US Solar Fund moves towards dividend target with placing

Liam Roche
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US Solar Fund moves towards dividend target with placing

US Solar Fund in $105m intermediaries fundraiser

US Solar Fund (LON:USF) announced on Wednesday that a placing programme will be conducted over the coming year, including an initial placing, offer for subscription and intermediaries offer of new ordinary shares (initial issue) which has now launched.

The proceeds of the initial issue are expected to be used mainly to fund two transactions which should benefit US Solar Fund by reducing gearing, enhancing dividend coverage, being NAV accretive, all while increasing the company’s size and diversifying its portfolio.

Firstly, by an amount of approximately $82.5 million for the refinancing of the 177MWDC Heelstone Portfolio, reducing the cost and quantum of gearing.

Secondly, by an amount of around $22 million for the acquisition of a further 25% interest in Mount Signal 2, a 200MWDC operating solar plant located in the Imperial Valley of Southern California (MS2), bringing the US Solar Fund’s total ownership of the asset to 50%.

The issue price per new ordinary share will be $1.00 which represents a discount of 4.3% to the closing mid market share price of $1.045 as at 12 April 2021 and a premium of 3.1% to the 31 December 2020 Net Asset Value of $0.97.

New shares issued pursuant to the Initial Issue will be entitled to receive the interim dividend for the three months ended 31 March 2021, the first interim dividend this year. US Solar Fund expects to declare the first 2021 interim dividend in June 2021 for payment in July 2021.

Gill Nott, Chair of US Solar Fund, commented on the announcement:

“US Solar Fund has now delivered on our IPO objectives. As we step up to our target 5.5% dividend we are today asking investors for funds to reduce borrowing costs by refinancing existing debt, and build on our existing stake in California’s Mount Signal 2 solar plant.”

“With a President deeply committed to fiscal policy backing climate change pledges, the United States is now on a clear path to a fully carbon-free transition within 14 years. Delivering on bold and welcome plans in this short time means an urgent need to develop further utility scale solar.”

“The US remains one of the world’s most attractive investment markets for solar power production, with well-established policy frameworks and long-term power purchase agreements. These provide power price certainty for our investment grade corporate offtakers, and reliable cashflows for our investors.”

Equity market correlation with Cryptocurrencies could signal further volatility

UK Investor Magazine
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Equity market correlation with Cryptocurrencies could signal further volatility

We record this Podcast on the wake of the debacle around the European Super League so it would be fitting we touch on the subject and briefly ramifications for the sport.

The FTSE 100 quietly shed a couple of hundred points at the beginning of the week as investors wavered with crashing cryptocurrencies and fears over rising coronavirus cases on India.

There is a question to address in as far as whether the same market forces and investor psychology that drove cryptocurrencies higher are at play in equity markets.

We discuss Kavango Resources (LON:KAV), Coinsilium (LON:COIN) and Union Jack Oil (LON:UJO).

Pensana: A Strategic Stake in the Future

Jon Levinson
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Pensana: A Strategic Stake in the Future

Pensana (LSE: PRE) 
163p (160p- 165p)
Mkt Cap: £330m
Next Results: Y/e June est Oct 
A World-Class Sustainable Supply of critical Rare Earths for the Green economy in Humber 
The new economy needs electric vehicles and wind turbines and these and other strategic green economy industries need tonnes of permanent magnets. Pensana are developing a rare earth mine in Angola, which has an estimated 20 years plus mine life with an annual production of 12,500 tonnes of rare earth oxides. This includes 4,500 tonnes of strategically critical magnet metal rare earth ox...

Netflix Share Price: what now as subscriber growth falls?

Liam Roche
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Netflix Share Price: what now as subscriber growth falls?

Netflix Share Price

Netflix expanded its viewership during lockdowns as people remained in their homes and had little else to do. This phenomenon was reflected in the company’s share price. Compared to exactly one year ago, the streaming company’s share price is up by 26% to $549.57. However, as lockdown restrictions are being eased across the world, there may now be a reversal in the company fortunes. Netflix’s share price dropped by as much as 10% in after-hours trade following the release of its Q1 earnings report, after the FAANG stock revealed that its growth in new subscriptions has taken a hit.

Earnings

Netflix has revealed that its growth in new subscriptions has fallen after lockdowns caused an initial upturn in viewers last year, while it also interrupted production of its major shows. The group added less than four million users in the quarter just gone, two million down on its expectations, warning that it could add a mere one million users in the coming quarter.

Russ Mould, investment director at AJ Bell, has suggested that customers could are exhausted by watching TV and films and now have viable alternatives for entertainment:

“One of the biggest threats to Netflix in 2021 is the great outdoors. People are bored of sitting at home under lockdown restrictions and many will have exhausted all the classic films and boxsets on Netflix by now. The flow of new films to streaming platforms is currently weak and Netflix, in particular, is really suffering from having unappealing new content,” Mould said.

“Now that lockdown restrictions are slowly being eased, the appeal of signing up to Netflix is diminishing as there are alternative activities competing for individuals’ attention, namely pubs, restaurants, domestic travel and hopefully a greater range of leisure pursuits in time.”

