Tekcapital Investor Presentation December 2022
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Tekcapital creates value from investing in new, university-developed discoveries that can enhance people’s lives and provides a range of technology transfer services to help organisations evaluate and commercialise new technologies. Tekcapital is quoted on the AIM market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in the UK.
Power Metal Resources Investor Presentation December 2022.
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Power Metal Resources plc (LON:POW) is an AIM listed metals exploration company which finances and manages global resource projects and is seeking large scale metal discoveries.
The Company has a principal focus on opportunities offering district scale potential across a global portfolio including precious, base and strategic metal exploration in North America, Africa and Australia.
Project interests range from early-stage greenfield exploration to later-stage prospects currently subject to drill programmes.
Motor dealer Vertu Motors (LON: VTU) has announced the proposed acquisition of Helston Garages Group Ltd for £117m. This deal will be significantly earnings enhancing.
Helston Garages is based in the south west of England and it has 28 outlets. This takes the group into Volvo and Ferrari for the first time and boosts the exposure to upmarket marques. Helston Garages had already offloaded ten outlets – predominantly VW sites – prior to the purchase deal with Vertu Motors.
AIM-quoted Vertu Motors’ exposure in the south west of England will be much more significant. The purchase includes £66.7m of freehold property. Nearly all the outlets will be rebranded as Bristol Street Motors or Vertu. There is a limited amount of capital spending required on the outlets.
In 2021, the acquired businesses generated pre-tax profit of £17.9m on revenues of £489m. That is a particularly strong trading period for motor dealers and like Vertu Motors profit will have declined since then.
The deal is debt financed, although excluding car loans, there should be net cash by February 2023. FCA approval is required so there will be little or no contribution from the acquisition this year.
Zeus has increased its 2023-24 earnings per share forecast by 18.7% and by 24.7% for the following year when £3.2m of cost savings should be achieved. At 54.9p, up 6.5p on the day, the shares are trading on six times 2023-24 earnings, falling to just over five the following year. The share price is still well below the August 2022 net tangible assets of 71.2p a share, which will be slightly lower after this deal.
British American Tobacco are fighting off falling combustible volumes by taking big strides forward in their new categories units which includes vapes and other no-tobacco products.
The FTSE 100 stalwart said revenues for FY 2022 would increase 2% to 4% on a constant currency basis, despite the global tobacco industry contracting 2%.
The increase in revenue pays testament to the ‘A Better Tomorrow TM‘ transformation strategy that has positioned the company for increased use of less harmful nicotine products.
Analysts have highlighted British American Tobacco’s ‘resilience’ as the company enjoys a dominant market share in new categories with their brands including Velo, Vuse and glo.
“British American Tobacco is again proving its resilience, with strong pricing and a pivot to new products driving revenue growth, even as cigarette volumes fall,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.
“It’s also managing to eek out underlying profit growth. Outside of the United States volumes are holding up, but across the pond a prolonged period of inflation is starting to impact consumer behaviour, with early signs of accelerated downtrading in the industry in the second half of the year.
“BATS will be upping its marketing efforts here but it’s too early to say if it can slow this trend. But BATS is well spread across global markets and remains highly cash generative, all of which is supportive of a forward dividend yield of over 7%”.
Clean water technology developer MyCelx Technologies Corp (LON: MYX) says 2022 trading is in line with expectations even though project award times proved challenging. A paid trial has been completed in the US and other work is underway in Saudi Arabia. This should underpin the current forecast for 2023. The estimated $4.7m loss for 2022 is expected to fall to $1.5m in 2023 before possible breakeven in 2024. The share price jumped by 18% to 23p.
Executive chairman Rupert Labrum acquired 750,000 Primorus Investments (LON: PRIM) shares at 2.943p each, taking his stake to 22.35%. The share price rose 6.78% to 3.15p.
Purplebricks (LON: PURP) recovered % to p following its interim figures. Marketing spend was reduced but the estate agency still lost money. There was a £12m cash outflow in the six months to October 2022, leaving £31.3m in the bank, which is similar to the market capitalisation. A full year loss is expected, but the cash outflow should be stemmed in the following year. The share price rose 2.67% to 10.245p, having been 10.5p earlier in the day.
Acquisitions provided momentum for managed services provider Redcentric (LON: RCN) in the first half with a full contribution to come in the second half. Interim revenues were 39% higher at £61.5m with recurring revenues contribution 91.7% of the figure. The reported profit was boosted by a £9.69m gain on assets bought for less than book value, although this was offset by £4.66m of exceptional costs. Underlying interim pre-tax profit fell from £7.27m to £3.52m. The share price is 4.64% ahead at 112.75p.
