Tip: Right on track

Andrew Hore
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Tip: Right on track

Software companies do not always succeed in commercialising their technology however good it might be. A decision is then required on whether to continue or change direction. One AIM company that made the decision to take a new direction has been winning new contracts in international markets.
The company’s original banking technology initially won customers, but it did not progress as management wanted. The AIM quotation had a value, but it would not be fully utilised with the business as it was
The directors decided to find another technology business that might benefit from the expertise of...

New Aquis admission: Yooma Wellness talks up acquisition pipeline

Andrew Hore
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New Aquis admission: Yooma Wellness talks up acquisition pipeline

Yooma Wellness Inc has a dual quotation on the Canadian Securities Exchange and obtaining the Aquis quotation is part of the stated strategy to become the largest CBD business in the world. Acquisitions have been made this year and at least three more are lined up.
There are more potential targets and the cash raised in the placing is not going to fund all the acquisitions if they come to fruition. More cash is likely to be raised because of the ambitious plans of the management.
The placing price was a 14% discount to the Canadian Securities Exchange. There are no trades reported on Aquis for...

Fintech company sees record numbers of female investors

Liam Roche
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Fintech company sees record numbers of female investors

Chip finds that women outpace men when it comes to ESG investing

Chip, the digital savings app, has analysed the demographics and behaviors of its 350,000 users to find a record number of female investors.

In addition, it found that there is a higher appetite for risk among women compared to typical data but also a strong uptake in Environmental, Social, and Governance (or ESG) investing.

The fintech, which last month launched its ChipX plan, bringing more new BlackRock funds to its users, found that close to a third – or 27% – of its investors are women.

The figure is 17% higher than the national average reported by the Office for National Statistics.

Chip also found that 46% of its female investors have a Stocks & Shares ISA – nearly four times more than the UK average of 12%, as reported by Boring Money.

The analysis of specific funds women choose to invest in found that the top five funds most popular among female investors are:

1Balanced (official name BlackRock Consensus 60 – Acc (D)
2Ethical X (official name MyMap 5 Select ESG Fund)
3Cautious X (official name MyMap 4)
4Clean Energy (official name iShares Global Clean Energy UCITS ETF)
5Emerging Markets (official name BlackRock Emerging Markets Fund)

Chip’s findings suggest that the notion that women adopt a more conservative and cautious approach while men tend to have more appetite for risk, including investing in new and untested shares, is becoming increasingly outdated.

Simon Rabin, CEO of Chip, commented: “Our goal is to democratise savings and investments. I believe that everyone should have access to tools that can effortlessly take their savings to the next level and help grow their wealth. This includes levelling out the playing field, which has traditionally skewed male.”

“We want to show that investing is no longer an elite, exclusive world dominated by dusty legacy wealth managers or macho crypto-trading “bros”. Investing is a tool everyone should consider using. I hope that by removing barriers in the form of mountains of paperwork, overly complicated interfaces and complex language, we can empower absolutely everyone to put their money to work.”

Aviva share price: the hard work starts now for CEO Amanda Blanc

Liam Roche
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Aviva share price: the hard work starts now for CEO Amanda Blanc

Aviva Share Price

The Aviva share price (LON:AV) is up by over 5% over the past two days as the company made some big announcements yesterday. Thursday’s results round off what has been a positive year so far for the FTSE 100 company, which now has an optimistic outlook, following strong measures taken by CEO Amanda Blanc. Year-to-date the Aviva share price is up by 31.15%, and is well above its pre-pandemic level, sitting at 428.70p at the time of writing. Praise has duly been arriving for Amanda Blanc, however, the boss is clear that these results are only the beginning.

Disposals

Blanc has impressed so far by very rapidly jettisoning Aviva’s non-core operations. Aviva has carried out a series of disposals over the past year, allowing the company to focus its efforts on the key UK, Ireland and Canada markets. The disposals, not all of which are yet complete, will bring in a total of £7.5bn. The money not returned to shareholders will be used to pay down debt.

“However, this was low hanging fruit and now this process is pretty much complete – and the cash returns to shareholders have been more or less confirmed – attention is likely to switch to the performance of the remaining core business,” says AJ Bell financial analyst Danni Hewson.

Cevian

Aviva’s operating profit rose by 17% to £725m over the first half of the year. However, it came in below the company-provided consensus of £781m. “The reason behind the weaker than forecast showing is weakness in the bulk annuity market – where pension schemes buy an insurance policy to cover future pensions and benefits due to be paid to its members,” said Hewson.

“It helps when this bitter pill on profit is sweetened by a very chunky return of capital, though still short of what activist investor Cevian had been pushing for since it joined the register of shareholders in June,” Hewson added.

Cevian being around means there is a lower chance of Blanc getting complacent and they are likely to keep her feet to the fire as they look for progress on driving down costs to support the Aviva share price.

