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UK Investor Magazine Podcast- CEO Alan Green discusses Mitchells & Butlers, Chemring, and Graphite

investor

Alan Green joins the Podcast to delve into a number of UK equities and key market themes.

We discuss:

  • Mitchells & Butlers (LON:MAB)
  • Chemring (LON:CHG)
  • Sovereign Metals (LON:SVML)

Mitchells & Butlers swung to a profit as the pubs and restaurants group bounced back from the pandemic. We look at how the festive period may play out for the group.

Chemring is dividend payer with many defensive attributes. We run through their offering and outlook for shares.

With finish with an update on Sovereign Metals and their titanium rutile and graphite project in Malawi.

Mitchells & Butlers, Chemring, and Graphite with Alan Green – UK Investor Magazine

Ken Baksh – December Investment Monthly

In our December investment review, Ken discusses the macro picture in the US, Europe, China and Japan before looking at the effects of inflation. We then look at moves over the past 2 months before moving to the UK economy and issues such as consumer confidence, the trade deficit and Govt deficit, insolvencies and recession expectations. Ken highlights the good job that PM Rishi Sunak has done in steadying the ship, before we look at how previous stock picks in October and November have performed. These include Legal & General #LGEN, Smith & Nephew #SN, Begbies Traynor #BEG, Greencoat UK Wind #UKW, Whitbread #WTB, Frontier IP #FIPP, Enquest Bond #ENQ2 and Georgia Capital #CGEO. Ken then picks out four more stocks for growth, These are:

Chemring #CHG

Lloyds Preference Share #LLPC

Asia Dragon Trust #DGN

Legal & General Cyber Security ETF #ISPY

DECEMBER 2022 Market Report

Investment Review

Summary

During the one-month period to 30th November 2022, major equity markets, as measured by the
aggregate FTSE All – World Index, rose by over 5%, reducing the year-to-date loss to 18%, in $ terms.
Chinese equities, were very strong gaining over 30% and taking the broad emerging market indices
and Asia with them. The VIX index fell, finishing the period at a level of 22.22.
Government Fixed Interest stocks also rose over the month. The UK 10-year gilt ended the month on
a yield of 3.16% with corresponding yields of 3.77%, 1.94% and 0.25% in USA, Germany, and Japan
respectively. Speculative and lower quality bonds, however,fell in price terms. Currency moves
featured a weaker US dollar. Commodities were mixed.

News

Over the recent month, the OECD has made further downgrades to world economic growth and
anecdotal evidence from several third quarter reporting companies suggests that the slowdown is
accelerating. e.g. Maersk (“freight rates peaked….decreasing demand”).
At the same time, key data indicators (factory gate and commodity prices, shipping rates, inflation
expectations) suggest that headline price growth is set to slow in coming months, although labour
compensation developments must be watched carefully .
More volatility expected in oil prices as western countries prepare to impose a price cap on Russian
crude.
FTX,a leading crypto exchange,and a sprawling network of affiliated firms filed for bankruptcy
protection dealing another blow to the crypto sector.

US

Recent US Federal Reserve meetings and informal comments by Jerome Powell and other Fed
governors remain hawkish and further increases are expected though calls for 50bp rather than
75bp are increasing. The latest rise took the benchmark rate to the 3.75%/4% range.At a speech at
the Brookings Institute yesterday,the Fed Chairman sent mixed signals that the fight against
inflation “had a long way to go” while also sending a strong hint that the next rate rise,mid
December, would be 50bp rather than 75bp
would be Downward projections to economic growth, and upward moves to inflation forecasts
were also released.
Recently announced inflation indicators showed October headline CPI of 7.7%, lower than estimates,
while the core inflation rate rose by 6.3%. First quarter negative GDP growth followed by second
quarter of -0.9% signals a “technical recession”, although labour/employment trends still seem
reasonably robust. Third quarter preliminary GDP growth of 2.6%, annualised, while higher than

estimates concealed a weaker consumer component offset by a strong trade balance. Recent
consumer sentiment indicators (November composite PMI for example), retail sales, housing
activity, construction figures and the Empire States Survey back this up, showing declining trends
into recent weeks. . The Fed’s own forecasts expect GDP growth of 0.2% and 1.2%, and core PCE
growth of 4.5% and 3.1% respectively for 2022 and 2023
US midterm election results showed the Republicans narrowly taking control of the House of
Representatives while the Democrats retained the Senate, a situation which could minimise more
extreme policies, but also thwart some of Biden’s ambitions. Donald Trump has vowed to return in
2024, although the Republican Party is far from united at the current time

 

EUROPE

The European Central Bank raised interest rates by half a percentage point on July 22nd, and a further
75bp in September also pledging to support surging borrowing costs from sparking a eurozone debt
crisis. The ECB raised interest rates by another 75bp, to their highest level since 2009, on 27th
October, pledging to continue increasing borrowing costs in the coming months to tackle record
inflation, despite a looming recession. On 29th November, Christine Lagarde, the ECB president,
warned that the bank was “not done” raising interest rates, saying that inflation “still has a way to
go”.
First quarter 2022 GDP for the Eurozone showed a weaker than expected trend especially in
Sweden, Italy and Germany and more recent indicators show a continuation of this trend,
exacerbated by the Russia/Ukraine conflict, supply chain issues, and rapidly increasing costs. The
“flash” PMI figure for October, released on the24th October, fell to 47.1 the lowest since November
2020, although German quarterly GDP growth figures, just released, were marginally ahead of
expectations.
Current ECB staff projections foresee economic growth of 2.8% for 2022, a sharp reduction on the
previous forecast, and further downgrades could be likely in the wake of the ongoing Ukrainian
conflict and related gas shortages.
November Eurozone inflation, just released, of 10.0% was lower than expected.with slower gains in
energy and services ,and faster growth in food prices.

ASIA excl JAPAN

The GDP figures, shown below (source: CLSA, CEIC) show that 2022 and 2023 growth
projections for the Asia excl Japan region compare favourably with those of other developed
regions. The reasons include a “better” Covid experience, selective commodity exposure,
tourism, continued FDI Investment (especially China related) and better initial fiscal
situations (compared with late 90’s for example) and limited direct connections with the
Russia/Ukraine situation. The forecasts do not assume a total easing of Chinese covid rules.
Headline inflation of around 5% (core 3%) also compares favourably.
Geo-political concerns must be taken into account, especially In Taiwan.


