Energean shares surge on 65% revenue increase, maiden quarterly dividend declared

Natasha Doris
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Energean shares surge on 65% revenue increase, maiden quarterly dividend declared

Energean shares surged 10.9% to 1,381p in early morning trading on Thursday following a 65% increase in revenues to $339 million in HY2 2022 against $205.5 million the year before.

The energy company reported a 165% spike in adjusted EBITAX to $198.2 million compared to $74.7 million.

Energean said its sparkling financial returns were underpinned by strong commodity prices.

The group confirmed $812.1 million in group cash at 30 June 2022, including restricted amounts of $138.4 million.

The firm also noted a one-off windfall tax in Italy of $29.3 million, with 40% paid in HY1 2022 and the remainder scheduled for payment by November 2022.

Energean revised its medium-term targets following improved gas prices in Israel and Egypt, with expected annual revenues of $2.5 billion from $2 billion, and an annual adjusted EBITAX anticipated at $1.75 billion from $1.4 billion.

“During H1 2022, Energean delivered strong operational and financial results. The ex-Edison assets have outperformed our expectations and our flagship Karish project is on track to start production within weeks and will enhance energy security in Israel and the region,” said Energean CEO Mathios Rigas.

“In addition, our growth drilling and development operations offshore Israel have enhanced our portfolio by de-risking 58 bcm of natural gas, and we are evaluating multiple geographical routes to monetisation through either increased Israeli domestic sales or key regional export markets.”

Dividend

Energean declared a maiden quarterly dividend of 30c per share, in line with its commitment to return an initial $50 million per quarter by the end of 2022 and at least $1 billion by the end of 2025.

The oil and gas firm also noted its aim to provide a minimum $100 million per quarter dividend stream to shareholders once its medium-term targets are reached.

“The strong financial performance of our existing assets, the current readiness status of our Karish project, and our strong liquidity position have allowed us to, today, declare our maiden quarterly dividend, in line with our previously announced dividend policy,” said Rigas.

“We are concurrently raising our medium-term targets to annual revenues of $2.5 billion and Adjusted EBITDAX of $1.75 billion, underpinned by production of more than 200 kboed.”

Associated British Foods shares sink on lowered FY 2023 guidance

Natasha Doris
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0
Associated British Foods shares sink on lowered FY 2023 guidance

Associated British Foods shares sank 8.3% to 1,337.5p in early morning trading on Thursday following a lower adjusted operating profit and adjusted EPS guidance for FY 2023, linked to the cost of living crisis.

The firm also highlighted the effects of macroeconomic uncertainty on its Primark business in FY 2023, with the strengthened US dollar and higher energy costs driving a stiff rise in expenses.

Associated British Foods noted the fall in consumer income would likely dent its Primark sales next year, alongside a lower operating profit margin expected for HY2 2022.

The company mentioned its adjusted operating profit and adjusted EPS for FY 2022 saw a “significant increase”, with price actions driving Q4 sales growth.

Meanwhile, adjusted operating profit outlook for grocery, sugar and agriculture sectors were reportedly in line with expectations.

Associated British Foods said improved trading in its ingredients business was projected to deliver higher operating profits.

Its Primark sales were anticipated to climb 40% to £7.7 billion, ahead of reported sales the year before at constant currency, along with an expected FY 2022 operating profit margin of 9.6% and a HY2 8% operating margin.

Associated British Foods noted approximately £1.5 billion in net cash before lease liabilities and net debt including lease liabilities of £1.7 billion.

The company added its board would consider in November whether the group had sufficient surplus cash and capital available for shareholder returns.

North America propels Somero Enterprises

Andrew Hore
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North America propels Somero Enterprises

North American demand remained strong for Somero Enterprises Inc (LON: SOM) but trading in the rest of the world was mixed. Cash generation remains impressive.

Somero Enterprises Inc designs, assembles and supplies concrete levelling equipment. There have been some supply problems that have hampered progress and inventory levels have been raised.

