Imperial Brands shares give up after trading statement

UK Investor Magazine
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Imperial Brands shares give up after trading statement

Imperial Brands shares (LON:IMB) fell on Wednesday after the group released a trading statement pointing towards an ever reducing market for their combustible products and no changes to Imperial’s outlook for the year.

The group’s Next Generation Products (NGP) – which are designed to reduce harm when compared to their combustible products – are expected to produce similar sales in the second half as the first half.

Imperial Brands shares were down 1.9% in early trade on Wednesday.

“Imperial’s pressing forward with its strategy to focus on quality rather than quantity when it comes to its global footprint. This is a key part of being a tobacco company these days—with the number of smokers dwindling, the only lever to pull is hiking prices. Having a commanding market share and recognisable brand name is paramount,’ said Laura Hoy, Equity Analyst at Hargreaves Lansdown

Imperial Brands also faced the impact of a great level of travel allowing smokers to purchase their products in cheaper destinations and reduce Imperial’s revenue in their priced locations.

Imperial Brands said they expect their combustibles market shares to decline by 2-3 basis points this year, an improvement on last year’s 17 basis points decline.

“Aside from a shrinking addressable market, Imperial’s combustibles business is battling against loosening travel restrictions which are funnelling some customers away from more expensive product offerings. Add to that declining revenue in Australia and a £50m legal bill in the US, and it’s a recipe for profit declines. On the bright side, improved performance in Next Generation Products (NGP) and Distribution should make up for this, with group underlying profit ultimately expected to rise,” Hoy said.

“Combustibles is still the growth engine for Imperial—but NGPs is ultimately the future. So far it’s had a lukewarm reception, but management’s managed to trim some of the fat by exiting less profitable markets. While the second half will still show the impact of these abandoned markets, a narrowed focus should help the group build out more successful cigarette-alternatives.”

Chief Executive Stefan Bomhard commented:

“We have made good progress in implementing our strategy through a sharper management focus, greater investment behind our priority combustible tobacco markets and new market trials in heated tobacco and vapour. We are building a high-performance culture with the introduction of new more consumer-focused ways of working, and have made a significant number of new hires to enhance our capabilities in key areas. I am pleased to report the business continues to perform well and we remain on track to deliver our full-year results in line with expectations.”

Electric Vehicles sales rise 30% in the UK

UK Investor Magazine
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Electric Vehicles sales rise 30% in the UK

Electric Vehicle (EVs) sales in the UK rose 30% year-on-year in September from 20,800 to 29,600.

As the country queued for fuel and sales of Electric Vehicles jumped, the sales of Diesel cars unsurprisingly crashed 72% over the same period.

“September is often a bumper month for EV sales, but even these statistics surprised us. Twice as many people bought electric cars as bought diesel cars, showing the ongoing slump in sales of polluting diesels,” said Ben Nelmes, Head of Policy and Research at New AutoMotiv.

“In many UK cities – Newcastle, Bristol, London, Oxford, Cambridge and Birmingham, the figures suggest that 1 in 5 cars bought are fully electric. That is good news for the millions of people living in areas with illegally high levels of air pollution.

“Our data show that the market for EVs is incredibly diverse, with a growing number of brands and models bringing electric cars to market. Among the brands that are fastest to electrify, Jaguar tops the table for the third month in a row – a British success story that we can all celebrate.”

The expansion in the number of charging points is also attributed to helping the number of EVs sales in the UK.

One of the biggest drawbacks of buying an EV previously was the lack of range of the vehicles and the scarcity of charging points.

The is know as ‘range anxiety’ due to the fear drivers would have when setting out on long journeys and would only use their electric vehicles for shorter journeys as opposed to some of their more demanding trips.

Although these are still a factor in owning an EV, situation has improved dramatically and there are now 44,000 public charging points across the UK.

According to New Automotive, if you are on a UK motorway or A road, you are now never more than 25 miles away from a charging point.

