The price of Benchmark Brent Crude fell to $102 per barrel, with the soaring prices enjoyed by the commodity on the back of the Ukraine war starting to tumble as the world’s largest consumer felt the impact of Covid-19 lockdowns over summer this year.
On similar ground, mining groups have downgraded their production guidance on expectations of lower consumption across China, including FTSE 100 mining giant Rio Tinto.
“Questions over demand are outweighing serious supply constraints, suggesting industrial outlooks are bleak,” said Hargreaves Lansdown lead equity analyst Sophie Lund-Yates.
“The biggest contributor to this recent shift is without a doubt the news that factory activity in the world’s largest oil importer, China, has fallen unexpectedly.”
“For the global consumer, this is likely to be met with relief as the cost to fill up cars recedes, but the broader theme of uncertainty sadly outweighs these short-term wins.”
China reported a manufacturing growth below market estimates, following on from its dramatic slowdown in economic activity last month to 0.4% growth, coming far below analyst expectations of a 1.2% forecast.
China’s manufacturing purchasing managers’ index slid to 49.0 in July from 50.2 in June, dropping beneath the market estimated of 50.4.
Analysts confirmed the effects of Covid-19 lockdowns were seen in core trends, along with overall concerns linked to the economy as a result of drastic monetary tightening moves.
The report pointed out contractions in output, new orders, buying levels and export levels.
The news has served to make the market uneasy, adding to the pressures of soaring inflation in the UK and US, and recession fears spiking across the global market scope.
“The latest National Bureau of Statistics of China manufacturing purchasing managers’ index unexpectedly fell to 49.0 in July, from 50.2 in the previous month and missing market forecasts of 50.4,” said Hargreaves Lansdown lead equity analyst Sophie Lund-Yates.
“There was a very mixed bag hidden within the results, with core trends showing the negative effect of new lockdowns in key cities and general concerns over the global economy, following sharp monetary tightening efforts.”
“Output, new orders, buying levels and export orders all shrank. This latest data set does very little to offset concerns around darkening global economic output, especially when put together with a further easing of sentiment.”
Wishbone Gold (LON: WSBN) has announced encouraging drilling results at the Red Setter project in Western Australia. It is the best performer on the day with a 23.3% share price increase to 13.25p. The current hole has been drilled to a depth of 370 metres and the core will be sent for assay in the coming weeks. The previous hole intersected visible mineralisation and it will be re-entered after the current hold is completed.
Vast Resources (LON: VAST) says that it will commence molybdenum concentrate production in August at its Baita Plai polymetallic mine in Romania. The mine produced 268.8 DMT of copper concentrate in the second quarter, which was a 17% increase on the previous quarter. Last week, it was announced that there will be an official opening ceremony for the Takob joint venture in Tajikistan. Vast receives a participation equivalent to a 12.25% royalty over sales of non-ferrous concentrate and other metals produced by the Takob processing project. The share price jumped 21.1% to 0.775p.
Fulcrum Utility Services (LON: FCRM) recovered by 13.6% to 5.85p. The utility connections business is still struggling. Full year revenues were 31% ahead at £61.8m, but it continues to lose money.
Franchise lettings group Belvoir Group (LON: BLV) revenues increased 11% in the first half of 2022 with lettings growth offsetting lower property sales. The main growth came from financial services. Net debt is £3.1m. Full year pre-tax profit is expected to dip to £9.7m before returning to growth in 2023. The share price firmed 6.25% to 4.25p.
Minoan Group (LON: MIN) shares have risen 14% to 1.225p following Friday afternoon’s interim results announcement. Minoan reduced its interim loss, and the repayment of secured debt has been extended to the end of 2022. Discussions continue about the resort development of the project in Greece.
Deepverge (LON: DVRG) subsidiary Modern Water has gained orders worth £2.1m to treat wastewater from chemical plants in India and provide desalination services in North Africa. All Membrane Brine Concentration technology will be used. These orders will be delivered in 2022 and 2023. The share price rose 4.92% to 16p.
Alien Metals (LON: UFO) has received the laboratory analysis results for its Mexican projects at San Celso and Donovan 2. There were no significant intersections at San Celso and access has been denied for drilling of the priority target. There was an anomalous section at Donovan 2 which returned an assay of 0.33% copper with lead and zinc. However, the sample recovery was sub-standard for the industry. A zone of weakly anomalous zinc was identified, and this could indicate a potential target at greater depth. The share price fell 11.1% to 0.6p.
Symphony Environmental (LON: SYM) is raising £1m at 18p a share from Sea Pearl Ventures and there are four million warrants associated with the placing that are exercisable at 25p each. The share price declined 7.9% to 17.5p. Sea Pearl will own a 17.4% stake in the oxo-biodegradable plastics technology developer. First half revenues dropped from £4.9m to £3m due to logistics problems and orders delayed. Contracts that have been announced in recent weeks will help the second half to be much stronger. Zeus still expects 2022 revenues to improve from £9.2m to £11.9m and Symphony Environmental should break even.
Ascential shares decreased 6.4% to 273.2p in late morning trading on Monday after a widened reported operating loss of £35.2 million in HY1 2022 compared to £2.4 million in HY1 2021.
