices fall sharply. Ten-year gilt yields touched 4.5% in the immediate aftermath of September’s “mini budget” having started last year at around 1%. Whilst UK government securities have recovered their poise, they still offer 3.5%. Given investors can now generate income from these conventional sources they no longer need to take enhanced risks. Consequently, it has made sense to switch out of, say, an infrastructure trust yielding 5% into gilts. It became clear that many of these trusts had originally been bought purely in response to yield starvation rather than for their fundamentals. In response to the evaporation of the yield premium there appears to have been a universal selling of investment trusts with many babies thrown out with the bath water.
Investment trust shares are purely decided by the balance of supply and demand in the market and the current oversupply has left perfectly decent portfolios trading well below their fundamental values. This is because there is a lack of demand for the structure that owns them rather than the assets themselves. Inevitably the market will exploit this arbitrage by takeover bids. An early example has been Blackstone’s 168p bid for Industrials Reit one of our core positions which owned mixed light industrial estates. Its shares languished on a wide discount closing at 118p the day before the offer was made.
We expect the headwind to turn into a tailwind for MIGO.
Risks
Alternative investments typically behave differently to traditional investments such as bonds and equities. They can include a range of assets such as specialist lending, private equity, hedge funds and gold. Adding alternative investments to a portfolio can help to make it more diverse but can also make it more volatile.
Nick Greenwood
Fund Manager – MIGO Opportunities plc
ENDS
Notes to Editors:
This information is intended for journalists and media professionals only. It should not be relied upon by retail clients or investment professionals. The views provided are those of the author at the time of writing and do not constitute advice. These views are subject to change and do not necessarily reflect the views of Premier Miton Investors. The value of investments may fluctuate which will cause fund prices to fall as well as rise and investors may not get back the original amount invested.
Issued by Premier Portfolio Managers Limited which is registered in England no. 01235867, authorised and regulated by the Financial Conduct Authority and a member of the ‘Premier Miton Investors’ marketing group and a subsidiary of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE.
Intelligent Ultrasound (LON: IUG) shares jumped 62.1% to 11.75p ahead of full year results on 20 April. A trading statement has already flagged a one-third increase in revenues to £10.1m, helped by strong UK sales. AI-related revenues are low but growing rapidly. This is the highest the share price has been for six months.
Chain and transmission equipment manufacturer Renold (LON: RNO) made a much higher profit in the year to March 2023 than was forecast. Like-for-like growth in revenues was 13% and there was a strong fourth quarter. Efficiency improvements helped to improve margins. Earnings per share have been upgraded by one-fifth to 5.8p. Net debt is lower than expected at £29.8m. The order book is worth £99.5m. The 2023-24 profit forecast has been edged up, but it is still lower than the 2022-23 figure – partly due to higher interest charges. The share price has jumped 14.1% to 28.4p, which is a prospective 2023-24 multiple of six.
Sabien Technology (LON: SNT) set up b.grn with Parris Group to develop waste plastic recycling sites in the UK. A memorandum of understanding has been signed with South Korean companies that will provide a recycling project cluster plan for an oil recycling plant in the Midlands. The share price has risen 11.3% to 17.25p.
Surface Transforms (LON: SCE) more than doubled its 2022 revenues, but the loss increased from £4.3m to £5.9m. The brake disc technology developer has an order book worth £290m. Technical issues have been solved and capacity is being added. A move into profitability is expected in the second quarter of 2023 and this year’s revenues are forecast to more than treble to £16.2m – a small full year pre-tax loss is still expected. The share price is 9.23% higher at 35.5p, although it has fallen back later in the morning.
Environmental and life sciences technology company DeepVerge (LON: DVRG) says that revenues have been incorrectly recognised. That means that the 2022 figure will be 45%-50% lower than the £17.2m previously flagged. Some of the expected revenues have been delayed while others will not be recognised. The order book is more than £10m and this will be recognised in 2023 and 2024. There is £1m in the bank and more funding will be required. The share price dived 43.1% to 0.825p, which is a new low.
Fashion retailer Quiz (LON: QUIZ) grew revenues by 17% to £91.7m with the fastest growth in UK stores and concessions. A pre-tax profit of at least £2m is estimated. Management is cautious about consumer spending and says that there is limited visibility for this year. Net cash was £6.2m at the end of March 2023. Even so, the share price fell 14.6% to 13.2p.
Tekcapital (LON: TEK) is raising £2m at 15p a share to invest in its portfolio companies, including MicroSalt, which is soon to float on AIM. There will be £1m spent on inventory for MicroSalt so that orders can be fulfilled. A further £500,000 will be invested in a facility for autonomous vehicle technology developer Guident. The share price declined by 10% to 15.75p.
Omega Diagnostics (LON: ODX) says revenues are in line with expectations, but the EBITDA loss will be double previous estimates at £2m. Production problems have led to the higher loss. There was £5m in the bank at the end of March 2023. Mediation with the UK government over a potential £2.5m pre-production payment is likely to commence in late April. The share price is 8.62% lower at 2.65p.
The Harland & Wolff Group Holdings (LON:HARL), which owns the Islandmagee gas storage project in County Antrim in Northern Ireland, has just issued the findings of a report into the development of its important project.
The company believes that the study and the Report’s findings takes it one step further in future-proofing the project and preparing it for the transition from a natural gas to a hydrogen-led economy.
In due course, it is expected to provide 25% of the UK’s natural gas storage capacity.
The pioneering facility is a low-cost fast cycle operation aimed at providing safe, secure and flexible gas storage that will serve the island of Ireland and mainland UK.
It plans to create up to seven salt caverns, which when fully developed the facility will be capable of storing up to a total of up to 500m cubic metres of gas in Permian salt beds approximately 1,500 metres below Larne Lough.