CHINA

The 5.5% official GDP growth target for 2022 looks clearly unachievable, with some investment
banks now forecasting below 3%. Official data shows weakening trends in consumer spending, fixed
asset investment and construction activity while more recent “live” tracking data e.g., mobility,
cement production and electricity use also showed subdued economic activity. Official data for the
third quarter, just released shows growth of 3.9%. The major historic negative issues of a very
restrictive anti-Covid policy and major disruption within the property market have now been
supplemented by increasing US restrictions on the production/export of certain key electronic
products.
At the time of writing a property “rescue” package has been implemented, while on the Covid front,
tens of thousands of people have taken to the streets protesting strict coronavirus controls and
suppression of freedom of speech, triggering clashes with police and security forces.While nothing is
certain in Xi’s approach to the Covid Pandemic, there is a growing feeling that certain measures will
be relaxed/increase in vaccination.


JAPAN

The Japanese economy contracted 1.2% on an annualized basis during the third quarter of 2022,
missing forecasts of 1.1% growth, and considerably weaker than the 4.6% expansion recorded during
the second quarter. This was the first down quarter of the year reflecting weak domestic
consumption, a slowdown in business investment and an acceleration in imports. Estimates for the
full year seem to fall mainly within the 1.5%-2.0% band. Inflation, while still well below international
peers, rose by 3.6% in October, the highest since 1982, driven by currency weakness.
Recently the Japanese government unveiled a $197 billion stimulus package to ease the impact on
consumers of soaring commodity prices and a falling yen, while the BoJ stuck by its ultra-loose
policy, maintaining very low interest rates and re-affirming it yield control policy.

UNITED KINGDOM

Within the UK, live activity data (e.g November Gfk data) continues to show a weaker overall trend,
especially within the services sector. According to this survey, released late November, covering the
mid November period, consumer confidence remains very low, amid the cost-of-living crisis.The

retail sales figure for October did however show a slightly better than expected reading but this may
have been distorted by the Queen’s mourning period . Unemployment, however, is still at a very
low level, although recent official figures did show a tentative slowing in hiring intentions.
Inflation continues to rise, the October CPI and RPI readings registering hikes of 11.1% and 14.2%
respectively. Kantar and the ONS both reported food/grocery prices rising about 15% year on year as
well as turkey/egg shortages.Happy Christmas!
The PSBR was starting to deteriorate again, largely as a results of rapidly rising interest (index linked)
payments and expectations of higher public sector pay and state pensions. The most recent “official”
figure showed September PSNB at £20 billion, much larger than forecast and the second largest
since monthly records began in 1993, according to the ONS.

Despite some relief with the recent energy price package, until April at least, (but not other utilitiessee below), shop price inflation, greater Council Tax “freedom”, upward interest/mortgage rate
pressure, stalling house prices, accelerating rents, insolvencies/evictions, legacy Brexit issues and ,
strike activity, will continue to be headwinds and the outlook for economic growth over coming
quarters is highly uncertain. Both the Bank of England as well as the OBR and now the OECD are
expecting recessionary conditions for one to two years.

Experts at consultancy EY-Parthenon reported that company profit warnings had jumped from 51 to
over 86 over the third quarter of 2022 citing increasing costs and overheads as the main reason,
especially in consumer facing businesses. Another report from Begbies Traynor, Latest Red Flag Alert

Report for Q3 2022 – 07:00:07 19 Oct 2022 – BEG News article | London Stock Exchange quoted that
over 600,000 business were already in severe financial distress.
Monetary policy has tightened from a 0.1% interest rate in December last year to the 1.25% rate set
in June and a further 50bp at the August, meeting, followed by 50bp in September, taking the
benchmark rate to 2.25%. Markets are expecting rates to be above 4.0% by mid-2023.

Autumn Statement
On 17th November, Chancellor Hunt told a sombre House of Commons that a massive fiscal
consolidation including £30 billion of spending cuts and £25 billion of tax rises was needed to restore
Britain’s credibility and tame inflation. The OBR said they expected the economy to shrink 1.4% and
not regain pre -pandemic levels until 2024.Inflation was expected to remain over 7% next year.
While many of the proposals had been leaked, and the market reaction was muted (first objective
achieved!), there were a few positive surprises (e.g help for NHS and education) and several
negatives.
From an investor point of view the reduction in tax free allowances for investment income and
capital gains, was higher than expected. Make full use of ISA etc while can!


Monthly Review of Markets
Equities
Global Equities rose over November (+5.02%) extending the quarterly recovery and reducing the
year to date decline to 18.04% in dollar terms. All major indices climbed with especially large gains
registered in China, which also benefited Emerging Market and FT Asia-excl Japan bourses.

Continental European indices were also relatively strong, while the NASDAQ and Nikkei lagged in
relative terms. The VIX index fell over the month to end November at a level of 22.22. The ten –
month gain of 29.04% reflects the degree of risk aversion compared with the” relative calm” of last
December (medical, geo-political and economic!)

UK Sectors
Sector moves were again very mixed over the month although most ended in positive territory. The
few losers included telco’s and tobacco On the other hand, miners, utilities, life companies,
financials,retailers and food were relatively strong. The FTSE100 outperformed the All-Share Index
and is about 3% ahead of the broader index since the beginning of the year. By IA sectors, UK active
unit trusts are underperforming benchmark indices, trackers etc, so far this year, with small
company funds even more so. Income based funds, by contrast, are significantly outperforming the
averages. “Balanced” funds, by IA definitions, are falling by about 8%-10% so far this year (Source:
Trustnet November 30th).