Content

Investors will want to know what Netflix’s plans are to provide outstanding content in the coming months and years. And will it be it enough to support continued growth of the company?

The streaming service has allocated a budget of $17bn for 2021. It represents a significant increase from the company’s budget of $11.8bn the year before, which was reduced due the pandemic, and its budget for 2019 of $13.9bn.

“As we’ve noted previously, the production delays from Covid-19 in 2020 will lead to a 2021 slate that is more heavily second half weighted with a large number of returning franchises,” said the company in a letter to shareholders.

Netflix subscriptions slump a concern for investors

Liam Roche
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Netflix subscriptions slump a concern for investors

Netflix expecting to add a mere 1m users in the coming quarter

Netflix (NASDAQ:NFLX) has revealed that its growth in new subscriptions has taken a hit after lockdowns caused an initial upturn in viewers last year, while it also interrupted production of its major shows.

The group added less than four million users in the quarter just gone, two million down on its expectations, warning that it could add a mere one million users in the coming quarter.

The fall in subscriber growth could indicate that the trend of stocks performing well thanks to lockdowns is being reversed back as restrictions are eased.

The Nasdaq company’s revenue increased by 24% to $7.16b during the first three months of the year, bringing net income up to $1.71bn from $720m.

The company said: “We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays.”

Russ Mould, investment director at AJ Bell, provided insight into the company’s news:

“One of the biggest threats to Netflix in 2021 is the great outdoors. People are bored of sitting at home under lockdown restrictions and many will have exhausted all the classic films and boxsets on Netflix by now. The flow of new films to streaming platforms is currently weak and Netflix, in particular, is really suffering from having unappealing new content,” Mould said.

“Cinema operators know that customers will only visit their screens if there are enticing films. The same applies to streaming providers – it’s all about content and Netflix’s proposition is diluted by having too many poor-quality shows. Disney Plus’s considerable success in the past few years has shown that quality rules over quantity.”

“Now that lockdown restrictions are slowly being eased, the appeal of signing up to Netflix is diminishing as there are alternative activities competing for individuals’ attention, namely pubs, restaurants, domestic travel and hopefully a greater range of leisure pursuits in time.”

FTSE 100 gets back on its feet after big fall

Liam Roche
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FTSE 100 gets back on its feet after big fall

Following its most substantial fall in two months, the FTSE 100 is up by 0.54% to 6,897.04 on Wednesday, as the index has staged a mini-resurgence.

“Investors will be relieved to see the FTSE 100 dust itself off and get fight back on Wednesday as it looks to regain some of the big losses,” says AJ Bell investment director Russ Mould.

The move higher comes despite one of the market’s big fears – inflation – ticking up in the UK.

“It probably helps that the CPI measure came in short of expectations and it is also worth remembering that a modest climb in prices is a sign of the economy getting back on its feet,” Mould said.

“The likely trajectory of inflation in the longer term means this issue is not going to go away and will remain something investors need to consider even if a short-term spike linked to pent-up demand in lockdown diminishes,” he added.

In London shares linked to the reopening, including airlines and other travel-related businesses, managed a bit of a rebound. “We will almost certainly see more swings in sentiment as we move from spring into summer,” said Mould.

FTSE 100 Top Movers

Making up the most ground on Wednesday is IAG (3.41%), Hikma Pharmaceuticals (2.65%) and Next (2.54%).

While at the bottom end of the FTSE 100 less than two hours into the day’s trading is Just Eat (-4.48%), Bunzl (-2.88%) and Weir Group (-2.28%).

BHP

BHP gave an update on production at its Western Australia iron ore business, which it said had reached record levels in the first nine months.

The mining giant said it was expecting to finish the year strongly as a result. 

The FTSE 100 company said its annual production guidance for iron ore and petroleum was unchanged, while it reduced guidance for metallurgical coal and energy coal, on account of wet weather conditions.

Antofagasta

Antofagasta confirmed on Wednesday that its production and costs were aligned with its expectations in Q1 although it remains wary of the consequences of another lockdown in Chile.

The major mining company announced its copper production was on schedule at 183,000 tonnes, 5.7% lower than the year before, and 5% down on Q4. The results were largely down to reduced grades at its Los Pelambres mine.

India Capital Growth Fund presents at the UK Investor Magazine Virtual Conference April

UK Investor Magazine
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India Capital Growth Fund presents at the UK Investor Magazine Virtual Conference April

Managers of Investment Trust India Capital Growth Fund (LON:IGC), David Cornell and Gaurav Narain, were welcomed to the UK Investor Magazine Virtual Conference to outline the investment case for India, and in particular the India Capital Growth Fund.

The India Capital Growth Fund is listed on the London Stock Exchange and is fairly liquid with £0.5m in daily traded volume. The Trust focuses on the Mid-Cap section of the Indian equity markets and is positioning for the upcoming revery in the Indian economy after the pandemic.

Managers of the India Capital Growth Fund detail their view on India becoming a manufacturing hub and provide background on the wider economy, highlighting the IMF’s prediction India will be the world’s fastest growing major economy in 2021.

