AIM movers: Time Finance profit recovery and proposed Dev Clever delisting hits Asimilar

Andrew Hore
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11
AIM movers: Time Finance profit recovery and proposed Dev Clever delisting hits Asimilar

Small business finance provider Time Finance (LON: TIME) revenues are increasing and this is falling through to profit. In the six months to November 2022, revenues are 27% ahead at £13.2m and pre-tax profit improved from £1.2m to £2m. This is well on the way to the full year forecast of £2.8m. The gross lending book is £152.7m. The share price recovered 8.95% to 20.7p.

Zanaga Iron Ore Company (LON: ZIOC) has completed the acquisition of a controlling shareholding in the Zanaga iron ore project from Glencore Projects in return for the issue of a 48.26% stake in the company. Glencore has appointed Peter Hill and Denis Weinstein to the board. Glencore has exclusive marketing rights for the iron ore produced at the mine. The Zanaga Iron Ore share price rose 8.21% to 5.275p. Zanaga Iron Ore is in the top 40 AIM companies in terms of this year’s share price performance.

Business disposals and tax adviser K3 Capital (LON: K3C) is recommending a 350p a share cash bid from a vehicle controlled by affiliates of Sun European Partners. This values K3 Capital at £272m. The share price had already risen when the bid talks were announced, and it is 7.56% higher on the day at 341.5p. K3 Capital joined AIM in 2017 at 95p a share.

Redx Pharma (LON: REDX) has entered a clinical trial collaboration with Merck for the supply of Keytruda to be used in the combination arm of Redx’s PORCUPINE2 phase 2 clinical study evaluating RXC004 as a potential treatment for patients with biliary cancer. The share price rose 6.19% to 60p.

Education technology company Dev Clever (LON: DEV) plans to seek to leave the standard list and that has hit the share price of Asimilar (LON: ASLR), which owns 72.3 million shares and 35 million warrants exercisable at 25p each. The Asimilar share price has slumped by 58.1% to 1.625p. Dev Clever, which is rebranding as Veative Group, shares were suspended at 30p in December 2021, and it believes that a lack of interest in smaller companies means it is not worth staying listed. It may return to the market in the future. The Dev Clever investment accounted for around two-thirds of the Asimilar net asset value of £30.9m at the end of March 2022 – based on a 27p share price. Asimilar is valued at around £2m.

Broker and wealth manager WH Ireland (LON: WHI) revenues declined from £17m to £14.3m and it moved from profit to an underlying loss of £900,000. Both divisions lost money and market conditions are still challenging. However, the full year loss should be lower. The share price slipped 16.4% to 23p. This is the lowest the share price has been since 2003.

Restaurants operator Fulham Shore (LON: FUL) increased interim revenues by 26% to £49.9m and it has opened four sites since September. A range of cook-at-home Franco Manca pizzas have been launched. Management is cautious about the future even though trading in the first two months of the second half was 12% ahead. Costs are increasing and transport problem are having a negative effect. The share price declined by 15.6% to 9.5p.

North Sea oil and gas project developer Orcadian Energy (LON: ORCA) is in discussions with a preferred FPSO provider for the Pilot field but it is also exploring other concepts that could reduce capex. Pro forma cash is £1.2m. Farmout discussions could start after further progress has been made in field engineering development. WH Ireland has a fair value estimate of 259.2p a share. The share price fell 14.3% to 16.5p. The July 2021 placing price was 40p and the most recent placing was at 35p.

New AIM admission: Smarttech247

Andrew Hore
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4
New AIM admission: Smarttech247

Cyber security services provider Smarttech 247 has been planning to join AIM for more than one year and it has finally arrived. The cash raised and conversion of loan notes mean that there is a strong balance sheet to propel growth.
There will be €1m spent on new products and moving into new geographical markets. Another €200,000 will be spent on technology development. That leaves plenty of cash for working capital.
The share price ended the first day of trading at 30.5p (29.5p/31.5p) and more than 23,000 shares were traded via six bargains. Nearly 90% of the shares are tightly held so the li...

Lockdowns in China hold back Samarkand

Andrew Hore
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6
Lockdowns in China hold back Samarkand

Lower revenues from the Nomad software platform in China hampered progress at Aquis-quoted Samarkand (LON: SMK), although there was a larger contribution from the brands that the company owns.

Covid lockdowns in China hampered e-commerce trading and made it more difficult to deliver products. It also meant that potential new clients have delayed signing up to the platform.

In the six months to September 2022, group revenues improved from £7.17m to £8.25m, while the loss was reduced from £3.53m to £2.18m. Distribution costs and overheads were lower, and they could be further reduced in the second half.