In the six months to June 2022, revenues increased from $64.4m to $68.5m – new products generated $3.2m. US revenues were 9% ahead, while European sales fell due to delays in shipping machines. Pre-tax profit dipped from $23.5m to $22.4m. There have been additional costs as part of expansion as well as some inflationary pressures.

The interim dividend is 11% higher at 10 cents a share, which is partly a rebasing of the interim dividend so that it is a larger percentage of the underlying total.

Additional capacity will come on stream before the end of the year and capital expenditure is likely to be lower next year.

Full year revenues are expected to improve from $133.3m to $138.8m, while pre-tax profit may edge up from £45.9m to £46.2m. Net cash of $40m is forecast for the year end. A total dividend of 43.3 cents a share is forecast, which includes an element of special dividend funded by excess cash.

At 415p, the shares are trading on eight times prospective 2022 earnings. Currently, next year’s revenues are expected to be flat and pre-tax profit slightly lower. This reflects the economic uncertainty and is a cautious estimate. Demand is still strong.

The yield is around 9%. Although it will depend on the exchange rate at the time of the dividend payment.

Alien Metals cash call

Andrew Hore
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Alien Metals cash call

Alien Metals Ltd (LON: UFO) is raising £1.5m via a placing and subscription at 0.5p a share. The cash will help to fund the development of the minerals explorer’s drilling and geological programmes. There are also plans to progress a resource review at Munni Munni platinum group element project in Australia. Prior to the announcement of the fundraising the share price ended the day at 0.65p.

Earlier this week, Alien Metals subsidiary Iron Ore Company of Australia has entered into binding heads of agreement to acquire a tenement near the company’s Hancock project. Alien Metals is negotiating a deal with Anglo American, which will provide up to $15m in funding and take 100% of iron ore production from Hancock.

There is also a revised option agreement with Windfield Metals that would give Alien Metals an indirect 90% interest in the Hancock project, as well as the Brockman DSO iron ore project. Alien Metals hopes to get Hancock in production in the first half of next year.

New executive chairman Roderick McIllree will acquire 50 million shares. He has also had 230 million shares issued to him under the terms of the EMI share option plan. They can be exercised at prices between 0.8p a share to 1.4p a share. Chief executive Bill Brodie Good will buy two million shares.

Over 70% of UK targeted by scammers in summer 2022

Natasha Doris
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0
Over 70% of UK targeted by scammers in summer 2022

The number of scams has soared year-to-date, with over 70% of UK consumers targeted by fraudsters over the last three months, according to the Financial Conduct Authority (FCA).

The cost of living crisis was identified as the main driver behind the rise in scammer activity, as desperation made easy prey out of vulnerable people.

FCA director Sarah Pritchard labelled financial con artists as a “complex and ever-evolving enemy” at the Financial Crime Summit, and called on all sectors of society to fight together.

The FCA noted a slate of scams linked to cost of living relief, with prevalent frauds including false access to rebates from utilities firms.

The Financial Ombudsman Service (FOS) reported a spike in scam complaints between April and July this year, with a significant chunk linked to cryptocurrency schemes.

“It is a depressing fact that the more vulnerable people become, the more active financial fraudsters are. We saw this during the worst of the Covid pandemic, and with inflation surging we are seeing it again during the cost-of-living crisis,” said AJ Bell head of retirement policy Tom Selby.

“Scammers often use sophisticated techniques to swindle people out of their savings, with cryptocurrency ‘investments’ offering huge potential returns increasingly used to tempt people to part with their cash.”

“These investments often end up being a Ponzi Scheme, or entirely fictitious, with those who hand over their money risking losing everything.”

Scammers are becoming more sophisticated, and are using the cost of living crisis to steal from the most vulnerable and at risk members of society across the country.

“While people of all ages can fall victim to scammers, those who are able to access their retirement pot – potentially the biggest asset they own – will inevitably be a prime target,” said Selby.

