Ahead of announcing its Annual Results on Friday of next week, 28^th June, Premier African Minerals (LON:PREM), the multi-commodity mining and natural resource development company focused on Southern Africa with its RHA Tungsten and Zulu Lithium projects in Zimbabwe, has this morning issued an Update on its Zulu Project.

The conditioning tank delivery and commissioning remains on track for completion during the week commencing 10^th July, while the sale of concentrates on hand is now expected to proceed on an ex-mine gate basis.

CEO George Roach stated that:

“Premier sincerely hope the conditioning tank will be the last plant modification and on that note, the Board remains confident regarding the prospects for Zulu and we note that at this time the development of Zulu, a complete mine, has cost the Company the better part of US$75 million, and neither this nor the deemed valuation of Zulu agreed with our take-off partner is reflected in our current market capitalisation.”

PREM has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe and lithium and gold in Mozambique, encompassing brownfield projects with near-term production potential to grass-roots exploration.

The £33m capitalised group’s shares were up 7.3% at 0.1100p on the news.

Ashtead shares fell on Tuesday after the group announced falling sales growth rates and diminishing profits.

The company was considered a growth powerhouse for many years due to its remarkable ability to shake off any economic constraints. This no longer seems to be the case and interest rates are partly to blame. 

Ashtead released results on Tuesday confirmed a prior slowdown in its core US business was not a blip. 

Fourth quarter sales growth slipped to 7%. Growth is still growth but the real concern for investors will be declining profit before tax over the full year period. Profit before tax fell to $2,230m in 2024 from 2,273m in 2023.

Higher interest rates were blamed for rising costs with financing expenses rising by around a third. Margins across all geographies were squeezed as a result. 

“Ashtead’s markets are slowing. Hot off the heels of news that it may be looking to move its main listing to the US, this was a slightly soft set of results,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“Whether you look at revenue, profit, or guidance, it’s hard to see much for markets to get excited about here. Management would be forgiven for giving slightly conservative guidance for the coming year after several disappointments of late, and it looks like that’s the case.

“But rental giant Ashtead is still demonstrating its strength, just in a softer market. The larger construction equipment players are taking market share, and that plays right into Ashtead’s hands. Mega-projects in the US will continue to act as a medium-term tailwind, and it was positive to see rental rates showing strength in the final quarter. This had been an area of concern going into the results. Longer term, the US rental market is fragmented and there’s a growing appreciation from end-users as to the benefits of rental over ownership.”

Just two weeks ago the shares of the self-proclaimed ‘UK’s most trusted electricals retail group’ AO World (LON:AO.) were up at 116p.

On 27^th March they were trading at 89.85p, that was the day before the group issued its Full Year Trading Update to end March 2024.

Its Finals will be released on Monday of next week and I feel that they will spark a fresh wave of investor interest.

The Business

The £605m capitalised company, which is based in Bolton, has the mission to be the ‘destination for electricals.’

Its strategy is to create value by offering brilliant customer service and by doing so making it the destination for everything they need, in the simplest and easiest way, when buying electricals. 

The company offers major and small domestic appliances and a growing range of mobile phones, audio visual products, consumer electricals and laptops.

It also provides ancillary services such as the installation of new and collection of old products, as well as offering product protection plans and customer finance.

The group’s AO Business operation serves the B2B market in the UK, providing electricals and installation services at scale.

Impressively the company also has a waste electrical and electronic equipment processing facility, ensuring customers’ electronic waste is dealt with responsibly.

Full Year Trading Update for FY24

In the late March statement, the company guided that its estimated revenues for the full year to end March are expected to be around £1.04bn. 

It reported that its core business continued to trade positively through its Q4 period, and that AO.com, as expected, had returned to revenue growth during the quarter.

The company also guided that it expects adjusted pre-tax profits for FY24 could be at least at the top of the previously guided range of £28m-£33m.

