ITV shares could benefit from the Netflix slowdown

Natasha Doris
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ITV shares could benefit from the Netflix slowdown

ITV shares gained the day after Netflix released its disappointing quarterly financial results, providing some reprieve to the stock which has been in a downwards spiral this year, giving up of 30% of their value year-to-date.

The sudden resurgence comes after streaming giant Netflix reported a loss in subscribers for the first time in a decade, with its shares consequently plummeting a heart-stopping 35% when the news broke on Wednesday.

However, as Netflix sank, the ITV share price soared, adding some 7% the day after Netflix posted their dismal update.

Streaming companies are aware that subscription-based entertainment is an increasingly fierce industry, and that most consumers have neither the financial capacity, nor the patience to sign up for every streaming competitor on the market. For one streaming company to succeed, another must suffer, making the market hyper-competitive and also making any new venture into the busy territory a risky gamble.

ITVX

ITV’s shares tumbled on the release of the company’s financial results after the group announced its intent to launch ITVX, a streaming replacement for its ITV Hub catch-up service.

Follow-up details revealed that ITVX would function as a streaming service for content before it aired live on conventional television, with thousands of hours of content for viewers to watch and 15,000 hours of material available upon the platform’s launch.

However, investors were critical of the company’s bid to break through into the heavily saturated ‘Squid Game’ of the streaming environment, and analysts sniped at the company’s attempt to jump into the ring with the established US heavyweights.

“ITVX is not as revolutionary as the company might like you to believe. It is effectively offering viewers a chance to see some of its programmes before they are broadcast on linear TV as well as its back catalogue of shows,” said AJ Bell investment director Russ Mould on ITVX’s unveiling in March.

“Viewers are increasingly switching on Netflix or Disney+ first and media groups like ITV need to find a way to make sure their brand also stays front of mind when someone is looking to put their feet up and choose something to watch.”

Analysts further cast doubt on the potential allure of ITVX’s slate of offerings, especially in light of smash hits including Netflix’s Bridgerton, Amazon Prime’s The Marvellous Mrs. Maisel or the entire catalogue of Marvel shows from WandaVision to Moon Knight on Disney+.

“Ultimately the proposition will only be as successful as its content, and here’s where ITV might have to dig deep to compete against the ever-growing number of rival streaming platforms. Yes, it has some classics, but will the lure of endless Carry On films be enough to get people to keep watching ITVX?”

The ITVX subscription would reportedly come with a tie-in subscription to Britbox, the streaming service which has proven popular in the US for its unfiltered access to UK content such as Doctor Who and Agatha Christie’s Poirot, which are in high demand across the Atlantic.

It was unlikely that the service would have made a great deal of headway against its juggernaut competitors such as Netflix, Disney+ and Amazon Prime without a major blow to the top tier streaming giants.

However, the gains this week were more likely attributed to the opportunity for ITV’s Studio business, as opposed to the hopes of gaining additional subscriptions at the expense of Netflix.

ITV’s Opportuntiy

ITV’s studio business posted strong growth in 2021 with revenue jumping 28% to £1.7bn. ITV Studios external revenue increased 30% to £1.17bn.

The FTSE 100 broadcaster and content creator provides content to streaming services such as Disney+, Apple TV+, Netflix, Hulu and Amazon.

If Netflix are to reduce spending on original content, they may turn to studios such as ITV for series and films to provide to their users.

ITV Studios generated 13% of total revenues from streaming platforms in 2021, up from 10% in 2020.

ITV says they expect this to grow to 25% of ITV Studios revenue by 2026, which is more than achievable given revenue from original commissions sold to streamers was up 95% in 2021.

Netflix strategy shift

Netflix reportedly cut its production costs to $2 billion last quarter, coming in below management expectations, and the service said it expects to reduce its spending further with an additional cutdown to $1.7 billion in the next quarter.

The company’s spending slowdown might make room for ITV’s content to find a home on Netflix’s roster as it spends less on original content and potentially seeks out existing options to fill the gaps in its streaming offerings.

Shows co-produced by ITV Studios including The Good Witch, Queer Eye, Snowpiercer, Bodyguard and Poldark have all found a home on Netflix in recent years, with new original content from partnerships between the two companies such as Cowboy Bebop hitting the platform, too.