“Huge efforts continue to be made to protect people from thieves, but ultimately the surest way to avoid becoming a scam victim is to know the tricks they use and not hand over your money in the first place.”

Pound falls to lowest level against dollar since 1985

Natasha Doris
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0
Pound falls to lowest level against dollar since 1985

The Pound fell to its lowest level against the dollar since 1985 today on the back of the US currency’s rising strength and the UK’s gloomy economic outlook.

The Sterling plummeted to $1.1407 and is currently at 1.1448.

The dollar has been growing in strength over recent days, hitting a 24-year high against the Japanese yen earlier on Wednesday.

Meanwhile, the dollar has also strengthened to a near 20-year high against the Euro.

The US Federal Reserve’s hawkish stance on interest rates, alongside the country’s quantitative tightening, have served to send the dollar’s value higher at a time of market uncertainty.

“While UK-based investors will be well aware of how weak the pound is against the US dollar, … sterling is not the only currency whose decline against the greenback is gathering pace,” said AJ Bell investment director Russ Mould.

“The DXY index, which measures the value of the dollar against six major currencies, stands at its highest level since 2002. Investors need to keep a close eye on this, because periods of marked dollar strength in the past have seen chaos in emerging markets, but also weakness in developed market stocks and commodity prices for good measure.”

“The US Federal Reserve’s interest rate increases and acceleration this month of its quantitative tightening programme are, respectively, increasing the returns available on dollars relative to other currencies and at the same time draining dollars from the global economy, to almost create a shortage of bucks.”

Venture Capital in high demand across MENA region, says GPCA

Natasha Doris
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0
Venture Capital in high demand across MENA region, says GPCA

Venture capital is in high demand across the Middle East and North Africa region, according to a recent report by the Global Private Capital Association (GPCA).

The sector has a strong appetite for fintech and e-commerce products, with fintech representing 23% and e-commerce accounting for 20% of all MENA venture capital investment since 2020.

GCPA highlighted consumer demand for crypto, digital payments and BNPL as the driving factors behind the thriving market in the area.

Countries with the highest demand levels included Egypt, United Arab Emirates, Pakistan and Saudi Arabia.

The report mentioned the impact of government subsidies on the tech revolution emerging from the MENA sector, diversifying the region’s economies away from oil and gas.

GCPA noted the largest private equity deal in the MENA area was the tech acquisition by Blackstone Group of UAE technology and visa outsourcing services company VFS Global for $1.1 billion in May 2022.

Private Equity activity was also led by Silver Lake’s $800 million investment into Abu Dhabi’s AI and cloud computing firm Group 42 in 2021.

Oil falls below $90 as demand fears spark price volatility

Natasha Doris
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2
Oil falls below $90 as demand fears spark price volatility

The price of oil fell below $90 on Wednesday, dropping to $89.93 per barrel for Brent crude as demand fears sparked market volatility, fanning the flames of recession fears.

Prices dropped to levels not seen since before Russia’s invasion of Ukraine, with the swing below $90 marking a far plunge from the commodity’s heights of almost $130 per barrel in March.

Lockdowns in the world’s largest consumer China sent demand fears surging across the market, after the country shut down its 21 million population in Sichuan Province capital Chengdu and introduced a tiered restrictions system in tech hub Shenzhen.

China’s growth and production levels have declined over recent months, and the latest lockdowns sent investment bank Noruma’s expectations of the nation’s GDP to 2.7%, representing a drop from its already bleak estimate of 2.8% from its August estimate.

“Back [on Aug. 17], when we cut our Q3 and Q4 GDP growth forecasts, we did not expect growth to worsen at such a pace,” said Nomura chief China economist Ting Lu.

“What is becoming increasingly concerning is that Covid hotspots are continuing to shift away from several remote regions and cities – with seemingly less economic significance to the country – to provinces that matter much more to China’s national economy,” said Nomura analysts.