Founder and CEO John Roberts stated that:

“I’m pleased with the clear progress that we’re making after pivoting our focus to profit and cash generation during the 2023 financial year.

As we expected at our half year results, we returned to revenue growth in our core business during Q4 and, as a result, we’re entering the new financial year with good momentum.

With net funds on our balance sheet and a clear plan, we remain confident in our ability to deliver on our ambition for 10-20% revenue growth in the year ahead and medium-term profit guidance of 5% adjusted PBT margin.”

The Equity

There are 578,570,448 shares in issue.

On 3 April John Roberts, transferred, at nil cost, 1,360,000 shares to charity, leaving him with a beneficial holding of 104,525,876 shares, some 18.07% of the equity.

The largest holder is Michael Ashley’s Frasers Group with 23.08%.

Others include Camelot Capital Partners (20.47%), JP Morgan Securities (5.29%), Odey Asset Management (5.14%), Chris Hopkinson, director (4.47%), Macquarie Investment Management Global (4.40%), Lancaster Investment Management (4.20%), The Vanguard Group (1.89%) and Waystone Management UK (1.38%).

Analyst View

Analyst Russ Mould at AJ Bell considers that the group has had ‘more ups and downs than a rollercoaster’ during its time as a listed company.

“Like many online-based retail businesses, AO was well-placed during lockdown but subsequently, its fortunes took a turn for the worse.

Having returned to a more sustainable path towards profit and cashflow in its financial year to the end of March 2023, the company has now confirmed revenue guidance for the current year and flagged profit at the top end.”

Mould reckons that AO now seems to be getting more of the basics right and that is coming through in its financial performance.

Over at Equity Development, its analysts Caroline Gulliver and Hannah Crowe have a ‘fair value’ of 140p on the group’s shares.

Their estimates for end March 2024 are for £1,038.9m (£1,138.6m) sales, adjusted pre-tax profits of £33.4m (£12.3m), and earnings of 4.3p (2.0p) per share.

For the current year they go for £1,175.6m revenues, £38.7m profits, and 5.0p earnings.

As for 2026 they estimate £1,328.4m revenues, profits of £51.5m and 6.7p of earnings.

The average from a consensus of six analysts following the company is a 111.7p Price Objective, with the overall view looking for Outperformance.

My View

A year ago, I featured the company for UK Investor when they were just 82p.

I suggest that this group’s shares are ready for another run up towards the 115p/120p range, possibly helped by bullish comment on the finals being announced next Monday.

They are now trading at around 108p, but I am convinced that they will be going a lot higher and fairly soon.

The FTSE 100 has started the session higher but the gains didn’t last with concerns about the Chinese property sector dragging on the index as the session progressed.

Investors who thought we’d seen the last of worries about the Chinese property market had a rude awakening on Monday after fresh data showed Chinese house prices had fallen further as the downturn persisted.

“The property slump is also showing no signs of imminent reversal with the latest snapshot from the National Bureau of Statistics showing new home prices fell yet again in May by 4.3%, compared to a year earlier, with 67 cities reporting annual price falls,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

Streeter continued to explain Chinese authorities were taking action to boost the housing market but the moves had little long-lasting imapct.

“Beijing is attempting to revive the real estate market, by encouraging local authorities to go on home buying sprees, but this data suggests it’ll just be a sticking plaster for a much deeper wound afflicting property sector. With home values falling, it’ll mean consumers’ wealth perceptions may also take a fresh knock, lead to more bargain hunting behaviour, increasing deflationary pressures in the economy,” Streeter said.

Miners were the obvious victims of concerns around China with Rio Tinto, Glencore and Anglo American all trading in the red. However, the gains were contained by hopes China would take action to stop the rot in the form of interest rate cuts later this week.

Russ Mould, investment director at AJ Bell, suggested the ‘alarming slump’ would “likely to put pressure on the Chinese central bank to cut rates when it meets later this week.”

