US regulators to vet Chinese firms’ audits, Reuters reports

Natasha Doris
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US regulators to vet Chinese firms’ audits, Reuters reports

US regulators have selected e-commerce companies Alibaba Group Holding and JD.com among its selection of US-listed Chinese firms for audit inspection starting from September, according to an exclusive report from Reuters.

The news organisation cited people with information of the situation. The report follows a landmark audit agreement between Beijing and Washington last Friday, which allows US regulators to vet accounting firms based in mainland China and Hong Kong.

The move marks a significant step towards ending a long-running disagreement that threatened to kick over 200 Chinese companies off the US stock exchanges.

Companies included in the initial slate of Chinese companies to have their audits inspected by US public watchdog the Public Company Accounting Oversight Board (PCAOB) apparently include Chinese KFC and Pizza Hut restaurant owners Yum China Holdings.

Reuters confirmed their unidentified source noted the respective accounting firms of Alibaba, JD.com and Yum China have been alerted to the inspection.

Alibaba currently stands as the most valuable Chinese company listed on the US market, with a value of $248 billion.

The new agreement comes after more than a decade of US regulators hammering on China’s door for access to audit the papers of US-listed Chinese companies, however Chinese authorities have previously denied any access to national accounting firms by US regulators, citing security concerns.

US regulations state any Chinese companies which fail compliance with audit working papers requests will be suspended from trading in the US from early 2024.

Reuters said it could not confirm how many and which other Chinese firms were scheduled in the first selection of US inspections at the time of writing.

FTSE 100 sinks into the red as oil prices fall

Natasha Doris
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FTSE 100 sinks into the red as oil prices fall

The FTSE 100 was impacted by falling oil prices on Wednesday, sending the blue chip index deep into the red.

Brent crude fell 3.6% to $95 per barrel on rising recession concerns, with oil giants spiralling to the bottom of the index.

Shell shares slid 3.5% to 2,257.5p and BP shares dropped 3.5% to 433.2p.

Utilities companies took a hit, with National Grid shares falling 4.1% to 1,077.5p, Centrica decreasing 2.3% to 74.7p and SSE decreasing 2.5% to 1,668p.

Food prices accelerate

Food prices continued to accelerate at alarming rates, exacerbating cost of living fears as households across the UK faced the horrible decision between heating and eating as grocery and energy prices crushed consumer budgets from all sides.

“Food price inflation continues to be an accompanying problem to soaring energy bills with the latest data revealing, somewhat alarmingly, that prices for fresh food are rising at their fastest level since the Great Financial Crisis,” said Mould.

Tesco shares fell 0.8% to 248.9p, Sainsbury’s slid 0.8% to 204p and Associated British Foods dropped 1.8% to 1,513.7p.

US Futures Steady

Meanwhile, US futures seemed steady despite US Fed chair Jerome Powell’s hawkish stance at the Jackson Hole convention last week, with aggressive interest rate hikes looming on the horizon.

“The big economic announcements later this week come from the US and include PMI figures and the latest jobs report,” said Mould.

“While both are typically influential on markets, this time round the firmness of Federal Reserve chair Jerome Powell’s hawkish stance at Jackson Hole means it could take a real surprise to alter the market’s trajectory.”

The Dow Jones was flat at 31,777 in pre-open trading, with the S&P 500 gaining 0.1% to 3,994.7 and the NASDAQ climbing 0.6% to 12,437.7.

European Markets

European markets opened to a rough day of trading after Russian energy group Gazprom turned off the tap for Nord Stream 1 to Germany.

The shutdown was announced earlier in August, with the company citing maintenance works as its reason for gas flow suspension. The move sent markets into decline as Europe braced for three days without gas supplies from Russia.

The German DAX dropped 0.6% to 12,882.6, the French CAC fell 0.9% to 6,153.7 and the Italian FTSE MIB slid 0.8% to 21,644.7.

However, some good news arrived as analysts noted European countries were stockpiling energy for winter ahead of schedule, easing some pressure from the continent ahead of a difficult season.

“A fall in wholesale gas prices yesterday, as European storage targets were met early, provided some hope that the current energy crisis might ease slightly,” said AJ Bell investment director Russ Mould.

“However, as we move out of the summer period into autumn and winter the pressures here are only likely to get more acute.”