Storage caverns will be developed in a natural salt structure below the seabed and will enable gas to be delivered, stored and then returned to the UK’s national transmission system.
The Islandmagee facility will support the growing demand for gas-fired power development and renewable energy generation throughout the UK and the Irish Republic.
The project would provide security of supply during peak demand for up to 14 days
Continuation of good group news
The good news keeps on coming from this group.
It recently announced a positive Business Update and Management Outlook for this current year and into 2024.
Its order backlog of over £900m covers contracts over the next seven years, while its new order pipeline is swelling with prospects of over £3.6bn in the next five years.
Apart from owning Islandmagee, 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.
Analyst Opinion – looking for trebled sales this year and reduced losses
Analyst Peter Renton at the group’s NOMAD and Joint Broker Cenkos Securities has a Buy recommendation out on the company’s shares.
His estimates for the current year to end December look for a 350% rise in group revenues to £100m but he then goes for a 2024 doubling of that figure to £200m.
On the basis of those figures, he looks for a pre-tax loss this year of £34.1m falling to £20.0m next year.
Conclusion – share price to double
The group’s shares at just 15.5p, up 2% on today’s news, look to be very capable of doubling in price in the next year or so.
Of course, this is only a personal view, and not investing advice. The high-risk notice is made for a reason. They’re speculative and volatile but come with the chance of exceptional returns for patient investors.
3. Greatland Gold (LON: GGP)
GGP shares have fallen significantly over the past year, but the gold explorer could be one of the best small-cap opportunities by dint of its 30% ownership of the world-class Havieron Project in Western Australia.
The other 70% is owned by mining titan Newcrest, who also owns the nearby Telfer gold mine and associated processing plant. The plan for some time has been to develop Havieron using Telfer’s infrastructure.
However, a spanner has recently been thrown into the works. Newmont has approached Newcrest with an improved offer $19.5 billion merger offer, which would create the world’s largest gold miner by some margin. Given the cost synergies, the companies’ shared history, and rudderless Newcrest leadership, I think this will now go through.
The implications for GGP are stark — they might be about to be in partnership with the world’s gold titan, though they may also look for a way to buy out the remaining 30% of the $1.2 billion project and also negotiate access to Telfer.
Regardless, a Newmont-Newcrest tie-up could act as a near-term price catalyst.
4. Premier African Minerals (LON: PREM)
PREM has been one of the best FTSE AIM performers in recent years, with its share price rising from lows of 0.02p less than four years ago to over 1p today — yielding a market cap over £220 million.
The Zimbabwe-based miner is the 100% owner of the Zulu Lithium Project, which is widely regarded as one of the largest undeveloped lithium reserves in the world. And it’s just cleared up the last couple of hiccups before production — including a missing reagent and government approval.
CEO George Roach has already noted that ‘with plant commissioning already complete, we are now going through the final stages of process control implementation with the plant designers with first concentrate expected shortly and first shipments now targeted for the end of the month.’
With investor Canmax holding circa 13% of shares and rights to 50% of offtake — and Chinese titans investing heavily in the country — investors are feverishly considering the prospect of a full buyout at a high premium.
If not, first sales could be enough by itself to catalyse the share price higher — though I’d caution that there are nearly always small problems when a plant first switches on.
5. Avacta (LON: AVCT)
Avacta is currently proceeding with clinical trials of its flagship AVA6000 — which it hopes will deliver ‘chemotherapy without the side effects.’
The company recently announced that the first patient of the fifth cohort of the flagship AVA6000 Phase 1a Dose Escalation Study has been dosed with the treatment in the UK — this first in-human phase I trial includes MHRA approval for higher dosages — at a level of 250mg/m2. The idea is to find out the maximum tolerable dose for further clinical trials.
CEO Alastair Smith notes that ‘the recent confirmation of release of active chemotherapy in the tumour tissue and the safety data being generated in the ALS-6000-101 study are providing detailed insights.’
The company has also opened two US Clinical Investigator Sites for AVA6000 Phase 1, one at the Memorial Sloan Kettering Cancer Center and the second at the Fred Hutch Cancer Center. Enrolment for soft tissue sarcoma patients has begun, with trials led by globally renowned oncologists Dr William Tap and Dr Lee Cramer.
Avacta has hinted that phase 1B may be conducted initially across the pond, claiming that stateside is ‘uniquely positioned’ for further research. CDO Neil Bell has highlighted the recent ‘major milestone,’ and plans to ‘build the clinical evidence base for the safety and tolerability of AVA6000.’
Further clinical success could see the share price rocket — and a buyout or US listing — could come at any time.
This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investing decisions made using the information provided.
Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
UK intellectual property investment group Tekcapital has secured additional funding to accelerate growth at their portfolio companies.
Tekcapital raised £2m by way of a placing at 15p per share. The funds will be allocated primarily to the growth of MicroSalt and Guident, with £1m designated to MicroSalt inventory.
“We are pleased to announce this oversubscribed offering to facilitate the further significant progress of our portfolio companies,” said Clifford M. Gross PHD., Executive Chairman of Tekcapital plc.
Tekcapital said MicroSalt were preparing for ‘significant forthcoming orders,’ suggesting the capital is required to build out inventories to meet demand.
MicroSalt has recorded several commercial achievements, including their SaltMe crisps being available in over 2,000 Kroger stores and inking deals with food manufacturers.
Having appointed Zeus Capital as their NOMAD late last year, investors will eagerly await further MicroSalt commercial updates, and this morning’s developments suggest momentum is gathering.
Guident will receive a £500k share of the funding raised to develop their Remote Control Monitoring Centre further and conduct additional testing of their regenerative shock absorbers for clients.
