AIM movers: Safestyle downgrade and Shearwater forex loss

Andrew Hore
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AIM movers: Safestyle downgrade and Shearwater forex loss

Replacement windows supplier Safestyle (LON: SFE) says demand has weakened and costs increased during the autumn. There are signs of improvement, but 2022 revenues will be lower than anticipated. Zeus no longer expects Safestyle to make a profit this year and it has more than halved its 2023 forecast pre-tax profit to £3.6m. This also means that the dividend expectations have been cut from 0.8p a share to 0.5p a share in 2022 and halved to 1p a share in 2023. Net cash should be £9m at the end of 2022. The share price dived by 15.5% to 26.15p.

A large foreign exchange loss on a contract pushed cyber security services and software provider Shearwater Group (LON: SWG) into loss and the share price slumped by 21.2% to 89.5p. The loss will partly unwind in the second half, so Shearwater should make a full year pre-tax profit of £600,000 according to Cenkos. The longer-term outlook is positive with two new distributors signed up in North America and a new software launch.

PipeHawk (LON: PIP) fell into loss on lower full year revenues. It has been hit by higher energy costs and delayed orders. Management says that the outlook is more positive. Net debt increased to £8.28m. The share price fell 13.3% to 13p.

Karelian Diamond Resources (LON: KDR) is raising £250,000 at 2p a share, while the share price dipped 12% to 2.2p. The cash will be spent on diamond concessions in Finland and Ireland. A meeting is upcoming relating to the Lahtojoki diamond deposit in Finland.

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. Assuming the cash is received it will be used to pay creditors. Other disposals are planned. The share price recovered by 28.6% to 0.45p.

Home buying technology developer Smoove (LON: SMV) has announced details of its £5m tender offer. It is acquiring up to 12.5 million shares at 40p each. That is 19.3% of the share capital. The share price rose 9% to 36.3p. The tender closes on 9 January. There was £17m in the bank at the end of September 2022 and the cash outflow should reduce.

Orcadian Energy (LON: ORCA) has entered into a memorandum of understanding with SLB to deliver services for the wells on the Pilot heavy oil project in the North Sea. There are plans for 34 wells. The share price improved by 8.33% to 26p.

Ariana Resources (LON: AAU) announced a 22% increase in the resource estimate for the Tavsan mine. The latest estimate is 307,000 ounces of gold and 1.1 million ounces of silver, with 83% of the resource in measured and indicated categories. Ariana Resources has a 23.5% stake in Tavsan. Further exploration should increase the resource. The shares rose 7.46% to 3.6p.

Radisson Hotel Group builds on milestone year with continued growth across hotel brands

Radisson Hotels
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Radisson Hotel Group builds on milestone year with continued growth across hotel brands

Following its 2021 milestone as the most successful year to date for signings, Radisson Hotel Group is showing no signs of slowing down. It has achieved continued growth in 2022 and expects the same for 2023. The group aims to double its portfolio to over 2,000 hotels in EMEA and APAC by 2025, and the development of its brands across the UK & Ireland is paramount. 

A significant development is the announcement that the prizeotel brand will be introduced to the UK & Ireland, marking Radisson Hotel Group’s eighth brand in the market. prizeotel offers owners and investors new build opportunities or easy conversion solutions and guarantees a high-design focused brand for lifestyle travellers in vibrant urban locations. The midscale lifestyle brand is expected to open its doors in top cities and strategic destinations in the UK & Ireland. With 19 hotels open and in the pipeline in countries including Germany, Austria, Belgium and Switzerland, and plans to expand the portfolio with 45 new signings in the next five years, the brand remains a key growth driver for Radisson Hotel Group in the wider EMEA market.

prizeotel represents an exciting alternative to conventional hotel brands in the midscale segment for investors. As part of its new expansion strategy, Radisson Hotel Group offers flexible contractual solutions with lease, management and franchise agreements. The optimised design concept is suitable both for conversions of existing hotels and for new developments. A high degree of space efficiency (16m² guest room) and smart FF&E solutions enable construction costs to be achieved at economy level, with the cost for a new project at approximately £75,000 per room, including FF&E and OS&E. The operating concept is lean, so that GOP margins of over 50% can be achieved, depending on the market. As a result, prizeotel combines the revenue level of a midscale lifestyle hotel with the efficiency of the economy segment – a unique value proposition for hotel investors.

prizeotel

Adela Cristea, Vice President, Business Development UK & Ireland, Radisson Hotel Group, said: “Our UK & Ireland portfolio is going from strength to strength. The launch of prizeotel will mark the introduction of our eighth brand to the market. Travelers coming to the UK & Ireland are looking for tech-savvy and high-design properties and prizeotel will be the perfect fit for them.”

