Hammerson still recovering from the pandemic

Anshula Kumar
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Hammerson still recovering from the pandemic

Hammerson shares were trading up 2.14% to 35.36p on Friday morning following the announcement of their full year results.

Hammerson is in the process of recovering from the pandemic.

Hammerson’s adjusted earnings saw an increase of 122% from £37m in FY20 to £81m in FY21. The earnings managed such an increase due to better net rental revenue, lower financing costs and the recovery in profitability of their value retail segment.

Surrender premiums saw a £17m increase followed by a £12m contribution to net rental income, in 2021.

The group’s balance sheet strengthened with £503 in 2021 from disposals. Due to the significant cash from disposals, the group’s net debt reduced by 19% to £1.8bn in 2021.

“Since the beginning of 2021, we have made fundamental changes in our business, realigning our portfolio with £623m of disposals, significantly strengthening the balance sheet, re-setting our organisation and putting in place a clear strategy for value creation focused on our prime urban estates,” stated Rita-Rose Gagné, Chief Executive Officer, Hammerson.

IFRS losses induced by pandemic restrictions reduced by £1.3bn to £429m in 2021.

Good results were seen in all territories as a comeback from the pandemic. Flagship leasing value saw a rise of 150% to £25m in 2021 due to a robust demand for prime space. The occupancy rate of the flagship leasing increased to 96% by FY21 from 93% HY21. Focus remains on the rent and arrears collection, with collections of 99% in 2020, to 90% in ’21 and currently 83% YTD.

“We are already seeing the tangible results from our strategy with strong occupier leasing demand, reduced vacancies, improved collections, a lower cost base and clear path to value creation from our land bank,” commented CEO.

The proposed final dividend of 0.2p per share is still subject to shareholder approval. However, an alternative of an enhanced scrip dividend of 2p per share is also available to the shareholders. Regardless, the dividend payments will be paid out from property income distribution.

Rita said, “The pandemic has accelerated trends in our operating environment, with people engaging with physical space in new ways. Our role is to create and curate relevant, appealing and sustainable spaces for the future.”

DiscoverIE group successfully disposes Acal BFi

Anshula Kumar
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DiscoverIE group successfully disposes Acal BFi

DiscoverIE have completed the sale of Acal BFi to H2 Equity Partners which began in November 2021.

DiscoverIE is a multinational firm that develops and manufactures cutting-edge electronics for industrial use.

DiscoverIE Group plc (LON:DSCV), a leading international designer and manufacturer of customised electronics for industrial applications, today announces that the sale of the Acal BFi distribution business has now completed. Acal BFi is a european expert electronic parts distributor with branches in the UK, Germany, France, Italy, Scandinavian region, and even the Benelux.

On November 9, 2021, the sale of Acal BFi for £50m to H2 Equity Partners was announced. H2 required regulatory approvals prior to the completion of the sale, which have now been received. The total cash consideration of £50m was established on a debt-free cash-free basis and comprised of a £45m upfront payment, followed by £5m deferred payment.

On an earlier date, Nick Jefferies, Group Chief Executive Officer, DiscoverIE said, “We are pleased to have found a new home for Acal BFi so that it can continue to grow under the existing management team, who have served discoverIE well over many years. We wish them and the whole Acal BFi workforce every success under their new ownership.”

Vertec SA sale came to fruition in January, 2022 followed by the sale of Acal BFi. The sale of both these businesses concludes the exit from the custom supply distribution business for DiscoverIE.

The profits from the sale will be used to lower the group’s net debt and advance the design and manufacturing growth strategy which is the main contributor to DiscoverIE’s financial health.

“The group has developed significantly in recent years, with a substantial and higher growth design and manufacturing business becoming the core of operations. The sale of Acal BFi concludes the Group’s exit from the business of distribution, with discoverIE becoming solely a global designer and manufacturer of customised electronics with higher operating margins, and provides additional resources to invest further in our growth,” commented Jefferies.