The rise of Vietnam’s retail investors

Vietnam Holding
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The rise of Vietnam’s retail investors

While Vietnam continues to battle by far its worst COVID-19 outbreak of the entire pandemic, economic growth is still expected through 2021. Individual investments continue as a result, with the stock market emerging as the most popular destination for retail investors. 

Dynam Capital sought to find out more about the characteristics of Vietnamese retail investors and engaged Indochina Research Vietnam – an independent survey research firm – to conduct the first retail investor survey in August 2021. Half of the respondents were investors who have joined the stock market less than one year ago – known locally as F0 investors. 

“We truly believe that the more information and trustful data are available, the more Vietnam will be understood for its true potential and attract foreign investments. We are looking forward to the next edition of the survey to consolidate the results with more participants and provide regular updates on retail investors’ behaviour to the community”, says Xavier Depouilly, General Manager of Indochina Research Vietnam.

The survey reached 425 participants, out of them 193 were fully validated and analyzed. It reflects that local retail investors, are mostly from Hanoi and Ho Chi Minh City, with a gender balance of 55% female and 45% male. Most respondents are white-collar office workers (53%), with an average overall monthly personal income of USD1,170 and an average portfolio value of $18,000. This place most retail investors surveyed among the medium-high income groups of the two key economic hubs.   

The results highlight how stock investors allocate their investment, with 35% having more than 50% of their money invested in stocks and a similar proportion (35%) investing up to $4,500 (up to 100 million VND).

Apart from stocks, bank deposits, real estate and insurance products are the most used placements. Interestingly, the traditional gold is only chosen by 15% while cryptocurrencies are now traded by 2 out of 10 investors.

The majority are very active, meaning they check the stock market index multiple times a day (84%) and 54% trading at least one time per week.

Download the Vietnam Holding annual report

Further analysis describes significant differences between F0 and F1+ investors. F0 investors have an average lower portfolio value ($11,000 vs $24,500 for F1), are more likely to surf stock with shorter positions held and have an overall lower expectation for return on their stock investment compared to the more experience F1 investors.

Positively, most investors (80%) have registered gains in the past year, more among F1 investors (88%), and 59% are confident that the stock market will even grow up more than 5% through the rest of this year, even in the face of the outbreak. 

Six out of ten (63%) consider the stock market as a source of extra income, by far the most common response, significantly more among F0 investors (71%). About 10% consider the stock market as a retirement / long term investment plan.

These F0 individuals are far from alone.

According to local media, 842,405 securities accounts were opened in the first eight months of this year, more than the number of new accounts in the last three years combined. Bank deposit interest rates remain low, driving increased interest in stocks. As of this June, there were 3.4 million individual stock accounts in Vietnam.

Vietnam has also been likened to Taiwan in terms of potential stock market growth. Currently around 3% of Vietnam’s population has a retail stock brokerage account, similar to Taiwan’s figure in 1986. Taiwan went on to experience a decades-long stock market surge, and Vietnam now has many of the same economic fundamentals in place. The Vietnamese government also wants to see further growth, with goals to increase stock brokerage penetration to 5% by 2025 and 10% by 2030.

Download the Vietnam Holding annual report

The growth in the stock market in Vietnam has been meteoric, the market value of publicly traded companies is close to USD 300 billion in 2021, up from USD 2 billion in  2006 when investment funds such as London-listed Vietnam Holding (VNH) commenced their activity. It has created wealth for some of the new domestic investors, and longer-term investors – such as those in VNH – have seen compound returns of 15% per annum over the last decade, according to public data. 

Yet, despite the growth and increased liquidity in the stock market (the second highest in ASEAN), for foreign investors Vietnam is still classified as a frontier market. For the time being, at least, it is the local investors who dominate, and seem to be benefitting most from its growth and development.