Netflix Originals

Netflix may have bitten off more than it can chew with its ambitious content, with shows from The Crown and Bridgerton to Stranger Things and the upcoming Sandman adaptation making headline news for their sky-high production budgets.

Stranger Things, one of the shows which put Netflix on the map as the original home of binge-watching, has reportedly cost $30 million per episode, while Neil Gaiman adaptation The Sandman is set to cost $15 per outing.

The service might need to fall back on licensed content agreements if it wants to compete in quantity and value-for-money, especially now that the company has raised its subscription prices in a time of record-high inflation levels of 7% for the UK and 8.5% for the US.

ITV Financials

ITV released a glowing slate of results for the last year on 3 March, with revenues increasing 28% to £1.76 billion against £1.37 billion in 2020

The company announced an operating profit of £519 million compared to £356 million in 2020, alongside an adjusted EBITDA of £813 million against £573 million the previous year.

ITV currently has a PE ratio of 5.1 and a forward PE ratio of 5.6, indicating analysts see largely earnings flat in the future. Nonetheless, a PE of 5.1 suggests significant value compared to historical averages.

The group also has a generous reported dividend cover of 4.6, meaning the broadcasting firm has the resources to pay out its dividend and potentially raise it over future shareholder payments.

ITV share price’s attractive valuation provided a solid base for investors to pick the stock up this week as they learned of the potential opportunity for ITV if Netflix, and other streamers, alter their content strategy and increase spending on ITV Studio’s productions.

Small & Mid Cap Roundup: Homeserve, Ferrexpo, XP Factory, Vivo Energy

Anshula Kumar
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Small & Mid Cap Roundup: Homeserve, Ferrexpo, XP Factory, Vivo Energy

The FTSE 250 and AIM dropped on Friday erasing the weeks gains with retail stocks taking a hit today as retail sales slumped 1.4% in March, however, companies including as Homeserve, Vivo Energy, WH Smith and Moonpig provided support for the small and mid cap markets.

Homeserve boosted the FTSE 250 when its shares soared 11.3% to 952p after the home repairs company announced that it is in conversation with Brookfield Infrastructure over a potential takeover offer.

Homeserve said it had received numerous bids from Brookfield since the end of March and now Brookfield has until May 19 to make a firm offer. The deadline for Brookfield’s firm offer was extended from Thursday.

Ferrexpo shares were up 3.6% to 181p following the company’s report of higher pretax profit due to a growth in production volumes through investments in high-grade production.

Ferrexpo saw its revenue climb 48% to $2.5bn from $1.7bn and pretax profit rise 43% to $1.07bn from $747.9m in 2021.

The company said the total dividend paid for 2021 was $0.46, 46% lower than the 2020s $0.85. Ferrexpo will consider whether to propose a further interim dividend for 2021. 

Ferrexpo reported a flat pellet production of 11.2m tonnes and sales volume fell 6% from 12.1m tonnes to 11.4m tonnes in 2021.

QinetiQ shares increased 1.8% to 347p as the group continued to attract investors throughout after announcing that its performance is exceeding expectations this week.

Broker ratings

Synthomer shares rose 1% to 301p despite Barclays cutting Synthomer’s price target to 420p from 460p.

Man Group gained 1% to 240p after Barclays raised Man Group’s price target to 255p from 240p.

Oxford BioMedica added 0.5% to 563p despite RBC cutting its price target from 1,340p to 1,070p.

EasyJet shares dropped 2.5% to 576p after Barclays cut its price target from 705p to 700p.

AJ Bell fell 0.2% to 283p following Jefferies’ amendment to its price target from 400p to 315p.

Retailers

Retailers are taking a hit today as retail sales have slumped again in March, except for the odd few like Vivo Energy, WH Smith and Moonpig.

Vivo Energy shares were up 1.4% to 140p as investors flock to the company which is in process of being taken over by Versor Investments.

WH Smith shares rose 0.2% to 1,505p after the company experienced “a recovery in travel activity and has a surprisingly resilient high street operation” according to Russ Mould, Investment Director, AJ Bell.