Experts are warning of a recession coming down the line in winter, exacerbating fears of lowered demand and sending oil prices down lower.

The closure of the Nord Stream 1 pipeline to Germany also served to add fuel to recession projections, according to credit rating agency Fitch on Tuesday.

Meanwhile, the US Federal Reserve is widely expected to hike interest rates following chair Jerome Powell’s hawkish stance at the Jackson Hole convention last month, and the ECB is anticipated to raise its rates aggressively at its next meeting.

AIM movers: GB Group bid approach and Arrow Exploration gas flow figures

Andrew Hore
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0
AIM movers: GB Group bid approach and Arrow Exploration gas flow figures

GTCR LLC revealed it was considering a bid for GB Group (LON: GBG) after the market closed on Tuesday. The identification services provider says that it will evaluate any proposals it receives. There is no indication of possible terms or valuation. GTCR says that it is acting on behalf of certain affiliated funds. There is no guarantee that there will be a firm offer.  

Yacht services provider GYG (LON: GYG) has risen for the second day even though the AIM quotation will be cancelled on Thursday 8 September. JP Jenkins is expected to provide a matched bargain facility before the end of September. The share price is 40% ahead at 35p, having been 21p at the start of the week. The GB Group share price has risen by 22.3% to 638.5p.

Full year results and Cenkos initiating research has helped the Coral Products (LON: CRU) share price to rise 10% to 14.85p. In the year to April 2022, revenues generated by the plastic products manufacturer increased from £10.7m to £14.4m, while pre-tax profit nearly doubled from £760,000 to £1.49m. Earnings enhancing acquisitions have helped to improve the profit and two more have been made since the year end. The total dividend is 1.1p a share. The prospective 2022-23 multiple is less than eight.

Better than expected test results from the East Pepper well in Alberta have pushed up the Arrow Exploration (LON: AXL) share price by 7.25% to 18.5p. Natural gas production peaked at 21,206 mcf/day and averaged 10,921 mcf/day. The ongoing production rate is likely to end up around 7,000 mcf/day. This well should be in production by the end of October. Arrow Exploration expects its total production rate to reach its target of 3,000 barrels of oil equivalent/day by next April.

Synairgen (LON: SNG) says a phase II study trialling SGN001 in patients with chronic pulmonary disease with a confirmed viral infection suggests that human rhinovirus, which 50% of patients had, was cleared more rapidly than in patients treated with a placebo. It also showed that in exacerbating patients there were indications of lower levels of bacterial infection in the second week of treatment. The share price has lost some of its initial gains but is still 3.64% higher at 22.8p.

Panthera Resources (LON: PAT) says that it has made a significant new gold zone discovery at Labola in West Africa. The shares are 7.3% ahead at 7.35p.

Zinnwald Lithium (LON: ZNWD) has published a preliminary economic study on the Zinnwald lithium project in Germany. Post-tax NPV at an 8% discount is $1bn with a 3.3 years payback period following the commencement of production. The project will supply battery grade lithium hydroxide to European battery manufacturers. The initial capital cost is $336.5m. The project could generate an average annual EBITDA of more than $190m. The life of the mine is more than 35 years. The share price is 4.57% higher at 9.15p.

Bluejay Mining (LON: JAY) and Rio Tinto have completed the drilling programme at the Enonkoski nickel copper cobalt project in eastern Finland. This has helped to define new targets. There is a joint venture and earn-in agreement with Rio Tinto. Bluejay Mining has decided to stop exploration at the Muhelampi site at the project, although other areas show promise. There was a negative share price reaction and it fell 9% to 5.75p.

The Verici DX (LON: VRCI) share price has fallen back following the interim figures. The 5.4% fall to 17.5p means that it is back to the level at the start of the week prior to the positive initial results from its validation study for pre-transplant prognostic test Clarava, which was shown to be effective in identifying patients that are likely to reject a transplant. There is net cash of $15.3m, which should last well into next year.