Please download full presentation slides here.

Antofagasta production meets expectations despite new lockdown in Chile

Liam Roche
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0

Antofagasta copper production for Q1 at 183,000 tonnes

Antofagasta (LON:ANTO) confirmed on Wednesday that its production and costs were aligned with its expectations in Q1 although it remains wary of the consequences of another lockdown in Chile.

The major mining company announced its copper production was on schedule at 183,000 tonnes, 5.7% lower than the year before, and 5% down on Q4. The results were largely down to reduced grades at its Los Pelambres mine.

Production of gold is down to 59,100 ounces, while production of Molybdenum, a silvery-white ductile metal, was up by 600 tonnes from last year to 3,000 tonnes.

Net cash costs came in at $1.16 per pound, compared to $1.10 per pound in Q1 of 2020. This happened as a result of lower levels of production, a strengthening in the Chilean peso and a one-time bonus payment to employees as the company avoided a strike earlier this year.

The FTSE 100 company shared concerns that a new wave of coronavirus infections, and a subsequent national lockdown, means that scheduled maintenance works at Los Pelambres would be rescheduled to later this year.

Nonetheless, Antofagasta did not change its guidance which is between 730,000 and 760,000 tonnes of copper, at a net cash cost of $1.25 per pound and capital expenditure of $1.6bn.

Antofagasta chief executive Iván Arriagada, made further comment on the second wave of Covid-19 in the South American country:

“In March, Chile entered a second wave of COVID-19 infections as the number of cases in Chile accelerated, reaching record daily cases since the outbreak of the pandemic. As a result, countrywide lockdowns have been reinstated with the availability of critical hospital infrastructure under significant pressure,” Arriagada.

“In addition to the health measures we introduced last year we have further reduced our on-site workforce and these actions have allowed us to continue to operate our mines and projects under these challenging conditions. Additional testing has been introduced throughout the Group while the full benefit of the country’s successful vaccination programme is expected to be realised later in the year. We also remain committed to supporting our local communities and suppliers, and contributing to the social and economic recovery of Chile.”

Nova Financial present at the UK Investor Magazine Virtual Conference April

UK Investor Magazine
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Nova Financial present at the UK Investor Magazine Virtual Conference April

Property Advisory company, Nova Financial, joined the UK Investor Magazine Virtual Conference to deliver key strategies for investing in UK property.

Paul Mahoney, CEO of Nova Financial, looked past COVID-19 and Brexit and explored the drivers of the UK property market. Paul delved down into key issues such as the impact on UK city centres as home owners seek great space and sacrifice location.

Nova Financial also outline geographical considerations when investing in property picking out attractive cities for investment.

You can download the full presentation slides here.

BHP in a “postion to finish the year strongly”

Liam Roche
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0
BHP in a “postion to finish the year strongly”

BHP says production of iron ore up by 4% to 188 metric tonnes

BHP (LON:BHP) gave an update on production at its Western Australia iron ore business, which it said had reached record levels in the first nine months.

The mining giant said it was expecting to finish the year strongly as a result.

The FTSE 100 company said its annual production guidance for iron ore and petroleum was unchanged, while it reduced guidance for metallurgical coal and energy coal, on account of wet weather conditions.

Production of iron ore increased by 4% to 188 metric tonnes for the three quarters up to the end of March while BHP anticipates its yearly production to be between 245 and 255 metric tonnes.

Production of petroleum is down by 8% to 75.8 megatonnes.

BHP has cut its guidance for metallurgical coal to between 70 and 73 metric tonnes from 71 and 77 tonnes, while for energy coal the guidance is down from 21-23 metric tonnes to 18-20 metric tonnes.

Jamie Maddock, equity research analyst at Quilter Cheviot, added that copper output is up which could beneficial to investors:

“Moreover, and after a stronger than expected quarter for copper output, which represents the bulk of the outstanding earnings, full year copper production guidance has been nudged higher with the longer-term targets restated. Copper is becoming increasingly crucial to development of ‘green economies’ around the world and as such BHP is well positioned to take advantage of the demand. Indeed, we have already seen this year the price of copper surge on increased demand, and we expect this to be sustained as the economic reopening takes shape.”

“Overall, the operations remain still very much on track with only minor cost revisions and we wouldn’t expect significant changes to earnings estimates.”

BHP chief executive Mike Henry commented further on the company’s updates from its mines across the world:

“BHP’s strong safety and operational performance continued during the quarter, with record year-to-date production at Western Australia Iron Ore, the Goonyella Riverside metallurgical coal mine in Queensland and concentrator throughput at Escondida in Chile,” Henry said.

“We are reliably executing our major projects, bringing on new supply in copper, petroleum and iron ore. The Spence Growth Option and Samarco are ramping up and West Barracouta, in Petroleum, started production this month. First production from Petroleum’s Ruby project is expected in the coming weeks and South Flank, with its higher grade and lump proportion, is on track to begin production in the middle of the year.”

“With our focus on keeping our people safe, costs down and productivity up, we are well positioned to finish the year strongly and continue delivering the essential products the world needs.”

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