On Friday morning, the group’s shares were trading down 1.7% to 806p.

New standard listing: Hamak Gold’s Liberian prospects

Andrew Hore
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New standard listing: Hamak Gold’s Liberian prospects

Hamak Gold is a Liberia-focused gold explorer with two gold prospects. Liberia is apparently an underexplored and underdeveloped area in sub-Saharan Africa. There are already two significant gold projects in Liberia.
Sampling should commence at both the licences in the first half of 2022, while the exploration drilling could start early in 2023.  
The share price opened at 12p and has stayed at that level, although the bid/offer spread is 10p/14p. That is a wide spread and the trading levels have been fairly low. Wait for further developments with the exploration programme.
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Ham...

VT Gravis Clean Energy Income Fund worth a look for green energy investors

Natasha Doris
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VT Gravis Clean Energy Income Fund worth a look for green energy investors

Ongoing investor climate change concerns, coupled with the impact of Russia’s invasion of Ukraine on fossil fuel prices, will bring green energy investments back to forefront of investor minds.

Having returned 66% since inception in 2017, the VT Gravis Clean Energy Income Fund is potentially worth a look for green energy and ethical investors.

VT Gravis Clean Energy Income Fund asset allocation

The VT Gravis Clean Energy Income Fund has split asset distribution between green energy and a selection of equities across the international market.

The fund has a respectable yield of 3.55% and focuses its investments across the green energy industry with no particular emphasis on geographical regions.

Commodities and energy account for 33.54% of the portfolio, with companies such as Greencoat UK Wind plc, The Renewables Infrastructure Group and Clearway Energy selected for the top allocations within the portfolio.

The VT Gravis Clean Energy Income Fund also boasts a collection of international equities, including a 15.91% weighting in UK equities, 15.10% in Canadian equities and 10.68% in US equities.

VT Gravis Clean Energy Income Fund portfolio

The portfolio is weighted towards closed-ended investment companies and has substantial exposure to wind and solar.

Portfolio holding Greencoat has seen shares increase 15.88% to 149.7p over the last year, and 25.27% over the last five years. Greencoat is listed in London as has a portfolio of wind power assets across the UK.

The Renewables Infrastructure Group also displays steady growth, with a share price rise of 1.98% over the past year to 132.27p and a 25.46% increase over the last five years.

Clearway Energy has seen particularly decent growth, with a share price rise of 17.02% to $30.60 over the last year and an 84.78% increase over the past five years.

Fund Verdict

The VT Gravis Clean Energy Income Fund looks like a good option for green energy and ethically-interested investors who prefer security from the current geopolitical storm over Russia and Ukraine.

The fund is also an attractive income proposition having increased payouts since its launch.

Why PGIM Jennison Emerging Markets Fund is the best performing IA emerging markets fund over 5 years

Anshula Kumar
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Why PGIM Jennison Emerging Markets Fund is the best performing IA emerging markets fund over 5 years

PGIM Jennison Emerging Markets Fund is the best performing fund of the 148 Investment Associations Emerging Markets OEICS and Unit Trusts, according data complied by Trustnet.

However, the fund is aiming at advisors and institutional investors and isn’t easily available to UK private clients. The fund isn’t available through either AJ Bell or Hargreaves Lansdown.

The fund is managed by an American manager, Prudential Financial inc – not to be confused with FTSE 100 listed Prudential plc.

The fund portfolio has an 83% investment in emerging markets. India has a significant proportion of the fund allocation is 36%, followed by China with 16% weighting.

The fund has returned 80% to investors over the last five years, making it the best performing fund in the sector over that period.

Managers of PGIM Jennison Emerging Markets have invested in companies which they feel are in the early stages of a growth cycle.

This differs to many emerging markets funds because most of their peers tend to focus on more established companies that rely on overall economic growth as a source of future earnings growth.

To manage risk, the fund managers believe in investing in companies which have a strong presence in their domestic markets with little impact on their growth from external markets.