Writing credit to Michael Tatarksi and Infographics credit to Indochina Research Vietnam

New standard listing: Oxford Nanopore Technologies

Andrew Hore
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New standard listing: Oxford Nanopore Technologies

Oxford Nanopore Technologies is one of the most successful companies backed by fully listed IP Group. The focus on nanopore-based life science research tools for DNA / RNA means that there is a fast-growing market to exploit.
The company has developed the world’s only pocket-sized portable sequencer called MinION. This means that it can be used outside the laboratory. There is also software sold on an annual licence.  
The 2023 life science tools revenues of £165m to £175m are being targeted with a target gross margin of more than 60%. Losses should reduce by 2023.
Prior to the start of u...

Oil shares help lift FTSE 100

UK Investor Magazine
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Oil shares help lift FTSE 100

The FTSE 100 rose on Tuesday in a broad rally which saw most sectors gain.

Oil shares were a significant contributor to the FTSE 100 in terms of points following the decision by OPEC to not lift production, sending oil prices higher.

“OPEC’s decision not to lift production volumes gave oil prices a lift into Tuesday, helping the FTSE 100 to solid gains as index heavyweights BP and Shell gushed higher,” says AJ Bell investment director Russ Mould.

BP shares were up 1.45% and Shell added 1.2%.

Ocado shares were the top riser on Tuesday lunchtime, gaining some 2.9%, as investors continued to bet that the takeover activity in UK grocers wasn’t over after Morrisons received final offers from US Private Equity.

Sainsbury’s was also higher after gaining 5% yesterday on speculation it could be the next target.

Facebook Outage

The gains in London came despite a rocky night on Wall Street as the Facebook outage caused volatility in tech shares.

Facebook services including WhatsApp and Instagram suffered prolonger downtime and investors took this as an opportunity to reduce positions in tech stocks that are fairly highly valued after a long bull run.

“This followed a tech-led sell-off in the US overnight as investors turned away from the likes of Apple, Amazon and, perhaps most notably, Facebook which had a pretty terrible day on Monday,’ said Russ Mould

“First it faced damaging allegations from a company whistleblower then it saw a lengthy outage on its eponymous social media app as well as its Instagram and WhatsApp platforms.

“After Beijing took its own technology sector to task in 2021, could 2022 see Washington follow suit with tighter regulation?

“A cocktail of risks is brewing for the US market around not just the tech sector but also the debt ceiling and stalled spending plans as political in-fighting continues.”

Despite giving up ground on Monday, Facebook shares were set to open higher on Tuesday.

Botswana Diamonds receives 6.1p price target from First Equity

UK Investor Magazine
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Botswana Diamonds receives 6.1p price target from First Equity

Botswana Diamonds share price (LON:BOD) has been given a 6.1p price target by analysts at First Equity.

The 6.1p price target represents significant upside from the current Botswana Diamonds share price of 1.07p.

Botswana Diamonds have recently announced two thick kimberlite zones identified of 19.1 and 13.5 metres at Thorny River and have exercised pre-emption rights over Vutomi Mining meaning BOD now have a 76% interest in the project.

First Equity point to the developments at the Thorny River project as an integral element of their price target but it is in no way the only asset providing potential shareholder value.

In addition to the Thorny River asset, Botswana Diamonds are developing the Ghagoo project which First Equity forecast to be worth $36.1m to BOD.

Analyst Jason Robertson said in a note: “We have taken a very prudent approach by calculating an estimated in-the-ground value using the SAMREC Indicated (at 8% value) and Inferred(1.5%) resource figures on a risked basis to factor in development and re-start risks at Ghaghoo (est. value $36.1m) and the KX36 discovery (est. $29.5m). At Thorny River, we await details of the model being developed to estimate the potential resource before ascribing a valuation, which we believe has potential to emulate the lucrative economic upside of the Marsfontein mine. Other Group projects such as the Sekaka database and Sunland licences are valued at a notional sum at this point.”