Fixed Interest
Major global government bonds rose in price terms over November, the UK 10-year yield for
instance finishing the month at a yield of 3.16%. Other ten-year government bond yields showed
closing month yields of 3.77%,1.93% and 0.25% for US, German and Japanese debt respectively. UK
corporate bonds also bounced strongly, up approximately 4% on the month in price terms.
Speculative bonds, however, bucked the trend falling in price terms.
Year to date, the composite gilt index has fallen approximately 22% underperforming UK higher
quality corporate bonds in price terms and more so in total return.
Check my recommendations in preference shares, selected corporate bonds,fixed interest ETF’s ,
zero-coupons, speculative high yield etc. A list of my top ideas from over 10 different asset classes
is also available to subscribers.

Foreign Exchange
Currency moves featured a sharp fall in the US dollar, largely following the better-than-expected
inflation rate. Sterling rose against the US dollar but fell against the Japanese Yen and Euro. Currency
developments during November also included modest strength in the Chinese Yuan.

Commodities
A mixed performance by commodities during November with weakness in Oil and many agricultural
commodities and strength in copper, Iron ore and the precious metals. Year to date, uranium and
the energy complex are strongly up in price terms while industrial metals copper, aluminium and
iron have all shown price declines of over 13%. Gold has also dropped in dollar terms by about 3% so
far this year.

Looking Forward
Major central banks have remained hawkish with reducing QE/commencing QT and accelerating the
timing and extents of rate increases as the main objectives, especially where inflation control is the
sole mandate. In a growing number of smaller economies where US contagion, politics, commodity
exposure inflation/fx are also issues, several official increase rate increases have already taken
effect. Japan, however, has continued to adopt stimulative measures, up to now.
Global Government Bonds have stabilised somewhat although differing inflationary outlooks and
supply concerns could lead to continued volatility in the sector.
For equities, the two medium term key questions will be when rising interest rates eventually cause
equity derating/fund flow switches, government, corporate and household problems, and how the
rate of corporate earnings growth develops after the initial snapback. Going forward, withdrawal of
certain pandemic supports, uncertain consumer and corporate behaviour and cost pressures are
likely to lead to great variations by sector and individual company. The third quarter reporting
season produced several negative surprises e.g large American technology companies and UK
building and property companies.


.

Observations/Thoughts
ASSET ALLOCATION
As well as maintaining an overweight position in UK equities, it may be worth initiating or adding to
Japanese positions within an international portfolio. The US market has fallen about 19% so far this
year (NASDAQ -30%) but remains a relative underweight in my view. Margin pressure headwinds,
political uncertainty, prospective dollar weakness and technology sector volatility must be balanced
against the current stock market ratings. Continental European equities appear cheaply rated in
aggregate, but great selectivity is required. Within the Emerging market space I currently favour
exposure to the Far East.

Another major asset allocation decision would be to keep part of the conventional “fixed interest”
portion in alternative income plays in the infrastructure, renewables, and specialist property
areas. Many instruments in this area provide superior capital growth, income, and lower volatility
than gilts for example. Recent stock market volatility has brought several renewable stocks back to
attractive levels.
I am also adding selected preference shares to the “fixed interest” allocation, where annual yields
of approximately 6% are currently available.

UK Equities continue to remain a relative overweight in my view, based on several
conventional investment metrics (see above), longer term underperformance since the
Brexit vote, style preference (value overgrowth) and international resource exposure
although be aware of the numerous domestic headwinds I have highlighted above.
Value should be favoured over growth, and the FTSE 100 favoured over the FT All-Share.
Apart from the style drift, remember that the non sterling element of leading FTSE 100
companies and sectors is relatively high
By sector, Oil and Mining equities continue to benefit from above average yields, strong
balance sheets, dollar exposure and secular demand e.g copper, cobalt for electronics,
construction, electric vehicles etc. Any moves regarding Chinese re-opening the economy
would be another positive for this sector.
Remain overweight in pharmaceuticals and underweight in non-renewable utility stocks
which may suffer from consumer and government pressures, and no longer trade on yield
premia, especially against the backdrop of higher gilt yields.
Construction materials, especially cement will benefit from growing
infrastructure/renewable initiatives., although rising cost pressures and falling housing
activity must also be considered.
Banks, may enjoy some relative strength from rising interest rates, but continue to
monitor the recession/loan growth and default risks.These mixed trends were very
evident in the recent third quarter figures. Preference Shares as well as ordinary shares
have attractions in this area
Housebuilders and real estate-expect depressed activity and remember that the rising
interest rates have not yet been fully factored into bricks and mortar property yields.
Industry data and anecdotal news from both housebuilders and REIT’s suggest further
weakness to come.

Retailers are in general suffering from a combination of falling sales and rising costs and
clear trends in consumers “trading down” are apparent. Certain on-line operations e.g
Asos additionally are suffering from an element of post-Covid comparison.
Domestic Breweries/pubs etc are having a hard time with stalling consumer’s
expenditure, supermarket competition and rapidly rising costs.
Airlines may suffer as a result of large dollar costs, uncertain foreign travel outlook and
often high debt levels
Extra due diligence at stock level more generally will be required as I expect a growing
number of profit warnings and downbeat forward looking statements. See the EY and
Begbies statements on page 7 above.
However,takeover activity is also clearly increasing with, for example, private equity
snapping up UK-listed companies at the fastest pace for more than twenty years. Foreign
takeover, stake building is also increasing, current weak sterling being a factor, with
Vodafone under scrutiny by a French (who already have BT interest!) investor. Biffa (waste
management),MicroFocus(technology),Aveva(software) and RPS(professional services)
have all succumbed to foreign takeovers in recent months, much by “strong dollar”
American or Canadian organizations.