Moonpig shares gained 1.2% to 203p despite Mould’s view of how “its easy to cut back on items like greetings cards” which should lead to a decline in share price.

However, some retail companies suffered after poor retails sales data and saw their shares fall such as Frasers, Pets at Home, Currys, Dunelm and M&S, whose shares dropped between 0.4% to 1.6%.

Amongst the FTSE 250 fallers were Trust Pilot whose shares were trading down 7% to 123p, followed by Baltic Classified and Aston Martin down 4% to 147p and 864p respectively.

AIM Market

Nanosynth shares tanked 14% to 0.45p after the company confirmed its move for growth through acquisitions, scaring off investors.

Tungsten West shares dropped 11.3% to 41.5p after the mining company announced on Thursday that the recommencement of production at its Hemerdon tungsten and tin mine remains at a halt until the group evaluates alternative approaches to restarting mining operations.

Strategic Minerals reported a lower sales figure of $0.7m in its March quarter due to weaker January sales leading the company’s shares to lose 7% to 0.33p.

Uru Metals shares plummeted 25% to 300p and were the AIM’s top faller on Friday.

Rurelac shares soared 37% to 0.65p marking it as a top performer in the AIM market. Other top performers include, i-Nexus Global, Quadrise Fuel and Rockfire Resources whose shares increased 17.7% to 5p, 17.3% to 2.47p and 13% to 0.48p.

XP Factory shares rose 7% to 31.5p after the company announced it has made great progress, including completing the Boom integration, growing its UK base, and expanding the site pipeline.

One Media iP Group shares increased 6.3% to 6.75p the digital music company posted higher annual revenue for 2021, where revenue climbed from £4m to £4.4m. The group also noted a fall in pretax profit from £734k to £720k due to a £93k cost associated with asset disposal.

Blackbird announced that it will be showcasing sustainable cloud video editing on Microsoft’s booth at NAB 2022 resulting in the group’s shares gaining 6% to 17p.

Directa Plus shares were trading up 4.2% to 124p after the graphene nanoplatelets producer announced that it signed a non-binding Letter of Intent with a supplier of automotive interiors to Tier 1 manufacturers to develop products for the automotive industry.

FTSE 100 retreats as retail sales fall 1.4%

Natasha Doris
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0
FTSE 100 retreats as retail sales fall 1.4%

The FTSE 100 dipped on Friday after the Office of National Statistics (ONS) announced a 1.4% fall in retail sales over March, marking a heavy drop from its 0.5% decline in February.

Retail shares are anticipated to plummet further, as consumers go so far as to cut down on typically essential expenses such as food and fuel.

The ONS highlighted a 1.1% fall in food sales, representing the sixth consecutive month of decline since November 2021.

Petrol and diesel sales also took a hit of 3.8%, indicating that people were spending less on non-essential car travel as the price of fuel continued to climb to record highs.

“When energy bills are shooting up, it costs considerably more to fill up your car with petrol and buying essentials like a loaf of bread and a pint of milk has become more expensive, it’s no wonder that retail sales have plunged,” said AJ Bell investment director Russ Mould.

“The gloomy outlook for UK retail caps off a frustrating post-Easter four-day session for equities, with the FTSE 100 slipping 0.3% on Friday which means it has essentially made no progress on the week.”

The Berkeley Group gained 2.4% to 41,730p after Jefferies raised the company to a ‘buy’ rating from ‘hold’ with a price target up to 5,587p from 4,703p.

B&M shares tumbled 5.9% to 517.5p on the announcement of CEO Simon Arora’s resignation after 17 years in the role.

“One might have thought cash-strapped consumers looking to save money would trade down to cheaper items which would benefit value retailer B&M, but the stock market clearly disagrees,” said Russ Mould.

“[Arora] has run the business for the past 17 years and made it one of the biggest modern success stories in UK retail.”

“The 5% share price decline on news of his forthcoming departure goes to show that the market doesn’t want him to go, although one must also factor in the latest retail sales figures as weighing further on the share price.”

Anglo American shares took a dip of 3.2% to 35,605p after RBC cut the group to ‘sector perform’ from ‘outperform’ and cut its price target to 3,400p from 4,300p.