Ascential attributed the loss to the amortisation of acquired intangibles at £17.5 million and share-based payments at £7.6 million, alongside non-trading items for acquisition earnouts, transaction and integration costs, and the expensing of build costs for its new ERP and Salesforce systems at £33.2 million.
The firm also noted a non-cash charge of £31.4 million for the impairment of the Edge Digital Shelf intangibles, along with the expenses of its strategic shift to refocus its foundational services on the leading global marketplaces.
Acential confirmed its results were in line with market expectations, with an adjusted EBITDA of £67.2 million against £42.8 million the last year, and a margin of 25.8% compared to 27.8%.
The company announced a revenue climb across all four sectors of £260.7 million against £154.3 million, reflecting continued structural growth in end markets, assisted by a bounce-back from major events.
The group highlighted an adjusted EPS profit from continuing operations of 8p against 5.7p the last year.
“Ascential has had an excellent first half of the year, with strong growth in group revenue and profit in line with expectations. Each of our segments delivered double digit revenue growth: all the more pleasing given the challenging macro backdrop,” said Ascential CEO Duncan Painter.
“We are making good progress with our mission to make Digital Commerce the number one, global real-time platform that powers eCommerce by enhancing our capabilities, expanding our partnerships with leading eCommerce marketplaces and increasing our addressable market through complementary acquisitions.”
Ascential commented its outlook included strong results for its Digital Commerce and Product Design businesses in FY 2022, with continued recovery anticipated for its Marketing and Retail and Finance sectors.
“Despite the current macro-economic uncertainty, all our businesses are well positioned to drive the success of Ascential now and in the long term, as we continue to invest to extend our market leadership and maximise our future profitable growth,” said Painter.
XP Power shares fell 6.5% to 2,840.6p in late morning trading on Monday, after the company announced a reported operating loss of £45.2 million in HY1 2022 from an operating profit of £17.1 million the last year.
The power solutions firm announced a pre-tax loss of £47.4 million compared to a pre-tax profit of £16.4 million year-on-year, alongside a diluted loss per share of 180.6p against an earnings per share of 68.1p.
XP Power confirmed an operating cash flow loss of £13.1 million compared to an operating cash flow of £19.7 million in the previous year.
Meanwhile, the company highlighted a net debt of £102 million from £20.3 million in HY1 2021.
However, XP Power mentioned a 3% uptick in revenue to £123.6 million against £119.9 million the year before.
“While underlying demand remained strong across all sectors, a combination of external supply chain factors, which restricted our capacity to deliver to customers, and inflationary pressures have produced a challenging backdrop in the first half,” said XP Power chair James Peters.
“The team is working hard to mitigate these industry-wide challenges, with an improvement in performance in Q2 being sustained into the early weeks of the second half. While we are confident of a substantially better performance in the remainder of 2022 supported by the inventory on hand and a record, committed order book, there remains a wider range of full year outcomes than in prior years including scenarios where full year outturn is at the lower end of current analyst expectations.”
“Longer term, the Group’s prospects remain bright, we are excited by the additional capacity to come from our new Malaysian facility and the opportunities that will provide. We are confident of delivering strong revenue growth and significant long term value creation as we outperform our end markets.”
HSBC shares gained 5.5% to 542p in early morning trading on Monday, after the banking firm announced an $800 million post-tax profit growth to $9.2 billion in HY1 2022.
The bank reported a reported pre-tax profit fall of $1.7 billion to $9.2 billion, reflecting a net charge for expected credit losses and additional credit impairment charges, against a net release in HY1 2021.
The company highlighted a slight revenue drop to $25.2 billion as a result of foreign currency translation impacts and HY1 2022 losses on scheduled business disposals.
Meanwhile, HSBC reported an adjusted revenue rise of 4% to $25.7 billion on the back of higher net interest income and high revenue performance from Global Foreign Exchange in Global Banking and Markets.
The banking firm added its reported ECL were a net charge of $1.1 billion, reflecting stage three charges of $800 million, alongside extra allowances to reflect increased economic uncertainty and inflation, slightly offset by remaining Covid-19 reserves.
HSBC also noted an operating expenses decrease of 4% linked to foreign currency translation impacts, while its adjusted operating expenses fell 1%.
The group confirmed a return on tangible equity of of 9.9%, marking a 0.5% growth year-on-year, including a 2.3% annualised impact of a deferred tax asset gain.
Meanwhile, its CET1 ratio reached 13.6%, representing a 2.2% decline against 31 December 2021.
HSBC commented its FY 2022 outlook remained positive, with an anticipated net interest income of at least $31 billion for FY 2022 and a minimum of $37 billion for FY 2023.
“Our first-half performance reflects the continued impact of our strategy, with gathering revenue momentum and tight cost control,” said HSBC CEO Noel Quinn.
“The progress that we’ve made growing and transforming HSBC means we are in a strong position as we enter the current rates cycle.”
“We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade.”
Our CEO Noel Quinn is confident about the future performance of the #bank for our #shareholders and customers.