AIM movers: Positive erectile dysfunction news from Futura and Shoe Zone continues to surprise

Andrew Hore
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AIM movers: Positive erectile dysfunction news from Futura and Shoe Zone continues to surprise

Futura Medical (LON: FUM) says that the clinical study for the MED3000 topical gel erectile dysfunction treatment has met its primary and secondary endpoints. They showed an improvement in erectile function and a highly statistic improvement in the onset of action at 10 minutes. There were limited side effects with 4.3% of patient suffering headaches and a further 4.3% nausea, which is much better than rival treatment tadalafil. The next move is submitting MED3000 for FDA review as a De Novo medical device for the over-the-counter treatment of erectile dysfunction. This could lead to marketing authorisation by the first quarter of 2023. MED3000 has received the UKCA mark. Cooper Consumer Health has the exclusive licence for the commercialisation of MED3000 in the UK and the EU. The share price has fallen back from its high for the day, but it is still 16.2% higher at 43p.

Footwear retailer Shoe Zone (LON: SHOE) has made another positive trading update thanks to its focus on affordable shoes and raised 2021-22 pre-tax profit guidance from £9.5m to £10.5m. Strong trading in August, helped by the return to school, and cost management have improved the expected profit. Zeus estimates earnings of 16.8p a share. That leaves the 6.8p a share dividend forecast well covered. The share price rose 5.17% to 152.5p.

Alien Metals (LON: UFO) has granted Anglo American an exclusive right to negotiate and agree terms for up to $15m in funding and 100% of the offtake from the Hancock iron ore project in Western Australia. Anglo American will receive a royalty for 24 months. The terms are indicative. Conditions include that Alien Metals has to raise $5m in new equity. Alien Metals shares have jumped 17.4% to 0.675p.  

Nanosynth Group (LON: NNN) shares are higher for the second day running following successful trail results with Volz Holdings concerning the use of the company’s antiviral technology in heating, ventilation and air conditioning units. UK regulatory approval will enable production of up to 100 tonnes of copper oxide nano material a year. The share price rose 16.5% to 0.6p.

Egg-free cakes retailer Cake Box (LON: CBOX) says trading is becoming more difficult and only part of the cost increases are being passed to franchisees. Sales are also under pressure with a like-for-like decline of 2.8% so far in this financial year. This means that full year profit will be much lower than the £7.2m expected. There is £6.7m in cash, although the £2m dividend will be paid in September. Cake Box is the worst performer of the say with a 40.2% slump to 107p.

AxisBiotix-PS revenues remain modest and SkinBioTherapeutics (LON: SBTX) shares have declined by 13.8% to 18.75p. A global partner is being sought for AxisBiotix-PS. The psoriasis treatment generated £75,000 in eight months. That is not doing much to reduce the cash outflow of the business. There was £1.8m in cash at the end of June 2022, down from £4.6m 12 months earlier. A cash raising is inevitable. There is positive news about the company’s oral health product and the optimal bacteria/lysate mix is being assessed prior to human studies. There could be good news to come from Croda, which is SkinBioTherapeutics’ partner in the cosmetics sector.

ECO Animal Health (LON: EAH) had already warned that it made a slow start to the current financial year and that it would have to provide for a potential sales tax liability on exports. Yet the share price fell another 6.95%% to 87p when the 2021-22 results were released. The share price has fallen by one-third since the original profit warning. The results themselves were not a great surprise because the 22% decline in revenues and slump in profit was expected. Low Chinese hog prices are hampering demand for antibiotics, such as Aivlosin. The business is growing outside of China.

Independent directors of market research firm System1 Group (LON: SYS1) are conducting a strategic review. This will assess whether the company can grow faster if partners or external investor are brought in. The proposed tender offer is being postponed. The share price has fallen 12% to 220p

Cancer diagnostics developer Oncimmune Holdings (LON: ONC) is delaying its 12-month results. The year end is being changed from ay to August, so the full financial period will be 15 months. The shares declined by 8% to 88.9p.

Co-op sells petrol stations to Asda for £600m

Natasha Doris
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Co-op sells petrol stations to Asda for £600m

The Co-operative Group has agreed to sell a selection of locations including its petrol stations to Asda for £600 million.

The transaction will see Asda acquire 132 locations from the Co-op for a cash value of £438 million and an additional expense of £162 million for IFRS16 lease liabilities.

The deal comes as part of Asda’s growth strategy to move into the convenience market, which includes 129 established sites with a grocery store between 1,500 and 3,000 square feet and an attached petrol station.

Asda confirmed the agreement would be financed through a combination of existing cash resources and bank finance.

The stores included in the deal delivered net sales of £863 million and pro forma EBITDA of £53 million for the 12 months to June 2022.

“We have always been clear in our ambition to grow Asda and are hugely excited to create this new and distinct part of our business, giving us the opportunity to bring Asda value in fuel and groceries to even more customers and communities across the UK,” said Asda co-owner Mohsin Issa.

“We see convenience as a significant growth opportunity for the business. This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second largest supermarket.”