JAPANESE EQUITIES also remain an overweight in my view, although my recent
comment re hedging may “nuanced “now following the extreme currency weakness and
surprise intervention. Unlike most other major economies, Japan is expected to continue
its easy money policy. Exporters have benefitted from the plunging Yen although higher
input costs and more “off-shoring” also must be considered. The prospective price/book
ratio of 1.19 is attracting interest of corporate and private equity buyers, while the
prospective yield of 2.6% is above the world average and compares very favourably with
USA (1.7%). Corporate governance is rapidly improving with diverse boards, reduction of
cross holding, higher dividends etc. There are clear signs that inward investment attracted
by the pro-growth, pro-deregulation agenda and relatively low costs (average Japanese
annual wage $30000 compared with $75000 USA) is increasing. Private equity stake
building interest in Toshiba and growing activity in the property sector (discount on a
discount in a cheap currency) demonstrate the search for value in Japan. Investors may
wish to adopt a partially rather than fully hedged FX position following recent
developments
On a valuation basis (see table above) the forward PE multiple of 12.9 is at a considerable
discount to the world, and especially US average (18.0)

EMERGING MARKETS-Very difficult to adopt a “blanket” approach to the region even in
“normal times”, but especially difficult now, with so many different COVID, commodity,
sectoral mix, debt, geo-political and increasingly natural disaster variables. The IMF recently
warned that several emerging nations could disproportionately suffer from a combination of
COVID and adverse reaction to “tapering” by developed counties e.g., FX/Interest rate

pressures. Six countries have already defaulted during the pandemic, and the IMF is currently
in various stages of bail-out discussions with Pakistan,Argentina,Zambia,Sri
Lanka,Ghana,Tunisia and Egypt.
Within the emerging/frontier universe I continue to have a relatively positive view on Asia.
The economic fundamentals were discussed on page 16 above, and the forward-looking
multiples and dividend growth metrics appear relatively attractive in a global context. Any
move by China to open more fully after their severe Covid lockdown, would of course
additionally help. Exposure to the entire area can be achieved through a number of ETF’s and
also investment trusts currently on discounts
If a country-by-country approach is adopted, I have a longer term positive view on Vietnam
where, the nation is supported by positive demographics, with a population of near 100
million, an emerging middle class, and a recipient of strong foreign direct investment.
Qualconn,an Apple supplier, Intel(semi-conductors),Lego and Samsung(mobile phone plant)
have all recently invested in new capacity in the country. Other big names moving chunks of
production from China to Vietnam include Dell and HP (laptops), Google(phones)and
Microsoft (Games Consoles) The economy is expected to grow at around 6.5% this year (7.7%
Q2 2022) and current inflation is running at about 3.5%. On a relatively low prospective PE
based on forecast earnings growth over 20%, Vietnamese equities appear good value. India,
although quite highly rated and a major oil importer, warrants inclusion in a diversified
portfolio, and is currently receiving some fund flows from “overweight” Chinese portfolios.
Indonesia, the last of my current Asian ideas benefits from a commodity boom, strong
domestic market, low debt, relatively stable currency, forecast 5% GDP growth and 5%
inflation

Caution is required in many South American markets with poor COVID-19 situations,
deteriorating fiscal balances, weak investment, low productivity (see below) and
governments in a state of transitioning e.g Brazil. However, some stock market
valuations currently appear interesting in the region, which, so far, has been relatively
unaffected by events in Ukraine. Commodity exposure, deglobalization beneficiary,
valuation and recovery from a very low-level account for some year-to-date stock
market relative out- performance. Many of these countries also raised interest rates
at an earlier stage, allowing relative currency strength, compared with say the Euro,Yen or Sterling.

Certain areas within Central Europe are starting to receive more attention, mainly on
valuation grounds, but the lingering Covid effects and indir
ect effects of the Russia/Ukraine invasion should be borne into account. Regarding the
latter, a reduction/termination of Russian gas supply could have a serious recessionary
impact in certain countries. Large refugee influxes e.g Poland are also starting to
create budgetary/social issues.

Comments re great selectivity above also apply to emerging market debt. For the
more adventurous fixed interest investor combinations of well above average yields
(sometimes caused by pre-emptive moves last year), stable fiscal and FX situations
and, diversified economic models could provide outperformance from carefully
selected bonds.


• COMMODITIES– Gold spiked to over $2000 in March, a recent high, when Russia invaded
Ukraine, but has since fallen about 12%, although of course, remaining reasonably stable in
many local currency terms . The longer-term prospects for more cyclical plays continue to
look brighter. Increased renewable initiatives, greater infrastructure spending as well as
general growth, especially from Asia, are likely to keep selected commodities in demand at
the same time as certain supply constraints (weather, labour and equipment shortages,
Covid, transport) are biting. Anecdotal evidence from reporting companies RTZ, BHP and
Anglo American appear to suggest that the industry is enjoying a bumper time, and with
disciplined capex programmes, extra dividends and share buy-backs are commonplace!
Current rumours of a cautious relaxation of the Chinese Covid policy, may provide a boost to
base metals.
• Wheat and other grain prices have fallen from the levels reached following the Russian
invasion of Ukraine, but the current grain shipment complications, planting/harvesting
schedules within the region and extreme global meteorological conditions are expected to
lead to further price volatility. If the conflict is prolonged it will affect millions of people
living in such places as Egypt, Libya, Lebanon Tunisia, Morocco, Pakistan and Indonesia that
could have political consequences. There has been renewed interest in agricultural funds as
well as the soft commodities themselves.

GLOBAL CLIMATE CHANGE remains a longer-term theme, and will be built into
the many infrastructure initiatives, being pursued by Europe, USA, and Asia. The
Russia/Ukraine conflict is accelerating the debate, and hopefully the action. There are
several infrastructure/renewable investment vehicles which still appear attractive, in

my view, combining well above average yields and low market correlation with low
premium to asset value. The recent volatility in natural gas prices has highlighted both
risks and opportunities in the production and storage of energy from alternative
sources. However, increasing levels of due diligence are required, in committing new
money to the area overall. Financial watchdogs across the world are sharpening their
scrutiny of potential “greenwashing” in the investment industry on rising concerns that
capital is being deployed on misleading claims.
• However, in the shorter term, the Russian invasion of Ukraine has precipitated a global
energy crisis, that has forced countries, especially in Europe to look for ways to quickly
wean themselves off Russian oil and gas, and reconsider timelines of commitments to
cut the use of fossil fuels. At the time of writing, it seems highly likely that USA will
increase oil and gas output, UK North Sea may see further investment and EU coal
consumption could increase.
• Another area currently in the ESG purist cross hairs is “nuclear”. Ignoring the fact that
nuclear weapons have not been used in anger since 1945, and the fact that some deterrent is
needed, (now?), where should the confused investor stand when it comes to nuclear power
substituting coal power? Japan, UK and Germany are all studying proposals to revive their
nuclear power capacities. I have some interesting “uranium play” ideas for those interested.


