Finding Opportunities in Volatility with Vietnam Holding

UK Investor Magazine
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Finding Opportunities in Volatility with Vietnam Holding

The UK Investor Magazine Podcast was delighted to welcome Craig Martin, Chairman of Dynam Capital, the manager of the Vietnam Holding Investment Trust.

Vietnam Holding was one of the best performing London-listed Investment Trusts in 2021. In 2022, Vietnam Holding outperformed the benchmark, but saw its share price fall in line with broad declines in Asian equities.

Craig outlines how the Vietnam Holding team reacted to this volatility and highlights specific sectors and companies they took the opportunity to add to the portfolio.

We discuss China and how Vietnam is benefiting from events over their northern border.

Find out more about Vietnam Holding on their website here.

Look at JP Morgan China Growth and Income for a Chinese equity recovery

UK Investor Magazine
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Look at JP Morgan China Growth and Income for a Chinese equity recovery

Like most China-focused Investment Trusts, the JP Morgan China Growth and Income Trust has had a torrid 2022.

A global tightening cycle that’s seen the highest interest rates since before the financial crisis, and persistent lockdowns in China has rocked the sector.

Mainland and Hong Kong-listed Chinese equities sank and many of London’s China mandated trusts hits the lowest levels for years.

A deterioration in sentiment around the world’s second largest economy saw Trust discounts expand and they now appear attractive. The depressed share prices of the trusts add to their appeal.

Indeed, there are four or five trusts with very similar underlying holdings that have performed in a similar way this year and would fit the bill for anyone looking for a recovery in Chinese stocks.

JP Morgan China Growth and Income stands out due to outperformance of the benchmark over the past three years and a 5.8% yield, which surpasses peers.

The trust trades at a circa 5% discount to NAV which is roughly in the middle of the range of the trust’s historical premium and discount.

JP Morgan China Growth and Income Trust’s portfolio is more heavily weighted to Tencent than peers and doesn’t have Alibaba in its top ten holdings.

Chinese reopening

A Chinese reopening will see a high level of correlation among China-focused Investment Trusts but should the much anticipated resumption of normal economic activities be delayed, the JP Morgan China Growth and Income dividend will pay investors a handsome dividend for the wait.

New Aquis admission: One Health surgery services

Andrew Hore
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New Aquis admission: One Health surgery services

One Health Group has been on the Apex segment of the Aquis Stock Exchange for eight trading days. The medical procedures provider has a good track record and there will be plenty of demand for its services as the NHS tries to reduce waiting lists.
The shares in the placing were sold by the One Health EBT trustee, raising £1.5m, with £50,000 of new money raised in subscription. There was already cash in the bank and the EBT will pay back money it owes to the company.
The flotation is to enhance the corporate profile and gain access to funding. The current share price is 172.5p (170p/175p), whic...

Equals grows business with larger corporates

Andrew Hore
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Equals grows business with larger corporates

International payments provider Equals Group (LON: EQLS) says full year results will be better than expected. Canaccord Genuity has increased its 2022 pre-tax profit forecast from £10.3m to £10.8m.

Revenues were £63.5m at the end of November 2022 and this is not far short of previous estimates for the full year. The fastest growth is coming from services to larger corporate clients.  

There should be no debt by the end of 2022. Cash in the bank is likely to be £17.9m at the end of 2022. Net current assets are forecast to be £12.1m. Investment in technology is continuing and there are earn-out payments that will become due over the next couple of years.

Roqqett

Last week, AIM-quoted Equals acquired open banking platform Roqqett for up to £2.25m, subject to regulatory approval by the FCA, with £1m upfront and the rest depending on R&D tax credit receipts and development milestones.

Roqqett has FCA authorisation to take payments and access data. This means clients can make and receive payments through mobile banking apps without the need for card details.

This deal expands the activities of Equals and the Roqqett service can be integrated into the FairFX online checkout and enhance the Equals Money service. There will also be additional data to monitor transactions. Roqqett is loss making, but it is expected to be earnings enhancing in the medium-term.

