IMI to acquire Bahr Modultechnik for €98m

Natasha Doris
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IMI to acquire Bahr Modultechnik for €98m

Institute of Motor Industry (IMI) shares rose 2.7% to 1,403p in early morning trading on Monday, following the firm’s proposed acquisition of electric liner motor specialist Bahr Modultechnik for €98 million.

Bahr Modultechnik is based in Luhden, Germany, and is currently owned by IK Partners.

The company is reportedly set to join IMI’s Industrial Automation Business Unit within IMI Precision Engineering, with co-CEO Cihan Halavurt and co-CEO and co-Founder Dick Bahr confirmed to remain at the business post-acquisition to assist with the maximisation of growth potential after the merger.

The acquisition is reportedly in line with IMI’s strategy of ‘breakthrough engineering for the better world’, and will allow the firm to develop a power agnostic series of pneumatic and electric liner motion systems.

“I am pleased to welcome Bahr Modultechnik to IMI. The company has a fantastic product portfolio that is highly scalable in attractive growth markets,” said IMI Precision Engineering divisional manager Beth Ferreira.

“We are looking forward to working with Cihan, Dirk and the entire Bahr team to leverage this fantastic opportunity and drive growth together.”

IMI confirmed that the purchase price implies a multiple estimated at 13.5 times the stand-alone forecasted EBITDA, excluding the growth synergy potential from the acquisition of the company.

Bahr Modultechnik reportedly grew revenue from 2019 to 2021 through the Covid-19 pandemic at a 12% CAGR and 27% growth for the initial four months of 2022.

“In the context of growing demand for automated solutions across various industries including warehouse automation and material handling, IMI has recognised the potential of Bahr Modultechnik and presented a vision that is strategically compelling for both Bahr and IMI. In IMI, we have found a partner who appreciates the value of our brand and capabilities and will support the company in its long-term global growth trajectory,” said Bahr.

“We will continue our successful course and open up new potential, as well as long-term stability, for our customers and employees by belonging to a successful Group.”

The deal is projected to close by mid-June 2022.

What can RCEP add to Vietnam’s FTA collection?

Vietnam Holding
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What can RCEP add to Vietnam’s FTA collection?

On January 1, the Regional Comprehensive Economic Partnership (RCEP) came online. The free trade agreement (FTA) includes the ten members of ASEAN, Australia, New Zealand, China, Japan, and South Korea. 

These 15 nations account for roughly 30% of the world’s population and 30% of global GDP, making RCEP the largest-ever trade bloc. 

As of this writing, however, Myanmar, Indonesia, and the Philippines have yet to ratify the agreement.

It also adds to Vietnam’s long list of FTAs, which range from other huge deals such as the CPTPP down to bilateral agreements between one other country. The country is currently part of 13 such agreements, including seven signed as part of ASEAN and six as an independent party. 

According to the Hanoi Times, Vietnam is already heavily integrated with RCEP members: in 2020, trade turnover with the bloc accounted for 55% of the country’s total revenue in 2020, while 41% of exports went to RCEP members, and 71% of imports came from them. 

This trade deficit within the FTA is a concern, but the deficit to total bilateral trade value has actually improved slightly over the last few years, and researchers at HSC argue that “it is rational to expect that trading with the RCEP bloc will result in an improved trade balance relative to total trade volumes.”

Register for Vietnam’s Prominent Role in the Global Supply Chain webinar here

At the same time, the lowering or eventual elimination of tariffs between RCEP members could allow Vietnamese companies to diversify their sources of production inputs. This would, in theory, reduce reliance on China, which accounts for nearly 40% of imports for Vietnam’s lucrative electronics and machinery industries. 

HSC forecasts that exports from Vietnam to RCEP nations could grow across the board, and especially to Japan and South Korea. 

While large-scale trade expansion isn’t expected given the existing FTAs with RCEP members, one unique aspect of the agreement is its ‘cumulation rule’ when it comes to rules of origin (ROOs). 