“We look forward to welcoming the Co-op colleagues to this new part of our business after we complete the transaction and due processes in the coming months.”

Polarean Imaging operational loss widens to $6.6m on product launch costs

Natasha Doris
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0
Polarean Imaging operational loss widens to $6.6m on product launch costs

Polarean Imaging shares dropped 2.6% to 60.8p in late morning trading on Wednesday, after the firm announced a gross profit decrease to $294,840 in HY1 2022 from $298,689 in the previous year.

The company reported a revenue growth to $834,087 against $621,874, as a result of its polariser systems sales to McMaster University in Ontario, Canada and the Cincinnati Children’s Medical Centre.

Polarean Imaging confirmed a rise in administrative expenses to $1.4 million from $1.2 million due to infrastructure building expenses to support the launch of its product, along with a cost of sales climb to $539,247 compared to $323,185.

The firm highlighted a loss from operations climb to $6.6 million from $5.2 million last year, and a loss on ordinary activities before tax of $6.9 million against $4.8 million.

Operating expenses rose to $7 million against $5.5 million on the back of higher regulatory costs to support the resubmission of its New Drug Application (NDA) for the firm’s drug-device combination.

The group mentioned net cash of $22.7 million as of 30 June 2022, which Polarean Imaging said could finance the company into 2024 “based on strategic decisions.”

Polarean Imaging noted a basic and fully diluted loss per share of 3.3c from 2.6c year-on-year.

“During the first half of this year, we have focused on the approval process of our NDA, and addressing the findings related to the CRL. The FDA processes are proceeding with question and answer and other interactions with the FDA as we approach our goal action date of 30 September 2022,” said Polarean Imaging CEO Richard Hullihen.

“We have also made appropriate progress on our commercialisation planning activities, which include medical engagement of pulmonology and radiology thought-leaders at scientific conferences, profiling of our target top-tier academic institutions, and reimbursement code investigation and applications.”

“We are excited to welcome our latest new researchers and sites, while renewing the capabilities of existing users, which continue to increase clinical research momentum.”

Russia shuts down Nord Stream 1 pipeline to Germany, energy crisis deepens

Natasha Doris
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0
Russia shuts down Nord Stream 1 pipeline to Germany, energy crisis deepens

Russian energy firm Gazprom shut down the Nord Stream 1 pipeline on Wednesday for unscheduled “maintenance work” on the Trent 60 gas compressor unit operating on the critical supply route to Germany.

Gas supply to Europe is scheduled for suspension until 2 September, temporarily crippling the continent’s efforts to stockpile energy supplies in advance of winter.

Gazprom reported gas transmission would resume on 2 September at a rate of 33 million cubic metres per day, provided “no further malfunctions are identified.”

The Nord Stream 1 pipeline was previously closed down for 10 days in July for repairs, however the current shutdown was announced with less than two weeks’ notice, sending Europe into an energy crisis spiral.

Russia previously cut Nord Stream 1 to 40% capacity in June and 20% in July, citing maintenance complications and sanctions apparently barring the installation of necessary equipment.

Gas prices have spiked by 400% as countries rush to stockpile supplies in fears Russia will cut off its flow entirely as the continent heads into a deepening cost of living crisis.

Cake Box shares plummet after ‘challenging economic and trading environment’ warning

UK Investor Magazine
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Cake Box shares plummet after ‘challenging economic and trading environment’ warning

The value of Cake Box Holdings shares nearly halved on Wednesday following a warning the company was facing a ‘challenging economic and trading environment’ that would squeeze margins.

The high levels of inflation seems to have claimed another victim in the operator of 220 outlets egg-free cake outlets across the UK.

The group said they were attempting to offset input cost increases by raising prices but said full year earnings would be below market expectations.

Despite the challenges of the immediate outlook, Cake Box maintained they had a strong balance sheet to see them through a period of softer economic conditions with a cash balance £6.7m, prior to paying the proposed dividend of £2.0m in September.

The company said they were looking to the future with a number of new outlet openings in the pipeline.

Castillo Copper shares gain on BHA project contractor confirmations

Natasha Doris
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0
Castillo Copper shares gain on BHA project contractor confirmations

Castillo Copper shares gained 8.4% to 0.89p in early morning trading on Wednesday, after the mining group announced the appointment of two contractors for its inaugural drilling campaign at the BHA project’s east zone in Q4.

The company confirmed the appointment of AllState Drilling, who will perform the campaign which comprises one diamond core and 17 RC drill-holes for 2,100 metres, with depths between 100 metres to 160 metres.

Castillo Copper also noted the addition of FieldCrew, who previously performed work at the NWQ Copper project in Queensland, Australia. FieldCrew will manage the day-to-day concerns of the drilling campaign.