The Nomad division’s revenues were 10% lower, but that was more than made up for by increased brand revenues, which are mainly generated in the UK. The distribution business, which had been falling, also increased revenues.

Technology investment will enable Samarkand to offer its e-commerce technology outside of China.

The second half, which tends to be stronger, will be affected by the same problems as the first half, although they appear to be easing. Brand revenues should continue to increase. A full year loss of £4.1m is forecast. The share price is unchanged at 53p. The March 2021 flotation price was 115p.

K3 Capital recommends bid

Andrew Hore
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K3 Capital recommends bid

Business disposals and tax adviser K3 Capital (LON: K3C) is recommending a 350p a share cash bid from a vehicle controlled by affiliates of Sun European Partners. This values K3 Capital at £272m.

The independent directors believe that trading could get tougher and that is why they recommended the bid. Some directors and management will take Bidco rollover notes as well as cash. These notes would eventually be exchanged for shares in the holding company of the business.

M&A adviser K3 Capital joined AIM in 2017 at 95p a share. Revenues and profit have increased significantly since then. This is through a combination of organic growth and acquisitions that diversified the business into other areas, such as tax.

Last year trading was better than expected for K3 Capital as revenues recovered. In the year to May 2022, revenues improved from £47.2m to £70.7m, with 24% organic growth. The total dividend was 12.1p a share. Net cash was £12m at the end of May 2022.

In the six months to November 2022, revenues are estimated to improve from £31.2m to £42m. Full year revenues are expected to be £79.5m, while underlying pre-tax profit is forecast to increase to £23m, which is much more than expected earlier in the year.

SkinBioTherapeutics raising up to £3.5m

Andrew Hore
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1
SkinBioTherapeutics raising up to £3.5m

SkinBioTherapeutics (LON: SBTX) has launched a £2.5m placing and a retail offer of up to £1m via REX at 16p a share. The share price had fallen to 15.92p.

The AIM-quoted microbiome-based skin treatments developer is using the cash to finance the roll-out of psoriasis treatment AxisBiotix-PS around the world, as well as funding development of other products, including an acne food supplement. There is also talk of potential acquisitions.  

There are main areas of focus are skin conditions, medical skin care, infection control and pharmaceuticals. The partnership with Croda is expected to lead to a product launch in 2023, which would generate revenues in the next financial year.

In the year to June 2022, there were initial revenues of £75,000, which was a disappointment. One year ago, it was hoped that the figure was going to be £1.2m. The AxisBiotix-PS is being sold directly to consumers. It is being marketed in the UK and US and there are plans for Spain and Italy. Management believes that additional marketing spending could accelerate growth.

There was £1.8m in the bank at the end of June 2022. That was after a £2.7m cash outflow.

A study for the acne food supplement should start in 2023 and a decision will be made on how this product should be sold.

The REX retail offer closes on 20 December.

FTSE 100 negative after Bank of England hikes rates

UK Investor Magazine
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FTSE 100 negative after Bank of England hikes rates

The Bank of England have moved to increase rates by 0.5% to 3.5% as expected and taken rates to the highest level in well over a decade.

The BoE followed the US Fed in moving rates higher by 50 bps as inflation rates start to fall, but remain at historically high levels and pile pressure on household spending.

The FTSE 100 was trading down 0.4% at the time of writing with consumer shares leading the losses.

Falling inflation has reduced the trajectory of interest rates which has been welcome news for equity markets that have largely priced in slower rate hikes.

However, inflation remains persistently high and further rate hikes are expected in early 2023.

“Since the last Monetary Policy Committee Meeting in early November, pressure on the Bank of England to maintain market confidence has abated somewhat and, while further rate rises are priced, the extent of further rises expected has fallen dramatically compared to those seen in the wake of the now infamous “mini” budget,” said Chris Arcari, Head of Capital Markets, Hymans Robertson.

The FTSE 100 was trading down 0.4% at 7,461 shortly after the announcement but has staged a significant rally since October. GBP/USD was down 0.9%.

Despite inflation rates falling, there is a consensus building that even if rate hikes slow in their pace, rates will remain at elevated levels for some time to come. Fed chair Jerome Powell alluded to an extended period of high rates overnight in the US.

“Judging by the market’s reaction, there’s plenty of smart money out there that thinks the most likely scenario is that rates are higher for longer. That means a deeper recession next year that could blow into 2024,” said Samuel Fuller, Director of Financial Markets Online.

Consumer shares were among the biggest faller following a poor set of results from Currys. There was very little movement in FTSE 100 constituents as a result of the rate hike but analysts highlighted the ongoing plight for consumer shares with high rates and rising prices.