Every FTA has its own ROOs which must be met in order for a country to enjoy preferential tariffs, and RCEP allows goods from one member to be used as input for production in another member while being designated as ‘made in’ the country where the final manufacturing takes place. 

This could benefit Vietnam’s textile and garment products being shipped to Japan, for example. Prior to RCEP, strict Japanese ROOs stated that fabrics had to originate from ASEAN, whereas Vietnam imports most of its fabrics from China.

Now that both China and Japan are part of RCEP, Vietnam can import material from the former and, by 2038, enjoy a 0% export tax rate on shipments to Japan.

“RCEP may also help Vietnam businesses import raw materials and intermediatory or semi-finished inputs for production at a lower price than the pre-RCEP period as most of the imported materials are being used to produce export items,” Dr. Erhan Atay, RMIT Senior Lecturer of International Business, told RMIT’s news site.

However, not everyone believes that the FTA will accomplish much. 

“RCEP will have little short-term benefit for our business,” Simon Pugh, president of AusCham Vietnam, said. “It is a high-level intergovernmental hand-shaking opportunity with 20-year windows on meaningful issues such as tariff reduction.” 

Standard Chartered, meanwhile, sees Vietnam as a key beneficiary in the long run, with RCEP potentially forming the basis for a new regional supply chain that the country would play a key role in. 

Register for Vietnam’s Prominent Role in the Global Supply Chain webinar here

This possibility comes as severe global supply chain issues continue to plague many industries, while the Vietnamese government aims for export growth of 6-7% annually until 2030. 

There are broader criticisms of RCEP as well, particularly around the lack of provisions on labor and environmental standards or state-owned enterprises – which are extremely important issues in most of the member countries.

But the economic benefits will likely come to fruition, with the Asia Development Bank estimating that if the agreement is effectively implemented, it could add US$245 billion in annual income to members while also adding up 2.8 million jobs by 2030.

As countries emerge from the Covid-19 pandemic at varying levels of economic health, every bit will help. 

Writing credit Michael Tatarski

Capital Gearing Trust announces £10.3m revenue, gears up for challenging FY 2023

Natasha Doris
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Capital Gearing Trust announces £10.3m revenue, gears up for challenging FY 2023

Capital Gearing Trust shares gained 0.2% to 5,163p in early morning trading on Monday, following the firm’s reported pre-tax net return revenue growth to £10.3 million in FY 2022 from £6.7 million in FY 2021.

The trust announced a pre-tax net return capital increase to £58.4 million against £57.3 million in the previous year, alongside a net return attributable to equity shareholders revenue uptick to £9.8 million compared to £6.3 million and a net return attributable to equity shareholders capital rise to £58.4 million from £57.3 million.

Capital Gearing Trust mentioned a share price dip to 10% from 10.6% year-on-year, with a NAV per share decline to 10.5% from 10.7% against the MSCI UK Index 18.7% rate against 19.1% the year before.

Its share price relative to the MSCI UK Index slid 7.3% in 2022 compared to 7.1% in 2021.

The group closed the fiscal year on a NAV per share of 5,025p with a share price total return of 5,140p, marking a reportedly decent year of returns for the firm despite a volatile market.

Portfolio in FY 2022

Capital Gearing Trust attributed its results to the outperformance of the equity and bond portions of its portfolio, with its percentage of inflation-linked assets climbing in the past year, including government-index linked stocks, property exposure, and investments in renewables and infrastructure opportunities.

The group confirmed investments in power and energy plans, which performed to a satisfactory extent in Q1 2022, with investments in ETFs and direct investment in companies, under the heading of risk assets, which accounted for 44% of the portfolio along with other equity investments.

Capital Gearing Trust said 50% of its portfolio was held predominantly in government index-linked stocks, with a small proportion of its holdings placed in short-dated conventional bonds, preference shares and treasury bills.

The company confirmed it had lined these options up as a contingency measure to deploy if the market failed, with 6% invested in gold and cash to buy into equities at attractive valuations.

The trust commented that this strategy had historically made a difference to long term returns for the company.