• ALTERNATIVE ASSETS-this group, encompassing private equity, private debt, hedge
funds, real estate, infrastructure, and natural resources is expected to continue growing both
in actual and relative terms over coming years.
Traditional asset management groups are racing to expand offerings in alternative
investments as they seek to boost profitability and head off competition from private
equity groups (see graph below).
I have, for a while, recommended some exposure to this area maybe as part of the
former “gilt allocation”. With strong caveats re liquidity, transparency, dealing
process, I still adopt this stance, continuing to use the investment trust route. So far
this year, gilts have declined approximately 24% while my favoured UK renewable
closed-end funds have appreciated by around 6% in capital terms and delivered about
6% in annual income. Please contact me directly for specific ideas

COMMERCIAL PROPERTY The MSCI/IPD Property Index showed a sharp fall in the total return across all
properties in October, the decline of 6.4% (-6.8% capital values, +0.4% income),taking
the year to date return to -1.6% (capital -5.2%,Income +3.8%).The monthly decline
accelerated the downward trend started in July this year, especially in Industrial
Properties. Rental growth however was positive at +2.4% in October..or 4.4%
annualised for the ten month period
Several analysts are down grading their estimates for the sector following the rapid move
in UK longer and shorter-term interest rates. Property asset valuations take time to
materialise where there is a lag between balance sheet date and results publication in
the listed area. Live traded property corporate bonds, however, have already moved
sharply lower.
Quoted property giants British Land and Land Securities both reported deteriorating
conditions witing their third quarter statements, expecting further valuation declines
following rising yields.

Full asset allocation and stock selection ideas if needed for ISA/dealing accounts, pensions.
Ideas for a ten stock FTSE portfolio. Stock/pooled fund lists for income, cautious or growth
portfolios are available. Hedging ideas, and a list of shorter-term low risk/ high risk ideas
can also be purchased.
I also undertake bespoke portfolio construction/restructuring and analysis of legacy
portfolios.
Independence from any product provider and transparent charging structure
Feel free to contact regarding any investment project.
Good luck with performance!
Ken Baksh Bsc,Fellow (UK Society of Investment Professionals)
kenbaksh@btopenworld.com

1st December ,2022
Important Note: This article is not an investment recommendation and should
not be relied upon when making investment decisions – investors should conduct
their own comprehensive research. Please read the disclaimer.
Disclaimer: Opinions expressed herein by the author are not an investment
recommendation and are not meant to be relied upon in investment decisions.
The author is not acting in an investment, tax, legal or any other advisory
capacity. This is not an investment research report. The author’s opinions
expressed herein address only select aspects of potential investment in
securities of the companies mentioned and cannot be a substitute for
comprehensive investment analysis. Any analysis presented herein is illustrative
in nature, limited in scope, based on an incomplete set of information, and has
limitations to its accuracy. The author recommends that potential and existing
investors conduct thorough investment research of their own, including detailed
review of the companies’ regulatory filings, and consult a qualified investment
advisor. The information upon which this material is based was obtained from
sources believed to be reliable but has not been independently verified.
Therefore, the author cannot guarantee its accuracy. Any opinions or estimates
constitute the author’s best judgment as of the date of publication and are
subject to change without notice.The author may hold positions in any of the
securities mentioned
The author explicitly disclaims any liability that may arise from the use of this
material.

Power Metal Resources #POW – December interview with CEO Paul Johnson

Alan Green talks to CEO Paul Johnson. We cover the drilling campaign at the Molopo Farms Complex project in Botswana, before Paul covers recent developments at the Tati Gold project, also in Botswana. We then look at developments in Canada, both at the group’s Athabasca Uranium project and the new Lithium project acquisition, before we turn to the upcoming IPO’s including Golden Metal Resources and First Development Resources. Paul looks at what the Christmas period will hold for the POW team and the likely news flow over the Xmas period and into the new year.

Vox Markets Podcast – Alan Green discusses HARL, TMOR and TYM

vox podcastBrand Comms CEO Alan Green appears on today’s Vox Markets podcast with Justin Waite to discuss:

  • Harland & Wolff #HARL
  • More Acquisitions (Megasteel) #TMOR
  • Tertiary Minerals #TYM

Link here:

https://www.voxmarkets.co.uk/articles/alan-green-talks-about-harland-wolff-more-acquisitions-tertiary-minerals-695267e

Quoted Micro 5 December 2022

AQUIS STOCK EXCHANGE

Good Energy (GOOD) says trading to the end of October was in line with expectations, but the subsequent mild winter has reduced gas consumption. Risk management actions should enable the energy supplier to meet 2022 expectations. There was £21.2m in cash at the end of October 2022. Heat pump installer Igloo Works has been acquired for £1.75m. Last year’s revenues were £1m. This will form an energy services division.

Invinity Energy Systems (IES) has sold 15MWh of vanadium flow batteries to Everdura Technology in Taiwan. A deposit will be paid soon, and the first deliveries will be late in 2023. This is the largest ever single order and there is follow-on potential of 255MWh over three years and it will help to underpin 2023 forecast revenues of £23.7m.

Capital for Colleagues (CFCP) has acquired Staffordshire-based MI Accountancy Solutions, which already provides accountancy services to the employee owned businesses investor’s clients. The cost is £90,000 with a further £20,000 deferred depending on performance.

Hydrogen Utopia International (HUI) has entered an agreement with Fishertown Property for a proposed lease of a 2.5 acre site in County Longford. This will become its first full scale waste plastic to hydrogen in Europe. A €50,000 payment has been made and an option for the site is being negotiated.

Tectonic Gold (TTAU) has completed drilling at the Specimen Hill project in Queensland. This has intersected a geophysical target below high-grade historic mine. An adjacent target has also been intersected. Joint venture discussions will be pursued.

Guanajuato Silver Company Ltd (GSVR) produced 700,264 of silver equivalent ounces in the third quarter, which is more than double the previous quarter. Cash costs fell by 19% to $19.53/ounce. However, lower silver and gold prices meant that the loss increased.