Portfolio

PGIM Jennison Emerging Markets has significant weighing towards India and with Indian indices dramatically outperforming other EM indices over the past five years. This was a key driver to the portfolios outperformance as many peers choose to focus on China and South Korea when looking at Asia.

FTSE 100 dips as fighting intensifies in Ukraine

UK Investor Magazine
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FTSE 100 dips as fighting intensifies in Ukraine

The FTSE 100 fell on Thursday as the world learnt of intensifying fighting in Ukraine and the promise of further action by the West on the Russian economy in an attempt to stop Russia’s atrocities.

The FTSE 100 was trading down 0.6% at 7,386 on Thursday morning as strong commodity shares failed to keep the index in positive territory.

“The stock market is trading slightly weaker this morning as investors continue to fret over the consequences of Russian aggression in the Ukraine. OPEC+ agreed to lift crude oil output yesterday, but only by a fraction of the amount that Russia used to supply each day,” said Steve Clayton, Fund Manager at HL Select.

“With the squeeze on energy supplies becoming ever clearer, crude oil prices continue to surge, with Brent crude jumping $4 per barrel to $117 this morning.”

“Iron ore futures are also on the climb so no surprises that commodity producers are dominating the leader board in the stock market this morning.”

Miners Rio Tinto, Antofagasta, Glencore and Anglo American were among the FTSE 100 risers.

Glencore’s share price climbed 5.8% to trade 479.2p, the highest level since 2012, with the commodities producer seeing huge rewards from higher commodity in a time of massive market volatility.

The London Stock Exchange Group saw a share price rise of 7.9% to 6,866p as a result of its Refinitiv acquisition. The Group reported that its cost synergies after the acquisition were ahead of target, noting an annual run-rate of £151 million in 2021.

Evraz rebounded from its drop yesterday with an increase of 6% to 63.5p as bargain hunters stepped in. The price shift comes despite the company’s scheduled exit from the FTSE 100 on March 21 as a result of its volatility following Russia’s invasion of Ukraine impacting its operations in the state.

ITV shares sink

ITV shares fell 16% to 92.5p despite the group’s strong financial performance.ITV is attempting to accelerate their streaming services, with the launch of ITVX in 2022. The new streaming service is expected to raise the firm’s digital revenues to £750m by 2026.

The investment for ITVX amounts to £20m in 2022 and an additional £160m in 2023.

“With the success of ITV Hub, ITV Hub+, Planet V and BritBox we see an exciting opportunity to at least double our digital revenues to £750m by 2026,” said Carolyn McCall, CEO, ITV.

The firm recorded 2021 revenues at $1.7bn which is a 28% rise from 2020 figures. Operating profit grew to £519m in 2021 from £356m. EBITDA increased by 41% to £813m.

The company proposed a final dividend of 3.3p for 2021.

Admiral

Admiral shares are trading down 10% to 2683p following the update on the firm’s financial results. The firm set expectations for dividend pay-outs to be 197p per share, however, they paid out 187p per share in total dividends. The group recorded a loss of £21m from £9m in the International Insurance segment despite growth of 13% in consumers.

Covid claims and business expansions were the reason behind the loss.Gross pretax profits saw an rise of 26% to £769m. Admirals posted a 4% turnover rise from £3.3bn to £3.5bn.

“The strong performance of UK Motor insurance is the key driver of our results. We also continued to expand our customer proposition. In 2021 alone, beyond UK Motor we added more than half a million customers, now representing around 40% of total Group customers,” said Milena Mondini de Focatiis, Group CEO, Admiral.

Sovereign Metals signs premium rutile offtake agreement

UK Investor Magazine
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Sovereign Metals signs premium rutile offtake agreement

Sovereign Metals have signed an offtake MOU for their world class Kasiya titanium rutile project in Malawi.

Sovereign Metals said they have signed a memorandum of understanding with Hascor, a market leading global processor and distributor of rutile products for the welding industry.

The MOU would see a supply of 25,000 tonnes of natural rutile per annum delivered to Hascor which has processing plants across five continents.