Gearing up for challenging 2023

Capital Gearing Trust mentioned the gloomy macroeconomic picture going into FY 2023, however it commented that the firm held a range of near-cash investments which it could deploy if the markets fell to more attractive levels, alongside its selection of inflation-linked assets which are set to protect the company from “the worst ravages of inflation.”

The group said it would focus its risk assets on sectors including rented accommodation, renewable infrastructure, energy, materials and commodities investments across FY 2023.

Capital Gearing Trust noted a revenue return per share post-tax and expenses of 56.8p, in light of higher levels of equity income, especially from infrastructure and property shares.

The board recommended a dividend of 46p per share, against a payment of 45p in FY 2021.

Dr Martens fall appears overdone

Andrew Hore
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Dr Martens fall appears overdone

Footwear supplier Dr Martens (LON: DOCS) is reporting its full year figures on Wednesday 1 June. Dr Martens floated 16 months ago and got off to an impressive start, going to a significant premium to the placing price of 370p. However, there has been a downward trend in the past 12 months, reaching 209.2p at the end of last week. The results should reassure investors that the decline has been overdone.
In the year to March 2022, revenues are expected to increase from £773m to £906m, while pre-tax profit could be around £196m.
The level of cash will be interesting. The consensus figure for net ...

Serica Energy remains cash generative despite tax

Andrew Hore
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0
Serica Energy remains cash generative despite tax

The new energy profits levy will hit the figures of AIM-quoted North Sea oil and gas producer Serica Energy (LON:SQZ), although it will still be generating enormous amounts of cash over the next three years.  
That is not to say that the new 25% tax on excess profit will not remove a chunk of the potential cash generation. Capital investment in the North Sea can be used to offset the tax charge. There will be 91p of tax relief on every £1 of new investment in the North Sea.
Production is expected to decline from 27.5M/boe/d to 23.5M/boe/d over the next three years, but high prices mean th...

Silverwood Brands secures skincare purchase

Andrew Hore
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0
Silverwood Brands secures skincare purchase

Silverwood Brands (LON: SLWD) has secured a suitable reverse takeover target. Balmonds Skincare, which manufactures products for people with skin conditions, such as eczema, psoriasis and dermatitis. The initial consideration is in shares and will equate to 41.7% of the enlarged share capital and 54.4% if the full payment is made.
Last November, Silverwood Brands raised £1.03m at a placing price of 40p. The share price soared in the first month of trading and it reached 110p, but it has fallen back to 65p. The consideration shares are being issued at a notional price of 85p each.
The total cos...

CAP-XX – a real burst of energy is now offered by this ‘penny-stock’

Mark Watson-Mitchell
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2
CAP-XX – a real burst of energy is now offered by this ‘penny-stock’

Sometimes even very small companies can be world leaders.

One such example is CAP-XX (CPX.L), it is only capitalised at £21m, yet it is a world leader in the design and manufacture of thin form supercapacitors and energy management systems.

After years of operating losses, I now believe that it is about to break into profitability that could turn this little ‘penny stock’ into a potential winner.

What is a supercapacitor?

A supercapacitor is an electrochemical energy storage device.

It is not a new invention – it is a technology that is over 65 years old. 

The first supercapacitor was created by General Electric in 1957. 

Standard Oil, nine years later, by accident developed its fuel cell possibilities.

It was not until the late 1970’s that NEC, the Japanese giant, started to offer commercially the first supercapacitor for computer memory backup.

Helping to transform hybrid-transportation

The latest variations are creating properties that are helping to transform hybrid-transportation.

The fast-expanding electric vehicle market is alert and excited about what is coming on offer.

Companies like Toyota, Peugeot-Citroen, Mazda, Lamborghini and, of course, Tesla, have all released new vehicles using a combination of supercapacitors and lithium-ion batteries.

Can you see yet the background of why I am now getting worked-up about the potential for this small-cap stock?

Firstly, let us get down to basics

Supercapacitors are a cross between a battery and an ordinary capacitor.