Advertising agency M&C Saatchi (LON: SAA), which remains the subject of two bids, published its interim figures today. Revenues were 10% ahead at £129m, while underlying pre-tax profit was 52% ahead at £16m, thanks to growth in higher margin specialities. However, the reported profit is much lower due to bid-related costs of £9.25m. Net cash was £39.5m at the end of June. Assuming the bids do not succeed a final dividend is expected this year. Forecast earnings are 12.5p a share. Even so, the share price fell 4.5% to 154.9p.

FTSE 100 lower as UK awaits energy relief details, Pound weakens against stronger dollar

Natasha Doris
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0
FTSE 100 lower as UK awaits energy relief details, Pound weakens against stronger dollar

Markets moved into the red as the UK awaited confirmation of the details for Liz Truss’ £130 billion energy relief plan, which would reportedly see the energy price cap frozen or reduced instead of its scheduled 80% rise to £3,548 in October.

The FTSE 100 dropped 0.4% to 7,266.3 in lunchtime trading on Wednesday.

“Action on energy bills continues to be widely trailed as new prime minister, Liz Truss, prepares for an official announcement on her policy,” said AJ Bell investment director Russ Mould.

“Given the big package that is expected, anything short could spark renewed selling in consumer-facing stocks.”

The Pound weakened against the dollar after the US currency strengthened, with the dollar index reaching a 20-year high of 110.69 earlier on Wednesday.

“Sterling remains weak and that is leaving UK stocks vulnerable to approaches from overseas predators – cybersecurity GB Group the latest on the block as it is targeted by a US private equity firm,” said Mould.

“An already shrinking UK tech sector on the London market can ill-afford another departure, GB’s peer NCC is also pulled higher by the news.”

Chinese economy

Investment bank Noruma cut its Chinese GDP forecast to 2.7% from 2.8% in August, after the country’s recent lockdown in Sichuan Province capital Chengdu and tightened Covid restrictions in tech hub Shenzhen dealt a blow to analyst estimates.

Noruma reported approximately 12% of China’s GDP was impacted by Covid measures at current time, marking a steep growth from 5.3% last week.

“Back [on Aug. 17], when we cut our Q3 and Q4 GDP growth forecasts, we did not expect growth to worsen at such a pace,” said Nomura chief China economist Ting Lu.

“What is becoming increasingly concerning is that Covid hotspots are continuing to shift away from several remote regions and cities – with seemingly less economic significance to the country – to provinces that matter much more to China’s national economy,” said Nomura analysts.

The Hang Seng dropped 0.8% to 19,044.3 and Chinese-facing stocks dipped on the FTSE 100, with Scottish Mortgage Investment Trust sliding 0.4% to 787.2p and Asia-focused insurer Prudential falling 1.1% to 922.1p.

Barratt Developments

Housing giant Barratt Developments dropped 1% to 417.9p despite rising revenues and a return to pre-Covid completion levels.

The group announced a £5.2 billion revenue in FY 2022 compared to £4.8 billion the year before, alongside 17,908 properties completed against 17,243 in 2021.

However, the positive results were marred by signs of a housing market slowdown, with the latest report from Halifax signalling a decline in housing demand on the horizon as the cost of living crisis bites.

House prices reached a new record of £294,260 per average UK property in August, however analysts warned of cooler prices for the red-hot market in the coming months.

“Now the cost-of-living crisis has hit home, and while we may not be forced to face the full impact of rises in energy prices, we’re still having to cope with rampant inflation across the board. At a time of rising rates and higher house prices, this is going to push property out of reach for desperate buyers,” said Hargreaves Lansdown finance analyst Sarah Coles.

“However, we won’t see annual house price rises fall in a straight line. This is partly because of the echoes of the stamp duty holiday last year which created really lumpy price changes a year ago.”

“However, it’s also because the property market is driven to a huge extent by sentiment, and right now, that’s a bit of a rollercoaster ride.”

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