AB Foods released an upbeat fourth quarter trading update on Tuesday pointing to growth across their food business and robust Primark sales.

AB Foods shares have staged a material rally over the past year and are almost 50% higher over the past 52 weeks. Today’s announcement validates this rally.

Primark reported strong like-for-like sales growth of 8% in the fourth quarter, driving its overall outlook higher than previously expected. The fashion retailer, owned by Associated British Foods, said it now expects full-year sales to be around 15% ahead of last year with 9% like-for-like growth.

Despite challenging weather in the UK and Europe, Primark’s fourth quarter sales in the UK rose 8% with 7% like-for-like growth. Sales in Europe excluding the UK jumped 18% with 9% like-for-like growth.

Parent company ABF said it now expects Primark’s full-year adjusted operating profit margin to be around 8%, higher than previously thought. It attributed the better margin to strong sales growth and carefully selected price increases that helped recover high inflationary input costs.

In food, AB Foods said its grocery division is expected to see significantly higher full-year adjusted operating profit compared to last year. The company’s sugar business also performed slightly better than expected in the fourth quarter. ABF said it now expects full-year adjusted operating profit for sugar to be modestly above last year.

ABF also pointed to Primark’s overseas store expansion, digital development and celebrity collaborations as driving the fashion retailer’s sales growth. It opened 8 new Primark stores in the fourth quarter and expanded its click-and-collect service.

“Not all retailers are made equal. Primark expects to report a 15% increase in sales for the full year, largely driven by price increases,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“The group’s savvy model means that starting with bargain prices allows more room to pump up price tags before putting consumers off in this very tough economic climate.

“The cost-of-living crisis hasn’t stopped customers from flocking to new stores either, which is a direct contradiction of the fortunes of many other large physical retailers who are closing their doors – not opening new ones. For all this to be possible Primark has to have a laser-like focus on its ranges and make sure it’s offering precisely what people want – there is no room for wasted hanger space. This seems to be being executed near perfectly, and is also being supported by Primark’s digital pivot.”

AB Foods shares were 0.8% to the good at the time of writing on Tuesday.

The FTSE 100 was supported by stronger miners on Monday after Chinese economic data boosted natural resources. Melrose was again the biggest faller after RBC analysts cut the stock to ‘underperform’.

Miners were due a rebound and the catalyst came from Chinese inflation data which showed consumer prices moved out of deflation in August.

Fresnillo was the FTSE 100’s top riser gaining 6%. Antofagasta rose 3.9% and Rio Tinto added 3.6%.

The FTSE 100 was dead flat at the time of writing after early gains faded.

“The FTSE 100 was firmly on the front foot on Monday, with the miners doing the heavy lifting as consumer prices in China edged into positive territory,” says AJ Bell investment director Russ Mould.

“The reading, which emerged over the weekend, implies an improvement in the commodities demand picture and in turn provides a boost to the resources sector.

“US inflation numbers and the latest decision from the European Central Bank dominate the agenda over the remainder of the week, before the Bank of England and Federal Reserve take centre stage next week. This could be a defining period for stocks as we get some clarity on whether the rate hiking cycle is truly at or near its end or if there is more work to do in the battle against inflation.”

There was little evidence of major positioning in UK stocks on Monday as volatility remained low. That said, as the week progresses and more traders return to their desks after the summer holidays, one would expect sharper moves in stocks.

The US will release CPI data this Wednesday. This singular data point has the potential to spark a move in markets this week as investors react to interest rate expectations.

The Federal Reserve is expected to pause rate hikes this month and markets have priced this in accordingly. If we should see a stronger-than-expected CPI print on Wednesday it could be followed by disruption in global equity markets.

“The US is still in a hot air balloon scenario with strong demand in the economy risking keeping inflation elevated. With the number of Americans applying for unemployment benefits unexpectedly falling to the lowest level in 7 months , it’s adding to expectations that the Fed could raise rates again later this year after another pause this month,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

Cadence Minerals shares rose on Monday amid optimism that their flagship Amapá Project would recommence production in a shorter time frame than previously expected.

Cadence Minerals has significantly shortened the expected licensing timeline for its flagship Amapá Iron Ore Project in Brazil. Licenses for the mine, railway and port are now expected within 12 to 16 months, down from the previously estimated 36 months.

The Amapá Project previously produced 6 million tonnes of iron ore per year and Cadence is working to secure Installation Licenses in 2024, followed by Operational Licenses once construction finishes.

The accelerated timeline resulted from discussions between the Amapá Project team and Brazilian environmental regulators as regulators allowed the project to submit more streamlined environmental plans rather than a full study.

Additionally, risk levels at the Amapá tailings storage facility have dropped thanks to ongoing maintenance and monitoring since 2019. While Cadence didn’t comment on timelines for revenue generation from the tailings, one would think the improvement in the risk rating brings this date forward.

Further licensing progress is expected in Q2 2024 when the project submits environmental reports for the mine, railway and port.