Rutile prices of offtake destined for the welding industry generally demand a premium when compared to rutile used in pigments.

The MOU is non-exclusive and non-binding and is subject to ongoing negotiations. The MoU will expire on 31 December 2023 but has the option to be extended.

“We are very excited to have signed this MoU with a major rutile supplier like Hascor about a future offtake agreement and to provide input on marketing for our premium rutile products from Kasiya,” said Sovereign’s Managing Director Dr Julian Stephens.

“Hascor is a market leader in natural rutile product development and distribution for the welding industry across five continents. The offtake MoU with Hascor points to the quality and strategic nature of our world-class Kasiya Rutile Project.”

The global rutile market currently demands 2.8mt per annum and Sovereign Metals is well placed to serve this market with the Kasiya project, the world’s largest undeveloped Rutile resource.

Why investors should look at Croda International shares

Natasha Doris
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Why investors should look at Croda International shares

Investors might want to consider Croda shares after the stock dropped to 7,138p from its high of 10,100p at the beginning of the year.   

This is a significant drop for a company that has consistently posted increased dividends over the past ten years and recently said they enjoyed a 46.6% increase in operating profit in 2021.

Croda International Share Price 

Croda shares are currently trading at 7,138p – the lowest level since 24 February 2022 – having fallen from recent highs of approximately 7,484p. The stock is down 30% year-to-date.

“This is not the company’s fault. It’s just the result of the stock’s lofty valuation and investors’ ongoing switch away from highly-rated growth stocks at a time of rising interest rates and toward commodity and raw materials plays at a time of rising prices and inflation,” said AJ Bell Investment Director Russ Mould.

The drop in price potentially represents an interesting opportunity for investors who see value in the company’s strong financial results. 

Croda International saw an increase in operating profit of 46.6% to £468.6 million against a 2020 figure of £319.6 million.   

The Group’s profit before tax was £445.2 million in 2021 against a result of £300.6 million in 2020.   

The company reported that all its businesses were trading ahead of pre-Covid-19 pandemic levels, and saw growth in areas including life sciences and from its recent acquisitions. 

However, Croda International shares have experienced a decline due to its pipeline of 150 Covid-19 related projects, in addition to a further 90 throughout 2021 falling in relevancy as the rates of international vaccination increased.

Expectations for 2022

The company’s growth is predicted to continue in line with its medium-term expectations.  

Croda International expects strong consumer demand, inflation cost recovery and the benefit of its recent investments to offset moderation in customer restocking.  

Following the sale of Croda’s performance technologies and industrial chemicals businesses (PTIC) to agricultural production company Cargill for £778 million, the Group is apparently set to streamline its business and give the company an increased level of capital to reinvest in its upcoming growth.  

“[The deal] will release more capital to reinvest in faster growth, higher return markets, positioning us to deliver more consistent sales growth and an even stronger profit margin,” said Croda International CEO Steve Foots.  

Croda International’s dividend  

Croda International’s statutory basic earnings per share in 2021 saw an increase of 48.3% to 230p compared to 155p in 2020.  

The company’s ordinary dividend per share increased 9.9% to 100p against a figure of 91p in 2020.  

The Group has seen a healthy dividend progression over the past two years, with increased returns to shareholders year on year.  

the Croda share price currently provides a dividend yield 1.4%.

Is the HSBC share price attractive at this level?

Anshula Kumar
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0
Is the HSBC share price attractive at this level?

Despite the recent announcement of buy backs and reduction of impairment charges leading to a jump in profits, HSBC shares have since sank on geopolitical concerns.

The recent drop in the HSBC share price will get the attention investors who will likely be questioning whether now is a good time to buy HSBC shares?

HSBC Share Price

Year to date, HSBC shares peaked in mid February at 567p and now trade at 504p, up 12% on the year.

Although HSBC posted good results, shares have declined due to geopolitical risks and concerns around the company’s outlook.