“Looking ahead, Aviva needs to demonstrate it’s got a functioning plan for turning its huge cash inflows into ongoing returns for shareholders – as well as navigating changing risks as climate change sees protection claims rise – to continue the impressive share price growth seen in the past 12 months,” James Andrews, senior personal finance expert at money.co.uk, said.

Olam opts for London for IPO

Liam Roche
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Olam opts for London for IPO

Olam has the potential to break into the FTSE 100 by listing its food ingredients unit

Olam International is weighing up the possibility of a London listing of its food ingredients unit for next year which would allow the company to raise £2bn.

The company confirmed on Friday that Olam Food Ingredients was looking at a premium listing on the London Stock Exchange, in addition to a secondary listing in Singapore during the first half of next year.

“It will be a substantial IPO. It will be amongst the larger IPOs done on the London Stock Exchange (LSE) in the recent past,” co-founder and CEO Sunny Verghese told Reuters in an interview. However, he did not reveal a fundraising target at this stage.

“One of the reasons that we are doing this exercise of re-organising is to make sure that we can focus and simplify a fairly diverse complex portfolio,” Verghese added.

The decision is welcome news for the UK market, which has been seen to be struggling to attract the biggest companies.

Olam Food Ingredients has the potential to break into the FTSE 100 based on the valuations of rival food ingredients firms.

Commenting on Olam picking London for its premium IPO, Mark Lynch, Partner at corporate finance house, Oghma Partners, said: “The listing of Olam ingredients in the UK is a vote of confidence in the London Equity market and reflects, amongst other things, its deep pool of liquidity.”

“Assuming that the Company does qualify as a UK Food Manufacturer, it provides a significant boost to the sector that has lost many former FTSE companies over the last twenty years including, Cadbury Schweppes, United Biscuits, Hillsdown Holdings, Albert Fisher, Northern Foods and Unigate. Importantly it also offers investors a route into the changing world of food ingredients which is seeing an expansion in its opportunities through the growth in demand for plant based foods, plus expanding Ag Tech and Food Tech applications and the focus of consumers and clients on traceability and sustainability.”

Institutional investors are anticipating an imminent commodity supercycle

Liam Roche
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Institutional investors are anticipating an imminent commodity supercycle

Retail investors have not yet caught on to the hype around commodities

Institutional investors are increasingly making the case that a commodity supercycle is on the horizon, particularly where copper is concerned.

Research has revealed that 82% of German pension funds believe that demand for commodities is set to surpass supply for an extended period of time.

A particular beneficiary of this demand is copper, according to analysts at Goldman Sachs.

At the time of writing, the copper price currently stands at $9,435.60. However, Goldman Sachs suggests that the price of the red metal could get to $11,500 within the next 12 months.

The major US bank is also expecting copper to outperform gold next year, as the yellow metal continues to underperform in 2021.

Analysis by Block-Builders.net of Google search engine data suggests that most people have not caught on to the red metal’s potential as an investment.

A score of 100 on Google trend means the highest possible demand, however, relative search volume for “buy copper” stands at 24.

Therefore, the view that copper is set to enjoy a supercycle, is one of institutional investors only.

Copper continues to be useful in a variety of sectors, particularly housing, electronics and cars. The red metal is set to play an important role in the renewable energy sector too, with electric vehicles and sources of renewable energy both using copper.

Chile accounts for meeting 28% of global demand for copper. It is a country that faces political events which can significantly impact the price of copper. For example, recent strikes led to the closure of mines and price increases.

“A variety of developments are fuelling demand for copper,” according to Block-Builders analyst Raphael Lulay. “This is also making the metal more and more attractive to investors.”

Early in the year, UK Investor Magazine reported on three commodities funds which could stand to gain from a supercycle. There is a mix of passive and actively managed funds along with selections providing attractive yields.

Disney surpasses expectations on new subscribers and reopening of theme parks

Liam Roche
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Disney surpasses expectations on new subscribers and reopening of theme parks

The pandemic allowed Disney to thrive in a fiercely competitive market

Disney (NYSE:DIS) saw its revenue beat expectations in Q3 as the company acquired new streaming subscribers, in addition to opening up its theme parks to thrill seekers again.

Revenue rose by 45% to $17.02bn (£12.3bn) for the quarter ending in July, surpassing estimates by analysts of $16.76bn (£12.14bn).

Having made a loss of $4.72bn (£3.4bn) in Q3 last year, Disney’s net income was $918m (£664m).

The pandemic allowed Disney to thrive and it is now one of the top dogs in what is a fiercely competitive market.

Between its three offerings – Disney+, Hulu and ESPN – the company brought in 15m new subscribers, bringing the total to just under 174m.

Over the same period, Netflix added 1.5m subscribers, as the streaming company looks vulnerable to new competition coming into the market.

