Blackstone in talks over £1.2bn takeover of property developer St Modwen

Liam Roche
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Blackstone in talks over £1.2bn takeover of property developer St Modwen

Blackstone now has over $196bn of property assets under management

Blackstone, the private equity company, is nearing a £1.2bn to takeover of UK property investment company St Modwen.

The deal, first announced in May, will see Blackstone fork out 542p per share for the developer, a 21% premium on its closing price on May 6.

It follows a string of property investments by Blackstone, which now owns Sage Housing and Bourne Leisure.

The private equity firm now has over $196bn of property assets under management.

The offer was initially opposed by JO Hambro Capital Management, one of the FTSE 250 developer’s largest shareholders with a 9% stake. It believed that the price was too low.

A spokesman for JO Hambro said at the time: “We feel it would be a shame for stock market investors to lose the long-term optionality within the group’s businesses and land bank, built up over many years, particularly for the small premium being offered.”

UK inflation climbs to 2.1%

Liam Roche
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UK inflation climbs to 2.1%

UK inflation surpasses Bank of England target of 2% by the end of the year

UK inflation rose again in May, surpassing forecasts by economists and the Bank of England target.

As the country has gone through its stages of reopening, prices for clothes, fuel and meals in restaurants have been pushed up.

The Office for National Statistics revealed on Wednesday that the price of consumer goods rose by 2.1% for the year to May. This was up from 1.5% in April.

The inflation figure was expected to come in at 1.8%.

ONS chief economist Grant Fitzner said: “The rate of inflation rose again in May and is now above 2% for the first time since the summer of 2019.

“This month’s rise was led by fuel prices, which fell this time last year but have jumped this year, thanks to rising crude prices. Clothing prices also added upward pressure as the amount of discounting fell in May.”

Inflation is now at its highest point since before the pandemic which could lead to calls for interest rates to go up.

Paul Craig, portfolio manager at Quilter Investors commented on the implications of today’s inflation figure.

“Inflation is on the up, breaching the Bank of England’s 2% target, yet it remains hesitant to respond by reducing the stimulus it has provided and the quantitative easing that has become so addictive for markets. For now, this is likely the correct decision as we still expect much of the inflation feeding through to be transitory. Wage increases do appear to be coming through, but again this data is so distorted by the furlough scheme that it can’t be seen as a reliable indicator,” said Craig.

Craig added that current levels of inflation are affecting poorer households the most.

“Unfortunately, much of the inflation that is coming through is bad inflation and hitting lower income households in the pocket. How long these price rises continue remains to be seen. Will inflationary pressures be self-defeating or resolved as pent-up demand dissipates or is met with increasing supply. But should it become sustained then it risks making the recovery even more uneven than it already is and thus, it will ultimately fall to government to pull the fiscal levers as it continues in its levelling up agenda.”

Toyota vehicle production at lowest point since 2012

Liam Roche
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Toyota vehicle production at lowest point since 2012

The car industry saw a massive downturn as Covid-19 caused the world economy to grind to a halt

Toyota (LON:TYT) produced its lowest number of vehicles in nearly a decade, at 7.55m units, for the year ending in March 2021. This is according to data presented by TradingPlatforms.com.

The car industry saw a massive downturn as Covid-19 caused the world economy to grind to a halt during 2020.

It is the lowest number of vehicles produced by the Japanese car company since 2012, when it made 7.44m vehicles.

Rex Pascual, editor at TradingPlatforms.com, commented:

“Toyota’s production downturn in FY 2021 is in line with industry trends, as the pandemic stifled demand significantly across the board. But Toyota’s status as one of Japan’s most iconic brands ensures a bright post-pandemic future for the car manufacturer. Its emergence as market leaders in hybrid electric vehicles as well as hydrogen fuel-cell vehicles shows the historic brand’s willingness to adapt to more modern trends.”

Toyota’s most lucrative market is North America, where it sold 2.7m vehicles during 2020. However, this figure dropped to 2.31m, a fall of 14.74% for the year ending in 2021.

In the Asia market, which excludes Japan, Toyota saw a sizeable contraction of 23.63% in sales for the year ended in March 2021 to 1.22m vehicles. This compares to 1.6m vehicles sales during the full year ending in 2020.

