Visioneering Technologies expands into Asia by securing Hong Kong registration Wed, 24 Jul 2019 06:21:00 +0100 9 Spokes clears path to pursue new global banking opportunities Tue, 23 Jul 2019 22:05:00 +0100 Marrone Bio Innovations is bringing biological pesticides to the pest management industry Tue, 23 Jul 2019 20:15:00 +0100 NexTech AR Solutions expecting strong Q-4 numbers, looking for growth in 2020 Tue, 23 Jul 2019 19:28:00 +0100 NexTech AR Solutions (CSE:NTAR-OTC: NEXCF) CEO Evan Gappelberg joined Steve Darling from Proactive Investors Vancouver to discuss the company releasing their preliminary fourth quarter numbers. The company expecting to see some very healthy growth. 

Gappelberg also told Proactive, NexTech is really eyeing end of 2019 start of 2020 to transform the company with big growth expected and also when the company may be cash flow positive. 

]]> mCloud signs first Oil and Gas company to deploy AssetCare Solution to 6 facilities Tue, 23 Jul 2019 16:21:00 +0100 mCloud (CVE: MCLD-OTCQB: MCLDF) Chief Product Officer Dr Barry Po sat down with Steve Darling from Proactive Investors Vancouver to discuss the company signing their first oil and gas client to mobilize their AssetCare technology.

Po Telling Proactive how many facilities will use the technology and also what the reaction as been since the acquisition of AutoPro and how they plan on generating growth. 

]]> Bragg Gaming subsidiary, ORYX Gaming goes live with new online casino content from gamer Red Tiger Tue, 23 Jul 2019 15:50:00 +0100 NexTech AR Solutions trumpets 4Q revenue growth, sets sights on 10-fold growth in 2020 Tue, 23 Jul 2019 15:47:00 +0100 GlobeX Data, an industry leader in cyber security, begins trading on CSE Tue, 23 Jul 2019 13:26:00 +0100 GlobeX Data (CSE: SWIS) CEO Alain Ghiai joined Steve Darling from Proactive Investors on Skype from Switzerland to talk about his company debuting on the Canadian Securities Exchange under the ticker "SWIS" 

Ghiai telling Proactive about the cybersecurity company and why being located in Switzerland is just one of the many advantages the company has over competitors.

]]> Learning Technologies CEO hails 'outstanding margins and cash generation' in first half Tue, 23 Jul 2019 12:12:00 +0100 Learning Technologies Group PLC's (LON:LTG) Jonathan Satchell talks Proactive London's Andrew Scott through the firm's first half 2019 update.

He expects full-year underlying earnings to be “materially ahead” of market expectations after a strong first half for sales and profits.

Revenues for the first six months of the year are expected to come out at around £62.5mln, up 85% on this time last year.

]]> Seeing Machines' FOVIO system to be installed in more models by existing customer Tue, 23 Jul 2019 06:27:00 +0100 Hazer Group marks milestones toward commercialising unique graphite production process Tue, 23 Jul 2019 05:55:00 +0100 Animoca Brands chairman outlined blockchain opportunities at Pocket Gamer Connects 2019 Tue, 23 Jul 2019 04:05:00 +0100 archTIS expands into New Zealand with reseller agreement Mon, 22 Jul 2019 23:16:00 +0100 FANGs ain't what they used to be: Facebook, Amazon, and Google-owner Alphabet all set to report this week Mon, 22 Jul 2019 20:24:00 +0100 Universal mCloud implements AssetCare technology at oil and gas operations in Alberta Mon, 22 Jul 2019 16:01:00 +0100 BioLargo's engineering subsidiary wins US Air Force subcontracts Mon, 22 Jul 2019 14:35:00 +0100 Polarean Imaging welcomes new institutional investor in £2.1mln raise Mon, 22 Jul 2019 14:25:00 +0100 Polarean Imaging PLC's (LON:POLX) chief executive Richard Hullihen chats to Proactive London's Andrew Scott following the announcement they've raised £2.1mln through a share placing.

He says the objective was to strengthen the company’s balance sheet and to support phase III clinical trials and product launch planning.

]]> CUI Global subsidiary Orbital Gas Systems wins $900,000 service order from major UK gas network operator Mon, 22 Jul 2019 13:40:00 +0100 CentralNic Group 'moving into the next league' after debut €50mln bond issue Mon, 22 Jul 2019 12:05:00 +0100 CentralNic Group PLC's (LON:CNIC) Ben Crawford caught up with Proactive London's Andrew Scott soon after raising €50mln through its debut senior secured bond issue.

Crawford says he's delighted with the response to the bond issue which was supported by a wide range of debt investors globally.

Funds from the bonds will help replace existing debt facilities and pay for a couple of recent acquisitions - including TPP worldwide, an Australia-based domain name resale platform.

]]> Tekcapital expects IP strategy to lead to improved returns Mon, 22 Jul 2019 11:46:00 +0100 Seeing Machines set to benefit from growing interest in driver monitoring systems Mon, 22 Jul 2019 09:38:00 +0100 Polarean Imaging raises £2.1mln in share placing Mon, 22 Jul 2019 09:31:00 +0100 Learning Technologies surges on back of 'material' improvement in earnings Mon, 22 Jul 2019 08:56:00 +0100 Tekcapital signs strategic alliance with Mexico's UTEQ Mon, 22 Jul 2019 07:02:00 +0100 ITM Power inks agreement for new manufacturing base in Sheffield Mon, 22 Jul 2019 06:59:00 +0100 Seeing Machines confirms Kate Hill as new chair Mon, 22 Jul 2019 06:47:00 +0100 Kleos Space will use launch delay to further enhance satellite strategy Mon, 22 Jul 2019 06:09:00 +0100 ShareRoot raises more funds to advance digital health opportunities Mon, 22 Jul 2019 04:26:00 +0100 XTEK raising capital to fund strategic acquisition and commercialisation opportunities Mon, 22 Jul 2019 03:45:00 +0100 Vault Intelligence confirms record June quarter growth Mon, 22 Jul 2019 02:08:00 +0100 XTEK acquires US ballistic armour company to accelerate product commercialisation potential Sun, 21 Jul 2019 23:53:00 +0100 XTEK Ltd (ASX:XTE) managing director Phillipe Odouard updates Proactive Investors on the company’s strategic US acquisition of Ohio-based body armour and protective equipment company, HighCom Armor Solutions, Inc.

Mr Odouard says the strategic acquisition represents a key milestone in XTEK’s evolution to become a leading global ballistic armour player.

Completion of the acquisition is expected to take place in September 2019, pending regulatory and HighCom shareholder approvals.

]]> Capstone Turbine distributor says its microturbines continued to run despite recent NYC blackout Fri, 19 Jul 2019 17:34:00 +0100 Cory Glick, President of Reliable Secure Power Systems (RSP), the exclusive distributor for Capstone Turbine Corporation (NASDAQ:CPST) tells Proactive Investors the firm's microturbines powered through the recent blackout that plunged a broad swath of Manhattan into darkness.