The move follows the company’s disappointing 10% decline in output over its first quarter due to high rainfall levels across several of its projects and Covid-19-related absences impacting its mining operations.

Retail sales fall 1.4% as inflation burns through consumer wallets

Natasha Doris
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Retail sales fall 1.4% as inflation burns through consumer wallets

Retail sales saw a dramatic fall of 1.4% in March as inflation spiked to record levels of 7%, according to the latest figures from the Office of National Statistics (ONS).

The largest contributor to the decline was non-store retailing, with sales dropping 7.9% over the month after a 6.9% decline in February.

The ONS said that food store sales fell 1.1% in March, marking the sixth consecutive month of plummeting sales across the sector, with more consumers choosing to eat out as Covid-19 restrictions eased, alongside the rising cost of food eating into customer wallets.

However, non-food store sales volumes increased 1.3%, due to growth in non-food stores of 2.9% and household goods stores such as DIY outlets benefiting from a 2.6% boost in sales.

Petrol and diesel sales fell 3.8%, as data suggested that non-essential car travel was reduced on the back of higher fuel costs.

“When energy bills are shooting up, it costs considerably more to fill up your car with petrol and buying essentials like a loaf of bread and a pint of milk has become more expensive, it’s no wonder that retail sales have plunged,” said AJ Bell investment director Russ Mould.

However, the rising tide of people dining out again as consumers embraced post-Covid socialising had given pubs and restaurants reason to hope for good news.

“Pubs will be also watching the trends closely as while beer drinkers may be less willing to trade down to cheaper products, there is still the question of getting them through the door in the first place,” said Mould.

“More people returning to working from the office theoretically increases the chances of pubs enjoying a tick-up in sales thanks to people socialising once their shift is over.”

Mould caveated the shining potential of post-work dining sales with the gloomy reality of spiking inflation rates, which might dampen consumer appetites for after-work happy hour drinks, commenting, “[that] post-work pint may have to become a less frequent treat if inflation keeps ticking up.”

Online retail sales tumbled 26% as more consumers ventured into physical stores again in the post-Covid era, with online shopping bidding farewell to its heyday of lockdown gains as the high street reopened for customers.

The high street’s trajectory unfortunately looks set to fall in line with online shopping, once the higher energy bills and household expenses burn through consumer budgets.

“The ONS’ retail sales data is a wake-up call that life is going to be tough for shops – virtual or physical – in the coming months,” said Mould.

“Once those vastly increased energy bills hit the doormat and households take time to reassess their financial situation, there is every chance that retail sales could get even worse.”

Unessential items have already taken a hit, with luxury and slightly whimsical purchases on the decline as higher-end companies saw their shares take a dip over the past few months of tightened consumer belts.

“The share price movements tell you what the market thinks about the consumer spending outlook,” said Mould.

“It’s easy to cut back on items like greetings cards and clothes, as evidenced by big declines in the shares of Moonpig and Marks & Spencer.”

Petropavlovsk hits production targets, struggles for gold buyers

Natasha Doris
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0
Petropavlovsk hits production targets, struggles for gold buyers

Petropavlovsk shares spiked 16.4% to 2.2p in early morning trading on Friday, after the company hit its production targets for Q1 2022.

The Russian mining group reported a total gold production of 80.2koz, representing an 8% rise in due to higher volumes from its Pioneer project and third-party concentrate.

Petropavlovsk noted a 73% surge in third-party gold production to 22.8koz compared to 13.2koz over the same period in 2021 as a result of higher throughput volumes.

However, the company mentioned a 3% drop in its own-mined gold production to 80.2koz against 82.4koz in Q1 last year on lower production at its Albyn processing facility and Malomir floatation plant.

“Petropavlovsk achieved its production targets in the first quarter of this year, with higher output from Pioneer, aided by its new flotation plant, and 3rd-party concentrate offsetting expected lower production at Albyn and Malomir due to lower grades,” said Petropavlovsk CEO Denis Alexandrov.

The mining firm highlighted total gold sales of 89.8koz, representing a decline from its 95.6koz sales over its first quarter in 2021.