As of July 2014, Toyota was the largest listed company from Japan based on market capitalization, a ranking it still holds as of writing. Toyota was also listed by Forbes as the 42nd largest company in the world based on market cap.

GSK share price: new biotech deal secured as investors keep pressure on

Liam Roche
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GSK share price: new biotech deal secured as investors keep pressure on

GSK Share Price

It has been a tough past 12 months for the GSK share price (LON:GSK), as the pharmaceuticals company has significantly underperformed the FTSE 100. However, despite being down by 11.42% over the past 12 months, the GSK share price has regained some momentum. Having added over 3% since the beginning of the year, it now stands at $1,418, its highest point since 2020.

GSK trailed its major rivals, each bringing their variations of the coronavirus vaccine to the market, and its revenues fell, causing investors to turn away from the company. However, more recently it has managed to push on. Investors will be curious to know if it can sustain this mini-resurgence both in the short and long-term.

US Biotech Deal

On Tuesday an announcement emerged that could somewhat appease investors who have been previously displeased by the pharmaceutical giant’s recent performance. GSK has put pen to paper on a deal to pay a US biotech firm $2.1bn to work together on a cancer treatment.

The British pharma firm will pay an American biotech company an upfront payment of $625m to collaborate on an antibody treatment in its second phase trials for advance solid tumours.

GSK will become the only pharma group to have antibodies that target three checkpoints, which are capable of shutting down the immune system, which fights against cancer. It plans to find a more effective solution to treat a variety of cancers, by combining its recently approved Jemperli with these antibodies. GSK will begin looking into these combinations next year.

Pressure from Investors

The biotech deal comes as GSK sets outs its plan for the future of the company next week following its consumer health business ‘spinning off’ in 2022. Pressure remains on Emma Walmsley, the chief executive of GSK, to give hope to investors around the future prospects of its drugs manufacturing.

Elliott Management, the American hedge fund, is leading the way having invested billions into the company. The company has a record of being robust in getting the most out of its investments which could serve GSK well moving forward.

While the mood around the GSK share price is not exactly an optimistic one, it is possible to see where the catalyst for a bull run could come from now and into the future.

Vietnam – a digital dragon, guarding a hoard of gold.

Vietnam Holding
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Vietnam – a digital dragon, guarding a hoard of gold.

Vietnam had the best performing stock market in the world in May, with its benchmark VN All Share Index up more than 32%. over the first five months of 2021. It is currently the world’s highest growth market, achieving nearly a 3% growth in GDP in 2020 while many other markets plummeted due to the pandemic. Despite recent outbreaks of new Covid-19 variants, Vietnam is also back on course to reach its 30-year track record of 6.5% growth.                    

Vietnam’s stock market ranks as the second most liquid in South-East Asia, recently recording more than $1bn of transactions a day, with almost 800,000 new stock market accounts opened in the last 12 months. There is now a total of 3.2m stock trading accounts in Vietnam compared with an estimated 2.2m in the UK. The new investors, who are also young consumers, are increasingly digitally connected, smartphone and app-enabled, and keen to embrace the new Industrial Revolution.

The strong rise in Vietnamese stocks selected by Vietnam Holding (LSE: VNH) made it the top performing investment trust in the UK in May by Net Asset Value increase, and the second highest by share price increase. This actively-managed high-conviction fund, is purely Vietnam focused, and up around 90% this financial year (June 30 year-end), strikingly with more than 28% outperformance against the VN Index benchmark. According to its manager, Dynam Capital, its portfolio is set for more than 40% growth in earnings per share and sits around 11x Price-to-earnings for 2021, which is in line with the investment strategy of ‘Growth at a Reasonable Price: GARP’. Notwithstanding this strength in performance and the future potential, the fund currently trades at a discount of 20% to its Net Asset Value on the London Stock Exchange, providing an attractive entry point for those looking to diversify their investments.

Dynam recently hosted a webinar to look under the bonnet of the VNH portfolio and in particular the fund’s largest holding, FPT, which is a key player in the digitalisation of Vietnam’s economy, and a leader in a sector that is estimated to grow to $52 billion in value by 2025. FPT has been the number one holding in VNH’s portfolio for over 18 months and has seen its stock price rally 60% this year alone. An on-demand recording of the webinar featuring a presentation made by FPT is available here.