The Disney share price rose by 5.3% in after-hours trading with Bob Chapek, Disney chief executive, praising the company’s position amid the challenges of the pandemic.

Additionally, Disney’s theme parks were a cause for optimism, with sites in America, China and France opening back up, and allowing the business to return to a profit. During the quarter, Disney’s parks and consumer products business made $356m in operating income on $4.3bn in revenue.

FTSE 100 set to close out the week in strong fashion

Liam Roche
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FTSE 100 set to close out the week in strong fashion

The FTSE 100 appears to be closing off a decent week in fine fashion as it set aside concerns of a Delta variant linked sell-off in Asia. The UK index added 0.35% on Friday, standing at 7,218 points at the time of writing.

“However, the closure of Chinese ports in an effort to control the spread of the more infectious Covid strain could add to global supply chain disruptions and become something the market cares about in fairly short order,” warned AJ Bell financial analyst Danni Hewson.

“For now UK stocks are taking their cue from the US, where the S&P 500 closed at a record high for a third consecutive day. Entertainment giant Disney demonstrated the increasing power of its huge library of content as it unveiled a better-than-expected quarterly performance.”

The blue-chip Dow and the S&P 500 are on course to close out a strong week after adding 0.8% and 0.6%, respectively, through Thursday at record highs.

The FTSE 250 is also on the up, remaining around the all-time high reached yesterday, up 0.18% at 23,790.

FTSE 100 Top Movers

Rolls-Royce (1.77%), Flutter Entertainment (1.47%) and Intermediate Capital Group (1.34%) are leading the way atop the FTSE 100 as the week draws to a close, each making modest gains.

At the lower end, Fresnillo (-1.72%), Auto Trader (-0.98%) and Phoenix Holdings (-0.98%), have all lost ground.

Airbnb enjoys strong Q2 but warns of impact of Delta variant

Liam Roche
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Airbnb enjoys strong Q2 but warns of impact of Delta variant

In after-hours trading the Airbnb share price dipped by around 3%

Airbnb reported robust growth in revenue for the quarter as people from countries with higher vaccination rates brought about a recovery for the travel sector.

However, the short-term rental company also warned of the potential spread of the Delta variant of coronavirus and its impact on booking levels for the remainder of the year.

“As we exit the second quarter and come into the third, we have a combination of fewer bookings for the fall, just given the nature of some of the seasonality and any kind of impact potentially on COVID concerns,” Chief Financial Officer Dave Stephenson said on a post-earnings call with investors.

In after-hours trading, the Airbnb share price dipped by around 3%, as investors took onboard the update.

Between April and July Airbnb enjoyed a positive period as people became more comfortable travelling long distances thereby using the company’s services.

Destinations where the vaccine roll-out was successful saw a specific rise in the number of bookings.

Airbnb’s revenue stood at $1.34bn for the second quarter, four times higher than in 2020, and 10% more when compared to the same period in 2019.

Hotels and similar types of businesses were battered by the pandemic last year as restrictions on travel made it impossible to operate.

Airbnb adapted well by focusing on offering longer-term rentals as people moved to work from home in a more convenient way.

The company is expecting to report record Q3 adjusted income before interest, taxes, depreciation and amortization (EBITDA) and margin.

Oil prices slide as Goldman Sachs says OPEC+ unlikely to raise production levels

Liam Roche
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Oil prices slide as Goldman Sachs says OPEC+ unlikely to raise production levels

News follows calls by White House on OPEC and its allies to raise its levels of oil output

Goldman Sachs said the USA’s plea to OPEC+ to increase output is unlikely to bring about higher production levels in the short-term as the Delta variant remains a threat to demand.

Earlier this week, the White House called on OPEC and its allies to raise its levels of output in a bid to keep rising fuel prices under control, as inflation in America reaches its highest yearly growth rate in 13 years.

“We don’t see the recent White House statement as threatening the current market deficit nor the pace of the rebalancing in 2H21,” Goldman Sachs said in a note dated Thursday.

The investment bank maintained its end-of-year forecast for Brent crude oil at $80 per barrel.

Oil prices slid on Friday, with Brent crude 0.8% lower at $70.74 a barrel, while US crude down almost 1% to $68.44 a barrel.

Goldman also said that an additional increase in OPEC+ production by the end of the year is required to balance out recent supply issues across the world. The investment bank expects OPEC+ spare capacity to return to normal levels by spring 2022.

OPEC and its allies reached an agreement in July to increase oil supply in an effort to keep soaring crude oil prices under control.

The group’s plan is to pump an additional 400,000 barrels per day each month during August, increasing output by 2m barrels per day by the end of 2021. 

“Looking beyond the Delta headwind, we expect the demand recovery to continue alongside rising vaccination rates,” Goldman Sachs said.

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