With the geopolitical risk around the Russia conflict sending waves through the financial system, there is a significant chance HSBC shares face further volatility in the coming weeks.

This is due to the global nature of HSBC’s operations and complexities of the financial system. Sanctions on Russia will likely have a greater impact on HSBC, when compared to domestic focused banks such as Lloyds and Natwest.

HSBC Earnings

HSBC announced a rise in profit after tax of $8.6bn to $14.7bn for 2021, and a profit before tax of $10.1bn to $18.9bn in 2021.

The profits had a positive impact due to impairment charges being reversed and bad debt provisions being reduced. The impairment charges for HSBC saw a steep decline from $8.8bn in 2020 to $0.9bn in 2021 which had a positive impact on the banks profitability.

However HSBC were forced to set aside cash to provide for any adverse scenario in the Chinese property markets. Analysts highlighted this as one of the major concerns for investors going forward.

“China’s property woes clearly remain a cause for concern for the Asia focused bank. The market is having a less than savoury response to higher than expected impairment charges, a lot of which relates to uncertainty in the Chinese commercial real estate sector,” said Susannah Streeter, senior investment and market analyst, Hargreaves Lansdown shortly after the release of HSBC’s results in February.

Net Interest Margin

Streeter also highlighted the precarious nature of HSBC’s business in a world that is starting to rate rises, but also relies on lendng activities across multiple geographies.

“The Goldilocks dilemma is also evident in this update, as HSBC needs inflation to tick up enough to prompt rising rates, but not be so hot it makes customers nervous about taking on new borrowing, which could dent its loans business,” Streeter said.

HSBC announced a decline in group in net interest income in 2021 with net interest margin decreasing 12 basis points to 1.2%.

Lower margins were a result of UK bank base rate cuts in 2020, as well as increased quantities of client deposit balances and cash at central banks.

With the ongoing situation in Ukraine, UK banks might miss out higher net interest margins, if the Bank of England – and other central banks – hold back from a steep tightening cycle.

HSBC Dividends

HSBC investors will be happy to see dividends increase to $0.25 per share for the full year. HSBC now has dividend yield of 3.7%.

HSBC Shares Valuation

With the HSBC share price are trading at 508p, the stock has a forward P/E of 9.39x and trailing P/E of 11.13x which is significantly above FTSE 100 banking peers.

This will reflect their global operations but seems rich given ongoing geopolitical risks.

Palace Capital surpasses targets on strategic disposal

Anshula Kumar
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1
Palace Capital surpasses targets on strategic disposal

Palace Capital were able to exceed the goals set on strategic disposal with the sale of Pelhan House in Brighton.

Palace Capital is property investment firm. The group’s portfolio is filled with handpicked commercial real estate in the UK. The location of the real estate units are mainly outside of London, with a concentration in the office and industrial sector.

On Thursday, Palace Capital declared the completion of the disposal of their asset, Pelham House. Pelham House is in Pelham Square located within Brighton. The sale generated £1.6m.

A strategic disposal plan was established by the property investment firm in April of 2021. Fifteen non-essential properties were established for disposal, which would yield an income of £30m minimum. With the sale of Pelham House, which is the 14th of the 15 properties to be sold off, the group has enjoyed £31.5m in total consideration from the sales programme.

The current income collected from the sale of the 14 assets is exceeding the aggregate book value by 20% and the previous procurement rate inclusive of capital expenditure by 12%.

From the proceeds, £15.7m have been utilised in paying off debt. The remainder of £15.8m will be used in reinvestments of assets which are in line with the firms needs.

“These sales at 20% above book value have generated an ungeared 11% aggregated IRR for shareholders which with our continuing Hudson Quarter apartment sales, have further strengthened our balance sheet,” said Neil Sinclair, Chief Executive, Palace Capital.

“Following the recent acquisition and letting activity, new income exceeds the rent lost through disposals, resulting in fewer but better quality properties. With a pipeline of potential opportunities, we look forward to updating the market on further acquisitions in due course as we continue to recycle capital.”

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