Previously known as condensers, a capacitor is a passive two-terminal electrical component. It contains two electrical conductors separated by a dielectric, such as an insulator. It stores electrostatic energy to give that energy to a circuit, when required.

Lithium-ion batteries rely entirely on chemical reactions, they consist of a positive (anode) and a negative (cathode) side. The two sides are submerged into a liquid electrolyte and separated by a micro-perforated separator, which allows only ions (atoms or molecules of net electrical charge) to pass through.

When batteries are charging and discharging, those ions flow back and forth between the cathode and the anode. That process gradually wears down the lifespan and the energy power.

Supercapacitors are different to lithium-ion batteries, in that they do not rely on a chemical play to work, because they store potential energy electrostatically within them. They use an insulator between their plates to separate the collection of the negative and positive charges building up on each side’s plates.

That separation enables the device to store energy and quickly release it. Supercapacitors are best used for very small bursts of power.

Due to their ability to store and release energy they are superior to traditional capacitors.

During the ion transfer process batteries get heated, expand and then contract, which degrades a battery and reduces its lifespan.

A regular battery can handle between 2,000 to 3,000 charge and discharge cycles, while supercapacitors can handle more than 1m. Their ability to recharge within seconds does not rely on chemical reactions, as in batteries, so they do not degrade over time, also offering a much longer lifespan. Which in turn helps to save in both materials and other costs.

The company

Based in New South Wales, Australia, the company was formed way back in 1990 under the name of Energy Storage Systems Pty.

It later changed its name to CAP-XX, before getting its equity quoted on AIM in late April 2006. 

At that time the company was valued at some £45.2m, with its shares having been Placed at 93p each to raise £17.1m in the process.

It develops, manufactures and markets thin, prismatic supercapacitors and energy management systems which offer exceptionally high-power density and energy storage capacity. 

Helping to power next generation products, they can be used alone or in conjunction with batteries to create power solutions for a large range of commercial devices.

Ideally suited for use in space-constrained and mission critical applications, they offer high cell voltage and can be operated in wide temperature ranges, with very low current leakage.

Its products can be used for in a variety of applications, such as for digital cameras, mobile phones, tablet computers, handheld computers, scanners, smart meters, point of sale terminals, wireless sensors, telemetry units, asset and location-tracking equipment and finally for clean energy applications, such as energy harvesting and micro-hybrid vehicles.

Although it is based in Australia, the company operates and has global distributors in the Asia Pacific region, in Europe, the Middle East and Africa, as well as in North, Central and South America.

Recent developments advance group prospects.

A recent research report states that a breakthrough could be achieved from graphene-based supercapacitors.

Graphene, which is claimed to be the world’s thinnest material, is a single layer of carbon atoms, yet it is stronger than steel.

A solution has been created, consisting of two graphene layers with an electrolyte layer between them.

That results in a film that is not only strong and thin, but which can release large amounts of energy in a short time.

Researchers consider that the new, thinner supercapacitors could replace bulkier batteries in future versions of electric vehicles.

They could store more energy than a lithium-ion battery while retaining the ability to release its energy up to ten times faster. The supercapacitors could be built into car body panels enough to entirely power the car, after a full charge, sufficient to run over 300 miles.

This means that in tandem with the use of lithium-ion batteries the new supercapacitors would be playing an important and necessary role in hybrid-electric technology.

Reduced graphene oxide doubles

Early in May the CAP-XX group announced that it had entered into a Joint Venture Agreement with Ionic Industries for the commercialisation of reduced graphene oxide materials (rGO) for supercapacitors and other energy storage devices.

Ionic, which is another Australian company but based in Melbourne, has under a licence for rGO, developed new forms of graphene for transformational energy storage technologies. 

The JV, 51% to CAP-XX and 49% Ionic, will buy rGO products from Ionic, while CAP-XX will manufacture and sell supercapacitors and energy storage devices using rGO on behalf of the JV.

The rGO material is highly conductive, which increases electrode energy density by over 100% compared to CAP-XX’s current electrode. That approaches the energy density of lead acid batteries, providing superior power density and cycle life.

