AIM-Listed eEnergy announced on Tuesday it would be rolling out its eSolar solution to organisations and providing an end-to-end service.

The solution will provide capital-free access for organisations to install onsite solar panels to help reduce the cost of their power supply.

eEnergy will deliver end-to-end solutions covering design, specification, installation and ongoing operations and maintenance.

Following a trial period to gauge the demand for the service, eEnergy believe they can deliver solutions totalling 8.9 MW, equivalent to circa 30,000 standard 300w panels.

eEnergy hopes that by removing the capital requirements they are able to target a broad range of organisations and complete installation in a short time period of 4-6 months from initial agreements.

“The launch of eSolar is another exciting step on our journey to providing organisations and businesses across the UK and Ireland with an end to end net zero solution,” said Harvey Sinclair, CEO of eEnergy Group.

“In addition to eCharge, eSolar provides our customers with the very real ability to generate their own energy, giving them increased energy independence in the knowledge that they’re using green and sustainable sources as well as achieving significant cost savings.”

Operating out of the Middle East, North Africa and Europe Gulf Marine Services (LON:GMS) provides self-propelled, self-elevating support vessels to groups in the offshore, oil, gas and renewables sector.

Its interim results to end June showed revenues up 29% from $51.4m to $66.4m and a big increase in its EBITDA to $37.3m ($26.5m), leaving its profits after tax up more than six-fold at $13.1m ($2.0m).

Stronger usage

Higher utilisation levels of its fleet of vessels at a time when day rates had been rising was helpful.

It was also boosted by the group’s management continuing to focus on saving operating costs.

Reduction in debt

There was also a good first half reduction in the group’s net debt to $341.4m ($371.3m) as part of the ongoing deleveraging strategy.

Orders increasing

The group anticipates seeing continued improvements in day rate and utilisation levels, but at a more gradual rate.

Its secured backlog was $163.3m as at 30 June 2022 ($215.4m) and it is currently working on a number of projects that will have a favourable impact on its backlog. 

Executive Chairman, Mansour Al Alami, stated that:

“I am pleased to report GMS operational results for first half of the year which provides us a solid platform for achieving our full year EBITDA guidance. The first half performance reflected higher day rates, improved utilisation and efforts made on continuous cost savings.

We will realise the benefits of improved day rates on new contract awards announced during H1 2022.  As the Middle Eastern market continues to increase production, we expect an increase in demand for our sector, which in turn will lead to an increase in day rates and utilisation over time.”

Reaction

The group’s shares initially dipped on the back of the results on very high dealing volume but are now regaining composure at around the 6p level, still looking undervalued.

The FTSE 100 suffered a break through 7,000 on Monday as shares in UK banks and the country’s leading house builders plunged on concerns about the outlook for the UK economy.

The FTSE 100 was down 0.85% to 6,961 at the time of writing.

Friday’s mini-budget has been met with extreme selling of the pound and soaring government bond yields as investors panicked about a plethora of tax cuts that will be funded by government borrowing.

“Markets are raising alarm bells as the Chancellor signalled a doubling down of tax cuts over the weekend,” said Janet Mui, head of market analysis at wealth manager Brewin Dolphin.

“The new borrowing will be financed at a much higher rate of interest which could put the UK onto a fiscally unsustainable path. Sterling and gilts are the quickest and most liquid pressure valves for markets to express these concerns.”

Higher rates

Markets are now pricing in a 1% increase rise in UK rates at the next Bank of England meeting, and rates hitting 6% in early 2023.

£ touches record low & investors now betting on UK interest rates topping 6% by 1st half 2023.

Senior Tory MP: ‘What are the fiscal rules? How can markets be expected to come to a settled view if no framework for size of borrowing/timeframe on growth is set out by HMT’ 1/

— Beth Rigby (@BethRigby) September 26, 2022

The crashing pound is also raising the question of an emergency rate hike to help support the currency. Such a sharp trajectory higher in UK interest rates has unnerved equity investors who have been dumping their holdings in housebuilders and UK banks.

A move to anywhere near 6% will send a tsunami through the UK housing market and could see banks forced to set aside provisions for bad debts as households are put under pressure.

Taylor Wimpey was down 7.3% at the time of writing while Persimmon shed 6.5% and Berkeley Group 5%.

Banks – typically beneficiaries of higher rates – are now facing the prospect of mortgage defaults as homeowners struggle to meet higher payments.

The UK’s largest mortgage provider Lloyds fell 4% and NatWest fell 3.6%.

Although the banks and housebuilders are suffering today from the wider implications of a weaker pound, the FTSE 100 is typically supported by a weaker pound and may provide some outperformance for the index compared overseas equity indices.

“Overall, the FTSE 100 tends to benefit from a weak pound, because most big companies listed in London actually earn most of their money overseas, which will be worth more when it’s converted back into pounds,” said Sarah Coles, senior personal finance analyst, Hargreaves Lansdown.

Stronger Dollar

While many headlines will focus on the pound, the stronger dollar was causing issues across the globe with EUR/USD falling ever further past parity to 0.9645.

Emerging markets also felt the pain of a strong dollar and even US futures fell as investors shunned riskier assets.

The interim results from this UK floor coverings distributor for the six months to the end of June showed sales up an impressive 108% to £58.4m (£28.0m) and a 77% increase in underlying pre-tax profits at £1.91m (£1.08m).

The figures from the Solihull-based Likewise Group (LON:LIKE) also showed 77% improvement in its net assets from £22.4m to £39.7m.

Coping with the pressures

The very acquisitive group has really been spreading its coverage in the last couple of years, at the same time its organic business has grown.

That is impressive against the backdrops of Covid-19, inflationary costs, stock supply and staffing hassles.

The fast-growing £52m capitalised group countered such pressures by increasing its selling prices in early May.

There has been a continuation of positive sales in the last three months, as it leads into the busier final quarter of the year.

CEO Tony Brewer stated that: “Likewise has made considerable progress in the last two years. The acquisition of Valley was a particularly important step. The increase in Net Assets and subsequently solid Balance Sheet provides the Group with strong foundations for the future.

With the extensive logistics, sales and marketing investment we are confident in progressively building a substantial and profitable floor covering distribution business.”

Analyst’s opinion

Brokers analyst Andy Hanson, at Zeus Capital, rates the group’s shares as a Buy. 

He is looking for benefits to come from new product launches in the second half of the current year, together with the almost doubling of the group’s logistics capacity to 15m cubic feet, helping to expand its geographic coverage.

His estimates for the year to end December are for sales of some £114.9m, providing more than doubled profits of £3.7m, generating 1.3p of earnings per share, together with a 0.3p dividend.

The 2023 trading year sees Hanson estimating £136.6m in sales, £5.9m in profits, with earnings of 1.9p and a 0.5p per share dividend.

The recent acquisitions, logistics increase and rising coverage across the country should be able to help push the Likewise Group 2024 revenues up to £160.8m, its profits up to £8.8m, and earnings of 2.7p amply covering a 0.7p per share dividend.

Good equity involvement

The group’s management has a good 21% of its equity, while it is also being backed by a good number of institutional investors, like Octopus, CRUX, AXA, and Allianz Global.

I now see the group looking to make its recent acquisitions, and its operations generally, perform to management expectations.

The company has a strong balance sheet, with gross cash of £7.9m and net cash of £1.9m, backed up by over £20m of properties.

Floated at 25p a share in August last year, they were up to 52.5p by last December, since when the shares have gradually drifted back to the current 21.5p.

At that level they could well offer investors the potential for a 50% appreciation within a year or so.