London’s leading index was down just 4 points at 8,143 at the time of writing but had ranged between 8,187 and 8,120 during the session.

Weakness in miners was offset by a stronger session for UK house builders, financials and retail stocks. B&M was 2% higher, while St James’s Place added 2.4%. St James’s Place is due to be demoted to the FTSE 250 later this month.

Oil and gas projects developer Longboat Energy (LON: LBE) is exiting its assets in Norway and selling its 50.1% stake in Japex Norge joint venture stake for $2.5m and the assumption of $8,5m of debt by the acquirer. This should save $1.25m in costs in 2025. The cash will be invested in Malaysia and should last until next year. The main asset is the 52.5% owned Kertang gas prospect, offshore Sarawak. There is strong demand for gas in southeast Asia. A farm out process will be conducted in the second half of 2024. An updated competent person report is due at the end of the month. The share price is 55.2% higher at 11.25p.

Sound Energy (LON: SOU) shares have rebounded 26.5% to 1.0575p following the announcement after the market closed on Friday that it has sold most of its interest in its Moroccan assets to Managem. It is selling a subsidiary that holds most of these assets for up to $45.2m, but it will retain a 20% interest in the Tendrara production concession and a 27.5% working interest in each of the Grand Tendrara and Anoual exploration permits. Managem will provide funding for phase 2 of the Tendrara concession, including two exploration wells. The disposal proceeds include $13m of back costs and contingent consideration of $1.5m one year after first gas from the phase 2 development. The rest of the consideration is covered by the funding being provided by Managem for the concession and the two permits. The subsidiary being sold generated pre-tax profit of £1.3m in 2023.

Modular housing supplier Eco Buildings Group (LON: ECOB) says that its factory in Albania is fully operational. The automated production line has improved efficiency and quality. Production time has been reduced by one-third and this improves the outlook for profitability. The company’s product has passed safety testing in Chile and there are plans to move into the south American market. The share price rose 16.7% to 14p.

Inspiration Healthcare (LON: IHC) shares continue to recover after Mennen Medical increased its stake in medical ventilators supplier from 5.22% to 6.21%. Israel-based Mennen Medical is a developer of medical technologies, including static and wearable monitors. It is developing a new monitoring product for babies, which overlaps with Inspiration Healthcare’s focus. The share price increased 12.2% to 27.5p.

FALLERS

Training services provider Mind Gym (LON: MIND) reported an 18% decline in revenues and a slump into loss in the year to March 2024 and revenues are expected to continue to decline this year. Clients are putting off spending on developing the skills of employees. There was a loss of £12.1m after exceptional costs of £8.9m. There was a £6.6m write down on digital assets, restructuring costs of £1.8m and a £500,000 impairment of a US office lease. At the end of March 2024, cash was £1.4m. Liberum expects the underlying loss will be reduced from £3.3m to £1.7m in 2024-25. The new chief executive is updating strategy through further productisation of services. The share price slumped 22.1% to 30p, which is a new low.

Corcel (LON: CRCL) has raised £500,000 at 0.1p/share from high net worth individuals. The oil and gas company will use the cash to finance geological and geophysical work in Angola and business development in Brazil. This fundraising replaces the subscription money from a previous fundraising at 0.5p/share where subscribers, including largest shareholder Extraction, had not come up with the cash. Those shares will no longer be issued. The share price dipped 7.69% to 0.12p.

Dowgate has taken a 6.57% shareholding in Trellus Health (LON: TRLS). The company has developed technology to help manage chronic conditions. At the end of 2023, there was net cash of $12.2m and there was a cash outflow of $7.6m during the year. Agreements are being signed with US health insurance companies. The share price lipped 9.68% to 1.4p.

Electric Guitar (LON: ELEG) non-executive director David Eldridge has resigned less than two months after selling his digital marketing business 3radical to the company. The shares to acquire 3radical were issued at 2.1p each. The share price fell 6.67% to 1.05p.