“The market has yet to price in the importance and potential upside of Botswana Diamonds’recent project additions, including the high-grade KX36 kimberlite pipe and Sekaka database last year and more recently, in August ’21, a stake and option over Ghaghoo, which constitutes over 50% of our estimated Group enterprise value. Once the model details and potential resource at Thorny River are known, we should understand more about the value of this highly interesting diamond bearing system and its development upside.”

Octopus Renewables acquires 59MW of Polish onshore wind

UK Investor Magazine
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Octopus Renewables acquires 59MW of Polish onshore wind

Octopus Renewables has expanded its Octopus Renewables Infrastructure Trust portfolio with the acquisition of a wind asset in Poland.

Octopus have secured the Krzecin and Kuslin wind farms from PNE Group. PNE Group will continue to provide construction services for the assets which will have a total capacity of 59MW.

The acquisition will be the second Polish addition to the Octopus portfolio and means their assets can provide renewable power to 195,000 Polish homes.

Chris Gaydon, Investment Director at Octopus Renewables, said:

“We are delighted to have completed this acquisition and to have developed a strong relationship with a highly experienced developer. These projects benefit from attractive government-backed fixed revenues, in a market which is set to experience significant growth in renewable capacity over the coming years.”

Markus Lesser, CEO of PNE AG said:

“We are very pleased about this sales success and it shows that our many years of commitment have paid off in this market that is becoming increasingly open regarding clean energies. We also really appreciate the opportunity to continue working with Octopus and to stay involved in the projects in the long run, thanks to our management activities in the operation of the wind farm.”

Greggs continues store openings despite supply chain disruption

Safiya Bashir
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Greggs continues store openings despite supply chain disruption

New results from Greggs have revealed a 3.5% increase for the third quarter despite the staffing and supply chain disruption.

The bakery chain said on Tuesday that it will continue its plans for new store openings thanks to strong sales over the year. Greggs plans to open 150 new shops over 2021.

Greggs said that trading was particularly strong in August thanks to the ‘staycation’ effect. In the year to date they have opened 84 new shops, giving a total of 2,146 stores trading in the UK.

“Greggs has not been immune to the well-publicised pressures on staffing and supply chains and we have seen some disruption to the availability of labour and supply of ingredients and products in recent months,” said the group in a trading statement.

“Food input inflation pressures are also increasing; whilst we have short-term protection as a result of our forward buying positions we expect costs to increase towards the end of 2021 and into 2022.”

Commenting on the results, Ross Hindle, Analyst at Third Bridge, said: “Supply chain issues and labour shortages remain a key risk for Greggs with no end in sight. Temporary interruptions for some ingredients could result in the Group reducing its range and would hamper current momentum.”

UK new car registrations plunge in weakest September since 1998

Safiya Bashir
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UK new car registrations plunge in weakest September since 1998

New data has found new UK car registrations to plummet by 35% year-on-year this September due to global shortages of semiconductors.

It’s the weakest September for 23 years – a time when car sales are usually strong as people often buy at this time of year to have the latest number plate.

The Society of Motor Manufacturers and Traders said that 214,000 units were sold in September. The SMMT has also said that over 32,000 battery-powered cars were registered last month, which is a new record.

Car sales across Turkey and Italy were also low last month as countries across the world have been hit by the shortages of semiconductors.

The final registration data will be released by the SMMT later on Tuesday.

FRC investigates audit of former AIM company subsidiary

Andrew Hore
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FRC investigates audit of former AIM company subsidiary

A technology company that is a former subsidiary of a company that had been quoted on AIM before it was taken over has sparked a Financial Reporting Council (FRC) investigation into the auditing of its accounts by accountant Crowe UK LLP.
The investigation into this audit covers the accounts for 2016, 2017 and 2018. The FRC has been busy in recent times investigating past company accounts.
Last month, the FRC published its final decision notice concerning the role of auditor Grant Thornton in the collapse of Patisserie Valerie owner Patisserie Holdings, where entrepreneur Luke Johnson was chai...

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