The pandemic has heavily impacted global uranium production, taking around 20% of global capacity offline, exacerbating the supply deficit and leading to users running down inventories at an even faster rate. The net effect has been a rising uranium price (up 32% YTD), but the managers of Geiger Counter (GCL) believe that there is still much more to go for.
Companies: Geiger Counter
The covid-19 pandemic has heavily impacted global uranium production, taking around 20% of global capacity offline. This has exacerbated the supply deficit, leading to users running down inventories at an even faster rate. The net effect has been a rising uranium price (up 32% so far in 2020), but the managers of Geiger Counter (GCL) believe that there is still much more to go for.
2018 saw a strong recovery in the uranium price. This has stalled this year, but with the uranium market now in supply deficit, Geiger Counter’s (GCL’s) managers see the potential for a resurgence in the price as more reactors come online (particularly in China and India), while major producers hold off from reactivating mothballed mines.
2018 saw a strong recovery in the uranium price. This has stalled this year, but with the uranium market now seeing more demand than supply, Geiger Counter’s (GCL’s) managers see the potential for a resurgence in the uranium price, as more nuclear reactors come online (particularly in China and India), while major producers hold off from returning mothballed mines to production.
Geiger Counter (GCL’s) managers see the potential for further recovery in the uranium price, as more reactors come on line (particularly in China and India, where governments are keen to reduce CO2 emissions) while major producers hold off from reactivating mothballed mines. This should help broaden the recovery in uranium stocks beyond just the majors, benefitting GCL’s portfolio and potentially allowing it to make up recent underperformance. The managers note that uranium is emerging from a 10-year bear market which has left valuations of uranium miners at attractive levels.
Geiger Counter (GCL’s) managers see the potential for further recovery in the uranium price, as more nuclear reactors come on line (particularly in China and India, where governments are keen to reduce carbon-dioxide emissions) while major producers hold off from reactivating mothballed mines (a low uranium price has seen a lot of uranium mining capacity removed from the market – see Figure 4 on page 7). This should help broaden the recovery in uranium stocks beyond just the major uranium companies, benefitting GCL’s portfolio, which is focused on smaller uranium companies, and potentially allowing it to make up recent underperformance. The managers note that uranium is emerging from a 10-year bear market which has left valuations of uranium miners at attractive levels.
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Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing, with its main operations in Australia and the UK. The company provides funding for litigation in exchange for a share of any settlement and has built a strong track record of supporting winning c
Companies: Litigation Capital Management Ltd
In a positive 10-month update Belvoir has detailed trading is ahead of its pre-COVID expectations. Gross profit is up +10% in the Property division and +11% in Financial Services. Overheads are now significantly below the original budget and management has decided to reimburse staff for salary sacrifices earlier in the year and repay the Government in full for COVID furlough monies and grants. Taking all this into account, we have upgraded our FY 2020E EPS by +4%. A further catch-up dividend of 1.3p will be paid alongside the final 2020 dividend and we forecast net debt of £4.5m at December 2020. The resilience of Belvoir’s franchise model has been proved and, in our view, highlights the long-term growth potential when markets return to more normal conditions.
Companies: Belvoir Group PLC
H1 has seen a clearer outlook for portfolio valuations which has allowed Mercia to recoup some of the reduction at the Finals. Cash earnings are better than expected as costs have remained lower for longer. A well-funded portfolio and £25m cash has prompted declaration of a maiden 0.1p interim dividend – a strong signal of confidence. Lower costs and increased asset values have prompted 30-45% upgrades to adj. EBITDA across the horizon. The shares are trading at a 32% discount to NAV, of which 17% is cash. This disregards all value for the asset management platform. A 10x EBITDA multiple ascribed to 3rd party asset management earnings plus NAV points to a c.40p/share intrinsic value, before further value creation.
Companies: Mercia Asset Management PLC
Today's trading update demonstrates Equals producing robust FY20E revenues, as it rebounds steadily from a COVID-19 affected Q2/20. Material progress has been made on rightsizing costs, the benefits of which should be felt in FY21E. While our newly reissued forecasts expect a weaker profit delivery in H2/20E, we expect strong YoY EBITDA growth thereafter, as the group returns to double-digit revenue growth with a rationalised cost base and geared profit growth. Should these forecasts be met, we expect the current c2x EV/Sales multiple to move back towards Jan 20's pre-covid 4x multiple, hence we move back to “Buy”.