A reservoir modelling report from Schlumberger commissioned by Pantheon Resources (LON: PANR) reported oil in place estimates for Alkaid, Theta West and Talitha in Alaska of 1.67 billion barrels, 10.9 billion barrels and 5.26 billion barrels respectively. This is lower than the company’s previous estimates. The share price fell 12.2% to 85.15p.
Audio equipment supplier Focusrite (LON: TUNE) edged up full year revenues thanks to positive currency movements, which was impressive given the Covid lockdown boost to demand in the previous year, but underlying pre-tax profit fell from £40.7m to £33.8m. Higher costs put pressure on margins. Asia Pacific was a particularly strong market last year. The total dividend was higher than expected at 6.1p a share. There was a positive start to the new financial year, although Focusrite will do well to maintain its profit this year. The shares are 9.77% lower at 785p.
Allergy Therapeutics (LON: AGY) is trying to conserve cash after production was paused at its Worthing factory to improve production quality. Funding options are being reviewed. The peanut allergy trial has commenced. The share price declined by 9.43% to 12p.
Cyber security services provider Falanx (LON: FLX) reported flat core services interim revenues of £1.8m in the first half, having shed unprofitable work. The loss increased, but the additional investment in the business is paying off with new orders being won. The share price dipped 8% to 0.575p.
Late on Wednesday, video platform SEEEN (LON: SEEN) announced a £2.6m placing and a £500,000 one-for-six open offer at 6p a share. The share price fell 7.14% to 6.5p. The nominal value of the shares has to be reduced to 0.1p each so that the share issued can happen. Allenby has been appointed as nominated adviser and joint broker. The cash will be invested in sale and marketing to secure higher margin revenues (£1.2m), plus technology development (£1m).
Ex-dividends
Alpha Financial Markets Consulting (LON: AFM) is paying an interim dividend of 3.7p a share and the share price rose 2.5p to 467.5p.
James Cropper (LON: CRPR) is paying an interim dividend of 2p a share and the share price is unchanged at 875p.
D4T4 Solutions (LON: D4T4) is paying an interim dividend of 0.88p a share and the share price is 2.5p lower at 238p.
First Property (LON: FPO) is paying an interim dividend of 0.25p a share and the share price is unchanged at 24.8p.
Cadence Minerals flagship asset, the Amapa iron ore project in Brazil, is moving towards key milestones in its development.
The Amapa iron ore project was previously valued at $660 million by mining giant Anglo American. Cadence Minerals has a 27% stake in the project and first right of refusal to increase their stake to 49%.
In October this year, Cadence released a mineral resource upgrade that predicts the project will have a mine life of 15 years. The resource was upgraded to Measured and Indicated Resource of 229.48 Mt at 38.76% Fe, up from 176.7 Mt at 39.75% Fe. There was a step change in the Inferred Mineral Resource which increased to 46.76 Mt at 36.20% Fe, up from 8.7Mt at 36.9% Fe.
The resource encompasses mineralisation that extends around 6.5km in length and 1.5km in width. The mineralisation is encountered at depths of 100m in some places.
“The results clearly indicate the robustness and consistency of the Amapá resource,” said Cadence Minerals CEO Kiran Morzaria when the results were released.
The upgraded resource will be instrumental in the pre-feasibility study (PFS) which is currently ongoing. The PFS is a crucial step in moving Amapa towards production and cashflows to support shareholder value creation.
Pre-feasibility studies typically provide an indication of mining costs and production levels and are highly anticipated by investors. Amapa’s PFS and any subsequent definitive feasibility study (DFS) will attach a Net Present Value to the project based on Ore Reserves and other factors specific to the project.
A PFS and DFS will confirm the economics of a project and can attract larger scale investors to mining projects to provide funding for the final stages of development before production.
These events are now on Amapa’s horizon.
Baron Oil shares have faded a sharp rally in October as the stock consolidates ahead of what could potentially be game changing news for the junior gas explorer.
The AIM-listed firm are evaluating the Chuditch PSC located around 185km south of Timor-Leste in close proximity of the Bayu-Undan field which feeds the Darwin LNF facility in Australia. The Bay-Undan field is set to stop producing later this year.
Baron Oil are awaiting a competent persons report (CPR) on the Chuditch prospect which investors will hope supports Baron’s in-house assessment.
