A very simple note out from CAP-XX (LON:CPX), the supercapacitors group, that it has been awarded and received a A$2.05m tax rebate from the Australian Tax Office encouraged its brokers to put out a new Buy note.

The company develops, manufactures and markets supercapacitors and energy management systems for small scale electronic devices and automotive applications.

Its systems, which are manufactured in Australia, Malaysia and in China, are researched and developed in Australia, hence the Tax Rebate being sought and gained.

Cenkos Securities, joint brokers to the group, have concluded that:

“With a growing product portfolio, and upside left in a number of areas such as litigation and new licensees, we continue to believe CAP-XX is significantly undervalued and iterate our Buy recommendation and 14p DCF based valuation.”

The group’s shares are currently trading at only 3.75p.

AO World saw its sales drop 17% in the six months to 30 September but the board was optimistic about the remainder of the year and eyed strong trading over the end of year festive period.

AO World sales fell to £546m in the first half, but were confident stringent management of costs would achieve full year adjusted EBITDA at the top end of their £20m-£30m guidance.

The optimism of their forecasts caught the attention of investors on Tuesday and AO World shares were over 15% higher at the time of writing. AO World shares are still 42% weaker year-to-date.

Analysts at AJ Bell highlighted the challenging nature of the retail environment and suggested the company were pinning their hopes on a strong festive period, which will be instrumental in achieving their guidance.

“First-half results from online electronics retailer AO World are being released in the calm before the storm which is Black Friday and Cyber Monday when the company will hope to be extremely busy,” said Russ Mould, investment director at AJ Bell.

“AO World was a pandemic winner whose fortunes have taken an alarming turn since, but these results hint that the company may have bottomed out and is ready to recover.

“The backdrop is undoubtedly difficult. Given the pressures on household budgets, people are putting off purchases of new appliances where they can, though to some extent if your washing machine or fridge freezer breaks down, a replacement is a non-discretionary item. 

“This set of numbers from AO World is as messy as the bottom of a student’s fridge, but management guidance is notably robust, with full-year earnings expected at the top end of expectations. Though it’s important to note this is largely being driven by cost cutting, rather than any inherent strength in the business.”

Severn Trent has provided insight into how they are operating in an environment punctuated by soaring inflation in their first half results in which revenue increased.

Soaring inflation meant the company’s revenue increased, but the impact of inflation-linked debt saw their overall earnings suffered.

Severn Trent’s revenue grew £103.6 million to £1,061.8 million but Adjusted basic EPS nearly halved to 29.9p from 54p.

The culprit was a sharp increase in net financing costs which hit £186.9m, compared to £120.8m in the year prior. This more than offset the increase in revenue and profit before interest and tax.

Nonetheless, Severn Trent increased their dividend. With a yield of 3.7%, the willingness to improve investor distributions, despite a challenging backdrop, will be an attraction to investors seeking a reliable income play.

“Severn Trent are showing the benefits of being a utility provider when inflation’s running wild, as inflation linked tariff rises gave revenue a £39m boost over the half,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown.

“That’s not to say Severn Trent’s been immune to pressures, higher costs meant a big chunk of the 11% rise in revenue never made its way down to the profit line and inflations impact on index-linked debt meant financing costs shot up. Though it’s worth remembering, most of the rise in finance cost is a non-cash charge due to how changes in the value of index linked debt is accounted for, rather than a cost that had to be paid in cash.”