Amongst Radisson Hotel Group’s existing UK based brands is the upper upscale, and undoubtably fun, Radisson RED, which also has exciting additions in store for some of UK’s most popular cities. In the coming weeks, Radisson RED Liverpool is set to make a splash in the hotel space, taking over the historic North Western Hall connected to Liverpool Lime Street train station, seeing the Grade II listed building restored and revamped to fit the creative Radisson RED brand. The hotel will include historic features, such as a rediscovered secret doorway and a grand, sandstone staircase. 

Radisson RED Liverpool

Not only situated in buzzing cities, Radisson RED also has presence at the UK’s busiest airport with Radisson RED London Heathrow, which is part of the UK’s first dual-branded property, with 258 Radisson RED guest rooms and 637 Radisson guest rooms. The hotel offers guests a restaurant, bar and leisure club as well as large events spaces with two multi-purpose conference centres and 41 meeting rooms. Each Radisson RED property incorporates local art, music and fashion within its design. The eye-catching entrance at London Heathrow includes a Mini Cooper car and iconic red phone boxes that serve as self-check in terminals as a nod to England’s capital, creating a memorable arrival.

Radisson Hotel Group’s core brand, Radisson Blu, has been named the largest upper-upscale brand for the past 11 years*. It has presence in leading European cities such as Frankfurt, Stockholm, Copenhagen, Barcelona and Nice, and in the UK in Edinburgh, Glasgow, Birmingham and Leeds to name a few. Recent additions to the UK portfolio include Radisson Blu Hotel, Perth, in Scotland, and Radisson Blu Hotel, Sheffield, set to open at the end of 2023. Housed within the striking Victorian architecture of Pinstone Street, the property is a key part of Sheffield’s city centre transformation.

To stay up to date with Radisson Hotel Group’s latest news, openings and exciting destinations, visit www.radissonhotels.com

*Source: MKG Hospitality-ON 

China-exposed stocks help lift FTSE 100

UK Investor Magazine
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China-exposed stocks help lift FTSE 100

The FTSE 100’s China-exposed stocks were big winners on Tuesday on reports the Chinese government would focus on ensuring the country’s older population would receive the COVID vaccine.

Chinese vaccine rates of the over 65s are way behind other major economies – a significant factor behind the ongoing COVID-zero policy. China is also using a different vaccine to western countries which has a lower efficacy.

However, widespread unrest in China’s largest cities over the weekend sparked a response from Chinese authorities and market participants are hopeful of a continued effort to reopen China’s economy.

“The FTSE 100 bounced back on Tuesday as the same oil and mining stocks which had driven the index lower yesterday recovered on hopes for an easing of China’s strict zero-Covid policy,” said AJ Bell investment director Russ Mould.

The FTSE 100 was 0.5% higher at 7,513 at the time writing. The index had briefly broken above 7,540 earlier in the session.

China-exposed stocks

Rio Tinto was 3.5% higher while Anglo American, Glencore and Antofagasta also gained on hopes of increased demand for natural resources.

Prudential was the FTSE 100’s top riser, gaining some 5%, as investors bought into the wealth manager which earns around a third of its profit from Hong Kong and Mainland China.

Burberry also gained on the prospect of China’s luxury consumers returning to their stores in greater numbers.

easyjet

easyJet was among the FTSE 100’s worse performers after the disruption of cancelled summer flights overshadowed a record 4th quarter. easyJet shares fell as analysts pointed to struggles with costs and expansion plans.

“EasyJet is struggling to compete on costs and fares with Wizz Airline and Ryanair. Our experts say that it’s proving difficult for EasyJet to expand in markets where there is already an abundance of capacity, such as Milian,” said Olly Anibaba, airlines analyst at Third Bridge. 

“EasyJet is in a better position to compete with legacy carriers in capacity-constrained airports, thanks to its relative cost base. Easyjet’s strength remains in its aggressive cost-saving measures, including greater utilisation of aircrafts and more reliable on-time performance.”

5 Things Moving Markets 29th November

UK Investor Magazine
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5
5 Things Moving Markets 29th November

Chinese equities rally

After a weekend of unrest in major Chinese cities, the authorities have signalled they would work towards rolling out the coronavirus vaccines to the older members of their populations. The over 65s have a low rate of vaccination compared to other developed economies and has prevented the reopening of the economy.

Chinese equities rallied on the news and sparked a global risk-on rally.