Pre-tax profit could improve to £15m in 2023. At 92p, the shares are trading on 13 times prospective 2023 earnings.

New standard listing: Dial Square Investments sporting plan

Andrew Hore
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New standard listing: Dial Square Investments sporting plan

Dial Square Investments is seeking to buy sports management businesses. This encompasses a number of different areas related to sport from owning teams to organising events and sponsorship.
The strategic advisory board includes First Artist boss Jon Smith. First Artist was one of the football agents that floated on AIM two decades ago when there was a fashion for these types of companies. He subsequently bought out the business and the shell became involved in theatre marketing and other related services.  
The cash raised will be used to provide working capital and finance the search for...

Premier Miton upgraded by Peel Hunt

Andrew Hore
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Premier Miton upgraded by Peel Hunt

Peel Hunt has upgraded its forecasts for AIM-quoted investment manager Premier Miton (LON: PMI). The dividend yield is particularly attractive.

There was a 24% decline in assets under management to £10.6bn in the year to September 2022. Since then, the assets under management have recovered to £11.3bn thanks to net positive inflows since September. Peel Hunt expects that level of assets under management by September 2023.

In the year to September 2022, revenues were £90.2m and pre-tax profit was £14.4m. The tough markets mean that revenues are expected to decline to £76.7m this year, while pre-tax profit would drop to £14.4m.

The higher than expected level of assets under management has prompted Peel Hunt to upgraded earnings per share by 2% for this year and 12% for 2023-24.

The unchanged 10p a share dividend is 72% covered by earnings, but the target is to pay between 50% and 65% of earnings. This year the dividend is unlikely to be covered. That is likely to limit the short-term upside with earnings unlikely to grow be enough over the next two or three years to get back to the target payout ratio.  

There could even be a reduction in the dividend, but Premier Miton management is keen to keep a significant dividend payment.

At 104.5p, the prospective multiple is just over 14 and the yield is 9.6%.

Boost for AG Barr

Andrew Hore
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Boost for AG Barr

Soft drinks maker AG Barr (LON: BAG) is acquiring Boost Drinks for an initial £20m with up to £12m more payable depending on performance over two years. This will be funded from the Irn-Bru company’s cash pile and will be earnings enhancing in the first full year.

The Boost brand was founded in 2001 and is in the functional drinks category, which includes energy and sports drinks. It has a strong position in independent retailers and AG Barr will help it to broaden is distribution.

Production and warehousing is outsourced. Boost will continue to be managed by the founder as a separate business. In 2021, Boost Drinks generated revenues of £42.1m and pre-tax profit of £1.9m.

In the year to January 2023, AG Barrr is expected to make a pre-tax profit of £43m on revenues of £306m. A full contribution from Boost Drinks in 2023-24 will add 3% to earnings per share.

The AG Barr share price is 6.5% higher at 538p. That means the shares are trading on 16 times prospective 2023-24 earnings.

AIM movers: Wentworth Resources bid and Fulcrum Utility runs short of cash

Andrew Hore
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AIM movers: Wentworth Resources bid and Fulcrum Utility runs short of cash

Etablissements Maurel & Prom is bidding 32.5p a share in cash for Wentworth Resources (LON: WEN), which values the Tanzania-focused gas producer at £61.7m. The share price rose 26.6% to 31.65p. The bidder is the majority owner and operator of the Mnazi Bay gas project, where Wentworth Resources owns 31.94%.

Petro Matad (LON: MATD) has gained access permission for exploration drilling on Block V in central Mongolia and the licence term has been extended. The development of the Heron-1 well continues and should be in production by the end of the year. Cash flow should finance further drilling. The share price jumped 16.2% to 2.15p.

Windar Photonics (LON: WPHO) non-exec director Paul Hodges bought 55,000 shares at 23p a share. The share price has recovered since trading recommenced after results releases were up to date. The share price further improved by 14.3% to 24p.