However, the company benefited slightly from the average realised price of gold increase of 5% to $1,871 per ounce compared to $1,789 per ounce.

Guidance for 2022

Petropavlovsk confirmed its guidance for own gold production in 2022 remained unchanged at 345-365koz, with third-party concentrate guidance lowered to 30-40koz from 35-55koz due to predicted supply chain disruptions.

The mining firm’s total gold production is currently expected to land in the range of 375-405koz against its previous guidance of 380-420koz.

Gazprombank

The company reported no current impact from sanctions on its business or any of its employees, however the group said that sanctions against its largest creditor Gazprombank have prohibited it from making interest and principal repayments below a $200 million committed term loan, and $86.7 million in revolving credit facilities.

Gazprombank has also reportedly notified the company of demands for early repayment of the term loan and revolving credit facilities, and of the assignment of the term loan to joint stock company UMMC-INVEST.

Petropavlovsk also confirmed that it has been prohibited by sanctions from selling gold to Gazprombank, which had previously acted at the main off-taker for the company’s production.

The firm commented that it was currently seeking alternative options for buyers, and that it has applied for a new license to export gold.

“Despite the conflict in Ukraine and related sanctions that have led to various challenges at the corporate level, our mines operated without disruption throughout the period,” said Alexandrov.

“In this rapidly changing environment, we continue to monitor the situation to take all necessary steps to ensure the continuity of our business and compliance with sanctions, and to plan for contingencies that may adversely impact our operations.”

Elon Musk secures $46.5bn for Twitter takeover

Anshula Kumar
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0
Elon Musk secures $46.5bn for Twitter takeover

Elon Musk has secured $46.5bn in financing for a potential hostile takeover of Twitter, with Musk contributing $21bn of his funds as part of the deal.

Elon Musk has managed to obtain $46.5bn to fund the potential hostile takeover of Twitter.

Elon Musk is also obtaining an additional $12.5bn for the offer through a margin loan secured against his shares in Tesla, the electric carmaker he leads as CEO.

Morgan Stanley, a major investment bank in the United States, is spearheading a group of financial institutions that will provide $13bn in debt financing.

The agreements were detailed in a filing with the US SEC on Thursday. The agreement stated that the world’s wealthiest man was “exploring whether to commence a tender offer” for the Twitter shares he did not own.

Elon Musk already owns 9.2 % of Twitter and just announced a $54.20-per-share offer last week.

A tender offer is considered a hostile bid since it avoids the company’s board of directors, which would normally suggest an offer to shareholders in a traditional takeover situation. 

Instead, Twitter’s board members have taken steps to prevent Elon Musk from expanding his stake in the company without its approval.

Last week, Twitter filed a so-called poison pill defence against Elon Musk’s bid, aiming at preventing him from owning more than 15% of the company.

If anyone tries to buy more than 15% of Twitter without the board’s approval, the method, which is often used by company boards as a barrier against unwanted approaches, will allow existing investors to buy shares at a steep discount. This would diminish an undesired bidder’s equity and would be a severe roadblock to any non-board-approved bid.

Shareholders who support Elon Musk’s strategy, on the other hand, may force the board to abandon the poison pill strategy.

Elon Musk, who has over 82m Twitter followers and is a frequent user of the network, where he hinted during the weekend that a compassionate approach was being considered.

Apart from publicising the poison pill action, Twitter has yet to respond formally to Musk’s $43bn deal.

Twitter said on Thursday, “We are in receipt of the updated, non-binding proposal from Elon Musk, which provides additional information regarding the original proposal and new information on potential financing.”

“As previously announced and communicated to Mr Musk directly, the board is committed to conducting a careful, comprehensive and deliberate review to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders.”

Elon Musk has stated that the microblogging service does not give users complete freedom. In a letter to the board last week, he said Twitter was “the platform for free speech around the world,” but that it couldn’t meet this “societal imperative” in its current form and “needs to be transformed as a private company.”

Elon Musk had hinted at some changes he would make to the firm before announcing his takeover offer, including the addition of an edit button for tweets.

As Tesla met share price and financial growth milestones in its earnings on Wednesday night, Musk, who is already worth an estimated $249 billion, is in line for the bonus share payout.