“Even with an increase in rates, when coupled with sky-high inflation, anyone with cash or near cash savings will see their money being eroded in real terms. And this is likely to be felt more acutely by pensioners who are likely spend a higher proportion of their cash savings on energy bills,” said Les Cameron, savings expert at M&G Wealth.

AIM movers: PetroTal rebuilds oil production as river blockade ends and ex-dividends

Andrew Hore
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9
AIM movers: PetroTal rebuilds oil production as river blockade ends and ex-dividends

Peru-focused oil producer PetroTal Corp (LON: PTAL) says that the blockade of oil barge transportation has ended, and oil production is being ramped up. It is expected to reach 18,000 barrels of oil per day for the rest of December. The share price is 9.54% higher at 40.75p.

Blackbird (LON: BIRD) continues to rise following Tuesday’s announcement about progress with its partner EVS Broadcast Equipment, which has launched a new product including Blackbird’s video editing technology. The share price is 11.1% ahead at 15p today and it is up by one-quarter this week.

Biopesticides developer Eden Research (LON: EDEN) has secured Corteva France as exclusive distributor of biofungicide Mevalone in France. Mevalone is used to treat botrytis on grapes and other crops. Cenkos believes that the potential market is worth more than €50m. Corteva already has a relationship with Eden Research. The share price has risen by 6.19% to 6p.

Science Group (LON: SAG) has benefited from the relative strength of the US dollar and profit should be slightly ahead of expectations. The 2.25p a share bid for TP Group (LON: TPG) should be completed in early 2023. The total cash outflow should be less than £25m and the deal should be earnings enhancing. The share price has edged up by 3.95% to 395p.

Trackwise Designs (LON: TWD) is sliding closer to its 1p funding share price. It is down a further 34.3% to 1.15p.

Argos Resources (LON: ARG) is selling its PL001 production licence in the North Falkland Basin – near to the Sea Lion oilfield – to JHI. Argos Resources will receive shares in JHI, which has and interest in a project offshore of Guyana, plus cash to cover transaction costs. The PL001 licence has been extended to the end of 2024. Argos Resources is likely to have a 9.3% stake in unquoted JHI and that would be its only asset, so it will seek shareholder approval to leave AIM when the deal goes through. The share price has slumped 28.6% to 1.25p.

Clean energy technology company Libertine (LON: LIB) generated revenues of £600,000 in the first half, mainly from development work with Hyliion. Initial test results of the company’s powertrain technology have met expectations. Development spending is increasing. There was a £1.9m cash outflow in the period and cash was £4.8m at the end of September 2022. That should be enough cash for at least 12 months. The share price has declined by 21.2% to 13p. The December 2021 placing price was 20p.

Thor Mining (LON: THR) shares have declined following drilling results from the Kelly’s prospect at Ragged Range in the Eastern Pilbara. It has said that a previously announced sample was incorrectly analysed at the laboratory and it was not a high-grade result, instead it barely contained any gold. The recent results appear positive, but the share price dived by 19.1% to 0.275p. This is below the recent placing price.

Ex-dividends

Caspian Sunrise (LON: CASP) is paying a dividend of 0.04p a share and the share price is unchanged at 4.2p.

DSW Capital (LON; DSW) is paying an interim dividend of 1.76p a share and the share price is down 0.5p to 120p.

Mercia Asset Management (LON: MERC) is paying an interim dividend of 0.33p a share and the share price is unchanged at 33p.

MS International (LON: MSI) is paying an interim dividend of 2p a share and the share price fell 16p to 451p.

Northamber (LON: NAR) is paying a final dividend of 0.3p a share and the share price is unchanged at 43.5p.

Netcall (LON: NET) is paying a final dividend of 0.54p a share and the share price declined by 1p to 89.5p.

Numis Corporation (LON: NUM) is paying a final dividend of 7.5p a share and the share price is 5.9p lower at 182.7p.

Pittards (LON: PTD) is paying an interim dividend of 0.5p a share and the share price is unchanged at 61.5p.

Redcentric (LON: RCN) is paying an interim dividend of 1.2p a share and the share price slipped by 1p to 119p.

Supreme (LON: SUP) is paying an interim dividend of 0.8p a share and the share price is unchanged at 100.5p.

Vertu Motors (LON: VTU) is paying an interim dividend of 0.7p a share and the share price fell 0.2p to 52.5p.

Currys shares sinks as revenue hit by cost-of-living crisis

UK Investor Magazine
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6
Currys shares sinks as revenue hit by cost-of-living crisis

Electrical goods retailer Currys have revealed the damaging nature of the cost-of-living crisis on their business in their interims on Thursday.

Currys shares fell 7.5% as the group said revenue contracted by 7% on a reported basis. The ability for UK consumers to shell out on big ticket items and competition overseas were the main factors driving lower sales.

