Creo Medical group—Schedule 1 update.. £20m raise. Expected market cap £61.2m, admission expected 9 December.
ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m.
RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m
Companies: CPX AUTG CNIC JOUL LID PCF BHRD CHOC FIPP KMK
Share prices are built on expectations - expectations about all sorts of things, such as a company’s future sales growth, the trend in margins and the profits it can return. Understanding those expectations and how they move is critical to share price formation. Listing rules require quoted companies to update investors on progress relative to expectations. What managements often fail to understand is that many of their key investors do not have access to brokers’ research and, thus, cannot put management statements into context. It is these very investors that can cause shock movements in share prices on announcements in limited trading.
Companies: ABZA AGY ARBB BUR COG CLIG COS DNL LRM MUR ODX PPH YGEN PHP PURP RE/ RGD REDX SCLP TRX TON CHOC AVO AVCT VRP TETY
Many commentators realise that the traditional institutional broking model is no longer sustainable. However, the reduction in the quantity of non-corporate coverage that has already occurred, even before MiFID2 comes into effect, will still come as a shock. The evidence shows that there is no commercial sense in brokers covering non-corporate companies with less that £200,000 daily turnover in their shares.
Companies: ABZA AGY ARBB BUR CLIG COS GRA LRM MUR PPH PHP PURP RE/ RGD REDX SCLP TRX TON CHOC AVO AVCT VRP TETY
The dramatic – and historic – vote on June 23rd for the UK to exit the EU caught many organisations short, not least the EU itself. Both stock markets and currency markets were anticipating a narrow majority for the UK to remain within the EU – on a similar basis to the 2014 Scottish referendum. But it was not to be. As a result, the financial markets have reacted sharply in recent months, although other non- Brexit factors have also come into the equation.
Companies: AGY APH ARBB BUR CLIG GRA LRM MUR YGEN PHP PPH RE/ REDX RGD TON TRX CHOC AVO AVCT VRP TETY
‘Smaller UK public companies, typically those below £100m in size, face many barriers to accessing growth capital from the stock market. Poor liquidity results in these companies being perceived as private companies with a quote’.
Companies: AGY APH CLIG GRA LRM MUR YGEN PPH RE/ RGD TRX CHOC PHP AVO VRP TETY
In recent years, various sectors have seen dreadful share price performances, not least the banks once the magnitude of the 2008 credit crisis became all too apparent.
Companies: AGY APH BUR CLIG GRA LRM MUR RMAX RGD PPH CHOC PHP AVCT VRP TETY
VSA Agri Thought for the Month
It is hard to forecast the precise impact on UK farming from the recent Brexit vote but we would highlight a few areas:
Subsidies: Annual subsides of c£3bn are currently paid to UK farmers. Farming Minister George Eustice has previously said that support would be maintained following a Brexit vote. Farmers will be anxious to see this happen. However, money may be saved through a cap on the maximum payout
for the largest farms.
Regulation: How will regulations change as we exit the EU Common Agricultural Policy? Farmers will look for regulations to be simplified and more tailored to the UK.
Exports: A weaker currency should increase the attractiveness of UK farming exports, offset by any increased cost from raw material imports and any newly imposed trade tariffs.
Labour: UK farming is heavily reliant on seasonal agricultural workers, many from other EU states. The UK government has previously looked to encourage the employment of more UK workers on-farm but how will things change for those bringing in workers from abroad?
Companies: ZAM MPE PIM CWK CHOC NWF AEP DKL
Our key feature article, titled “The Capital Cycle of a Growth Company”, looks at two key related issues that many growth companies typically face with insufficient consideration:
1) Who will be their next investors?
2) What will their investors expect from in return?
The author, Antony Gifford, has had a distinguished career as an investment manager for 19 years, having worked for Hardman Global Investors, Deutsche Asset Management and Flemings.
Companies: AGY APH GRA LRM MUR PPH YGEN PURP RE/ RGD TON CHOC PHP AVCT VRP TETY
Nigel Hawkins is again our feature writer of the month. Last month it was a review of the UK/ EU Electricity Sector – this time he has again turned his attentions to UK/EU Relations by assessing the risks to the UK financial and business sectors from our possible exit from the EU. The main conclusions from Nigel’s analysis are: The £ Sterling will be volatile, especially if Brexit prevails. Few of the largest FTSE 100 stocks are heavily exposed to the EU- Vodafone being a notable exception. A vote for Brexit may be the start of a long drawn out process of exiting the EU – if the UK Parliament approves the relevant legislation. Major changes in the tariff rates would have a significant impact but existing trade arrangements may last for many years.
Companies: AGY APH BUR CLIG GRA LRM MUR PPH YGEN PURP RE/ RGD REDX TRX CHOC PHP AVO AVCT VRP TETY
This month’s feature article is the first publication of the top 15 drug companies in the 2015 global industry ranking and how this has changed over the last decade. In trying to analyse the changes that have taken place, we have looked at different strategies used by management teams. Many companies are featured, but there is emphasis on GlaxoSmithKline (GSK), AstraZeneca (AZN) and Shire Pharmaceuticals (SHP). In addition, we have analysed how drugs derived from antibodies have driven market growth and now represent just over 10% of annual industry sales.
Companies: AGY APH GRA LRM MXF MUR PPH PURP RE/ RGD REDX TRX CHOC PHP AVO AVCT TETY
United Cacao (CHOC LN)# , a cocoa plantation developer based in Peru, has provided an update on two of its legal proceedings, both of which have been decided in its favour.