Companies: Equals Group Plc
Today's news & views, plus announcements from AZN, LLOY, WEIR, TATE, GFTU, INCE, DELT, SOLG, HYVE
Companies: LLOY SOLG INCE
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Companies: Lloyds Banking Group plc (LLOY:LON)Real Estate Investors plc (RLE:LON)
Record has set itself the goal of generating greater growth and H121 showed some encouraging steps in this direction. The substantial new dynamic hedging mandate in the period was traditional business for the group, but there was also news of a new currency impact fund, which provides diversification, higher fee margins and the potential for significant development. The implementation of new IT systems is underway, and measures to develop and retain staff have been taken.
Companies: Record plc
Today's news & views, plus announcements from Capita, JD Wetherspoon, HarbourVest Global Private Equity, Walker Crips Group, Randall & Quilter*, Michelmersh Brick, LoopUp, Schroders British Opportunities Trust and Baillie Gifford UK Growth Trust.
Companies: Randall & Quilter Investment Holdings Ltd.
An in-line trading update for the year to 31 December 2020 states EBITDA will be at least £3.6m and £2.0 at the PBT level. However, conservative budgeting affects 2021E and 2022E with the company rebasing expectations following year-end re-forecasting exercise, taking into account the prolonged challenging macroeconomic environment. The acquisitive opportunity remains in place.
Companies: STM Group PLC
Resilience throughout the COVID pandemic has driven positive portfolio gains and further capital investment. The 119p/share NAV does not come as a surprise given the £27.5m equity raise at 120p was only completed a month ago, and will be deployed to target a deep £120m pipeline – now underway. Trading momentum has been sustained in Augmentum's (“AUGM”) portfolio companies which are high growth, disruptive and innovative. There is (much) more value to play for as this continues. For public markets investors, this is a diversified and professionally managed route to access attractive VC assets with structural growth. Should this value be forthcoming, the current premium is only the tip of the iceberg.
Companies: Augmentum Fintech
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
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To achieve YoY revenue growth over H1/20A despite the challenges of Covid-19 and its impact on the travel sector is testament to Equals' resilience and increasing focus on B2B and International payments services. While weaker gross profit and EBITDA margins have impacted profitability in H1/20, we see potential for an earnings recovery in H2/20 given cost reduction measures currently being undertaken. This should lead Equals to cash breakeven in Q4/20 and FCF positive by early FY21.
Today's news & views, plus announcements from AV, BVIC, PZC, RQIH, PMI, MUL, AEXG, INCE
Companies: AEX RQIH INCE
The Merchants Trust (MRCH) has been managed by Simon Gergel at Allianz Global Investors (AllianzGI) since 2006. He is continuing to find interesting opportunities in the UK market, seeking high-quality, reasonably valued companies with attractive dividend yields. The manager says we are ‘past the worst’ in terms of dividend cuts in the wake of the coronavirus pandemic, with many companies reinstating their payments. MRCH has sufficient revenue reserves to be able to build on its record of 38 years of consecutive annual dividend growth. As shown in the chart below, the trust offers a consistently above-market dividend yield.
Companies: Merchants Trust
Murray Income Trust’s (MUT) recent combination with Perpetual Income and Growth Investment Trust (PLI) has doubled the trust’s assets under management to £1.1bn and is expected to deliver a substantial fee reduction to investors. MUT invests in a diversified portfolio of mainly UK equities and aims to provide a high and growing income, combined with capital growth. It has achieved these objectives, having just delivered its 47th consecutive year of increasing annual dividends, while also outperforming its benchmark (a broad UK stock market index) and most of its peers over both the short and longer term. Manager Charles Luke’s success – even in the current climate, which has been characterised by widespread dividend cuts – confirms his conviction that ‘quality, sustainable and growing income is out there, if you know where to look’. He intends to maintain his research-intensive search for resilient companies capable of growing future earnings and dividends over time.
Companies: Murray Income Trust