CEO Kiran Morzaria commented: 

“We are delighted with the progress we saw first-hand in our recent visit to Amapá. Agreeing a shortened route to the operational licence is key to getting the Amapá Project back into production in the shortest time possible.”

Cadence Minerals shares were 3% higher at the time of writing on Monday.

Barkby Group (LON: BARK) is considering the sale of sleep technology business Cambridge Sleep Sciences, which is set to generate revenues of more than £10m from licensing deals over the next three years. Management first said it intended to sell non-core investments back in July 2022 and the progress made by the company makes this a good time to seek offers. The share price jumped 166.7% to 8p. That is the highest it has been since the beginning of the year.

LungLife AI (LON: LLAI) chief executive Paul Pagano and finance director David Anderson each bought 7,123 shares at 69.84p each on 14 August. This helps to explain the share price rise in the middle of August. There was a further 18.1% rise to 117.5p.  

Bushveld Minerals (LON: BMN) has signed a binding term sheet for a potential $69.5m-$77.5m investment by Southern Point Resources. This includes the acquisition of 50% of Vanchem and 64% of the Mokopane project, plus a $12.5m investment in Bushveld Minerals. There will also be a working capital facility provided. Southern Point Resources will take over marketing and sales of vanadium and other products. The stake disposals will lead to a book loss of $59.6m. The share price increased 13.6% to 2.3p.

Seed Innovations (LON: SEED) has sold 56.4% of Avextra, formerly Eurox, for around €2.9m (£2.45m), while maintaining a 3% shareholding. This represents a 62% return on the original investment. This takes cash to £4.6m with a further £2.5m coming in from the disposal of Leap Gaming. That means that there will be more cash than the market capitalisation. This is available for further investments, including short-term ones. The share price is 16.7% higher at 2.8p, valuing the company at £6m.

FALLERS

US-focused betting company Sportech (LON: SPO) plans to leave AIM and this knocked the share price by 43.2% leaving it at 55p. It says the burden of time and money is too great. A circular will be sent out to gain shareholder approval at a general meeting.

Beacon Energy (LON: BCE) confirmed that the Schwarzbach-2 well in Germany has encountered an excellent oil-bearing reservoir. The well could materially increase the company’s reserves and production by up to and ahead of the previous high case of 5.8mmbls. The well could generate $1.5m/month at $80/barrel. There are technical challenges, though. The share price slipped 26.9% to 0.1975p. That is still above the suspension price and much higher than the level when trading in the shares recommenced in April.

Delays in the construction of the CoalSwitch facility at Ashland, Maine has hit the Active Energy (LON: AEG) share price. Components and equipment are yet to be delivered and the facility is not going to be up and running until November. The share price fell 14.4% to 4.75p.

Litigation funder Burford Capital (LON: BUR) has lost some of the gains it made late on Friday after the release of a positive New York court judgment in connection with Petersen and Eton Park against the Republic of Argentina and YPF. The estimated award is at the higher end of expectations. Burford Capital has been funding this case since 2015. Shareholders were not compensated for the takeover of YPF by a tender offer as was required. It is estimated that Petersen should have been paid $7.5bn and Eton Park $900m with interest adding $6.8bn and $815m to the respective totals. Burford Capital is entitled to 35% of the Petersen net proceeds and 73% of the Eton Park payment. This means that the Petersen case could earn $5bn and Eton Park $1.25bn. The carrying value of these cases was $1.52bn at the end of March 2023. The share price dipped 7.15% to 1247p, but it is still above the level prior to the announcement.

Beacon Energy shares were down heavily on Monday after announcing delays to their German Schwarzbach-2 drill programme.

Beacon Energy announced an update on its Schwarzbach-2(2.) well in Germany, revealing delays in the works on the well that has previously encountered ‘excellent’ oil-bearing reservoirs.

Beacon Energy previously announced drilling found a 34-metre gross interval containing 28 metres of net oil-bearing reservoirs in the Pechelbronner-Schichten (PBS) sandstones. These were encountered 25 metres higher and 10 metres thicker than expected, with porosities averaging 18% in the Lower PBS and 21% in the Upper PBS. No water-bearing sands were found in the 42-metre hydrocarbon column.

According to Beacon, the positive reservoir properties indicate the well could achieve an initial production rate above 900 barrels of oil per day. Higher rates have been achieved on historic wells nearby.

However, the company revealed delays in the program on Monday. Following perforation and acidisation, reservoir clean-up commenced but has produced a mixture of oil, gas and drilling fluids. The drilling rig must now be released before clean-up is complete.

Beacon said commercial production is still expected using a rod pump with capacity for 250 barrels per day. An electrical submersible pump with higher capacity could be installed later. The rod pump is slated for installation in October, after further clean-up into the wellbore.

The company said it will start to work immediately to quantify expected reserve and resource increases thanks to the well results. Development plans will also be updated to maximise the value of the asset.