Field Systems Designs Holdings (FSD) was still affected by Covid in the year to May 2022. The mechanical and engineering contractor’s revenues fell from £9.98m to £8.09m. That meant that the loss increased from £534,000 to £1.9m. Revenues from the water sector have not grown as expected, but work is coming through. More than £9m of work has been secured for this year.

IamFire (FIRE) has subscribed for £2m of convertible loan notes in WeShop Holdings, which could be converted into one million shares, while an existing £4m investment would convert into 1.33 million shares. IamFire has the right to subscribe for a further £1.75m of convertibles. IamFire also holds convertibles in a shell that owns 25% of WeShop.

Pioneer Media Holdings (PNER) generated initial revenues of $482,000 in the year to May 2022. There was a reported loss of $28.6m, after $25.7m of impairment charges and fair value changes on investments. There was a credit of $3.26m relating to changes on accrued consideration. The cash outflow from operations was $2.14m. There is cash of $1.65m.

Recently floated Cooks Coffee Company (COOK) increased interim operational revenues by 37% to NZ$1.93m. Overall revenues fell because of the timing of recognising capital revenues on store openings. Pre-tax profit improved from NZ$128,000 to NZ$146,000 as costs were reduced.

Africa-focused sustainable investment company Inqo Investments (INQO) increased interim revenues from R608,000 to R3.39m. The loss was slightly reduced at R5.18m after a sharp increase in employee costs.

Nine months revenues from Yooma Wellness Inc (YOOM) improved from $4.91m to $8.91m and the reported loss was reduced.

Marula Mining (MARU) secured a 73% commercial interest in the Bagamoyo graphite project in Tanzania, which includes 22 graphite mining licences.

In the six months to August 2022, Asia Wealth Group Holdings Ltd (AWLP) reported a decline in revenues from $940,000 to $844,000 and it moved from profit to loss. There was $1.19m in the bank at the end of August 2022.

Ace Liberty and Stone (ALSP) says that it received £3.07m from its open offer at 25p a share, compared with the £4.56m it was seeking.

Evrima (EVA) chief executive Burns Singh Tennent-Bhohi has made a £250,000 secured convertible loan facility available to the company. So far, £100,000 has been drawn down. This matures at the end of November 2023 and the coupon is 10%.

Goodbody Health (GDBY) chief executive Marc Howells has resigned, and George Thomas has replaced him.

AIM

Online retailer boohoo (BOO) has increased its stake in Revolution Beauty (REVB) from 13% to 26%. Bob Holt has taken over as chief executive. The shares remain suspended and there are still concerns about the 2021-22 figures.

Digital media company Digitalbox (DBOX) has acquired The Poke (www.thepoke.co.uk) for an undisclosed sum. It picks humorous content from the internet, unlike the Daily Mash which writes its own content. The Poke generated revenues of £170,000 in the year to November 2021.

Duke Royalty (DUKE) reported a 67% increase in recurring interim cash revenues from its royalty investments and free cash flow was 1.71p a share. There was a further improvement in cash revenues in the third quarter.

First Property (FPO) reported a fall in reported profit due to one-offs, but the interim dividend was maintained at 0.25p a share. NAV is 48.3p a share, not including any valuation for the investment management business, which is more than twice the share price.

A trading update from Light Source Technologies (LST) says that farmers are reluctant to commit to capital investment and that has slowed progress leading to a higher loss in the year to November 2023. The growers are finding it difficult to pass on cost increases to customers, so they are not making the commitment to install the controlled environment technology. Also, contract manufacturing margins have declined.

Venture Life Group (LON: VLG) is buying HL Healthcare, which owns Earol, EarolSwim and Sterinase, for £13m. The products generated EBITDA of £1.7m in 2021-22 and they should do better this year – £3m of the consideration is dependent on 2022-23 revenues. Venture Life is expected to make a 2022 pre-tax profit of £946,000 and that could improve to more than £4m in 2023.

Telecoms customer engagement software provider Pelatro (LON: PTRO) says the currency movements between the US dollar and Indian Rupee will lead to a shortfall in reported revenues this year. Along with other factors, this will reduce revenues by up to $800,000, although the currency movements will have a positive effect on costs that partly offsets the shortfall. EBITDA will be slightly below expectations. Some new clients are moving to a licence model, which means revenue will be recognised earlier.

Luxury brand Mulberry Group (MUL) reported flat interim revenues with higher international sales offsetting a decline in the UK. Mulberry moved from profit to loss as marketing and other spending was increased. There was an £11.2m cash outflow from operations.

Compliance and maintenance services provider Kinovo (KINO) continues to improve its profit in the six months to September 2022 and it has a strong order book. Revenues improved by one-quarter to £29.8m in the first half. Margins continue to rise with underlying pre-tax profit recovering from £1.61m to £2.1m. Three-year visible revenues total £146m, which includes contracts and predictable spend. That underpins around 90% of the 2022-23 forecast revenues of £62.1m. Net debt has fallen to below £100,000. However, in the short-term debt will increase again because of the requirements to finish contracts that are part of DCB, which was sold and then went into administration. Part of the deal was that Kinovo would guarantee the completion of projects. This could cost a total of £4.3m.

Inspiration Healthcare (IHC) says that it expects 2022-23 revenues to be similar to the previous year because of market uncertainty, particularly in China. Cenkos has reduced its forecast revenues from £45m to £41.1m. Because the reduction relates to higher margin products it means that pre-tax profit will dive from £3.96m last year to £540,000 this year.

Floorcoverings distributor Likewise (LIKE) says third quarter like-for-like sales were 21.8% higher and in October and November this accelerated to 27.7%. Total sales have more than doubled this year.

Fox Marble (FOX) has won damages and costs in its arbitration proceedings with a customer in India. Damages were Euro383,177 and costs were £454,584. The customer has 28 days to challenge the award.

MAIN MARKET

Antimicrobial and textile odour control materials developer HeiQ (HEIQ) has acquired the land and property of Chem-Tex Laboratories Inc in the US for $2.5m in cash and shares at 74.4p each. Securing the site will enable further expansion. The focus of manufacturing investment will be the US because of the availability of chemicals and the reduced exposure to rising energy prices.