Glick says the units are fed by pipeline natural gas, and its technology can be configured to run grid-parallel 24/7 and also as stand-alones, even during power outages

]]> Telit expects top-end revenues for 2018 Fri, 19 Jul 2019 14:00:00 +0100 NexTech AR Solutions wraps up C$1.6M private placement Fri, 19 Jul 2019 13:00:00 +0100 Visioneering Technologies doubles growth in key metrics during June quarter Fri, 19 Jul 2019 02:45:00 +0100 Swift Media’s annualised recurring revenue rises to $18.5 million; further contract wins expected Fri, 19 Jul 2019 01:04:00 +0100 Wrap Technologies receives its first 'significant' international order for its BolaWrap device Thu, 18 Jul 2019 21:11:00 +0100 Wrap Technologies Inc's (NASDAQ:WRTC) President Tom Smith - who was co-founder of the firm which produced the first stun-guns known as Tasers - tells Proactive Investors that he has set his sights on a new remote restraint device called the BolaWrap 100.

Smith says the device, which discharges an eight-foot tether to entangle a subject from 10-25 feet away, has received its first 'significant' international order worth more than $1 million from an unnamed customer.

]]> Parallax Health Sciences inks licensing pact with HealthPointe Solutions Thu, 18 Jul 2019 17:00:00 +0100 Capstone’s microturbines powered through recent New York City blackout Thu, 18 Jul 2019 15:38:00 +0100 Bango PLC’s Ray Anderson looking forward to 5G as business fires on all cylinders Thu, 18 Jul 2019 15:07:00 +0100 Ray Anderson says mobile commerce group Bango PLC had a great first half to the year but there is more to come going forward.

User spend, the key metric for the business, doubled again and Anderson is confident it can maintain the trend again over the full year.

Bango also made an underlying profit in the second quarter, while the products available on its new marketplace platform jumped to 55 from five.

The introduction of 5G will be another boost as Anderson believes this will spur the growth of virtual and augmented reality games and other services because of its speed.

“ There are lots of things happening”.

]]> Bragg Gaming-controlled ORYX Gaming inks deal to add Stakelogic casino games Thu, 18 Jul 2019 14:55:00 +0100 IEC Electronics ramping up its service offering with the US government Thu, 18 Jul 2019 13:48:00 +0100 IEC Electronics Corp (NYSEMKT:IEC) CEO Jeffrey T. Schlarbaum tells Proactive Investors the New York-based electronic manufacturing services company has expanded its services with the Defense Logistics Agency from the US Department of Defense

Schlarbaum says the company's laboratory is now certified by the US government to complete counterfeit component detection, making sure components used in manufacturing are authentic.

]]> Commuter-rail operator Chicago Metra taps Duos Technologies’ pantograph inspection system Thu, 18 Jul 2019 13:25:00 +0100 Location Sciences targeting £2mln revenue from Verify in 2019 Thu, 18 Jul 2019 13:24:00 +0100 Ceres Power making significant commercial headway Thu, 18 Jul 2019 12:48:00 +0100 Minds + Machines higher as it unveils £1mln share buyback Thu, 18 Jul 2019 09:37:00 +0100 Audioboom strikes good note as podcasting drives half-year revenue surge Thu, 18 Jul 2019 08:58:00 +0100 Archer Exploration forges ahead with advanced materials in human health and builds relationship with German Biotech Thu, 18 Jul 2019 08:53:00 +0100 Archer Exploration Ltd (ASX:AXE) chief executive officer Dr Mohammad Choucair updates Proactive Investors on exciting work the company is working on in advanced materials in the human health side of the business.

While recent updates have been on Archer’s ground breaking quantum computing projects, the company also has big developments on new materials, tying in the three verticals of quantum computing, human health and reliable energy.

A new relationship is being forged with a German Biotech company, and the work of a patent is underway, with hopes of a patent registration in February.

]]> ShareRoot granted trading halt by ASX pending shortfall announcement Thu, 18 Jul 2019 05:20:00 +0100 ShareRoot raises more than $509,600 to advance digital healthcare strategy Wed, 17 Jul 2019 23:05:00 +0100 SenSen Networks has eye on AI for real-time video surveillance Wed, 17 Jul 2019 22:12:00 +0100 American Manganese receives material from disassembled EV batteries for treatment with its recycling tech Wed, 17 Jul 2019 18:26:00 +0100 NexTech AR lands another client signing deal with Touchstone Home Products Wed, 17 Jul 2019 17:54:00 +0100 NexTech AR Solutions (CSE:NTAR-OTCQB: NEXCF) President Paul Duffy joined Steve Darling from Proactive Investors Vancouver to talk about the company signing a deal with Touchtone Home Products. The deal will start with a 6 product launch using NexTech’s web-based AR experiences for e-retail.

Duffy talks about when they plan on expanding products and how this agreement fits nicely into their business model.

]]> Martello Technologies revenue surges in fiscal 4Q as business accelerates through acquisitions Wed, 17 Jul 2019 14:49:00 +0100 NexTech is bringing augmented reality to online furniture shopping Wed, 17 Jul 2019 12:47:00 +0100 Deal with Doosan opens up huge Korean market for Ceres says CEO Caldwell Wed, 17 Jul 2019 11:23:00 +0100 Fuel cell specialist Ceres Power PLC’s (LON:CWR) partnership with Doosan fulfils a key priority of breaking into the Korean market, chief executive Phil Caldwell told Proactive.

The deal is the latest in a string of collaborations with household name engineers.

Doosan is one the largest fuel cells groups in Korea and is likely to play a major part in the desire of the government there to have 15Gw of fuel cell capacity in place by 2040.

Caldwell says this is the first time it has worked with the Korean company but hopes it will be the start of a long-term relationship.

Ceres had been working to seal the deal with Doosan for a year, he added.

In October, Ceres sees the first commercial launch of a product containing its technology through Japanese boiler maker Miura, another of its long-term licensing partners.

Ceres started to work with Miura in 2016, which shows how good we are getting at building long-term partnerships, added Caldwell.

]]> Software giant Micro Focus launches US$200mln share buyback programme Wed, 17 Jul 2019 07:56:00 +0100 Westminster updates investors on port upgrade contract in Ghana Wed, 17 Jul 2019 07:12:00 +0100 Telit Communications tells of swing to profit in first half Wed, 17 Jul 2019 07:11:00 +0100 XTEK reveals transformational US acquisition; aims to become leading ballistic armour player Wed, 17 Jul 2019 03:45:00 +0100 Covata closer to content services transformation after completing SafeShare disposal Wed, 17 Jul 2019 01:47:00 +0100 Bragg Gaming unit ORYX Gaming to showcase content aggregation platform at iGB Live in Amsterdam Tue, 16 Jul 2019 13:44:00 +0100 Albert Technologies to delist from AIM Tue, 16 Jul 2019 07:12:00 +0100 ClearStar promotes from within to key role Tue, 16 Jul 2019 06:32:00 +0100 BigDish hooks up with restaurant awards firm Tue, 16 Jul 2019 06:21:00 +0100 archTIS wins 12-month contract extension from Department of Home Affairs Mon, 15 Jul 2019 23:15:00 +0100 Capstone bags first of possible bigger order for microturbines from Kazakhstan oil producer Mon, 15 Jul 2019 15:40:00 +0100 NexTech AR Solutions aims to raise C$1.6 million in financing, adds convertible debentures Mon, 15 Jul 2019 15:16:00 +0100 Government and regulatory criticism means Facebook’s Libra could be dead on arrival Mon, 15 Jul 2019 13:39:00 +0100 Micro Focus plunges to bottom of FTSE 100 as boss cashes in £11.6mln of shares Mon, 15 Jul 2019 09:45:00 +0100 Location Sciences hits the spot as it appoints media industry veteran to advise on location verification Mon, 15 Jul 2019 09:13:00 +0100 Tekcapital PLC raises £0.75mln to help with commercialisation of its portfolio Mon, 15 Jul 2019 08:01:00 +0100 Tekcapital PLC's (LON:TEK) Clifford Gross tells Proactive London they've raised £0.75mln from institutional shareholders to help with the commercialisation of its portfolio of technological intellectual property.

