Aquis weekly movers: VVV Resources share price slump
VVV Resources (LON: VVV) is the worst Aquis Stock Exchange performer of the week with a 43.6% decline to 55p (40p/70p). There were four trades during the week, and these were the first since March. The first trade was in 1,000 shares at 90p each, then 3,000 shares at 85p each and 2,000 shares at 80p each. The final trade was in 1,500 shares at 66p each.
SulNOx Group (LON: SNOX) has won a new order from Ghana for SulNOxEco fuel conditioner. There is enough to treat six million litres of diesel, which is a larger order than the previous one. New agreements are being discussed in other African countries. The share price fell 3.13% to 15.5p.
Engineering company Vulcan Industries (LON: VULC) has raised £132,000 at 0.92p each. The share price has fallen 2.23% to 0.875p.
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RISER
There has been significant trading in wine producer Chapel Down Group (LON: CDGP) in the past week, particularly on Thursday and Friday. The largest transactions were at 18.5p a share, but the share trades later in the day on Thursday and on Friday were at higher prices. The share price jumped 41.7% to 27.2p on the week, although it is still down by 38.9% this year.
Site works have commenced at the Blesberg lithium and tantalum project in South Africa. Marula Mining (LON: MARU) says mining permits have been applied for. Initial test work at the Blesberg shows an average lithium grade of 6.1%. Tantalum was also identified. The Marula Mining share price rose 2.38%.
AIM weekly movers: Potential Advance Energy reversal and Joules short of cash
Shell company Advance Energy (LON: ADV) was the best performer of the week rising 111% to 0.175p before trading was suspended. A fundraising generated £425,000 at 0.085p a share. There are warrants attached to each new share that are exercisable at 0.13p a share. The cash will enable management to investigate a suitable reverse takeover candidate and fund due diligence. Management is already assessing candidates and is in talks with the majority owner of a European oil and gas company. Any deal will be funded with shares and via an earn-out based on production. The suspension will continue until a prospectus is published or the deal does not happen.
Tertiary Minerals (LON: TYM) has signed a technical co-operation agreement with First Quantum Minerals for two copper projects in Zambia – Mukai and Mushima North. Mukai is next door to First Quantum’s Trident project. First Quantum also has interests in the same region as Mushima North. First Quantum will supply historical exploration date for the areas. First Quantum does not have any first right of refusal over the projects. Tertiary Minerals increased by 72.1% gain to 0.185p a share.
Labro Investments Ltd, which is associated with Chaarat Gold Holdings (LON: CGH) chairman Martin Andersson, has acquired shares in the Kyrgyz Republic-focused gold producer. It bought 261,373 shares at 9.82p each and 260,000 at 11.18% each. That takes the stake associated with Martin Andersson to 45.6%. the share price increased by 53% to 14.5p.
Baby products retailer Mothercare (LON: MTC) bounced back after its full year figures were reported. The share price was 45.6% ahead at 9.975p. Revenues fell from £85.8m to £82.8m, but Mothercare returned to profit. The figures were at the top end of expectations and the company was cash generative. finnCap forecasts a fall in pre-tax profit from £8m to £1.9m this year, but net debt should fall from £9.9m to £8.7m. The pension deficit is declining.
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Fallers
Retail brand Joules (LON: JOUL) has ended its talks with retailer NEXT (NEXT) about a cash injection, leaving it with the need to find another source of funding. That could require a share issue and it led to a 61% decline in the share price last week to 8.2p. Octopus has sold its entire 9.93% stake and Canaccord Genuity reduced its shareholding from 9.54% to 4.63%.
More delays have hit printed circuit technology supplier Trackwise Designs (LON: TWD) and it is trying to renegotiate the large contract with a UK electric vehicle client. Production volumes will be even lower than previously expected and that causes problems with the financing of capital equipment leaving Trackwise Designs short of cash. The company hopes to secure an advanced payment from the EV customer to ease the problem, but further funding will be required. Trackwise Designs is seeking partners in certain sectors, including EV, medical and aerospace. The share price slumped 54.8% to 9.5p.