Faron Pharmaceuticals (LON: FARN) has published a BEXMAB study update. The phase I/II study is for a combination of bexmarilimab in combination with standard of care in multiple haematological malignancies. An azacytidine-refractory acute myeloid leukemia (AML) patient achieved a complete remission. A second patient treatment shows signs of efficacy, and the remaining patients are stable. The treatment is well-tolerated. The share price improved by 11.5% to 315p.

Utility infrastructure provider Fulcrum Utility Services (LON: FCRM) is raising up to £6m in loans from significant shareholders Bayford & Co and Harwood Capital. The annual interest rate is 20% and the loans can be convertible from April 2023. There is a 20% fee for early repayment and an non-utilisation fee of 6%. If the loan is converted into shares, then other investors will have an opportunity to buy shares at the conversion price. Last week, Fulcrum Utility Services received £1.5m from asset sales. The share price dived 39.7% to 2.05p. The recovery of the business is proving a long-term process.

Digital health technology developer Induction Healthcare (LON: INHC) has reported interims following last week’s 2021-22 results announcement. Revenues were 54% ahead at £7.1m. Annualised recurring revenues are £14.5m. There was £9m in cash at the end of September 2022. There have been delays in in implementation and they may not be completed until the next financial year. This knocked 21% off the share price leaving it at 24.5p.

Professional service provider RBG Holdings (LON: RBGP) litigation funding subsidiary LionFish has lost two cases it invested in. There will be a non-cash write-down of £4m. There is still £3.3m of exposure to cases and management is trying to reduce ongoing exposure. The core business performed strongly, and it will exceed expectations this year even though corporate finance deals have been delayed. Underlying EBITDA will be between £11m and £12m in 2022. The share price fell 20.4% to 66.5p.

OptiBiotix Health (LON: OPTI) has raised £500,000 at 16p a share to invest in its direct-to-consumer products and US expansion. The share price of the microbiome-based products developer slumped 19.2% to 15.75p. Peterhouse has been reappointed as joint broker.

Aquis weekly movers: Invinity Energy Systems’ largest order

Andrew Hore
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Aquis weekly movers: Invinity Energy Systems’ largest order

Invinity Energy Systems (LON: IES) has sold 15MWh of vanadium flow batteries to Everdura Technology in Taiwan. A deposit will be paid soon, and the first deliveries will be late in 2023. This is the largest ever single order and there is follow-on potential of 255MWh over three years and it will help to underpin 2023 forecast revenues of £23.7m. The share price jumped 56.5% to 36p

Hydrogen Utopia International (LON: HUI) has entered an agreement with Fishertown Property for a proposed lease of a 2.5 acre site in County Longford. This will become its first full scale waste plastic to hydrogen in Europe. A €50,000 payment has been made and an option for the site is being negotiated.

One Health Group (LON: OHGR) joined the Apex segment of the Aquis Stock Exchange on 24 November and the share price continued to rise and ended the week up 10.2% to 172.5p. The NHS-funded medical procedures provider raised £1.56m at 150p a share.

Tectonic Gold (LON: TTAU) has completed drilling at the Specimen Hill project in Queensland. This has intersected a geophysical target below high-grade historic mine. An adjacent target has also been intersected. Joint venture discussions will be pursued. The share price rose 5.52% to 0.765p.

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Fallers

Goodbody Health (LON: GDBY) chief executive Marc Howells has resigned, and George Thomas has replaced him. The share price dived 23.1% to 2.5p.

Shares in Good Energy (LON: GOOD) fell 7.69% to 180p after it said that trading to the end of October was in line with expectations, but the subsequent mild winter has reduced gas consumption. Risk management actions should enable the energy supplier to meet 2022 expectations. There was £21.2m in cash at the end of October 2022. Heat pump installer Igloo Works has been acquired for £1.75m. Last year’s revenues were £1m. This will form an energy services division.