Investors bought 9.4mln new shares at a price of 8p apiece in the placing, with the new shares representing roughly 14.7% of its enlarged shares in issue.

]]> LightwaveRF expects annual revenue to double after robust third quarter Mon, 15 Jul 2019 07:33:00 +0100 Ceres Power surges as it inks £8mln agreement with South Korean conglomerate Doosan Mon, 15 Jul 2019 07:10:00 +0100 Instem on track to meet full-year expectations as SaaS transition gains momentum Mon, 15 Jul 2019 06:32:00 +0100 DomaCom Australia takes commercialisation step further with equity release product Mon, 15 Jul 2019 04:15:00 +0100 XTEK granted trading halt with capital raising news pending Mon, 15 Jul 2019 03:30:00 +0100 NexTech AR Solutions raises 1.58 million dollars to continue their impressive growth Fri, 12 Jul 2019 18:16:00 +0100 NexTech AR Solutions (NTAR) CEO Evan Gappelberg joined Steve Darling from Proactive Investors Vancouver to discuss the company raising just over a million and a half dollars, all from insiders of the company, including the CEO himself who invested 857 thousand.

Gappelberg talked about what money is going to be used for and about the 3 verticals of NexTech

]]> CentralNic “well positioned” for next stage of development Fri, 12 Jul 2019 14:00:00 +0100 Kromek Group hails order momentum across all three divisions Fri, 12 Jul 2019 13:47:00 +0100 Kromek “will achieve cash breakeven this year”, says Cantor Fitzgerald Fri, 12 Jul 2019 13:24:00 +0100 Seeing Machines plays down Volvo speculation Fri, 12 Jul 2019 13:20:00 +0100 Augmented-reality developer NexTech AR Solutions raises nearly $1.6M in management-led round of financing Fri, 12 Jul 2019 13:06:00 +0100 Universal mCloud brings in nearly C$23.5M gross from debenture financing to expand business Fri, 12 Jul 2019 12:09:00 +0100 Rival streaming services could cost Netflix 65% of its viewing hours, says Wedbush Fri, 12 Jul 2019 12:02:00 +0100 Sophos CFO exits for private equity-backed firm; swings to loss in first quarter Fri, 12 Jul 2019 10:45:00 +0100 Renalytix AI hails President Trump's new kidney-focused policies Fri, 12 Jul 2019 08:19:00 +0100 American Manganese sees impressive results from testing on recycling cathodes Thu, 11 Jul 2019 18:59:00 +0100 American Manganese (CVE:AMY) President and CEO Larry Reaugh sat down with Steve Darling from Proactive Investors Vancouver to discuss their latest result of pilot plant testing to recycle lithium batteries.

Reaugh also touched on another aspect of their business and their 100% owned Lonnie Rare Earth project.

]]> Newgioco Group reaches milestone 2,010 webshop locations in Italy Thu, 11 Jul 2019 16:43:00 +0100 PyroGenesis Canada completes 3D specialty metal powder contract for government agency Thu, 11 Jul 2019 15:05:00 +0100 Universal mCloud finalizes Fulcrum and Autopro acquisitions Thu, 11 Jul 2019 14:55:00 +0100 Marrone Bio and plant-nutrient producer Valagro announce R&D partnership Thu, 11 Jul 2019 14:35:00 +0100 Location Sciences set to grow 'exponentially' as it gains traction in the market Thu, 11 Jul 2019 13:51:00 +0100 Proactive London sits down with Location Sciences Group PLC (LON:LSAI) board advisor Paul Thompson to hear his views on the business and the role he's playing.

''They're first to market with a product that allows advertisers to get the most out of their location advertising spend .. making those campaigns more effective and efficient'', Thompson says.

''They're independent and have developed a technology which is unique in the respect that it analyses every single impression'', he adds.

''The business is set to grow exponentially because it's now getting traction, it's now a thing in the sense that people need to look at location advertising in the same way they need to look at the rest of their digital advertising''.

]]> American Manganese Inc hails 99.8% purity of cathode material produced at pilot plant Thu, 11 Jul 2019 13:21:00 +0100 Ex-Quanta Services CEO Jim O'Neil joins CUI Global board Thu, 11 Jul 2019 13:18:00 +0100 Feedback PLC's Cadran product 'the future of medical communication' - CEO Thu, 11 Jul 2019 12:13:00 +0100 Feedback PLC's (LON:FDBK) CEO Tom Oakley caught up with Proactive London's Andrew Scott following a strategic review into their Cadran picture archiving product.

Oakley reckons the system can become the go-to method of securely sharing patient information by mobile phone or tablet.

]]> Haydale resets as graphene sector slowly finds its feet Thu, 11 Jul 2019 10:34:00 +0100 KRM22's Keith Todd updates on 2019 trading and Quant Foundry partnership Thu, 11 Jul 2019 09:03:00 +0100 KRM22 PLC's (LON:KRM) Keith Todd details their recently signed partnership with quantitative solutions provider Quant Foundry to integrate risk models into its Enterprise Risk Cockpit (ERC).

As far as first half trading, Todd says annual recurring revenue (ARR) has risen 24% since the end of 2018 to £4.1mln, in line with management expectations.

The group increased its number of customers to 37 from 26 at the end of 2018, while cash at the end of June was £1.4mln with term debt of £2.1mln.

]]> University of Kansas Medical Center orders another of Polarean’s 9820 Xenon Polariser systems Thu, 11 Jul 2019 08:35:00 +0100 Haydale Graphene looks ahead after challenging year Thu, 11 Jul 2019 08:35:00 +0100 KRM22 partners up with Quant Foundry to integrate risk models Thu, 11 Jul 2019 08:30:00 +0100 Tekcapital raises cash to 'expand' commercialisation of IP portfolio Thu, 11 Jul 2019 08:13:00 +0100 BigDish licks its lips as restaurant platform launches in Brighton Thu, 11 Jul 2019 07:08:00 +0100 ShareRoot signs three new clients for its AI-powered digital health insights platform Opyl Thu, 11 Jul 2019 04:42:00 +0100 The GO2 People opens capital raising to investors Wed, 10 Jul 2019 22:45:00 +0100 Synchronoss Technologies CEO outlines the company's growth potential and why it is attractive Wed, 10 Jul 2019 18:01:00 +0100 Synchronoss Technologies Inc (NASDAQ:SNCR) CEO Glenn Lurie tells Proactive Investors how the Software-as-a-Service (SaaS) company plans to meet ROTH Capital Partners' $13 price target from where its currently trading at $8.