Broker and administrator Jarvis Securities (LON: JIM) has appointed Ocreus to review systems and controls at its main subsidiary. This will take between three and six months. Jarvis has voluntarily agreed not to take on new clients from certain existing Model B corporate clients until the systems have been reviewed. Dividends will only be payable to Jarvis Securities with the FCA’s approval. The restrictions should not hamper forecast revenues and profit, although the costs of the review could hamper shareholder dividends from Jarvis Securities. This news was announced late on Friday and the shares slumped 48.4% to 94p.
Reabold Resources (LON: RBD) says terms have been agreed for the sale of investee company Corallian Energy for £32m (320p a share). Reabold Resources will receive £12.7m from the sale, compared with a total investment of £7.5m. It has also completed the acquisition of a portfolio of projects from Corallian for £250,000. The rest of the cash can be reinvested in other oil and gas assets. Investors do not appear to be happy with the disposal price and there was a 36.1% fall in the Reabold Resources share price to 0.31p.
FTSE 100 hit by growth concerns as the pound sinks
Investors were forced to weigh the positivity of strong Chinese economic data against the prospect of higher interest rates on Friday, and consider whether strength in the world’s second largest economy was reason enough to buy into equities in a backdrop of tightening monetary policy.
Better than expected Chinese retail sales and industrial production were not enough to help lift Chinese equities overnight, nor were they enough to support European stocks in early trade on Friday.
However, the destruction of UK retail sales saw sterling fall to the lowest level against the dollar since the 1980’s, and in turn provide support for the FTSE 100’s overseas earners, limiting the downside in the UK’s leading index.
“It’s Bleak Friday for the pound, amid worries the UK has hurtled into recession, as the cost-of-living crisis intensifies and confidence in the government’s ability to prompt an economic turnaround fades,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
“It’s a chilling repeat of the dismal day, 30 years ago, when sterling faced another crisis and spectacularly crashed out of the European Exchange-Rate Mechanism.”
Having touched 7,247 early on Friday, the FTSE 100 rallied to trade in positive territory as the pound sank, but the gains proved to be unsustainable and the FTSE 100 closed the week out at 7,236.
Asset Managers rally
The FTSE 100’s dollar earners were among the outperformers on Friday while asset managers Abrdn, M&G and Hargreaves Lansdown provided some support for the index as bargain hunters stepped in. Hargreaves Lansdown is down 37% year-to-date as short sellers target the stock.
As US exchanges opened, selling accelerated across the wider markets on a stark warning from Fedex they were experiencing low volumes. Fedex shares were down over 23% in US trade on Friday and is seen as a bellwether for the US economy, thus the health of the global economy.
The major drag on the FTSE 100 came from mining stocks feeling the pressure of Asian volatility and general concerns of global growth. Glencore, Rio Tinto, Anglo American and Antofagasta shed between 1-3% on Friday.
AIM Movers: Light Science contract progress and AfriTin Mining funding
Controlled agricultural environment equipment supplier Light Science Technologies (LON: LST) has progressed with its project with Zenith Nurseries. The cloche lighting system has been developed and proved to be viable and this has generated £51,000 of revenues for the company. A later phase of the project has been brought forward and this has potential revenues of £1.9m. The total contract is worth £13.8m. The related grant has increased to £621,000. The share price recovered 12.5% to 6.75p, but it remains below the October 2021 flotation price of 10p.
Utility services installer Fulcrum Utility Services (LON: FCRM) is the largest riser on the day, up 16.7% to 7.35p, but there are no announcements. Previous share price jumps have been due to buying by the Bayford Group, which has a 29.1% stake. Bayford cannot buy many more shares without going above 30% and triggering a mandatory bid.
John Celaschi has increased his stake in solar technology company Verditek (LON: VDTK) from 8.34% to 10.59%. The share price has risen by 10.5% to 2.1p.
Yesterday’s new admission Aurrigo International (LON: AURR) has risen a further 9.52% to 57.5p. The transport technology products supplier raised £8m at 48p a share when it joined AIM. The cash will be invested in the aviation technology division and to develop new products.