“The SCHB2(2.) well has been a challenging well from an operational perspective, with hole stability issues encountered in the initial and sidetracked hole sections, however, it has encountered an excellent oil-bearing reservoir with thickness and properties that are far in excess of pre-drill prognosis,” said Beacon Energy Chief Executive Officer, Larry Bottomley.

“The data we have gathered during the drilling of the SCHB2(2.) well indicates the potential for substantial reserve and production upside for the Stockstadt Mitte segment – up to and potentially more than the High Case (5.8 mmbbls) outlined in the Company’s December 2022 CPR which clearly bodes well for the long-term value we believe we can realise from the asset.

“We believe this well has the potential to deliver at very high rates and establishing these flowrates through clean-up of the wellbore, and eventual installation of an ESP is now our top priority although we won’t be able to provide definitive guidance on production expectations until we have completed the clean-up and artificial lift solutions. At flow rates of 900 bopd, the Company would expect to deliver operating cash flows in excess of US$1.5 million per month (assuming $80/bbl Brent).”

Beacon Energy shares were down 22% at the time of writing.

Vustry shares jumped on Monday after announcing a shift in strategy to focus on affordable housing through their partnership model and reiterated their profit guidance.

Vistry shares surged over 15% in early trade on Monday as the group reiterated its guidance for adjusted pretax profit to exceed £450 million in 2023.

Vistry Group said it continues to see good demand for affordable mixed-tenure housing from local authorities, registered providers and PRS providers. Open market private sales have slowed further since June, partly due to the summer period but also further mortgage cost increases.

The company highlighted strong demand from first-time buyers for shared ownership delivered through its partnership model and direct grant funding. Vistry continues to expect fully offsetting cost increases for the full year after synergy benefits. With the decline in industry output, it sees opportunity to work with supply partners to deliver overall lower build costs going forward.

Vistry’s partnerships business has a £3.0 billion forward order book with 90% mixed tenure units. Its housebuilding order book totals £1.3 billion with 87% of forecast 2023 units secured. Both divisions continue securing transactions with local authorities and registered providers to deliver 2023 forecasts and increase affordable housing supply, utilising Homes England funding.

“Vistry’s overall performance was impressive given the challenging environment for UK housebuilders, and the group’s announced a big strategy change today. Vistry’s set to shift its operations to focus solely on the more defensive, high-return Partnerships business, which focuses on affordable housing. This means Housebuilding will be fully merged into Partnerships by the end of the second half, freeing up capital to strengthen the balance sheet and help fund shareholder returns as well as the continued growth of the Partnerships division,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

“It’s fair to say the Housebuilding division’s been stuttering lately. Recent interest rate rises have reduced affordability for buyers, causing private sales rates to decline and completions to be wound lower as a result. That’s no surprise though, given housebuilding’s a notoriously cyclical sector. In contrast, Partnerships’ revenues tend to be more robust – the need for more affordable housing doesn’t go away because economic conditions look tough. This provides large fixed-volume projects which should hold up better in a downturn.

“Partnerships, which for the first time includes a contribution from the recently acquired Countryside, saw completions nearly treble to 3,203 in the first half. Cost-savings as a result of the acquisition are progressing well and helping to keep underlying pre-tax profit guidance for the full year intact, expected to be in excess of £450m.”

Tekcapital shares were higher after portfolio company Innovative Eyewear announced a fresh wave of innovation in their smart eyewear with advanced hinges that allow greater flexibility and durability.

Innovative Eyewear has developed a new patented innovation that will enhance the comfort and durability of their smart eyewear products. The company has filed a patent entitled Spring-loaded Hinges for Smartglasses that covers flexible spring hinges designed for use in most of their upcoming eyewear frames.

These proprietary flexible hinges will provide a number of benefits for consumers.

First, the spring hinges will improve comfort for users wearing the smartglasses for extended periods of time. By allowing the temples to flex, the hinges reduce pressure points that can cause discomfort.

Second, the flexible hinges enable each frame style to fit a wider range of head shapes and sizes. By adapting to the contour of the wearer’s head, the spring hinges will enable more consumers to achieve a customized, comfortable fit. Finally, the hinges are expected to increase durability of the eyewear by reducing stress on the temples that could lead to breakage over time

“The development of compact spring hinges for smart eyewear is another positive advent in our mission to build the global standard in the category. We believe this new component will improve the all-day comfort and durability of our eyewear,” said Harrison Gross, CEO of Innovative Eyewear.

“This latest innovation reinforces our brand promise to Upgrade your Eyewear®. This follows our previous innovations including the introduction of ChatGPT in smart eyewear, the launch of Vyrb, the first social audio app for smart eyewear, photochromic blue light lenses, an industry-leading 12-hour battery life, some of the world’s lightest smart eyewear frames including titanium front frames, and the first wireless dock charger for smart eyewear.

“We look forward to launching the new self-adjusting hinges, starting with our Lyte 2.0 XL collection debuting in October 2023, alongside additional unique designs, and product upgrades.”

Today’s news in the latest in a series of innovations announced by Tekcapital portfolio companies including MicroSalt’s baked goods patent filed last week.