Lurie says the positive Roth report shows the amount of progress the company has made in the last year and a half, and expands upon the companies' partnerships with AT&T Inc (T:NYSE). He says the relationship between the two are still 'very strong.'

]]> AdEPT Technology CEO looking to simplify organisation and streamline its brands Wed, 10 Jul 2019 16:13:00 +0100 AdEPT Technology Group PLC's (LON:ADT) CEO Phil Race talks Proactive London's Andrew Scott through the firm's results for the year to March 2019.

In the year the group’s revenue rose 11% to £51.3mln from £46.4mln the year before.

The business is continuing to switch its focus towards managed service and information technology (IT) revenues, and revenue from managed services now represents around 75.0% of the group’s total, up from 69.8% in the previous financial year.

]]> JP Morgan Cazenove thinks now is the time to have a little flutter on Playtech Wed, 10 Jul 2019 13:10:00 +0100 Seeing Machines 'focused on implementation, delivery and monetising its IP' Wed, 10 Jul 2019 12:25:00 +0100 Seeing Machines PLC's (LON:SEE) Paul McGlone and Nick DiFiore caught up with Proactive's Andrew Scott while in London to update on progress across the firm's divisions.

McGlone says the big focus for them going forward is implementation.

''We have a number of large contracts with OEMs and it's very important we deliver''.

''In terms of a slight shift in strategy we're going to focus very much on our intellectual property and seek to leverage and monetise that a lot more aggressively''.

]]> Bango bounces as revenues jump by two-thirds in first half Wed, 10 Jul 2019 09:47:00 +0100 Feedback chief says co will 'prioritise' Cadran product as focuses on secure messaging between doctors Wed, 10 Jul 2019 06:59:00 +0100 K2fly advances resources-focused software-as-a-service model Wed, 10 Jul 2019 00:50:00 +0100 Buds & Duds: As cannabis stocks flounder, Martello Technologies stock shines as former Canopy Growth CEO Bruce Linton continues to step up Tue, 09 Jul 2019 20:10:00 +0100 Buds today are Martello Technologies Group Inc (CVE:MTLO) (OTCMKTS:DRKOF), Harvest Health & Recreation Inc (CSE:HARV) (OTCMKTS:HRVSF). Duds are CannTrust Holdings Inc (TSE:TRST) (OTCMKTS:CNTTF), Canopy Growth Corporation (TSE:WEED) (NYSE:CGC). 

]]> Marrone Bio Innovations rolls out new pest control program targeting almonds and grapes Tue, 09 Jul 2019 19:01:00 +0100 Marrone Bio Innovations Inc (NASDAQ:MBII) CEO Pam Marrone tells Proactive Investors the biotech company's BioUnite pest management program is giving California’s almond and grape growers a tremendous edge by helping them tackle mid-season pest control issues.

Marrone says BioUnite, an umbrella brand for its products, has introduced its first spray against naval orangeworm larvae, a pest that targets almonds, as well as its first spray to control powdery mildew, a fungal disease that targets grapes.

]]> Fertoz is working to become the largest provider of organic inputs in North America Tue, 09 Jul 2019 18:54:00 +0100 Fertoz (ASX:FTZ) Exec Chairman Pat Avery joined Steve Darling from Proactive Investors on Skype to chat about the company that specializes in organic fertilizer. Avery talked about the origins of the company and how they have grown this year in order to set them up for the future.

Avery also told Proactive about their North American operations and the goals for the company over the next year. 

]]> Data Storage Corporation sees 'synergistic acquisitions' as part of its growth strategy Tue, 09 Jul 2019 18:24:00 +0100 Data Storage Corporation (OTCQB:DTST) CEO Chuck Piluso explains to Proactive Investors how the technology services company is aiming to grow its technology offerings for its 300-plus customer base.

Piluso says "synergistic acquisitions" will increase growth for the New York-based company, as well as expand lead generation. This year, the company signed a $3.5 million contract with a $8 billion retailer.

]]> Canopy Growth’s loss is Martello Technologies gain as Bruce Linton’s focus shifts Tue, 09 Jul 2019 18:05:00 +0100 Buds & Duds: As cannabis stocks flounder, Martello Technologies stock shines as former Canopy Growth CEO Bruce Linton continues to step up Tue, 09 Jul 2019 17:25:00 +0100 California farmers embrace Marrone Bio Innovations’ BioUnite pest control program Tue, 09 Jul 2019 16:45:00 +0100 ClearStar expects strong revenue growth for 2019 after record first half Tue, 09 Jul 2019 14:54:00 +0100 ClearStar Inc’s (LON:CLSU) Bob Vale caught up with Proactive London’s Andrew Scott after announcing they’d recorded their highest-ever six-month revenues in the first half of 2019.

In a trading update for the period ended 30 June the firm reported revenue growth of around 17% year-on-year (YOY) to US$11.6mln.

The strongest growth came from its direct services business, which climbed 49% in the period while its share of total revenues increased to 36% from 28% a year ago

]]> American Manganese kicks off rock and soil geochemical surveys at Lonnie project in British Columbia Tue, 09 Jul 2019 14:36:00 +0100 Micro Focus reiterates guidance after a steady half year Tue, 09 Jul 2019 12:45:00 +0100 Bragg Gaming subsidiary ORYX Gaming launches new content aggregation hub Tue, 09 Jul 2019 12:40:00 +0100 Ceres Power raises expectations after transformational year Tue, 09 Jul 2019 12:15:00 +0100 Canopy Growth ex-CEO shines a new-found spotlight on Martello Technologies Tue, 09 Jul 2019 11:56:00 +0100 Martello Technologies Group Inc (CVE:MTLO) (OTCMKTS:DRKOF) CEO John Proctor explains to Proactive Investors why the company's stock is continuing to soar Monday, as the Canadian technology company stands to benefit from former Canopy Growth Corp (NYSE:CGC) (TSE:WEED) co-founder Bruce Linton’s deal-making skills. Linton is co-chairman at Martello.

]]> Rosslyn Data wins two contracts with big multi-national companies worth £0.6mln Tue, 09 Jul 2019 11:50:00 +0100 Renalytix gushes higher as kidney failure test shines in validation study Tue, 09 Jul 2019 09:15:00 +0100 ClearStar shines as it reports highest-ever first half revenues Tue, 09 Jul 2019 08:04:00 +0100 AdEPT Technology focused on developing organic sales growth Tue, 09 Jul 2019 06:55:00 +0100 Agrios Global Holdings uses data analytics to create consistent cannabis products Mon, 08 Jul 2019 12:54:00 +0100 Agrios Global Holdings Ltd (OTCQB: AGGHF) (CSE:AGRO) CEO Chris Kennedy tells Proactive Investors the Vancouver-based company, which grows its cannabis plants in a mist environment without the use of soil, also uses data analytics to promote the best growing conditions to optimize yield.

Kennedy says the company is focused on building out its product development strategy within multiple markets, including Washington State and Missouri.

]]> appScatter Group partners with interarrows to take its offering to Japan Mon, 08 Jul 2019 07:41:00 +0100 appScatter Group PLC's (LON:APPS) Jason Hill tells Proactive London they're expanding their Priori Data brand into Asia after signing a joint venture (JV) with Japanese on-demand internet consultancy interarrows Inc

Hill says the JV will initially base its Priori Data platform in Japan, which boasts one of the world’s largest app markets valued at around US$13.7bn in 2017.