Oriole Resources (LON: ORR) shares have lost some of yesterday’s gains. The share price has fallen 8.3% to 0.22p, but it is well above the 0.155p it was two days ago. Phase 4 drilling results from the 90%-owned Bibeme gold project in Cameroon showed the existence of multiple grade-bearing sub-horizontal veins as well as the previously tested sub-vertical veins.
AfriTin Mining (LON: ATM) has completed a placing and subscription at 5p a share that was announced last night. The share price has fallen 6.4% to 5.1p. The amount raised of $22.8m was higher than initially anticipated. This is part of a funding package for phase 2 expansion at the Uis mine in Namibia. Orion Resource Partners is providing $25m through a royalty deal, convertible loans and shares. The Development Bank of Namibia is proposing a $5.8m lending facility. The cash will help to develop lithium and tantalum opportunities at the mine.
Shares in Empyrean Energy (LON: EME) fell 4.77% to 1.0475p after the oil and gas company reported a higher full year loss. The £8.1m loss included a cyber fraud loss of £1.98m and an impairment of exploration asset of £4.13m.
CENTRED, reaches a $25 Million Valuation after Acquiring London based Start-Up, BUA FIT
CENTERED, a US wellness platform, acquires British outdoor fitness technology, BUA FIT, to offer its platform of wellness programs to Fortune 500 companies while supporting fitness trainers’ businesses in the US.
CENTRED
CENTRED connects travellers to leading and emerging wellness brands in over 900 cities worldwide. The company utilises a vertically integrated platform with an app, website, physical locations, e-commerce for health and wellness and loyalty programs.
MIAMI, Florida, Brian Chappon, CEO of CENTERED, declared, “BUA’s success in the UK will be reflected in the US in the coming weeks. David has brilliantly executed and crafted an outstanding product to connect trainers to lovers of outdoor and online group classes. I am delighted David has joined our team and BUA will add tremendous value to our user experience at CENTRED.”
Through CENTRED’s partnerships with global credit cards, brands, and aggregators, they have access to over 57 million affluent members worldwide. Their passion lies in driving volume to small businesses while setting a new global standard for wellness. Working with global B2B partners in travel, healthcare, fitness, and beauty tech, CENTRED is uniquely positioned to provide peace of mind to travellers worldwide.
CENTRED Director, Jim Lane – a 20-year alumni of Goldman Sachs & Co – commented, “With BUA, CENTRED can now showcase an array of outdoor fitness experiences worldwide, while also providing a platform for personal trainers to accelerate their growth on a global level.”
LONDON, David Stapleton, CEO and Founder of BUA FIT commented, “Brian and I believe having our companies coming together gives us a much stronger competitive edge and I’m confident we will be a billion-dollar business within four to five years, if not earlier. We wanted to move on the opportunity as our vision and missions are aligned. This strategic acquisition makes us a super strong team and it’s something we’ve been working on all year.”
Stapleton will join the CENTRED Board of Directors. The combined entity will expand BUA’s offering in the United Kingdom, USA, Canada, and Europe. The platform is planning to launch in the US early next year.
BUA FIT
BUA FIT is a platform for group outdoor and online fitness. BUA connects fitness professionals to consumers with social technology. The tech recently surpassed 1,000,000 user engagements. The marketplace has a wide variety of talented fitness partners which has helped BUA enter the corporate market and work alongside brands such as Meta, Mubadala Capital and Starbucks.
The marketplace brand means ‘victory’ in Gaelic and is supported by Google for Startups and US venture firm, StartUp Health. The start-up was financed by Stapleton since 2016 and launched in the summer of 2019, outside of a £420,000 investment at early seed stage. To date, the strategy has been sustainable, organic growth to lower risk and achieve product market fit and now has completed well over 5,000 classes with international users.
Centred are keen for BUA’s platform to be rolled out across large towns and cities such as Los Angeles, Austin, San Diego, and Miami. With sunshine all year round, parts of the US are a huge opportunity. There are also potential plans for growth in Sydney, Australia too.