Hemogenyx Pharmaceuticals provided an update on its cancer and viral disease treatment activities and progress on Monday, detailing the expansion of clinical trials, and advancements in the CBR platform and the development of mRNA-based delivery systems.

Hemogenyx announced progress in its clinical trial activities by adding a prestigious US medical centre to its list of clinical trial sites for HEMO-CAR-T, its CAR-T cell therapy. This expansion will enhance the scope and expedite the timeline for implementing clinical trials.

In addition, Hemogenyx is seeking to expand HEMO-CAR-T to include paediatric acute myeloid leukaemia (AML) and a subset of paediatric acute lymphoblastic leukaemia patients. If approved, trials will be implemented at the newly established site.

In immunotherapy, the company’s Chimeric Bait Receptor (CBR) platform aims to reprogram innate immune cells, such as macrophages, to combat viral threats and eliminate specific cancer types. Hemogenyx are developing and testing multiple CBR constructs to identify candidates for targeting rare cancers like epithelial ovarian carcinoma.

“We are excited about the progress we are making across our various programs. The addition of a world-renowned medical center to our HEMO-CAR-T clinical trial sites marks a significant step forward in our mission to develop life-saving therapies. Our expansion into pediatric indications for HEMO-CAR-T highlights our commitment to addressing unmet medical needs in both adult and pediatric populations,” said Dr Vladislav Sandler, CEO & Co-Founder of Hemogenyx Pharmaceuticals.

“Furthermore, our advancements in the CBR platform and the development of mRNA-based delivery systems for treating airborne viral infections demonstrate our innovative approach to tackling complex diseases. The progress in our CDX bispecific antibody program also underscores our dedication to bringing effective treatments to patients with relapsed or refractory AML and other severe conditions.

“We are diligently pursuing non-dilutive financing options to support these initiatives and remain focused on translating our scientific discoveries into clinical success. We look forward to updating our shareholders and the market as we continue to make strides in our development programs.”

Ibstock shares still offer value after rebounding from 52-week lows, and the stars may be aligning for the brickmaker with a change in government promising increased homebuilding.

We suggested Ibstock shares to readers in September 2023, when the UK housing market was showing early signs of recovery. UK house prices have since stabilised, and Ibstock shares have followed suit.

The next catalyst for Ibstock shares could well be firm plans to encourage home building during the next parliament.

One thing the Tories and Labour can agree on is the need to build new houses. How many they will actually build in the next parliament remains to be seen but Ibstock will inevitably see demand for its bricks increase should manifesto promises be followed by action.

The Tory’s plans to build 1.6 million homes have rightly been met with scepticism, given that they’ve had 14 years to boost house building and are unlikely to be in a position to enact the manifesto. Labour said they plan to build 1.5 million homes, and will likely ease planning laws, helping spur a wave of building.

Recovery

This is a recovery play with ample potential upside in the medium term, but investors should expect some volatility, which could provide a better entry point than the current share price.

In a recent trading update, CEO Joe Hudson said; “While we expect market demand to remain subdued in the near term, lead indicators reflect an increase in housing market activity, which offers encouragement for an improvement in volumes in due course.”

Ibstock has suffered dearly over the past two years as construction levels decline amid higher interest rates. The worst may still be to come if the Bank of England keeps rates at similar levels into next year.

In addition, just last week, new data revealed a sharp increase in mortgage defaults, demonstrating underlying pain for homeowners struggling to meet higher mortgage rates. 

There may still be a flush out of homeowners who can’t afford their mortgages leading to lower prices. This would be a favourable situation for Ibstock.

Lower prices would bring first time buyers into the market and existing owners would take the opportunity to upgrade. This spurt in activity will play straight into the hands of the house builders who will jump at the chance to meet demand with new builds. 

Housebuilders, of course, will be straight on the phone to Ibstock. 

The company has taken steps to control costs during the downturn, which will help amplify profits when demand recovery builds momentum.