]]> Deal with Gulf Aviation is a great door-opener says Westminster Group’s Peter Fowler Fri, 05 Jul 2019 10:21:00 +0100 Westminster Group PLC’s alliance with Bahrain-based training group Gulf Aviation Academy is of major strategic importance to the company says chief executive Peter Fowler.

“That’s far more important than potential revenues,” he says.

“What we are doing is training the senior management in exactly the areas where we are looking to expand our managed services contracts business.”

Fowler is also excited by the huge potential in Saudi Arabia, where the group has just signed a joint venture with local company Hazar and also at Tema, where the container port has just opened.

With all that is going on Westminster is very undervalued, he believes.

]]> Bango PLC teams up with management and data intelligence platform appScatter Thu, 04 Jul 2019 10:48:00 +0100 Bango PLC's (LON:BGO) Ray Anderson and appScatter Group PLC's (LON:APPS) Philip Marcella speak to Proactive London's Andrew Scott after announcing a partnership deal between the two companies.

The two groups said the deal will grow in-app revenues for appScatter's global community of app developers, helping them substantially boost their revenue by targeting marketing campaigns at users most likely to spend.

]]> Bango and appScatter Group agree significant partnership deal Thu, 04 Jul 2019 10:39:00 +0100 Bango PLC's (LON:BGO) Ray Anderson and appScatter Group PLC's (LON:APPS) Philip Marcella speak to Proactive London's Andrew Scott after announced a partnership deal between the two companies.

The two groups said the deal will grow in-app revenues for appScatter's global community of app developers, helping them substantially boost their revenue by targeting marketing campaigns at users most likely to spend.

]]> BigDish gearing up for UK roll-out with territory managers to be in place by September Thu, 04 Jul 2019 10:22:00 +0100 BigDish PLC (LON:DISH) CEO Sanj Naha caught up with Proactive London's Andrew Scott ahead of the launch next week in Brighton.

Naha describes Brighton as a significant location and that they expect restaurants to sign up to the service quickly.

BigDish is currently recruiting territory managers, who it aims to have in place by early September.

]]> uBuck enter into alliance with Spare to use virtual ATM to enhance their platform Wed, 03 Jul 2019 16:38:00 +0100 LiteLink Subsidiary uBUCK Technologies (CSE:LLT-OTC:LLNKF) CEO James Youn joined Steve Darling from Proactive Investors Vancouver on Skype to talk about the company signing a deal with Spare to utilize their virtual ATM platform.

Youn telling Proactive this move gives them access to the very large California market.

]]> Crossword Cybersecurity thrilled to be working with Nursing and Midwifery Council Wed, 03 Jul 2019 11:12:00 +0100 Crossword Cybersecurity Plc's (LON:CCS) Jake Holloway tells Proactive London's Andrew Scott its Rizikon Assurance business has been selected by the Nursing and Midwifery Council (NMC).

Rizikon will automate supplier onboarding process and manage ongoing supplier risk for the group.

]]> Blackbird Plc hails its growing presence in international news and sport industry Wed, 03 Jul 2019 11:08:00 +0100 Ian McDonough, CEO of Blackbird PLC (LON:BIRD), tells Proactive London's Andrew Scott their software allows its customers to create video rapidly, to a high professional standard, in the cloud.

''Our customers are generally B2B customers in the sports, post and news areas ... but also large production companies''.

They've just announced that Corrivium has chosen Blackbird for the clipping and publishing of highlights of Global Rapid Rugby -  a new international rugby competition.

Corrivium is a live streaming provider which delivers live streaming events globally for some of the world's largest brands.

]]> K2Fly achieves record quarter to cap off strong FY19 performance Wed, 03 Jul 2019 00:38:00 +0100 K2Fly Ltd (ASX: K2F) chief executive officer Brian Miller updates Proactive Investors on a record quarterly performance for the financial year ending June 30, raising invoices of almost $1.5 million, a 52% increase compared to the same period of 2018.


Miller says the company was up around $1.6 million for invoicing for the financial year, which has now reached almost $4.2 million - an increase of more than 62%.


The company’s recent acquisition of RCubed is also tracking well.

]]> Metaverse Capital sees potential in Facebook's new currency Libra Tue, 02 Jul 2019 15:39:00 +0100 Metaverse Capital (CSE:FORK-OTC:GBCHF) CEO Shidan Gouran joined Steve Darling from Proactive Investors Vancouver to talk about Facebook's news cryptocurrency Libra.

Gouran talks about how Libra will work and how he hopes to capitalize on it with their company by attracting the millions of people in the unbanked world. 

]]> Covata updates on transition to content services and dataglobal acquisition Tue, 02 Jul 2019 06:17:00 +0100 Covata Ltd (ASX:CVT) managing director Ted Pretty speaks to Proactive Investors on the company’s transition to content services and broadening the market as well as its acquisition of German company dataglobal GmbH.
Pretty notes the company has had some significant recent transactions and raised $2 million in additional capital earlier this year. 
Covata also agreed to sell the SafeShare part of the business for around $5 million.
This forms part of a transformation as the company plans to trade in future as dataglobal Limited after completing the acquisition of the German-based company.
]]> Polarean Imaging on track to complete enrolment for its phase III clinical trials Mon, 01 Jul 2019 14:00:00 +0100 Polarean Imaging PLC's (LON:POLX) chief executive Richard Hullihen talks Proactive London's Andrew Scott through the firm's 2018 results.

Polarean reported slightly higher revenues and lower costs than expected for the past calendar year.

It's currently taking its drug-and-device technology through late-stage clinical trials and he says they're on track to apply for regulatory permission in the US next year and deliver first commercial sales by end of the year.

]]> Social Life Network debuts sold out cannabis investors event Mon, 01 Jul 2019 13:49:00 +0100 Social Life Network Inc (OTCMKTS:WDLF) CEO Ken Tapp tells Proactive Investors its subsidiary, hosted a 'fantastic' cannabis-focused investor forum, called The MjMicro Conference, at the Westin New York Grand Central Hotel.

Tapp says the event was sold out in three weeks, with demand for additional events, including its planned Los Angeles-based conference in September. Tapp also spoke about the company's planned spinoff of MjLink as a separate publicly traded company.

]]> Capital Network analyst on MTI Wireless Edge's water management acquisition Thu, 27 Jun 2019 13:21:00 +0100 Capital Network analyst Ed Stacey discusses MTI Wireless Edge Ltd's (LON:MWE) decision to buy a 50% stake in one of the main resellers of its Mottech Water Solution in Australia.

The addition of Parkland Australia for up to AU$0.8mln is expected to enhance earnings and offer potential to grow both revenue and profit.

]]> Kromek making big strides on all fronts and in a great place says CEO Basu Thu, 27 Jun 2019 12:16:00 +0100 ''The last year was a milestone for us'' says Arnab Basu, chief executive of medical and nuclear screening group Kromek PLC (LON:KMK).

''We won US$80mln of new contracts to make the total US$145mln over the past three years.''

''As these contracts are multi-year in nature we have visibility on 80% of revenues this year as well.''

Sales rose 23% in the year to April, underlying profits rose four-fold and losses halved and Basu expects further improvement in the current twelve months.