Angus Energy shares build base as investors await UK gas production figures
Angus Energy shares have began to build a base around 2p as the market awaits production figures from the Saltfleetby facility.
Angus Energy is an energy transition company with a focus on natural gas and has recently made first gas nominations to Shell via National Grid. The Saltfleetby field was previously the largest on shore gas field in the UK and Angus Energy acquired a 100% interest in 2020 with a view to restart production after it was shutdown in 2017.
Recent developments have seen Angus Energy shares soar and the next catalyst for shares will be production figures expected to be released at the end of the September.
In a recent evaluation, Angus Energy achieved flow rates from well A4 of 4 mmscf/d at approximately 55 bar and well over 4.5 mmscf/d from well B2 at approximately 45 bar which exceeded prior tests in 2017 and 2019.
Having recorded just £27,000 revenue in the six months to 31st March, Angus Energy’s next set of results will be highly anticipated and questions will continue to be asked of the current £53m market cap.
The strength of production from Saltfleetby will be key to the future of Angus Energy which will finds it self in an attractive position given the need for UK sources of gas.
Sterling falls against Dollar and Euro as UK retail sales crumble
The Pound fell sharply against the dollar and Euro on Friday after UK retail sales missed estimates, implying a deterioration in the health of the UK consumer and economy.
GBP/USD fell 0.6% to 1.1400 and GBP/EUR was down 0.33% at 1.1429. The pound was at the weakest level against the Euro since February 2021 and lowest against the dollar since 1985.
“UK retail sales have seen their biggest decline so far this year, dropping 1.6% compared to a 0.4% increase in July. This is markedly worse than forecasts of a 0.5% fall, and indicates rising prices and the cost of living crisis is stopping consumers from reaching for their purse when it comes to extra spending,” said Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown.
“There is also the possibility these figures suggest the UK is already in recession.”
If the UK were to be in a recession it wouldn’t be a huge surprise. The Bank of England warned we face a prolonged recession earlier in the summer and we have already experienced monthly GDP contractions this year.
GBP/USD
A strengthening dollar has pummelled GBP/USD this year and pushed down to key support around 1.1400.
Analysts at Credit Suisse highlighted 1.1409/1.1350 as key technical support levels that could signal a move to near parity with the dollar, if broken.
“GBP remains weak on a Trade Weighted basis and we thus continue to look for a break below 1.1409 and then a move to potential trend support at 1.1350, below which would signal a substantial breakdown and open the door to 1.1285 next, ahead of 1.1020/00, which is now our core objective. However, we would not rule out a move all the way to the 1985 lows at 1.0520 if 1.1409/1.1350 breaks.”
Gulf Marine Services – a cheap share in the profits from the booming Middle Eastern oil and gas sector
As we go into the Autumn and Winter seasons, the population of the UK is fearing the continuing escalation in energy prices.
It is apparently inevitable, despite Government energy price cap controls, that we will all suffer cost pressures.
If you already have your own ‘solar farm’ or a ‘forest of wind-turbines’ then you will not want to know about my penny stock suggestion to build up your capital protection.
But if you do want to know what I am ‘plugging’ now, then take a look at this £68m capitalised group that is scoring well working in the booming oil and gas sector out in the Middle East.
Self-propelled
Established some 45 years ago in Abu Dhabi, Gulf Marine Services (LON:GMS) is today one of the world’s leading providers of advanced self-propelled self-elevating support vessels.
With around 550 employees and operating from its offices in the United Arab Emirates, Saudi Arabia and Qatar, the group’s fleet provides an invaluable service for the oil, gas and renewable energy industries.
It has one of the world’s newest fleets of these vessels, on average no older than 11 years, while they have an expected life-use of up to 40 years.
The versatility of its vessel’s meets the demand of the group’s clients, to provide cost-effective solutions, in a safe and efficient service, while minimising the environmental footprint.
With a current fleet of some 13 self-elevating support vessels, they are used in offshore oil and gas platform refurbishment and maintenance work, on well intervention activities, as well as on offshore wind turbine installation and maintenance duty.
They are also effective for offshore oil and gas platform installation and decommissioning.
