Symphony Environmental Technologies (AIM:SYM) have been busy since our last recommendation at 23p with Interims, a strategic investment at 30p and most recently an Exclusive Distribution Agreement. After years of substantial investment in developing its platform technology the Interims to June reported a loss of £0.6m on £4.9m Turnover. There was also substantial progress in many product areas including an increase in customer trials and product-tests currently underway.
An existing strategic Investor paid 30p for £750k worth of shares with warrants at 40p taking their holding to 14%.
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The FTSE 100 started the week with a spring in its step as London’s leading index neared post-pandemic highs.
The FTSE 100 was 0.34% higher at 7,229 in mid afternoon trade on Monday.
A mixture of strong corporate results and continued momentum in the FTSE 100’s miners helped lift the index.
HSBC
HSBC gained after it reported a $1.6bn pre-tax profit that beat estimates and CEO Noel Quinn said “we believe that the lows of recent quarters are behind us.”
“HSBC is a giant in its industry, and with signs of more positive economic conditions comes a brighter set of results. Pre-tax profits have been buoyed by a huge swing in expected credit losses – with a chunky charge this time last year, turning into a release that buffer this quarter. The group is so confident about the direction of travel, it’s announced a $2bn share buyback programme,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
“A CET1 ratio well above target risks looking like a waste of uninvested equity, and capital returns are one way to deal with that. However, a lack of available investment opportunities could be a potential concern for more growth minded investors.”
Uncertainty
Despite the strength of the FTSE 100 on Monday, some analysts warned that a number of upcoming events could cause uncertainties in markets which may lead to volatility.
“The combination of a pandemic, recession and supply-side destruction on one side, and massive monetary stimulus, fiscal stimulus and changes in working and consumption patterns on the other means that no-one knows what’s coming next – not even central bankers. If they did, they would hardly still be running policies that were described as emergency measures when they were launched in the wake of the Great Financial Crisis,” says AJ Bell Investment Director Russ Mould.
Subsea equipment rental company Ashtead Technology Ltd is planning to join AIM in the second half of November. This is an international business with a spread of activities around the world.
Aberdeen-based Ashtead Technology was formed in 1985 and its initial focus was offshore oil and gas. The market has broadened into offshore windfarms. Services are provided for project development, construction and installation. There are also inspection and maintenance services for the oil and gas sectors. Most of the equipment can be used for oil and gas or windfarms.
The offshore wind market is expected to grow by 19% a year between 2020 and 2025. There is no indication about where in the world the market is going to grow fastest. More clients are opting to rent equipment rather than spend money on buying it. There are nine service centres in the Americas, Europe, West Africa, Middle East and Asia Pacific.
The ultimate holding company of Ashtead Technology Ltd is Bedfordshire-based BP INV2 Holdco Ltd, which in turn is owned by a Jersey-registered company. In 2020, Ashtead Technology Ltd revenues fell from £21.4m to £18.5m, while pre-tax profit declined from £5.34m to £979,000.
In the same period, BP INV2 Holdco Ltd revenues slipped from £47.8m to £42.4m, while a pre-tax profit of £2.77m turned into a loss of £4.89m. The intention to float announcement estimates that 2021 revenues will be at least £52m, so it appears that it is BP INV2 Holdco Ltd – possibly via a name change – is floating or there will be a reorganisation of ownership.
There is no geographic breakdown in the Ashtead Technology Ltd or BP INV2 Holdco accounts published at Companies House. There have been five acquisitions since 2017 and more are planned in what management calls a fragmented market. Management believes that organic growth can be in low double digits. The fastest growth should be in offshore wind with steady growth in oil and gas demand.
Numis is nominated adviser. There will be more information in the prospectus when that is published.
The flotation of Tungsten West (LON: TUN) is good news for Hargreaves Services (LON: HSP), which has connections with the Hemerdon mine in Devon dating back to the time it was owned by Wolf Minerals. This will generate significant revenues for Hargreaves Services.
Tungsten West bought the mine from Hargreaves Services in 2019, after the latter had taken ownership of the main assets from the administrators in lieu of the money it was owed by Wolf Minerals. This is the fourth largest tungsten resource in the world.
Tungsten West believes that it needs to invest £44.6m to improve the Hemerdon min...
Future Metals NL did not raise any cash when it gained a secondary quotation on AIM to go with its existing ASX listing. Future Metals was previously known as Red Emperor Resources, which had been involved in oil and gas, and it cancelled its AIM quotation to make it easier to complete its acquisition of Great Northern Palladium.
The acquisition was completed in June, and that brought an 80% stake in the Panton PGM project in Western Australia. After Future Metals owns 100% after it took up the option to buy the other 20%.
This is an area that has been explored in the past and Future Metals kn...
The Bank of England’s new chief economist has said that UK inflation could go above 5% next year.