New standards are coming in for airport screening security while health authorities are realising diagnostics is a crucial way to improve the effectiveness of treatment.

Meanwhile, China and India are markets that are just opening up.

]]> K2fly acquires RCubed to boost resources and reserves SaaS offering Wed, 26 Jun 2019 23:40:00 +0100 K2fly (ASX: K2F) chief commercial officer Nic Pollock updates Proactive Investors on the recent acquisition of resource and reserves software solution, RCubed to strengthen its reach in the resources sector.
“Going forward our strategy is to increase our software business which attracts higher growth and higher margins,” he says. 
The digital solutions company is also set to pay $450,000 cash in the next three years for Prodmark assets.
]]> Universal mCloud CEO update financing and introduces new Chief Financial Officer Wed, 26 Jun 2019 18:44:00 +0100 Universal mCloud (CVE:MCLD) CEO Russ McMeekin and new company CFO Chantel Schutz joined Steve Darling from Proactive Investors Vancouver to talk about the company's financing that is nearing completion.

McMeekin also talked about the hiring of Schutz and we discuss her background role within the company. 

]]> FluroTech using technology to provide a better faster test for cannabis quality control Tue, 25 Jun 2019 18:32:00 +0100 FluroTech (OTCQB:FLURF) COO Rex Kary sat down with Proactive's Christine Corrado at the MjMicro Cap Conference in New York. FluroTech is a technology and marketing company whose core business is focused on the commercialization of new technologies in the cannabis industry.

]]> Pyrogenesis Canada secures C$3.6M order for a waste-treatment system Thu, 20 Jun 2019 20:38:00 +0100 Pyrogenesis Canada Inc (CVE:PYR) (OTCQB:PYRNF) CEO Peter Pascali tells Proactive Investors the plasma technology company has received a C$3.6 million purchase order for a non-military and land-based client to utilize its waste-treatment system.

Pascali says this is the company's first foray into the waste-management industry, a space the Montreal-based company will continue to pursue.

]]> Duos Technologies Group uplists to the OTCQX Wed, 19 Jun 2019 17:05:00 +0100 Duos Technologies Group Inc (OTCQX:DUOT) CEO Gianni Arcaini and CFO Adrian Goldfarb tell Proactive Investors the Florida-based company has uplisted to the OTCQX Best Market from the OTCQB Venture exchange.

Arcaini says the railroad technology company is very proud of this milestone, while Goldfarb points to strong fiscal 2018 results that helped the company make the jump.

]]> Tema port contract is huge for Westminster but there is more to come says CEO Wed, 19 Jun 2019 14:41:00 +0100 Westminster Group PLC’s (LON:WSG) Peter Fowler says its new contract to run screening services at Ghana’s container port at Tema is going to have a material impact on both revenues and the business.

Several more managed services are also on the cusp of being signed, he told Proactive's Andrew Scott.

At Tema, capacity is being increased to 3.5mln containers a year from one million currently and Westminster will earn a fee for each unit that passes through.

Westminster won a scanning contract for two Asian ports earlier this year, but Tema is different as it will be long-term recurring revenue Fowler said.

Final details are still being agreed but Westminster already has people on the ground helping to install the hi-tech scanners to be used at Tema.

Elsewhere, the aviation arm has seen record passengers at the West African airport where it provides security, while the training business is also going great guns as well said Fowler.

]]> Parity Group focused on boosting margins after reshaping long-term strategy Wed, 19 Jun 2019 08:41:00 +0100 Parity Group PLC's (LON:PTY) Matthew Bayfield talks Proactive London's Andrew Scott through the firm's refreshed strategy since he took over as chief executive at the start of the year.

In 2018 the company took action to address its performance by exiting its loss-making virtual reality business Inition and focusing on the higher-margin data consultancy services division. 

''We need to listen to what our clients want ... and what they value abut working with us and that's been my experience with every business that's been successful that I've been involved in''

]]> Hazer Group Limited outlines its recent MoU with Water Corporation Wed, 19 Jun 2019 06:43:00 +0100  Hazer Group Limited (ASX:HZR) managing director and chief executive officer Geoff Ward speaks to Proactive Investors about a commercial demonstration plant for its Hazer Process and the next stage of development.

 Ward notes the company has identified that biogas is an ideal feedstock for the process and acts a low-cost way to produce hydrogen.

“We think this is a terrific opportunity to collaborate with a sustainable organisation like Water Corporation to develop a first source of low emission hydrogen in Western Australia,” he says.

]]> ROBO Global targets tech investments with growth potential in ETF Securities partnership Mon, 17 Jun 2019 22:00:00 +0100 ROBO Global (ASX:ROBO) chief executive officer Richard Lightbound and ETF Securities co-head of sales Kanish Chugh speak to Proactive Investors about the two companies' partnership to formulate strategies for investment into robotics, automation and artificial intelligence. 
"It's all about anticipating where there's going to be continued demand acceleration, where we're going to see growth and returns," says Lightbound
He continues, "When you look at the data over the past three years we've had in excess of 15% annualised returns."
Chugh says that ETF Securities partners with companies like ROBO Global and utilises their index, fully replicating the underlying investments of Robo and providing them to a wider range of investors.
]]> WestStar Industrial secures underlying project revenue in transformative growth phase Mon, 17 Jun 2019 01:32:00 +0100 Weststar Industrial Ltd (ASX:WSI) chief executive officer Robert Spadanuda speaks to Proactive Investors about the industrial and civil services company and the projects and clients on its order book.
"Through MSP Engineering we are working on a couple of key projects in Western Australia at the moment - we've done significant works on the Talison Lithium plant and also we've been doing a significant amount of work in Kwinana," Spadanuda says.
He continues, "The type of works that we're working on, they are certainly transformational for our company."
Spadanuda adds that the company has two subsidaries but the company's focus is on SINPEC, or Structural Instrumentation Mechanical Piping Electrical and Civil works.
]]> Capstone Turbine strengthens its partnership with IndyCar Series drivers Fri, 14 Jun 2019 20:47:00 +0100 Capstone Turbine Corporation (NASDAQ: CPST) CEO Darren Jamison tells Proactive Investors the microturbine energy system developer has strengthened its partnership with the IndyCar Series by inviting professional race car drivers Colton Herta and Conor Daly to its headquarters.

Jamison says the two will serve as brand ambassadors to help spread the California-based company's messaging of combating climate change with its renewable technology.

]]> Eckoh PLC sees new business growth hit record levels Fri, 14 Jun 2019 11:02:00 +0100 Eckoh PLC's (LON:ECK) Nik Philpot caught up with Proactive London's Andrew Scott to talk through their results for the year to March 2019.

Pre-tax profit rose to £1.2mln in the period from £1.1mln last year with revenue up 5% to £28.7mln.

Total business sales jumped 62% to £32.7mln with new business up 47% to £22.6mln.

]]> Ethernity Networks expects to soon close on two 'transformational' deals Thu, 13 Jun 2019 13:08:00 +0100 Ethernity Networks PLC's (LON:ENET) CEO David Levi talks Proactive London's Andrew Scott through their 2018 results.

Levi expects the firm to start generating cash from 2020 as momentum builds for its new generation of modules.

Ethernity’s technology helps servers run much faster through the efficient 'offloading' and rerouting of internet traffic.