Ranging in size – K-Class (Small), S-Class (Mid) and E-Class (Large) – the four-legged vessels are capable of operating in water depths of 45m to 80m, depending upon the leg length.
Four legs are certainly better than the prevalent three-leg vessels which are not considered to be as safe or versatile.
The vessel’s four legs give such structures weather tolerance, location versatility and operational stability.
Being self-propelled means that they do not require tugs or other support vessels to help in moves from one location to elsewhere in a particular field – that time-efficiency is more cost-effective than those vessels without such propulsion.
The very-large desk space creates ability for accommodation facilities for up to 300 people and big crane capacity, sufficient for each client’s requirements.
Top Global Clients
The group has a global clientele, including Aramco, Total, StatOil, ADNOC, Shell, McDermott, Occidental Petroleum, Orsted, Spirit Energy, ABB, Dubai Petroleum, Fugro, Subsea 7, Siemens, Conoco Phillips, Larsen & Toubro, Ithaca Energy, National Petroleum Construction, Hyundai Heavy Industries, Vestas, NT Offshore, Saipem, Cooec, and Heerama amongst many others on its lists.
The Middle East and North Africa region (MENA) continues to be the largest geographical market representing 89% (2020: 88%) of total Group revenue. The remaining 11% (2020: 12%) of revenue was earned from Offshore Windfarms in the renewables market in Europe.
National Oil Companies continued to be the Group’s principal client representing 70% of 2021 total revenue (2020: 68%).
The UAE remains the largest revenue contributor in the MENA region, generating 50% of total revenue last year (2020: 52%). The remainder is split between Saudi Arabia and Qatar at 19% and 20% respectively (2020: 17% and 19%).
Larger Investors
The group has fractionally over 1bn shares in issue.
Mazrui Investments has the biggest holding (25.6%), while other larger holders include Seafox International (15.6%), Castro Investments (4.85%), Qatar Insurance (4.53%), and Horizon Energy (3.14%).
Related Party Transactions
In April 2020 Seafox International announced a possible cash Offer for the group.
Seafox is a leading global offshore jack-up company, providing services to support the oil and gas and renewable industry. It owns and exclusively manages eleven self-elevating jack-up units.
The two groups came to an understanding earlier last year ahead of the reorganisation and fund-raising.
The Group has never had transactions with Seafox International and has agreed with its banks, in its latest agreement signed in March 2021, restrictions on any future transactions with them or their affiliates.
During the last trading year, the Group received catering services totalling $0.5m (2020: nil) on-board one of its vessels provided by the National Catering Company, an affiliate of Mazrui International LLC.
Reorganised and back to profit
Very shortly we should be seeing the group updating shareholders about the first half-year’s trading up to the end of June.
There were indications of higher utilisation rates earlier in the year, which are expected to have continued in the subsequent months. Also, higher day rates could well become evident for the year as a whole to end December.
There will, no doubt, have been continued improvement on the group’s day rates due to demand in the Middle East outstripping supply.
The Executive Chairman, Mansour Al Alami, recently stated that:
“The primary aims of last year included reorganising the Company, to regain the trust of stakeholders and to build a business able to consistently provide value to its shareholders. These aims have been delivered on and we are proud of having made such significant progress in such a short period of time. GMS today is back to profitability, it is back to being on a growth path and continuing to deleverage.”
Leverage decreasing fast
Net bank debt reduced to US$ 371.2m ($ 406.3m). A combination of reduced debt and improved adjusted EBITDA led to a 28% reduction in the net leverage ratio reducing from 8.0 times in 2020 to 5.8 times at the end of 2021. The Group will continue its focus on organically reducing leverage going forward. Its target is now 4.0 times, which is a massive turn around and extremely positive.
The Group is currently operating as ‘a Going Concern’ without any material uncertainties. This is the first time the Group has been operating as ‘a Going Concern’ without any material uncertainties since 2017.
With reduced debt and much improved terms, the Company will be well placed to benefit from the improving market cycle in oil and gas in the Middle East and inrenewables in Europe and the potential for increases in day rates as the market continues to tighten. This will build on the significant progress made to-date, which includes a much-reduced costs base, a strengthening of the order book and far better levels of vessel utilisation.