Vietnam’s internet penetration reached 69% in 2020 and 70.3% in 2021. This is among the highest in Asia, though behind China (107%) and Japan (77%). Double digit growth, therefore, surely lies ahead. The cost of accessing broadband is low in Vietnam – the cheapest plan is equivalent to less than GBP 5.8 per month, compared to Thailand’s GBP 15, Korea’s GBP 20, Indonesia’s GBP 25, and according to BT’s website, GBP 28 in the UK. As we have seen, cheaper access to fast internet can contribute greatly to economic growth. For FPT, fast internet means customers can stream content over their rapidly growing Pay TV business. Pay TV has around 55% penetration in Vietnam, less than China’s 76% and South Korea’s 99%, so room to grow.

Vietnam’s digital development is uniquely benefited by geography. It is a 2000-mile-long country, and narrow in places, which favours long high-capacity fiber-optic backbones, with smaller spurs to the regions and rural areas. It also has smaller legacy copper networks than in the US and Europe, so fewer roads to dig up. The country currently has an estimated 100,000 telecom towers, one of the highest levels per capita in Asia, providing mobile voice and data coverage and accommodating the future roll-out of 5G. 

In addition to being the top domestic IT services company in Vietnam, FPT is an emerging digital champion internationally with its provision of software and services to Fortune 500 companies. 20 years ago, Indian software companies, such as Infosys, Wipro, Satyam and TCS handled an increasing amount of outsourced IT work for the world’s multinationals. One catalyst for this was the infamous “millennium bug” or Y2K coding short-cut that was expected to cause global chaos with fears that aeroplanes would fall out of the sky and missiles fire by accident all simply by the hypothetical resetting of dates on computers at the stroke of midnight on the 1stof January 2000. The success of the software outsourcing model in India created an industry worth around US$150 billion, or 8% of the country’s  GDP. Vietnam’s software engineers on average cost one third of the level of those in India and China, so the opportunity for a Vietnamese company such as FPT to be competitive is immense. Already FPT serves many Japanese and US companies, who are trying to move their activities to the cloud, and upgrade their technologies to adapt to new customer usage patterns.

The final pieces in the digital picture are education and government regulations. FPT trains around 40,000 software engineers a year at its campuses across Vietnam, creating a deepening pool of talent for domestic and foreign companies alike. Engineering jobs within growth areas, such as Artificial Intelligence, Blockchain, and Cloud computing, should be readily available. The government is also pushing hard for digital technologies as a way to scale Vietnam’s development as a modernising industrial nation. It is looking to promote e-payment and e-government. Soft infrastructure is as important as hard infrastructure, and both can have a multiplier effect on economic growth.

Visit www.vietnamholding.com for more information on the opportunities in Vietnam.

The future of space and rocket advancement with Orbital Machines

UK Investor Magazine
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The future of space and rocket advancement with Orbital Machines

The UK Investor Magazine Podcast is joined by CEO and Founder of Orbital Machines, Eivind Liland.

Orbital Machines is solving a major pain point for the micro launcher industry, building scalable electric motopump systems, ready to be implemented into aerospace and space applications.

The Norwegian based company is providing an electric based solution for smaller launches in an overall private space industry that is estimated to worth $1.4 trillion by the 2030s.

Although Orbital Machines are setting their sights on electric propellant pumps initially, Eivind outlined where he sees the business evolving with other components for rockets such as sensors and connectivity facilitators so rocket makers do not have to build everything from scratch.

Eivind discusses what Space travel could look like in the future, including the need to produce propellant in space. He mentions his interest around mining in space and travel to further reaches of the solar system to sustain humanity.

Orbital Machines are currently overfunding at Seedrs. Check out their campaign at Seedrs.com now

19% of adults have less than £100 in savings

Liam Roche
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19% of adults have less than £100 in savings

Survey shows the ‘further widening of the financial wellbeing gap in the UK’

Nearly one fifth of adults hold less than £100 in savings, a survey has revealed.

In a sign that financial inequality may be widening, around the same proportion of people have increased the amount they are saving on a monthly basis during the pandemic.

Yorkshire Building Society conducted the survey, which found that 19% of adults had less than £100 saved, while 21% of people were not saving at all.

13% of people have zero savings to their name and over 26% of people have less than £500 stored away.

On the other hand, 17% of people who took part in the survey said they were able to reduce their debt levels during the pandemic.