]]> My Size aims to help consumers and retailers by preventing online returns with its measuring tech Thu, 13 Jun 2019 12:58:00 +0100 My Size Inc (NASDAQ: MYSZ)(TASE: MYSZ) CEO Ronen Luzon tells Proactive Investors the four-year old Israel-based technology company is beginning to penetrate the e-commerce and retail market, saying several Tier-1 retailers are already integrating its mobile measurement technology solution.

Luzon says in 2019 the company generated its first licensing revenues, and investors should expect revenue to ramp up by next year.

]]> Keywords moves into audio description services with DVW acquisition Thu, 13 Jun 2019 08:41:00 +0100 Keywords Studios PLC's (LON:KWS) Andrew Day discusses the acquisition of Vancouver-based audio description provider Descriptive Video Works Inc (DVW).

DVW's worked with large US and Canadian media networks including NBC Universal, CBS, CBC, Viacom and A&E as well as streaming giant Netflix Inc (NASDAQ:NFLX).

]]> Braingrid Corporation secures 5.1 million dollars in financing over 3 years Wed, 12 Jun 2019 16:11:00 +0100 Braingrid Corporation (CSE:BGRD) CEO Michael Kadonoff joined Steve Darling from Proactive Investors in Toronto to talk about their agreement with the European High Growth Opportunities Securitization Fund for 5.1 million dollars.

Kadonoff told Proactive how the financing will work and where he plans to utilize the proceeds to help grow the business. 

]]> Polarean Imaging updates on clinical trials ahead of investor symposium Wed, 12 Jun 2019 09:04:00 +0100 Polarean Imaging PLC's (LON:POLX) chief executive Richard Hullihen tells Proactive London's Andrew Scott the enrolment of the final few patients for clinical testing of its drug-device combination for MRI lung scans will soon begin at a third trial site.

They've so far enrolled 85.4% of the required number of patients in the lung transplant pathway and 62.5% for the lung resection pathway.

This is up from 80% and 50% in mid-May.

]]> Gfinity PLC driving growth through multi-year deals with top brands and publishers Wed, 12 Jun 2019 08:20:00 +0100 Gfinity Plc's (LON:GFIN) Garry Cook discusses with Proactive London's Andrew Scott the strategic refocus he's implemented at the business since taking on the role of executive chairman.

Among a number of recent deals, GFIN has been selected by HP's gaming brand 'HP Omen' as the production partner for esports show The Esports Report - Season 2.

With the global esports economy predicted to break the $1bn barrier this year he believes they're at the 'cusp of the inflection point' in capturing the opportunity ahead of them.

]]> Maxim analyst maintains a Buy on Capstone Turbine ahead of its 4Q earnings report Tue, 11 Jun 2019 17:29:00 +0100 Maxim Group LLC Senior Vice President & Senior Industrials Analyst Tate Sullivan tells Proactive Investors he's placed a price target of $2 on microturbine developer Capstone Turbine Corporation's (NASDAQ:CPST) stock, trading around $0.82 today. The company is due to report its fiscal 4Q financials after the closing bell.

Sullivan, who initiated coverage on the California-based company, talks about what Capstone needs to reach this target.

]]> Workforce management company Deputy aims to breach north of 2 million users by end of 2019 Mon, 10 Jun 2019 17:36:00 +0100 Deputy Global President Steven Power tells Proactive Investors the company that develops software for workforce management aims to hit north of 2 million users by year's end.

Power says privately held Deputy, whose customers include McDonald's Corporation (NYSE:MCD) and Uber Technologies Inc (NYSE: UBER), closed its A$110 million in its Series B round of funding in late 2018, what he says is the largest round in Australia to date, enough financing to carry the company to its growth goals.

]]> Blackbox Stocks connecting social media to day trading Fri, 07 Jun 2019 15:58:00 +0100 BlackBox Stocks (BLBX:OTCMKTS) Co-Founder Eric Pharis joined Steve Darling from Proactive Investors at the LD MIcro show in Los Angels to talk about their company that develops real-time, web and mobile-based analytical software tools for day traders and swing traders. Their servers are located in close proximity to the NYSE, AMEX, NASDAQ, and OTC exchanges and use proprietary algorithms that allow the system to monitor and analyze over 13,000 stocks simultaneously.

]]> American Manganese receives another patent for the disruptive technology Fri, 07 Jun 2019 09:41:00 +0100 American Manganese (CVE:AMY) President and CEO Larry Reaugh sat down with Steve Darling from Proactive Investors Vancouver to bring news the company have received another patent for their technology.

Reaugh talks about the significance of this patent and what it means for the company. 

]]> PyroGenesis Canada wins largest contract in company history Thu, 06 Jun 2019 17:55:00 +0100 PyroGenesis Canada Inc (CVE:PYR) (OTCMKTS:PYRNF) CEO Peter Pascali tells Proactive Investors the Montreal-based company has been awarded a contract worth potentially C$55 million in future revenue, beating out its competitors.

Pascali says a due diligence will take place, and the contract will then be signed "very soon."

]]> Bragg Gaming boosts revenue numbers, CEO comments on recent Wire Act decision Thu, 06 Jun 2019 16:52:00 +0100 Bragg Gaming Group (CVE:BRAG) (OTCMKTS:BRGFF) CEO Dominic Mansour tells Proactive Investors the gambling company has had a substantial revenue boost in its 1Q earnings due to its recent ORYX Gaming acquisition.

Mansour says along with the boost in earnings, muddied waters are clearing up quite nicely this week, as a New Hampshire US district judge overturned the Justice Department’s opinion on the Wire Act, which deemed online gambling illegal.

]]> Institution ups stake in MTI Wireless as its doubles first quarter profits Thu, 06 Jun 2019 13:36:00 +0100 MTI Wireless Edge Ltd's (LON:MWE) Moni Borovitz updates Proactive London on their Share Repurchase Programme as well as first quarter trading.

The firm saw pre-tax profits more than double in Q1 while also recording significant growth in its order book.

For the three months ended 31 March pre-tax profits had risen to US$560,000 from US$250,000 previously, while revenues had jumped 16% year-on-year to US$9.1mln

]]> Taoping Inc looking at incredible growth potential with untapped Chinese cities Thu, 06 Jun 2019 13:18:00 +0100 Taoping Inc's (NASDAQ:TAOP) Chang Qiu chats with Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The IT service management company provides cloud-based app technologies for smart city IoT platforms, digital advertising delivery, and other internet-based information distribution systems in China.

]]> Ionix Technology looking at increasing growth with the emergence of electric vehicles Thu, 06 Jun 2019 13:16:00 +0100 Ionix Technology Inc's (OTCQB:IINX) Minister of Overseas Business, Shuyu Li, sits down with Steve Darling of Proactive Investors at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The China-based company designs develop, manufactures, and sells portable power banks, LCD screens, and lithium-ion batteries for electric vehicles.

]]> Gfinity PLC - Proactive One2One Investor Forum June 2019 Thu, 06 Jun 2019 07:34:00 +0100 Gfinity Plc's (LON:GFIN) Garry Cook presents at the Proactive One2One Investor Forum June 2019.