Analyst Opinion – 20p Target Price
Daniel Slater, at Arden Partners, the group’s corporate broker, rates the shares as a Buy, with a Target Price of 20p a share.
Following last year’s fund raising and corporate reorganisation the net debt figure is accelerating downwards.
He considers that the company’s market is increasingly tightening as customers ramp up activity, which will put upward pressure on GMS vessel utilisation and day rates to the benefit of the group.
For the current year Slater is estimating group sales to rise to $135.3m ($115.1m), while adjusted pre-tax profits will rise to $32.8m ($20.7m).
For the coming year he has pencilled in $143.6m revenues, $39.7m profits, worth 3.1c in earnings per share against an estimated 2.5c this year.
Conclusion – Trading Update Due Soon
The net debt position might well put off many investors, however, looking at the way that leverage ratio has dropped in the last two years, there is a much more positive feeling about that situation.
As far as the group’s business pipeline is going, there are suggestions that a substantial uplift may soon become visible as the boom out in the Middle East increases.
A recent report infers that the area’s oil producers are in line for an extra $1.3trn as higher energy prices continue to flood through. Additional income is anticipated over the next four years as Russia’s war in Ukraine continues to send prices into overdrive.
Bigger oil revenues in the region will drive even higher the demand for new production sources and GMS will be a natural beneficiary as discovery expenditure increases.
We are only a few weeks away from the group declaring its Interim Trading Update.
Looking at Arden Partners estimates for this year and next, it occurs to me that this group’s shares are substantially undervalued at the current 6.75p, at which level they are trading on a sterling equivalent of 2.17p earnings for 2022 and 2.69p for 2023, putting them on just 3.11 times and only 2.51 times price-to earnings ratios respectively.
Now that is a very cheap way to participate in the booming energy sector, giving UK investors an interesting way to reduce their own energy expenditure!
FTSE 100 rebounds as banks and housebuilders rally
The FTSE 100 stage a recover on Thursday as London’s leading index bounced back from a period of selling sparked by a higher than expected US CPI print earlier this week.
The index rose as high as 7,326 on Thursday before falling to trade under 7,300, nonetheless still in positive territory.
Cyclical stocks led the rally with the UK banks among the top risers as investors positioned for higher interest rates in the near term.
“In the UK, the FTSE 100 traded 0.6% higher, with banking stocks leading the way. Lloyds and NatWest were among the biggest risers, no doubt driven by investor expectation of higher interest rates and how that might have a positive impact on the banking sector’s earnings,” said Russ Mould of AJ Bell.
Lloyds shares notably traded at the highest levels since May as investor positioned for higher earnings in the bank. Natwest and Barclays were also gaining and approaching the highest levels for some months.
The FTSE 100’s Housebuilder also found strength following positive announcements from Redrow and MJ Gleeson in recent days. The two sets of data complimented recent updates from Barratt Developments, Persimmon and Taylor Wimpey in as far as the trend of higher house prices were supporting revenues at a time questions were being asked of the strength of the Uk housing market.
MJ Gleeson shares rose 3% on Thursday following a record set of results from the affordable-housing specialist.
“Gleeson Land’s market remained robust throughout the year and the business delivered a strong result. Demand in the South of England for quality sites with sustainable and implementable residential planning permission remains strong and the division is well-placed to drive further sustainable growth,” said Dermot Gleeson, the MJ Gleeson Chairman on Thursday.
Rolls Royce
Rolls Royce were the FTSE 100’s top gainers as the engineering company announced the sale of ITP Aero for €1.8bn. The sale will provide Rolls Royce with a welcome cash injection to help pay down debt and strengthen the balance sheet. Rolls Royce shares were 5.7% higher at the time of writing.
Ex-Dividends
Hikma Pharmaceuticals and Melrose industries were among the FTSE’s fallers as the companies went ex-dividend. Triple Point Social Housing REIT and Murray Income Trust were notable investment trust ex-dividends on Thursday.