Musk has set aside less money for a potential Twitter takeover than the $23bn bonus he is expecting to get from Tesla after it reported its growing quarterly profits.

Twitter Share Movement since October 2021

Twitter shares have gained 0.7% to $47.04 on Friday morning and Tesla shares rose 3.2% to $1008.78.

B&M CEO Simon Arora steps down after 17 years

Natasha Doris
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B&M CEO Simon Arora steps down after 17 years

B&M shares were down 6% to 516.8p in early morning trading on Friday, following the announcement that Chief Executive Officer Simon Arora would be stepping down after over 17 years in the position.

The company said that Arora is scheduled to leave the role in 12 months, and will remain at the group over the coming year to facilitate a smooth transition over to his successor.

Chairman Peter Bamford is set to lead a succession process to consider internal and external candidates to replace Arora as Chief Executive.

“On behalf of the Board and all stakeholders of the Group, I would like to thank Simon for his leadership over the past seventeen years,” said chairman Peter Bamford.

“The remarkable growth of the business from its humble beginnings to where it is today reflects his exceptional passion, determination and ability.” 

“Moreover, he has established a firm foundation from which the Group will continue to deliver its successful growth strategy and great value for its customers. We are all very grateful for his tireless efforts and he will leave us next year with our best wishes for the future.”

Simon Arora acquired the B&M franchise in 2004 with his brother, Bobby Arora, when the group consisted of only 21 stores.

The two brothers have since developed the company into a portfolio of 1,100 locations and gained a spot on the FTSE 100 index.

Bobby Arora has confirmed that he will remain in his role at the business as Group Trading Director after Simon retires.

“It has been a privilege to lead B&M for seventeen years and I am immensely proud of the incredible journey that we have been on,” said Simon Arora.

“B&M’s value for money proposition remains as relevant and compelling to shoppers today as it has ever been.”

“I would like to thank all 38,000 members of the B&M family for their hard work and commitment both now and as we continue our expansion.”

XP Factory shares up 7% with Boom integration

Anshula Kumar
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XP Factory shares up 7% with Boom integration

XP Factory shares gained 6.78% to 31.5p after the company announced new site openings since it acquired Boom Battle Bar in November 2021.

The XP Factory has made great progress, including completing the Boom integration, growing its UK base, and expanding the site pipeline.

The Boom estate consisted of one owner-operated site and six franchise sites when it was purchased in November 2021 by XP Factory.

There are currently 11 operating sites, consisting of 2 owner-operated and 9 franchised locations, with a further 10 sites currently under construction and set to launch in the following months. Seven out of the 10 sites are nearing or have completed construction said XP Factory.

The expanded estate of 21 locations will include 6 owner-operated and 15 franchised locations once it opens. According to XP Factory, more sites are nearing completion, and construction is slated to begin this summer and into the fall.

XP Factory’s progress thus far suggests that the board’s goal of 27 open Boom venues by the end of 2022 will be easily achieved.

The board’s box-economics projections for both sales and profitability are being validated by trading performance across both owner-operated and franchised locations.

XP Factory’s monthly operating leverage is increasing in line with the board’s planned maturity profile.

Boom and Escape Hunt will open co-located locations in Exeter, Edinburgh, and Oxford Street soon. The XP Factory group has been reinforced following the plans for 2022 and is increasing capacity for the upcoming rollout.

More information will be available in the XP Factory’s audited final results for the fiscal year ending December 31, 2021, which are expected to be disclosed in late May 2022 and will reflect performance in line with the company’s trading update made on January 26, 2022.

“We are delighted at how well Boom Battle Bar has been integrated into the group. It has been an extremely busy period for site development and we have an exciting run of openings in the coming weeks and months which position us well to deliver on our estate targets for the end of the year,” said Richard Harpham, CEO of XP Factory.

“The recent performances from our new Boom sites have validated our expectations for the site level profitability we believe is achievable. In addition, Escape Hunt performance has exceeded expectations for Q1, giving us confidence for the execution of our strategy as a whole.”