Edward Spencer is requisitioning a general meeting at MetalNRG (MNRG). He owns 7.3% of the company and wants to remove the chairman and chief executive. He wants four people to be voted onto the board, including himself.

Highway Capital (HWC) has still not completed the acquisition of Guinevere Esports and Entertainment, which was announced in October 2021. Highway made an interim loss of £243,000.

Andrew Hore

New UK Investor Magazine with our CEO Alan Green covering: EasyJet #EZJ, More Acquisition #TMOR

investor

Alan Green joins the UK Investor Magazine Podcast to dive into this week’s key market themes. We look at the FTSE 100 and the China-exposed stocks leading the index higher on Tuesday.

China has announced they will be looking at increasing the rollout of vaccines to the over 65s. Such a move will help reopen the economy and boost headline global growth figures.

We discuss easyJet and More Acquisitions.

https://ukinvestormagazine.co.uk/eastjet-china-growth-and-inflation-with-alan-green/

New Vox Markets Podcast out now discussing: First Class Metals #FCM, Technology Minerals #TM1, Revolution Bars #RGB

VOX

Alan GreenCEO of Brand Communications talks about the football world cup, including the upcoming England vs Wales and discusses the following companies:

– First Class Metals #FCM

– Technology Minerals #TM1

– Revolution Bars #RGB

https://www.voxmarkets.co.uk/articles/alan-green-talks-about-revolution-bars-first-class-metals-technology-minerals-8daf582

Quoted Micro 28 November 2022

AQUIS STOCK EXCHANGE

One Health Group (OHGR) joined the Apex segment of the Aquis Stock Exchange on 24 November. The NHS-funded medical procedures provider raised £1.56m at 150p a share, giving One Health Group a market capitalisation of £15.1m. The share price ended the week at 156.5p. Demand for the company’s services should continue to be strong as the NHS tries to reduce the backlog of operations. In the six months to September 2022, revenues were £9.7m. The plan is to pay 50% of post-tax profit in dividends. Net cash was £3.68m at the end of March 2022. The additional cash will provide working capital.

Electric vehicle drivetrains developer Equipmake Holdings (EQIP) edged up revenues by 3% to £3.71m in the year to May 2022. A much greater proportion of the revenues came from commercial and production contracts. The loss was more than trebled to £5.2m. There was still £1.88m of cash in the balance sheet and since then it raised £10m gross at 4.25p a share in its Aquis flotation. A partnership with an electrical aerospace specialist will generate initial orders for prototypes worth £400,000.

VSA Capital (VSA) has reiterated that it will report a first half loss. The Aquis corporate adviser is holding a showcase event for Aquis companies on 29 November.

Inqo Investments (INQO) has sold its investment in Zambia-based honey producer Bee Sweet Honey There was a ZAR950,000 loss on the investment.

Guanajuato Silver (GSVR) has made a partial early repayment of its silver and gold loans using 97,000 ounces of silver and 846 ounces of gold. In the three months to September 2022 produced 329,297 ounces of silver and 3,226 ounces of gold, while lead and zinc sales have become significant. The trend of quarter-on-quarter production increases is expected to continue.

Clarify Pharma (PSYC) has acquired £250,000 stakes in Nasdaq-listed companies Atai Life Sciences Inc (ATAI) and Compass Pathways (CMPS). Both companies are involved in developing psychedelic treatments.

AQRU (AQRU) is reducing the number of employees by three-quarters to save money. Monthly overheads will fall by 65%. Yields on the company’s cryptocurrency app are being reduced.

Cooks Coffee Company (COOK) has issued up to NZ$2m of convertible notes to wholesale investors. The cash will fund the growth of the café existing chain and acquisitions, as well as paying off some existing debt.

Ananda Developments (ANA) is seeking shareholder approval to acquire the 50% of DJT Group that it does not own, which has a licence to grow >0.2% THC cannabis for research. The cost is £3.2m in shares. The process of gaining approval to grow and manufacture medicinal cannabis has been formalised.

IamFire (FIRE) says investee company WeShop user downloads and transactions are increasing.

Marula Mining (MARU) has increased its stake in the Blesberg lithium mine from 5% to 100%. The cost is $1.7m. This is subject to regulatory approval. Mobile mining equipment and the majority of processing equipment is on the site and the infrastructure is being upgraded. First deliveries of lithium ore are expected in December.

Diesel additives supplier SulNOx Group (SNOX) has appointed Steele Environmental as a US distributor for shipping markets and land-based transportation and revealed a positive evaluation with Caspian Marine Services.

Invinity Energy Systems (IES) has cut the nominal value of its shares so that it can issue more shares. A 2.2 MWh energy storage sale has been made to the company’s Taiwan resale partner. That is ten Invinity VS3 batteries.

EDX Medical (EDX) announced a collaboration for the European cancer biomarker programme with Tianjin Bioscience. This should result in the development of cost-effective cancer tests.

MiLOC Group Ltd has changed its name to Crushmetric Group Ltd. A placing raised £22,000 at 20p a share.

A company owned by NFT Investments (NFT) chairman Jonathan Bixby and non-exec Mike Edwards have has acquired 20 million shares at 0.8p a share. Finance boss Rob Smith has purchased 724,503 Chapel Down Group (CDGP) shares at 25.5p each. A company associated with chief executive David Immelman bought 50,084 DXS International (DXSP) shares at 5.454p each.

Former Aquis-quoted company Jigsaw Insurance Services is recommending a 204p a share cash offer from insurance business consolidator PIB Group Ltd. There could also be additional consideration of 14p a share depending on completion accounts. That values the bid at up to £24.1m. Harrogate-based Jigsaw was formerly known as NCI Vehicle Rescue and it left what was then known as ISDX in February 2015, so it still comes under the Takeover Panel rules.

AIM

Michelmersh Brick (MBH) expects 2022 pre-tax profit to be ahead of expectations and it is acquiring pre-built brick products manufacturer and brick fabricator Fabspeed for an initial £6.25m. The Fabspeed acquisition will be earnings enhancing. There could be up to £2m more payable depending on performance over 24 months. A share buy back programme of up to £3m is being launched.