Meanwhile, Castillo Copper reported Australia secured preferred status for the supply of critical minerals to the US’s electric vehicles battery program.

The mining group said it wanted to deepen its knowledge of the East Zone’s Rare Earth Elements (RRE) potential at the Sisters Prospect and Iron Blow targets.

The Sisters Prospect’s two planned RC drill-holes will be analysed for copper-cobalt gold and REEs, and the Iron Blow operation will have its additional drill-core samples tested to determine if there are further extensions to known mineralisation, following the prior discovery of REEs.

“The Board is delighted to have secured AllState and FieldCrew as key contractors for the upcoming drilling campaign. Notably, AllState is a highly reputable drilling group, while FieldCrew has done considerable fieldwork across the BHA and NWQ Copper Projects,” said Castillo Copper managing director Dr Dennis Jensen.

“In addition, with sentiment currently positive towards REEs, the Board is interested in boosting its understanding of the potential across The Sisters and Iron Blow Projects.”

Alien Metals shares jump on Anglo American agreement

UK Investor Magazine
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Alien Metals shares jump on Anglo American agreement

Alien Metals shares surged on Wednesday after the metals explorer announced an agreement with global mining giant Anglo American related to the Hancock Iron Ore Project in Western Australia.

Alien Metals, through its wholly-owned subsidiary Iron Ore Company of Australia, has signed an agreement for 100% of the offtake from the Hancock project and $15 million funding.

Alien Metals will have access to a $10 million advance payment facility and upto $5 million in vessel payments for the first 12 months.

Anglo American will receive an agreed royalty for the 24 months as part of the deal that includes conditions such as a $5 million equity raise being used for Hancock and the approval of permits and licenses.

Today’s announcement is major endorsement of the Hancock project and the development work by the Alien Metals team. Alien Metals shares traded as high as 0.80p, before falling back.

“We are really pleased to have signed this Mandate Letter with a leading, global mining company of Anglo American’s stature,” said Bill Brodie Good, CEO of Alien Metals.

“The Mandate Letter provides a pathway to negotiate and agree the potential development debt funding, and a 100% offtake solution. This Mandate Letter supports our near-term production aspirations and, unlike conventional debt finance, the potential bespoke funding with offtake provides alignment between the parties for the pursuit of scale across multiple assets with a world class counterparty.

“The Board is continuing to assess development plans at Hancock which may reduce the initial capex requirement outlined in the October 2021 Scoping Study and will advise once this process is complete.”

Alien Metals operates the Hancock Project in a diverse portfolio of global mining assets which includes Mexican Silver projects and PGM asset in Australia.

Serabi Gold shares fall as HY1 revenues and profits slide

Natasha Doris
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0
Serabi Gold shares fall as HY1 revenues and profits slide

Serabi Gold shares fell 7.2% to 33.4p in early morning trading on Wednesday after the gold mining company announced a revenue decrease to $31 million in HY1 2022 from $32 million the last year.

Serabi Gold confirmed a problematic Q1 2022, with a net cash outflow of $2.5 million driven by lower production across the financial term. Production picked up by 19% in Q2, however profits and revenue still suffered a significant blow.

The firm reported a rising cost of sales to $23 million compared to $18 million.

Serabi Gold highlighted an EBITDA fall to $5 million against $11 million, alongside a drop in operating profit before finance and tax to $2 million from $8 million in the previous year.

The commodities group noted a pre-tax profit slide to $2 million compared to $6 million.

Serabi Gold mentioned a basic EPS decline to 2.74c from 9.06c.

The company pointed out cash and cash equivalents of $9.8 million at 30 June 2022 against $12.2 million at 31 December 2021, along with net assets of $84.1 million from $79.8 million.

“Compared with the same six-month period in 2021, we have incurred a 46 per cent increase in spending on underground drilling to grow the mineral resource inventory and build long term mining plans, a 48 per cent increase in power costs which includes diesel for generators and grid supplied electricity as well as increased costs of reagents and other consumables across both the mining and processing activities,” said Serabi Gold in a statement.

“As well as the continued investment in underground drilling to grow the mineral resource at Palito, we have continued to update the mining fleet with an additional US$1.5 million spent on capital equipment in the second quarter compared with less than $400,000 in the same period of 2021 and we continue to progress the mine development at Coringa. This capital programme together with the underground drilling activities are the platform for building the future production growth and complement the continued potential presented by the regional exploration that is attracting external interest.”

“The cash position remains strong, with cash held at 30 June 2022 of US$9.8 million with a further US$1.9 million received shortly after the month end for a sale of copper/gold concentrate following a small delay to sailing schedules.”

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