LXi REIT updates property portfolio

Anshula Kumar
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0
LXi REIT updates property portfolio

LXi REIT announced the disposal of Premier Inn anchored property and acquisition of M&S Simply Food store and an MKM trade unit on Friday morning.

LXi REIT is focused on the gradual growth of the company through “accretive acquisitions” such as the M&S Simply Food store and “profitable disposals” such as the Premier Inn anchored property.

LXi REIT Disposal

LXi REIT has exchanged contracts on the sale of its property in Saffron Walden, which was let to Premier Inn, B&M, Pure Gym, Pets at Home, and Costa, for £19.33m, with a 4.45% net exit yield, after receiving an unsolicited offer from a UK pension fund.

The property was purchased for £15.8m and a 5.72% net initial yield through a forward funding deal.

The sale generates an attractive 19% per annum IRR for the company and the property was listed for sale at the time of the latest valuation.

LXi REIT Acquistion

Marks & Spencer Food Store

Marks & Spencer is a FTSE 250 company with a market capitalization of around £3bn.

Separate developers have agreed to sell the business which is an M&S Simply Food store and an MKM trade unit for a combined £9.44m, providing an accretive 5.25% blended net initial yield to LXi REIT.

A pre-let forward funding arrangement is being used to acquire the food store in Largs, North Ayrshire by LXi REIT.

The 13,450 sq ft property has been fully pre-let to Marks & Spencer on a fresh, unbroken 15-year lease with five annual rental increases at a fixed growth rate of 2.5% compounded.

MKM Trade Unit

MKM is the largest independent builders’ merchant in the United Kingdom.

The MKM trade unit, which covers 15,250sqft, was built this year and is entirely leased to MKM Building Supplies on a long lease with 20 years remaining until the first break.

The rent is increased every five years under RPI inflation, which is capped at 3.5% per year and collared at 1.5% per year.

Both acquisitions have good ESG credentials, with the MKM unit having an EPC “A” rating and rooftop solar panelling, and the M&S Simply Food expansion aiming for an EPC “A” rating as well.

The remaining funds from the sale will be put into the LXi REIT’s accretive pipeline.

LXi REIT shares fell 0.07% to 150.6p in early morning trade on Friday after the company updated investors on its property portfolio.

Jangada Mines shares fall following technical update

Natasha Doris
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0
Jangada Mines shares fall following technical update

Jangada Mines shares plummeted 23.4% to a closing price of 7.8p in Thursday trading following the updated technical report for its Pitombeiras Vanadium Project.

Shares fell after the company said the project now had $96.5 million post-tax Net Present Value (NPV) and 100.3% post-tax Internal Rate of Return (IRR).

This marked a downward revision in the projects economics from a report last year that pointed to a $106.5 million NPV and 317% IRR.

However, the company confirmed in its updated technical report that it had received the green light on all legal, technical and geological fronts, noting no additional impediments to the development and production of its Brazil mine.

Resources

Jangada Mines said that it currently expects high levels of Ferrovandium concentrate (Fe 62%) and Titanium Dioxide (TiO2) from its Pitombeiras Vanadium Brazilian project.

The company noted a particular interest in extracting TiO2 due to its accelerated rate of use in the booming green energy market, especially in lithium batteries used in electric vehicles across the green transport industry.

“We are witnessing an increase in focus on commodities that broadly fit the emerging energy and battery space,” said Jangada Mining executive chairman Brian McMaster.

“Given this, we have gone back and optimised the development route at Pitombeiras to include the 9.85% TiO2 component alongside the Fe 62% and V2O5 to obtain a clearer picture of the Project’s potential.”

The firm said that it anticipated an annual production of 186,000 tonnes of Fe 62% and 66,000 tonnes of TiO2 at a production/processing rate of 600,000 tonnes per year.

The group also commented that it expects a Life of Mine (LoM) extraction of resources at 5.1 million tonnes of measured and indicated material, with 3.1 million tonnes in inferred resources.

“[Given] our extensive in-country contacts and positioning, we are continuously seeing additional projects and regularly review opportunities, particularly in the technology metal space, that may complement our existing asset suite and create further value for shareholders,” said McMaster.

“We look forward to updating the market further as we complete the on-going Feasibility Study including the titanium.”

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