The company have reevaluated the prospect and found gas reserves could be significantly higher than previously thought.
Baron’s preliminary interpretation of the Chuditch PSC reprocessed 3D seismic data suggested gas reserves attributable to Baron Oil could be as high as 4,125 BCF, up from 2,924 BCF in a prior study.
However, a third party will be required to validate in-house findings and the wait for confirmation of the reserves has proved too much for some investors who have booked profits and sent shares back to 0.14p. Baron had hit closing highs of 0.29p in October.
Baron Oil has engaged consultancy group ERCE to complete the CPR which will include a reserve estimate. Should ERCE’s finding corroborate Baron’s own assessment, the reaction in shares could be monumental.
That said, a disappointing result will likely see the shares suffer significantly.
Baron Oil shares were trading at 0.14p at the time of writing.
The Trading Update from this £208m capitalised UK housing solutions provider was a cheerful start to seasonal proceedings.
The group, which is responsible for maintenance on around 10% of the UK’s social housing stock, has enjoyed a stronger than expected second half of its current trading year.
In fact, it has come in with guidance to the market that both revenues and profits will be higher than anticipated.
Mears Group (LON:MER), which employs over 5,500 people, provides a range of outsourced services to the public and private sectors in the UK.
It offers rapid-response and planned maintenance services to local authorities; gas and repair services; and maintenance and repairs, capital works, energy investment, and regeneration solutions for public buildings, as well as grounds maintenance services.
The Gloucester-based company also provides housing management services, which include supply of affordable homes to public and private sectors, emergency and temporary accommodation services, affordable housing services, housing with care services, and housing services to government departments.
In addition, it offers house building services; and facilities management services to the public and private sectors, including defence estates, education, healthcare, public buildings, and commercial office accommodation.
Excellent final half-year
In this second half of its trading year to the end of this month, the Group has continued to experience strong trading.
It now expects that it will deliver revenues of around £950m and adjusted profit before tax of about £33.5m, both above the current range of recently upgraded market expectations by another 3-5%.
It is apparent that the better-than-expected trading performance has been driven by the continued elevated volumes within the Group’s Management-led contracts.
Average daily net cash for the 11 months to 30 November 2022 of c.£40m is also ahead of previous guidance.
Consensus estimates had previously suggested revenues of £914m (£878m), pre-tax profits of £31.9m (£25.6m), with earnings of 22p (18.2p) and paying a 25% increased dividend of 10p (8p) per share.
CEO David Miles stated that:
“I am delighted with the strong financial performance of the Group and the business remains firmly on track to deliver revenues and profit before tax for the full financial year above our previous guidance. Our market leading position, based on a clear strategy and resilient operating platform, is underpinning current momentum and positions the Group for further sustainable growth in the medium-term.
Outlook for 2023
The Group’s Management is confident in its outlook for 2023 and is focused on continuing to improve the operating margin and delivering strong cash generation.
Conclusion – shares are far too cheap on 9 times pe
Mears Group shares, which rose 5% on the Update news, have very strong investment appeal and are on too cheap a rating for such balance sheet strength, the size of its order book and its profit potential.
Trading at 196p the shares are on less than 9 times current year earnings.
Major shareholder MS Galleon has put forward three votes for the forthcoming AGM of tiles retailer Topps Tiles (LON: TPT) through a requisition notice.
It wants to remove chairman Darren Shapland and have Lidia Wolfinger and Michael Bartusiak appointed as non-executive directors. The Topps Tiles board recommends voting against the resolutions.
MS Galleon owns 29.9% of Topps Tiles and it owns Cersanit, which is a major European tiles producer. It started building up a significant stake in May 2020 and it reached 20% that November.
Cersanit was a minor supplier to Topps Tiles – 0.5% of cost of sales in 202-21 – but it wanted to become a much more significant supplier. It also wanted board representation. The board believes that the flexibility of sourcing is important to competitiveness. No more than 10% of products are bought from a single supplier. Cersanit wants to supply 29.9% of products.
Shareholders owning 39.1% of the share capital say that they will vote against the resolutions.
Results
In the 52 weeks to 1 October 2022, revenues improved from £228m to £247.2m, costs increased but pre-tax profit improved from £15m to £15.6m. The total dividend was increased from 3.1p a share to 3.6p a share. Net cash is £16.2m.
So far this year, like-for-like sales growth is running at 3.4%. The Parkland commercial tiles brand could move into profit this year.
At 46p, down 3.8p, Topps Tiles is valued at £90.5m.