Huw Pill told The Financial Times: “I would not be shocked — let’s put it that way — if we see an inflation print close to or above 5%. And that’s a very uncomfortable place for a central bank with an inflation target of 2% to be.”
This September saw inflation dip to 3.1% – down from 3.2% in August. According to the Office for National Statistics, the rise in petrol prices and transport were the biggest contributors.
Mike Hardie, head of prices at the ONS, commented: “However, this was partially offset by most other categories, including price rises for furniture and household goods and food prices falling more slowly than this time last year.”
“The costs of goods produced by factories rose again, with metals and machinery showing a notable price rise. Road freight costs for UK businesses also continued to rise across the summer.”
The increased demand for domestic holidays has meant Intercontinental Hotels Group is seeing an increase in bookings.
The owner of The Crown Plaza and Holiday Inn reported a 66% increase in revenues for Q3, which is 21% behind pre-pandemic levels.
“Domestic leisure demand was particularly strong in a number of markets over the summer, where occupancy and rate climbed back to 2019 levels,” said chief executive, Keith Barr.
Commenting on the results, AJ Bell financial analyst Danni Hewson, said: “The pandemic had an outsized impact on the hotels sector and InterContinental Hotels was no exception. Today’s update confirms a recovering picture with the company gradually clawing its way back to its pre-pandemic levels of trading.
“Its various franchises, including Holiday Inn and Crowne Plaza, have been boosted of late by domestic leisure travel, as people holidayed at home rather than jetted off overseas. This trend was particularly notable in the US where the gap between pre-Covid and post-Covid trading is narrowest.
“The group’s commitment to growth is notable but it is taking a refined approach, rather than chasing growth blindly, with the business also exiting a large number of hotels and committing to the improvement of others.”
With prices rising sharply it is essential to safeguard the real value of your wealth
For the first time in a generation we are seeing a meaningful increase in inflation. In the UK, the consumer prices index including owner occupiers’ housing costs rose by three percent in the 12 months to the end of August, with the Bank of England forecasting that it will hit four percent by the end of the year.
This may not sound much, but every £10,000 you have invested would lose £400 of spending power unless you can keep up with the increase in prices. Unfortunately there is no risk free way to do this, but the best option would be to use investment trusts to give you exposure to real assets that should appreciate in value.
These sorts of holdings often generate inflation-linked revenues that will pass any cost increases on to their customers without it impacting the bottom line. The one caveat is that they might be negatively affected if interest rates have to rise, as the discounted present value of the future cash flows would be expected to fall.
Infrastructure trusts such as International Public Partnerships (LON: INPP)are a good example. It invests in around 130 infrastructure assets, mostly in the UK, in areas such as energy transmission, transport and education.
INPP has the highest inflation linkage in the sector of 0.75%, which means that a one percent rise in inflation will produce a 0.75% increase in returns. The shares are yielding 4.6%, although they are trading on a 12% premium to NAV.
Real Estate Investment Trusts (REITs) are another option. One worth considering is the LXI REIT (LON: LXI)that holds a diversified portfolio of UK property that benefits from long-term index-linked leases with institutional-grade tenants. It is currently yielding 3.8% and trading on a nine percent premium.
Alternatively there is the Impact Healthcare REIT (LON: IHR), which owns a high-quality portfolio of UK care homes that pays an attractive yield of 5.3% and is trading on a seven percent premium. Its revenue is underpinned by the long-term, inflation-linked leases that are fully repairing and insuring with no break clauses.
The safest option would be to use one of the defensive multi-asset trusts like Personal Assets (LON: PNL)or the Ruffer Investment Company (LON: RICA). These aim to grow your investment ahead of inflation, but are based on a mentality of capital preservation.
Despite the ending of almost all lockdown restrictions, retail sales volumes have fallen every month since April. Clothing and department stores saw a slight increase but it was Household goods stores that reported a 10% fall in sales. Sales at chemists and toy stores also fell.
“An unexpected fall in retail sales, which came despite a boost from rising fuel prices, demonstrating that things are getting tougher out there,” said AJ Bell financial analyst Danni Hewson.
Helen Dickinson, the chief executive of the British Retail Consortium, commented: “For the sake of the UK’s economic recovery, it is vital that retail sales bounce back as we near the festive season.”
“Labour shortages across the supply chains, on farms, factories, warehouses and lorry drivers, all threaten to derail this recovery and it is vital that government finds a long-term solution to this problem,” she added.
Croma Security Services (LSE: CSSG) reported robust finals to June showing a 13% increase in EBITDA to £1.98m despite Covid restraints with Revenue slightly higher at £32.5m. Croma have provided total security solutions (muscle and technology) for over 25 years and is staffed predominately by ex-military. Its services protect people and assets over a range of situations such as event stewarding, mobile patrols, close protection, and Front of house. This increasingly requires technology solutions from CCTV, locks without keys, biometric access control, corporate security guardia...