Companies: United Cacao Ltd Sezc
Grafenia (GRA): We anticipate a trading update later this month | MedicX Fund (MXF): 8th February- EPRA NAV update: 71.2p (+2% vs end September) | Primary Health Properties (PHP): 4 th February Final Results announcement | Purplebricks Group (PURP): 26th January- interim results. Real Good Food (RGD): 7th February Trading update.
Companies: BUR CLIG GRA LRM MXF MUR PPH PURP RE/ RGD REDX TRX CHOC PHP TETY
The Financial Conduct Authority fears that the lack of transparency in investment and corporate banking and bundling reduces competition. They are in the process of a major study into this whole field. Any action they take is likely to hit the revenue model of these firms. Perhaps the traditional and unique British model of corporate broking will not survive.
Companies: AGY APH BUR CLIG EMR FUM GRA LRM MXF MUR PPH RE/ RGD SND CHOC PHP VRP TETY
Yesterday United Cacao (CHOC LN)# , a cocoa plantation developer based in Peru, announced that it had raised additional funds through a convertible bond and an equity placing in Peru.
The Office for National Statistics has just published its bi-annual report ‘Ownership of quoted shares for UK domiciled companies’ using 2014 data. For the first time, data for AIM companies has been split out from the whole market. It shows that retail investors form the largest cohort of investors in AIM, constituting 30.9%. We would argue that they are even more important because they provide the daily liquidity from which the share price is set; retail investors are not just the ‘marginal buyers’. Unless a company has a means of addressing this audience retail investors will either not be interested in the company, or worse, might be influenced by misleading analysis and information on media such as bulletin boards and blogs.
Companies: APH CLIG EMR FUM GRA LRM MXF MUR PPH RE/ RGD SND CHOC PHP VRP TETY
Research Tree provides access to ongoing research coverage, media content and regulatory news on United Cacao Ltd Sezc.
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FY20 top and bottom line missed expectations and Diageo didn’t provide guidance for next year. Improvements expected in the coming months thanks to lockdown restrictions easing, though the margin should still be under pressure for the next six months.
Companies: Diageo Plc
The Scottish government, an administration which has no powers to raise duty but has powers to manage the region's NHS on an independent basis has implemented Minimum Unit Pricing for alcoholic drinks. Unusually high per capita consumption of alcohol in Scotland was responsible initially for the move towards minimum pricing. Importantly, a minimum price is being set for alcohol in its own right rather than for an alcoholic drinks category.
Net sales were up +5.8% to £6.9bn on a reported basis, +7.5% organically, pushed by all regions. Organic volume grew by 3.5%
Reported operating profit reached £2.4bn (+11%), organic operating profit grew by 12.3%
Pre-exceptional EPS was 77.0p (+13.6%), while basic EPS was 80.9p, down by 1.6% due to the recent disposals
FCF at £1.3bn (+£317m yoy)
Interim dividend up by +5% to 26.1p per share
Following this strong set of results, the company has approved an incremental share buy-back of £660m, bringing the total programme up to £3.0bn for the year.
The group has also confirmed its guidance and continues to expect to deliver mid single-digit organic sales growth and to expand its operating margin by 175bp for the three years ending 30 June 2019.
The trade-off in the risk/reward for gold and gold mining equities is improving, as central banks push the current iteration of the post-World War II Bretton Woods financial order towards its limits.
Companies: AVO AJB AGY ARBB BUR CLIG DNL DPP FLTA GTLY GDR MCL MUR NSF PCA PIN SRE PHP RE/ RECI RMDL STX SCE TON SHED VTA W7L
Cake Box’s preliminary FY2020 results, released today, reconfirmed strong sales growth in FY2020 with scope for an expanded distribution footprint to deliver further sales revenue expansion in FY2021. While the Covid19 lockdown clearly disrupted franchisees’ in-store sales, Cake Box appears well placed to spring back both quickly and with a positive growth trajectory.
Companies: Cake Box Holdings Plc
Premier Foods’ FY20 results demonstrate the substantial progress the company has made over the past few years. The UK business has now grown for 11 consecutive quarters and Q121 is set to be very strong. In the UK the brands grew ahead of their categories and the innovation rate has hit a new high. A new landmark pensions agreement was signed in April, which could potentially significantly reduce the future funding requirements for Premier Foods. The recent triennial actuarial valuation delivers further credence to the pensions deal.
Companies: Premier Foods Plc
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Q2/20 operational EBIT of EUR 96m (Arctic: EUR 80m, Cons.: EUR 81m)
Better than expected margins in all regions except Norway
NIBD at EUR 1,380m vs EUR 1,357m in Q1/20 (Arctic: EUR 1,359m)
Share price relief likely due to earnings beat
Companies: Mowi ASA
Carr’s Group’s trading update for the 19 weeks ended 11 July 2020 notes that the company continues to trade in line with management expectations for FY20. The board is combining the two interim dividend payments this year into a single interim payment of 2.25p/share, equivalent to the two interim payments made in FY19. We leave our FY20 estimates unchanged but reduce our FY21 EPS estimate by 12% to reflect lower cattle prices in the US and weaker demand from the oil and gas industry, both related to the coronavirus pandemic.
Companies: Carr's Group Plc
Q2 figures reflected strong foodservices impact, but with encouraging recovery at the end of the quarter. No major change expected in our opinion/target price.
Companies: Kerry Group Plc