Tina Hughes, director of savings at Yorkshire Building Society, said: “Our new research continues to highlight just how fragile many people’s finances are, with the shocking figure that nearly a fifth of all UK adults have less than £100 in savings.”

“It also shows the further widening of the financial wellbeing gap in the UK. While we know it can be hard for people to put money away, especially with rising living costs and in a low-interest environment, we mustn’t overlook the impact saving has on people’s financial and mental wellbeing.”

People’s financial situation often has a direct impact on their mental health, as 22% reporting trouble sleeping due to the fact they are concerned about money.

Hughes added: “Now more than ever, with current and potential future economic uncertainty, it’s important for people to try to build their financial resilience and for us as a society to help people to save.

“Money worries can make people anxious, so we want them to know they don’t have to suffer in silence and we’re here to help them to manage their money during difficult times.”

Baby Boomers and Gen Xers have given out £8.2bn to family during the pandemic, with 25% of over 50s lending an average of £1,300 each.

More than half of parents and grandparents raided their savings to do so according to a separate survey.

India to classify bitcoin as an asset class says report

Liam Roche
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India to classify bitcoin as an asset class says report

Cryptocurrency Regulation Bill likely to be put forward in the oncoming Monsoon Session of Parliament

India may soon classify bitcoin as an asset class, according to a report, after it initially took an unwelcoming view of the digital currency.

Industry sources have suggested, according to a report from The New Indian Express, that the government will make moves soon while the Securities and Exchange Board of India (SEBI) will oversee regulations as the classification for bitcoin is changed.

The report added that India’s crypto experts have held talks with the finance ministry over the construction of new regulations.

In May it was reported that the government was seeking expert opinion as consensus was established that banning bitcoin was an outdated decision, highlighting a shifting stance within the Indian government.

A Cryptocurrency Regulation Bill is likely to be put forward in the oncoming Monsoon Session of Parliament.

“We can definitely say that the new committee which is working on cryptocurrencies is very optimistic on cryptocurrency regulation and legislation,” Ketan Surana, Director and chief financial officer, Coinsbit, told the New Indian Express.

India’s commitment to treating bitcoin as an asset class follows decisions by other countries to alter their approach. Notably, El Salvador, which made bitcoin legal tender alongside the US dollar.

Paraguay could soon follow as a member of its congress made plans to put forward a bill aimed at making the South American country more hospitable to the crypto industry.

Following a strong surge at the end of the weekend and into Monday, bitcoin is sitting above $40,000 as it awaits further announcements by policy makers and institutional investors from across the world. Its market capitalisation stands at $752.81bn.

Homebuilder Bellway makes record land investment amid rising house prices

Liam Roche
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0
Homebuilder Bellway makes record land investment amid rising house prices

Bellway has agreed to purchase 15,982 plots since the beginning of August

Bellway (LON:BWY), the FTSE 250 homebuilder, said on Tuesday that it expects demand for new homes to be strong for the remainder of the financial year, on the continued support from the government, as well as low lending rates.

The company expects to sell in the region of 10,000 homes during the year ending in July, up from 7,522 units the year before.

Bellway also confirmed it has made a record investment in land since last August.

The homebuilder has agreed to purchase 15,982 plots since the beginning of August, well up 10,620 during the 2019 financial year.

Bellway said its most recently bought plots are valued at £891m and that the average gross margin is around 23%.

Over the same period of time, house prices have jumped, down in part to the stamp duty holiday.

“Bellway is making hay while the sun shines. Amid strong demand for homes, the housebuilder is setting itself up for the future with its record investment in land acquisitions,” says AJ Bell investment director Russ Mould.

“While land prices may not be quite as depressed as they were in the initial stages of the pandemic, it is still an opportune time to buy and this should have positive implications for the profitability of homes built on these plots and for future growth.”

“The stamp duty holiday has clearly been a driver for demand but there are other factors at play as people look to get more space, largely for home working, in the wake of the pandemic. This in turn means people are buying more of Bellway’s larger, higher quality homes, which is driving up average selling prices,” Mould added.

“The main negative is the rising raw material costs and difficulties in securing skilled labour. At the moment these headwinds are having only a limited impact as house prices surge ahead. However, Bellway and its peer group may face a more difficult situation if the housing market cools.”

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