Hargreaves Lansdown analysts highlighted the efforts Curry had gone to in order to remain competitive, but ultimately the deteriorating macro environment was too much to maintain guidance.

“It’s been able to mitigate this in the UK with firm selling prices and cost savings but the International business has suffered in the face of heavy discounting from competition. The group has downgraded its full year pre-tax profit guidance to between £100-£125m down from a range of £125m to £145m,” said Derren Nathan, Head of Equity Research, Hargreaves Lansdown.

Currys are looking at options including credit lines to help support sales but investors have clearly decided not to wait around to see if the strategy pays off in 2023.

“Of course, our customers are feeling real cost of living pressure and our job is to help them get hold of the technology that’s more essential to their lives than ever,” said Alex Baldock, Currys Group Chief Executive.

“We’re doing that, through our price promise, giving customers access to responsible credit, and offering more products that save them money through lower energy costs. Our Go Greener range is flying off the shelves.”

DX (Group): AGM Statement sees brokers upgrade their Target Prices

Mark Watson-Mitchell
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6
DX (Group): AGM Statement sees brokers upgrade their Target Prices

The AGM Statement by Mark Hammond, Executive Chairman of the DX (Group) (LON:DX.) was very encouraging for shareholders of the delivery solutions group, whose shares were suspended for some eight months of this year.

“Trading in the first quarter of the new financial year was in line with management expectations. I am pleased to announce today that trading to date remains in line, and that the pipeline of new business opportunities continues to be very healthy. The Group remains in a strong financial position, with high levels of liquidity and significant net cash.”

The Group’s Business

Established in 1975, DX is a market leader in the delivery of mail, parcels, pallets and freight of irregular dimension and weight.

The group, which provides a wide range of specialist delivery services to both business and residential addresses across the UK and Ireland, operates through two divisions, DX Freight and DX Express.

DX now provides one of the widest ranges of overnight delivery services in the market, as well as logistics services. 

Items that DX transports range from confidential documents and valuable packages to large, awkward-to-handle freight, unsuitable for automated conveyor.

Analyst Opinions – price targets ranging 50p to 57p share

Analyst Guy Hewett at finnCap, the company’s NOMAD and joint broker, has estimates for the current year of £457.0m sales, £25.4m adjusted pre-tax profits, earnings of 3.5p and a 1.5p dividend per share.

He is even more bullish for 2024 looking for £475.6m revenues, £29.9m profits, 4.0p earnings and a 1.7p dividend per share.

Hewett has a 57p Target Price out on the shares. 

Over at the other joint broker, Liberum Capital, their analyst Gerald Khoo considers that the group’s shares have attractive fundamentals, while the company is resilient in its trading.

For this year his figures suggest £453.0m revenues, £26.7m profits, earnings of 3.3p and a similar 1.5p per share dividend. 

Liberum Capital rate the shares as a Buy and have upped their Target Price to 50p (45p).

Conclusion – from 26.5p to 35p 

I reckon that this group’s shares are looking distinctly undervalued at just 26.5p, trading at around 8 times current year earnings and yielding almost 6%.

Before the group provides a further update on trading in February it is reasonable to expect the shares looking to rise clearly over the 30p barrier, with 35p being a good price objective in 2023.

CyanConnode hopes for strong second half

Andrew Hore
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7
CyanConnode hopes for strong second half

Narrowband radio frequency communications networks developer CyanConnode (LON: CYAN) reported a decline its interim revenues but it is doing a good job of conserving its cash. The company is still on course to increase its revenues for the full year.

AIM-quoted CyanConnode is participating in tenders for 75 million smart meters in India, which is equivalent to £1bn of revenues, and more than 20 million have reached the final stage of tendering. The current record is that around one-quarter of the volume of tenders are won by partners of CyanConnode. Contracts are also being won in the Middle East and North Africa.

In the six months to September 2022, revenues fell from £4.08m to £1.35m. The operating loss doubled to £2.4m. There was a £114,000 cash outflow from operations and there was more than £1m in the bank at the end of September 2022.

Third quarter revenues are going to be at least treble those of the first half. Achieving the growth in 2022-23 revenues from £9.6m to £12.6m will still depend on improving activity levels in the fourth quarter. Demand tends to increase ahead of the March financial year end for Indian companies. A loss of £1.1m is forecast. There could be £3.2m in cash by the end of March 2023.

Uncertainty about the full year outcome has held back the share price. It did recover by 0.375p to 13.125p. That is not far off the low for the year. CyanConnode is valued at £31.6m.

If revenues can be significantly increased, then CyanConnode should be able to achieve profitability. Further contract wins will be required, though.

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