The banking giant said it expended a dividend payout ratio of 50% for 2023 and 2024, with an intention to return to quarterly dividends in 2023.
However, HSBC confirmed it expected the quarterly dividend for the first three quarters to initially be reinstated at a lower level than its prior dividend of 10c per share paid until the end of 2019.
“As a result, we are providing more specific dividend payout ratio guidance of around 50% for 2023 and 2024. We understand and appreciate the importance of dividends to all of our shareholders,” said Quinn.
“We will aim to restore the dividend to pre-Covid-19 levels as soon as possible. We also intend to revert to quarterly dividends in 2023.”
HSBC announced a HY1 dividend of 9c per ordinary share, which is set to be paid in cash.
Pearson shares rose 6.8% to 808.2p in early morning trading on Monday following an adjusted operating profit growth of 22% to £160 million in HY1 2022.
Pearson attributed its profit climb to a positive trading performance, FX benefit and property savings, slightly offset by inflation, portfolio investment and phasing costs in 2021.
The education group reported an underlying sales increase of 6% to £1.7 billion, driven primarily by a 16% rise in its Assessment and Qualifications business as a result of US Student Assessment and UK & International Qualifications after exam timetables started to normalise post-Covid.
Sales were also boosted by a 22% surge in Pearson’s English Language Learning sector, as improved global mobility aided expansion in the Pearson Test of English (PTE).
The company announced an adjusted EPS increase to 22.5p compared to 10.5p in HY1 2021.
Pearson noted an operating cash flow of £9 million against £10 million the last year, with the drop through of climbing profits offset by a growth in receivables on the back of strong revenue increases in HY1 which will be collected in HY2.
The group mentioned a HY1 net debt of £810 million from £646 million, with operating cash offset by dividends, share buyback and tax.
Pearson confirmed an available liquidity of £1.2 billion compared to £1.4 billion year-on-year at the end of HY1.
The company reiterated its outlook, including unchanged revenue and adjusted operating profit expectations for FY 2022.
The education firm highlighted the upside potential in English Language Learning, Virtual Schools and Clinical Assessment as a result of outperformance in HY1 and likely increased pressure in enrolments in OPM and higher education.
Meanwhile, the company said the growth in Pearson+ subscriptions would probably lead to a move in HE revenue recognition from Q3 to Q4.
We're pleased to share our half year results as we make good progress on our financial & strategic priorities. We’re proud of our colleagues around the world working hard to continue this momentum throughout 2022. Read more here: https://t.co/TDKY09cGLupic.twitter.com/N57fwdKUq6
“Pearson has delivered another encouraging financial performance in the first half of the year. We continue to make excellent strategic and operational progress, with momentum across the business,” said Pearson CEO Andy Bird.
“We are already seeing clear benefits from our increasingly diverse learning ecosystem, with Pearson serving more people across their lifelong learning journeys. Our digital strategy is progressing well; Pearson+ grew to 4.5m registered users, increasingly taking us direct to consumers.”
Pearson added it expected a net interest charge of £10-£15 million and an effective tax rate of 15% to 17%, reflecting the statute of limitations on a range of tax provisions which lapsed in April 2022.
“Our focus on delivery and execution remains and full year 2022 expectations are reaffirmed. In addition, the more integrated platform we are building across the company is creating efficiencies, underpinning our new guidance for accelerated margin improvement,” said Bird.
“We have a robust balance sheet which, together with our cash generation, will support continued investment in growth and create value for our shareholders.”
Dividend and share buyback
Pearson recommended a HY1 dividend of 6.6p from 6.3p in HY1 2021, with a £350 million share buyback currently in progress and over £165 million in shares repurchased as of 29 July 2022.
Equipmake Holdings has developed electric vehicle drivetrain technology that has won some initial contracts. It is still early days and the cash raised will help to increase capacity if additional work is won.
The share price ended the first day at 5.875p (5.5p/6.25p). There were five trades at between 5.65p a share and 6.1p a share. Just over 69,000 shares were traded.
Revenues are currently modest, but there are more than £400m of opportunities that are being negotiated. These include active discussions, soe with existing customers, or proposals that have been sent.
Positive news about this ...
Keller (LON: KLR) is the largest geotechnical company in the world, and it is growing strongly. On 2 August it is publishing its interim figures. These should show that Keller is on course
At the end of 2021, there was a record order book of £1.3bn, with £787m of this in North America. Since then, significant orders have been won. Keller has gained a contract in Saudi Arabia, that could end up generating hundreds of millions of pounds. The NEOM project involves constructing a new city and there will be an initial £50m in revenues generated in the next 12 months.
The first half is normally less...
Full year figures from AIM-quoted Hargreaves Services (LON: HSP) were better than previously upgraded expectations. Profit is forecast to fall this year, but they will still be significant.
In the year to May 2022, pre-tax profit improved from £21.2m to £32.7m. That included a £27.3m contribution from German associate HRMS, up from £13.6m in the previous year. Higher commodity prices and increased volumes of minerals traded continued to boost the HRMS performance. The steel waste recycling business moved into profit, while the carbon pulverisation plant is fully operational and broke even.
The...