FTSE 100 miners gain

The optimism from China spilled over into the FTSE 100’s natural resources sector with the mining names dominating the top gainers on Tuesday morning.

easyJet shares slip

easyJet had a record 4th quarter but overall results softer performance in the summer due to flight cancellations overshadowed recent progress as shares fell.

“Bottom line profits remain a little out of reach for easyJet, who’ve seen a wave of headwinds over the year from Omicron early on, to airport disruptions and flight cancellations more recently. Rather than head for the emergency exit, easyJet’s made the best of a bad year and full year results mask a positive fourth quarter, where on some profit measures easyJet posted record numbers,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown.

The pound gains ahead of BoE speech

Traders were betting on positive comments from the Bank of England’s Andrew Bailey ahead of his speech later on Tuesday. The Bank of England are meeting once more before the end of the year and markets will hang on his every word for hints of whether the bank hikes 50bps or 75 bps.

Oil rallies

Oil has faced threats of OPEC+ production increases and concerns about global growth in recent weeks. Today, the prospect of China’s demand increasing saw oil rally.

eastJet, China Growth, and Inflation with Alan Green

UK Investor Magazine
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eastJet, China Growth, and Inflation with Alan Green

Alan Green joins the UK Investor Magazine Podcast to dive into this week’s key market themes. We look at the FTSE 100 and the China-exposed stocks leading the index higher on Tuesday.

China has announced they will be looking at increasing the rollout of vaccines to the over 65s. Such a move will help reopen the economy and boost headline global growth figures.

We discuss easyJet and More Acquisitions.

Register for the December UK Investor Magazine Virtual Conference.

Kinovo continues to improve performance

Andrew Hore
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7
Kinovo continues to improve performance

Compliance and maintenance services provider Kinovo (LON: KINO) continues to improve its profit in the six months to September 2022 and it has a strong order book.

Three-year visible revenues total £146m, which includes contracts and predictable spend. That underpins around 90% of the 2022-23 forecast revenues of £62.1m.

Revenues improved by one-quarter to £29.8m in the first half. Margins continue to rise with underlying pre-tax profit recovering from £1.61m to £2.1m. Cash generation was strong even though delayed VAT payments had to be made in the period.

The changes in regulation over the next 18 months provide further growth prospects. Fire safety legislation has recently come into force and the building inspector and building control approver registers will start in April 2024.  

Financing

Net debt has fallen to below £100,000. However, in the short-term debt will increase again because of the requirements to finish contracts that are part of DCB, which was sold and then went into administration. Part of the deal was that Kinovo would guarantee the completion of projects. This could cost a total of £4.3m.

Net debt could reach £1.7m at the end of March 2023. If Kinovo achieves its forecasts, then there could be net cash by March 2024.

Canaccord Genuity forecast that pre-tax profit should improve from £3.8m to £4.8m. A further improvement to £5.6m is expected in 2023-24. Inflation of wages and other costs is a challenge, but Kinovo has managed to cope with this so far.

At 36p, the forecast multiple is six. That reflects the DCB overhang. If this can be paid for out of cash generation then investors will come round to the shares given the low rating.

RM sells non-core operations

Andrew Hore
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5
RM sells non-core operations

Educational supplies company RM (LON: RM.) is disposing of two non-core businesses that are part of its RM Technology division to The Key for up to £16m. This will help to bring down net debt.
The businesses RM is selling (RM Integris and RM Finance) have technology that is used by single-site primary schools. The customer base is increasingly multi-academy trusts and investment would be required to update the technology. The Key has been building market share for single sites. The move in the education market should benefit other parts of RM.
The businesses generated operating profit of £2.1m...

AIM movers: Windar Photonics returns from suspension and Inspiration Healthcare slides

Andrew Hore
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7
AIM movers: Windar Photonics returns from suspension and Inspiration Healthcare slides

Windar Photonics (LON: WPHO) shares returned from suspension after it published its 2021 accounts and 2022 interims after the market closed on Friday. The share price doubled to 16p. Windar Photonics has raised £1.8m at 15p a share. The wind turbine optimisation technology developer remains loss making.

C4X Discovery (LON: C4XD) has signed an exclusive worldwide licence deal with AstraZeneca that could be worth up to £402m. This relates to the use of the NRF2 activator programme to develop an oral therapy for the treatment of chronic obstructive pulmonary disease. There is an upfront payment of $2m with up to $14m more receivable for pre-clinical milestones. The hare price improved by 26.8% to 26p.

Energy supplier Yu Group (LON: YU.) says 2022 figures will be much better than expected with revenues expected to grow by 67% to £260m. This strong trading will continue into 2023. EBITDA margins are expected to exceed the 2.1% reported in the first half. Net cash will also be better than expected. The share price rose by 14.7% to 390p.