Boss of CAP-XX, Anthony Kongats, stated that

“We are delighted to have formed this joint venture with Ionic, which gives CAP-XX the opportunity to commercialise a new class of supercapacitors with significantly higher energy densities using Ionic’s proprietary reduced graphene oxide. Our immediate goal is to translate the rGO technology into a system that can meet all the stringent performance and specification requirements of commercial supercapacitors.”

Collaboration with University of New South Wales

The late May announcement that the group is preparing to launch a new 3V supercapacitor at the end of this year has given the company a bit of a spark.

Collaboration with university partners, such as the latest with the University of New South Wales (UNSW), can lead to direct commercial applications which can enhance the performance of the group’s supercapacitors.

The recent result of the Monash University collaboration is a supercapacitor with exceptionally low leakage current. Low leakage current is arguably the single most important parameter when considering a 3V supercapacitor being directly connected to a battery, especially a non-rechargeable battery. 

Originally it was planned to extend the project work at the group’s Malaysian manufacturing site, but certain delays and the results from UNSW prompted the Company to pivot back to using the group’s Sydney site.

The 3V supercapacitor, when launched, will provide a high-performance complement to traditional 3-volt coin cell batteries.

There is more good news to be generated

In due course the latest news, such as the development with Ionic and the collaborations with leading Universities, is looking very positive for CAP-XX shareholders.

The group has some 510m shares in issue, while its larger professional investors include Canaccord Genuity Wealth, Quilter Cheviot and Ruffer. 

Cenkos Securities, the company’s broker, rates the group’s shares as a ‘buy’ and has a discounted cash flow valuation on the shares at 13p each. 

That is more than three times the current share price.

For the current year to end June the broker is estimating that revenues will be up from A$4.1m to A$5.8m, with almost trebled losses of A$1.9m against just A$0.7m loss previously.

For the coming year starting in July it sees sales almost doubled to A$11.3m and the company turning around into operating profitably, with A$3.2m being its estimate, worth 0.6c in earnings per share.

In the year to end June 2024 Cenkos goes for A$16.3m sales, A$4.0m profits and A$0.8c per share in earnings.

That really will be a result for the group’s shareholders after consistent operating losses ever since it has been AIM quoted.

That is also why I consider that CAP-XX shares at the current 4.1p each have very significant upside, especially assuming the Cenkos valuation of 13p each.

FTSE 100: Energy shares fall, Asia-centred stocks gain

Natasha Doris
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0
FTSE 100: Energy shares fall, Asia-centred stocks gain

The FTSE 100 was up 0.2% to 7,585.4 at close of trading on Friday, as Asia-centred stocks benefited from a rally on the Hang Seng, which was up 2.8% to 20,697.3.

Scottish Mortgage Investment Trust shares gained 6.1% to 791.8p, following a rebound in portfolio holdings Tencent, Meituan and Alibaba.

“Better than expected updates from Alibaba and Baidu helped drive a rally in Asian shares, with investors also likely to have been pleased by the rally in US markets yesterday,” said AJ Bell investment director Russ Mould.

Burberry shares increased 2.2% to 1,678p as consumer optimism picked up in China, the fashion brand’s largest market, with Asia-focused insurer Prudential rising 2.3% to 1,030p.

Meanwhile, energy and utilities groups fell on Rishi Sunak’s 25% targeted profit levy on skyrocketing income reaped by the oil giants, which is set to provide approximately £5 billion in a move to help the most vulnerable households in the UK as the cost of living spikes.

The Chancellor announced tax relief for oil and gas companies on the premise that they commit to accelerated oil and gas extraction, yet it appears the energy majors are dropping investment plans like a hot potato.

“Rishi Sunak’s promise of greater tax relief for UK oil and gas investments hasn’t been the carrot he hoped the oil industry would follow,” said Mould.

“News that BP is reviewing its £18 billion of planned investments in the North Sea is a U-turn from previous comments by the company which said a windfall tax wouldn’t change its plans.”