Guanajuato Silver Company Ltd (LON: GSVR) produced 700,264 of silver equivalent ounces in the third quarter, which is more than double the previous quarter. Cash costs fell by 19% to $19.53/ounce. However, lower silver and gold prices meant that the loss increased. The share price fell 3.51% to 27.5p.

AIM weekly movers: Tailwind for Windar Photonics

Andrew Hore
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AIM weekly movers: Tailwind for Windar Photonics

Upward share price momentum continues at Windar Photonics (LON: WPHO) on the back of additional test orders for LiDAR wind sensor technology from Vestas. Also, non-executive director Paul Hodges bought 195,000 shares at 19.5538p each. The share price rose a further 163% to 21p and it is 20% higher over the year – making it one of the top 100 AIM performers in 2022.

Infrastructure India (LON: IIP) says it expects to receive proceeds from the sale of Indian Energy in December. The buyer has asked for additional time to complete the transaction and there is a possibility that the deal might not go through, and an alternative buyer comes forward. When cash is received it will be used to pay creditors. Other disposals are planned. The share price recovered by 38.5% to 0.45p.

Digital services provider TPXimpact (LON: TPX) rose 36.6% to 56p, following the publication of interim results that were no worse than expected. The underlying pre-tax fell from £4.7m to £400,000 and the interim dividend was maintained at 0.3p a share. The full integration of past acquisitions by the new management is continuing. A full year pre-tax profit of £5.45m is forecast.

Positive trial results for KidneyIntelX announced yesterday have boosted the share price of diagnostics firm Renalytix (LON: RENX) by 29.6% to 87.5p. KidneyIntelX has enabled early intervention with patients before kidney disease reaches a critical point. FDA approval is possible in the next few months.

Director buying at Primorus Investments (LON: PRIM) pushed the share price 28.3% higher at 2.95p. Executive chairman Rupert Labrum acquired one million shares at 2.86p each, taking his stake to 218%, and the wife of Hedley Clark purchased 784,791 shares at 2.53p each.

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Fallers

Falkland Islands oil and gas explorer Borders & Southern (LON: BOR) is raising £2.5m at 1.75p a share to finance studies of its 100%-owned Darwin gas condensate discovery. The previous market price was 3.15p and the share price has subsequently fallen 38.4% to 1.8775p.

ReNeuron (LON: RENE) is the latest small company to try to raise cash but find that market conditions mitigate against any fundraise. Cost savings are being made by the exosomes technology company so that the existing cash can last until the fourth quarter of 2023. Revenues are growing and the interim loss was reduced. The cash outflow from operating activities was £4.3m, while there was still £10.5m in the bank at the end of September 2022. The share price dived 37.6% to 15.3p.  

Covid lockdowns in China have hit demand for kettle controls supplier Strix (LON: KETL). Zeus has reduced its 2022 pre-tax profit forecast by 17% to £23.2m and cut the 2023 figure by 11% to £29.7m. There could be some upside from the recently acquired water appliance manufacturer Billi. The share price, which had been recovering, dived 34.8% to 81.3p.

Drilling delays at five development Russian wells continue to push the Petroneft Resources (LON: PTR) share price lower and it declined by further one-third to 0.3p.

Because announcements were made late at the end of the previous week there was a delayed reaction to news from energy efficiency as a service provider eEnergy Group (LSE: EAAS) that is had raised £2.525m of subordinated debt lasting until 2024 issued at a discount. That discount equates to 2% repayment fee and 1.25% interest each month. The share price slumped 31.7% to 4.1p. Existing shareholder Hawk Investment, a company owned by John Foley, who will become a non-executive director, and eEnergy directors are providing the debt. There will be 42.1 million warrants with an exercise price of 6p – the current share price – issued to the lenders. It is taking longer to collect cash. Last year’s figures were in line with the previous trading statement. Net debt was £3.2m at the end of June 2022. First quarter revenues were 90% ahead at £7.6m.

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