Tatton Asset Management (TAM) continues to generate impressive net inflows to its assets undermanagement. They were £907m in the six months to September 2022, helping to offset market declines. The 50%-owned 8AM Global added a further £1bn taking the group total to £12.3bn, which has already risen to £12.9bn in November. Pre-tax profit improved from £6.77m to £7.68m and the dividend was raised by 12.5% to 4.5p a share.

finnCap (FCAP) has ended bid talks with fellow broker Panmure Gordon. It was not possible to find a mutually acceptable structure or terms for the merger.

Osirium Technologies (OSI) is raising £1.53m at 2p a share and the cash will provide additional working capital and help the cyber security business reach cash breakeven earlier than previously expected. Annualised cost savings of £1m have been identified and £650,000 of these have already been implemented. Sales director Stuart McGregor is replacing chief executive David Guyatt and he will become executive chair instead. Allenby has increased its forecast 2022 revenues to £1.8m and slightly reduced the expected loss to £3.22m.

Tissue products manufacturer Accrol (ACRL) increased interim revenues by 64% to £121.1m through a combination of higher prices and volume growth. Net debt was £30.5m at the end of October 2022 and it could fall to £24.4m by April 2023. A full year pre-tax profit of £6.7m is forecast.

Omega Diagnostics (ODX) has received the £4m deferred consideration for the sale of the CD4 business. Net cash is expected to be £6.2m by the end of March 2022. This can be used to expand the health and food intolerance operations. The US is a market where more investment is planned. Omega Diagnostics remains loss making but could move into profit in 2023-24.

Electrolyser developer Clean Power Hydrogen (CPH2) is having problems with the design and operation of its cryostat unit in the MFE 220 test unit. Scaling up the unit has been a challenge. This delayed the expected October deliveries of two initial MFE 220 units. One customer has cancelled the order and is going with a rival electrolyser. A redesign of the unit should cure the issues. On the current forecasts, the cash could reduce to £3m by the end of 2024 and then rise the following year, but further delays could mean the cash reduces more quickly than expected.

Curtis Banks Group (CBP) is in advanced discussions concerning a bid from Nucleus Financial Platforms, which is conducting due diligence. Susan McInnes has been appointed as an independent non-executive director of Curtis Banks.

DeepMatter Group (DMTR) is the latest company with plans to cancel the AIM quotation because management believes that it will be easier to raise cash as a private company. The digital chemistry data analysis business says major shareholders support the plan. DeepMatter wants to raise £1m before leaving AIM and then a larger amount after the departure.

Trafalgar Property Group (TRAF) has moved into hydroponics. The residential property developer has acquired assets and leasehold premises from May Barn Horticultural Consultancy, which is controlled by Trafalgar Property director Dr Paul Challinor, for £30,000. Trafalgar Property will concentrate on assessing plant propagation requirements and studies on tissue culture of plant material. The current work is on lettuce varieties and hydroponic tomato seedlings, as well as seedlings of Nicotiana benthamiana for future development for cosmetics and pharmaceuticals.

Real Good Food (RGD) has secured additional financing of £2.5m from Hilco Private Capital, which lasts for 12 months and is in addition to the £6.3m from the Leumi ABL. This will help to fund restructuring and cost reduction.

Zanaga Iron Ore Company (ZIOC) is acquiring a controlling shareholding in the Zanaga iron ore project from Glencore Projects in return for shares that will give Glencore a 48.26% stake. Glencore can appoint two directors and is required to retain the shares for six months. Glencore has exclusive marketing rights for the iron ore produced at the mine. A general meeting will be held on 13 December to gain shareholder approval for the deal.

MAIN MARKET

Structural steel supplier Severfield (SFR) improved interim profit and it is continuing to improve in the second half. In the six months to September 2022, revenues improved from £195.9m to £234.9m through a combination of underlying growth and higher steel prices. Underlying pre-tax profit rose from £10.3m to £12.1m, including a doubled contribution of £600,000 from the India business. Net debt was £15.8m at the end of September and the interim dividend was raised from 1.2p a share to 1.3p a share. The UK and Europe order book is worth £464m and the India order book is £143m.

Devro (DVO) has agreed a 316p a share bid from Netherlands-based Saria, which has been interested in bidding for the sausage skins supplier since the beginning of 2022.

Cardiff Property (CDFF) increased NAV from 2549p a share to 2756p a share in the year to September 2022. The current share price is 2420p. The dividend was raised from 18.5p a share to 20.5p a share. There has been a downturn in confidence in the Thames Valley property market.

Alkemy Capital Investments (ALK) says its subsidiary Tees Valley Lithium has received full planning permission for Europe’s largest lithium hydroxide refinery in Teeside. This will supply the electric vehicle battery market. Production could commence in 2025.

National World (NWOR) has decided not to bid for Reach (RCH).

Motor dealer Caffyns (CFYN) improved interim revenues from £110.8m to £119m, although underlying pre-tax profit dipped by one-third to £1.6m. New car volumes were ahead of the market and there was a 12% decrease in like-for-like used car volumes. The interim dividend is unchanged at 7.5p a share.

Ross Group (RGP) has raised £136,000 at 1.5p a share. Ross has entered into a global exclusive supply chain management agreement with the Energy Group LLC in the US to manage green hydrogen production and projects. This could be the start of a significant business for Ross.

Andrew Hore

Alan Green covers Cora Gold #CORA & Blencowe Resources #BRES on this week’s Stockbox Research Talks

Alan Green covers Cora Gold #CORA & Blencowe Resources #BRES on this week’s Stockbox Research Talks

Markets and Stocks – Doc Holliday talks to Alan Green

As we head towards Christmas, Alan Green and Doc Holliday talk markets and stocks. We discuss the macro events in the UK and the opportunities that Brexit and inflation could be throwing up for UK agriculture before we turn to stocks. Doc covers Harland & Wolff #HARL, ECR Minerals #ECR, Contango Holdings #CGO, Emmerson #EML, Longboat Energy #LBE, Poolbeg Pharma #POLB, hVIVO #HVO, Reabold Resources #RBD and More Acquisitions #TMOR.

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