“There are plenty of places in the world for companies like BP to drill, so when one jurisdiction becomes heavy with tax it’s potentially time to up sticks and look elsewhere for future supplies.”

Harbour Energy shares fell 10.8% to 381.9p, BP slid 0.9% to 431.1p and Shell dipped 0.9% to 2,382p as the energy firms.

Utilities shares fell in line with the trend, with SSE dropping 1.7% to 1,749p, National Grid falling 1.9% to 1,163p, and Severn Trent dipping 0.7% to 2,919p.

Active Energy Group narrows loss to $5.8m, targets CoalSwitch mass production

Natasha Doris
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0
Active Energy Group narrows loss to $5.8m, targets CoalSwitch mass production

Active Energy Group shares saw a rise of 5.4% to 0.1p in late afternoon trading on Friday, after the firm announced a narrowed loss of $5.8 million compared to $8.7 million over FY 2021.

Active Energy Group reported a revenue decrease to $644,914 against $1.5 million the previous year, along with a basic and diluted loss per share of 0.1c from 0.6c the last year.

The biomass firm reported a slate of operational highlights, including a completed independent burn testing on CoalSwitch, which apparently confirmed its superior performance to alternative biomass fuels, alongside the commencement of negotiations to sell CoalSwitch to consumers in the US, Japan and across the international market.

The energy company further mentioned the finalised construction of its first reference plant at the Ashland facility, which is set to start production of commercial volumes of CoalSwitch.

Active Energy commented that it had a positive outlook for CoalSwitch, and that it is set to deliver on the increasing global market demand for biomass.

The group also reiterated its continued discussions with a selection of interested commercial partners for the sale of CoalSwitch.

“2021 was an important year for AEG,” said Active Energy Group CEO Michael Rowan. 

“Prospective customer tests and independent tests are proving the superior qualities of CoalSwitch to alternate biomass pellets currently available. Prospective customers have indicated that they would like CoalSwitch to be delivered as soon as possible and the current market conditions are emphasising this demand.”

“AEG is solely focused on attaining industrial scale production from Ashland at the earliest opportunity. The last 6 months has seen finalization of elements required to produce CoalSwitch, namely design, engineering and permit approvals and we now look forward to completion of the plant.”

Hummingbird Resources sales drop to $181.7m over 2021

Natasha Doris
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0
Hummingbird Resources sales drop to $181.7m over 2021

Hummingbird Resources shares fell 1.8% to 13p in late afternoon trading on Friday, after the company reported a decrease in sales to $156.6 million compared to $181.7 million in its FY 2021 report.

Hummingbird Resources also highlighted an operating loss of $7.1 million compared to an operating profit of $31.9 million the year before.

The firm mentioned an EBITDA slide to $28.2 million against $75.2 million, along with an adjusted EBITDA fall to $18.6 million from $62.3 million year-on-year.

Hummingbird Resources further noted a diluted loss per share of 2.7c compared to 5c in the last year.

The gold exploration firm confirmed a total bank debt of $61.8 million, with $13.2 million capital repaid across 2021, and a net debt of $21 million against net cash of $1.5 million the year before.

The company said it poured 87,558 ounces of gold over the year against 101,069 ounces, and mentioned an all in sustaining cost (AISC) of $1,536 per ounce compared to $1,147.

The precious metals company also highlighted the completion of its 68 metre drilling programme at Yanfolia, Mali and Kouroussa, Guinea.

“We set out in 2021 to grow our business by developing our portfolio of assets to become a multi-asset, multi-jurisdiction gold producer, expanding our Resources and Reserves through exploration and implementing improved ESG initiatives,” said Hummingbird CEO Dan Betts.

“With the signing of the mining licenses in May 2021 for our Kouroussa gold mine in Guinea, to commencement of construction in early 2022, we are well on our way to achieving our strategic goal of being a multi-asset producer and more than doubling our production profile in 2023/24.”

“As we look to 2022, we remain focused on delivering our vision for Hummingbird with significant initiatives across our portfolio to create value and build a Company that we and stakeholders across the business can be proud of.”

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