Anglesey Mining (LON: AYM) says a review of the Northern copper zone at the Parys Mountain copper zinc lead project in Wales shows a large body of copper mineralisation. Further drilling is planned over the next year and this zone could be more important than previously expected. The share price is 9.3% higher at 2.35p.

Inspiration Healthcare (LON: IHC) says that it expects 2022-23 revenues to be similar to the previous year because of market uncertainty, particularly in China. Cenkos has reduced its forecast revenues from £45m to £41.1m. Because the reduction relates to higher margin products it means that pre-tax profit will dive from £3.96m last year to £540,000 this year. The share price slumped 28.8% to 59.5p.

On Friday evening, energy efficiency as a service provider eEnergy Group (LON: EAAS) raised £2.525m of subordinated debt lasting until 2024, which was issued at a discount. That discount equates to 2% repayment fee and 1.25% interest each month. The 2021-22 figures were announced at the same time and 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. The share price dived 17.5% to 4.95p.

Condor Gold (LON: CNR) has issued £1m of convertible loan notes to a company related to its chairman Jim Mellon. The conversion price is 15p and this will happen if an open offer raises at least £1m for other shareholders. There are also 2.5 warrants exercisable at 15p for each converted share. The one-for-six open offer at 15p a share could raise up to £3.2m. A reduction in the nominal value of the shares from 20p to 1p is required to issue the shares. The share price slipped 11.8% to 18.75p.

Digital health technology company Induction Healthcare (LON: INHC) increased revenues in the year to March 2022, helped by acquisitions, but the loss also increased from £8.12m to £9.57m. The latest interims will be released on 5 December. The share price fell by 11% to 32.5p, which is not much higher than the all-time low.

5 Things Moving Markets 28th November

UK Investor Magazine
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5
5 Things Moving Markets 28th November

Chinese protest dents sentiment

Widespread protests in China hurt investor sentiment on Monday as Chinese citizens came out on to the streets in major cities. Protests are not unheard of in China, but the calls for the Communist party and leader Xi Jinping to step down have grabbed the world’s attention. Long lockdowns and deaths from a fire in a Chinese tower block have sparked unrest across China’s major cities.

Oil prices fall

Oil sank with risk sentiment on Monday with WTI trading down to $74 and Brent Crude $81.

FTSE 100 miners dip

The FTSE 100’s miner’s profits are inextricably linked to Chinese growth and the weekend’s developments will raise questions about the performance of country’s economy in the coming months.

7Digital wins contract with Pinterest

7Digital has won a contract with global social media company Pinterest to support content creation by allowing 7Digitial’s music service to be accessible through Pinterest’s library.

The dollar gains

The dollar gained against most major currencies as traders bought into the safe haven of the greenback in the face of uncertainties presented by China.

Superdry confirms possibility of replacing £70m funding facility

Mark Watson-Mitchell
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5
Superdry confirms possibility of replacing £70m funding facility

The Cheltenham-based ‘cool’ clothing group has confirmed that talks are underway with the Elliott Advisers-backed Bantry Bay Capital to help the refinance the £70m asset-backed facility that has to be completed in January.

Superdry (LON:SDRY) designs trend-setting affordable, premium quality clothing, accessories and footwear and its products are sold globally.

With some 695 branded stores, 220 physical stores and 475 franchisees and licensees, spanning 50 countries and employing some 4,000 people globally, the group has a strategy for delivering continued growth through its multi-channel approach that combines operating Stores, its Ecommerce sites, and through offering Wholesale.

The company has a declared mission “To be the #1 sustainable style destination” through its very distinct collections and defined by consumer style choices.

The group currently has an Asset Backed Lending Facility of up to £70m which is due to expire at the end of January 2023.

As of the end of October the group had only drawn down £45.3m of that facility, while current projections suggested the group would remain cash positive throughout most of the first half of the calendar year. 

With the early October Final Results Statement the company reported that it had positive discussions with prospective lenders but had not yet secured committed funding beyond January. 

Until those discussions conclude, the Directors stated that a material uncertainty exists around the going concern of the group, although they remained confident of a positive outcome.

Bantry Bay is a London-based specialist lender providing commercially-driven and creative debt capital solutions to corporates undergoing change.

The Elliott Advisors supported company focuses on asset-based financings, ranging from £10m to £100m+, for corporates underserved by the mainstream debt market, across a wide array of industries.

During the summer it was involved in a £60m facility out to Matalan, while it is said to be involved currently in discussions to fund some £35m to the Wilko retail chain.

The £104m capitalised Superdry group’s shares responded rapidly to the news with a heavily traded 4p rise to 130p.

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