For more information visit

]]> iCandy partners with Alibaba business unit 9Games Thu, 06 Jun 2019 06:17:00 +0100 iCandy Interactive Ltd (ASX:ICI) chairman and executive director Lau Kin Wai speaks to Proactive Investors about the mobile and digital entertainment company's partnership with Alibaba business unit 9Games to publish an existing iCandy game in the booming Chinese mobile game market.
"The game being published is a music-centric game that 9Games will localise and work with us to publish into the Chinese market," says Lau.
He continues, "iCandy will provide all the necessary technical support to work with 9Games ... this is the first time for iCandy to take one of our games into the mainland Chinese market."
Lau notes that the Chinese mobile game market is one of the biggest in the world, with nearly US$20 billion in revenue last year and a forecast US$25 billion by 2020. 
]]> One Stop System recent deal should give the company a major Lyft Wed, 05 Jun 2019 20:34:00 +0100 One Stop System Inc (NASDAQ:OSS) CEO Steve Cooper talks with Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The California based company does computer integrated systems design on an industrial grade.

]]> CleanSpark helps clients keep the lights on with its energy integration tech Wed, 05 Jun 2019 20:14:00 +0100 CleanSpark Inc (OTCQB:CLSK) CEO Matt Schultz talks with Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. CleanSpark develops software to help companies become more energy efficient. The company's services include intelligent energy monitoring and controls, as well as micro-grid consulting and implementation services.

]]> Seedo Corp already seeing success by bringing plant growing to you Wed, 05 Jun 2019 20:09:00 +0100 Seedo Corp (OTCQB:SEDO) CEO Zohar Levy talks with Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The Connecticut-based company manufactures and sells automated refrigerators that can connect to a mobile phone app, allowing for remote monitoring and control of lighting, humidity, and temperature.

]]> Victory Square Technologies seeing success helping technology start-ups succeed Wed, 05 Jun 2019 18:05:00 +0100 Victory Square Technologies Inc (OTCQX:VSQTF) Director Peter Smyrniotis tells Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The company, which is based in Vancouver, identifies and invests in start-ups. Through its portfolio companies, Victory Square focuses on technologies in blockchain, machine learning, artificial intelligence, and virtual reality.

]]> Generation Next Brands describes it's High-Tech frozen yogurt vending kiosks Wed, 05 Jun 2019 17:13:00 +0100 Generation Next Franchise Brands, Inc CEO Nick Yates joins Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The San Diego based company primarily operates as a franchiser, direct seller, and owner and operator of frozen yogurt equipment, robotic soft serve vending kiosks, healthy drink and snack vending machines.

]]> OneSoft Solutions continues to see success in it's increasing client base Wed, 05 Jun 2019 15:47:00 +0100 OneSoft Solutions Inc (OTCMKTS:OSSIF) President and COO Brandon Taylor chats with Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The Edmonton based company is a provider of software solutions which are developed using Microsoft's Cloud Platform, and are primarily used to assist pipeline companies in preventing pipeline failures.

]]> Cannabics Pharmaceuticals open up new lab and prepares to accept fresh biopsies Wed, 05 Jun 2019 04:30:00 +0100 Cannabics Pharmaceuticals Inc (OTCQB:CNBX) CEO Eyal Barad joined Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The biotechnology company develops pharmaceuticals focusing on cancer research and focuses on the development of therapies and tools aimed at diverse ailments.

]]> Riwi Corp hits milestone being profitable for three straight quarters Wed, 05 Jun 2019 04:08:00 +0100 RIWI Corp (OTC:RWCRF)(CSE:RIW) Founder and CEO Neil Seeman joined Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The technology firm operates in Canada, the United States, and Europe as a trend-tracking and prediction cloud platform.

]]> Intellicheck is changing the game when it comes to the stealing of ID's Wed, 05 Jun 2019 02:55:00 +0100 Intellicheck Inc (NYSEAMERICAN:IDN) CEO Bryan Lewis talks with Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The New York-based technology company provides ID authentication and verification solutions with its software.

]]> BioLargo working on new markets with their technology helping in cannabis industry Tue, 04 Jun 2019 20:21:00 +0100 BioLargo (OTCQB:BLGO) President and CEO Dennis Calvert joins  Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The California based company delivers invents, patents and sells solutions for water treatment, clean air technologies and for wound care products.

]]> WANdisco continues to lead helping clients move large amounts of data to the cloud Tue, 04 Jun 2019 19:32:00 +0100 WANdisco Plc Ord (OTCMKTS:WANSF) (LSE:WAND) CEO David Richards talks with Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The US and UK-based software company specializes in the area of distributed computing, as a provider of collaboration software to the software development industry.

]]> TrackX is becoming an industry leader in supply chain management Tue, 04 Jun 2019 19:29:00 +0100 TrackX Holdings Inc (OTCMKTS:TKXHF) CEO Tim Harvie chats with Steve Darling of Proactive Investors at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The software company provides asset management solutions by using  Radio Frequency Identification (RFID), GPS and Sensor-enabled Asset Tracking.

]]> EnviroLeach Technologies looking to drive revenue battling massive E-waste problem Tue, 04 Jun 2019 19:27:00 +0100 EnviroLeach Technologies Inc (OTCQB:EVLLF) CEO Duane Nelson chats with Steve Darling of Proactive Investors at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. Using its own proprietary treatment process, EnviroLeach extracts precious metals from mining ores, concentrates, and E-Waste. The company is self-described as being poised to become a standerd in eco-friendly precious metals extraction methods.

]]> Digital Ally Inc talks about its video and software solutions, used in emergency management Tue, 04 Jun 2019 17:31:00 +0100 Digital Ally Inc (NASDAQ:DGLY) CEO Stanton Ross updates Proactive Investors' Steve Darling at the 9th Annual LD Micro Invitational Investor Conference in Los Angeles, CA. The Kansas based company produces and sells video recording technologies and storage software, such as body cameras, to law enforcement, security and commercial clients.

]]> KRM22 PLC's global platform 'the future of capital market risk control' Tue, 04 Jun 2019 09:49:00 +0100 KRM22 PLC's (LON:KRM) Keith Todd caught up with Proactive London's Andrew Scott following the recent acquisition of Dutch-based risk management and post-trade services group Object+.

Todd says the deal will expand their market risk solutions to the pre-trade and at-trade areas while also offering direct connectivity to major global exchanges.

KRM22's also just unveiled a partnership with Trailight Ltd to distribute and support compliance products on its platform.

]]> discoverIE posts its best performance so far with record order book Tue, 04 Jun 2019 08:08:00 +0100 Nick Jefferies, chief executive of discoverIE Group PLC (LON:DSCV) caught up with Proactive London's Andrew Scott to talk through the group's results for the year to 31 March 2019.

The custom electronics maker reported an underlying pre-tax profit for the year of £27.2mln, 24% higher than the year before, while revenues climbed 13% to £438.9mln

]]> Braingrid's technology has potential to be a game-changer for the cannabis industry Thu, 30 May 2019 20:13:00 +0100 Braingrid Limited (CSE:BGRD) CEO Michael Kadonoff joined Senior Journalist Katie Lews in the Proactive Investors Toronto studio to bring news the company has signed three new clients, including Canna Farms and Up Cannabis.

Kadonoff talked about how their technology can merge and help the cannabis industry and what type of data their clients will now have access to.

]]> Litelink Technologies signs deal with InstaPay to make paying truckers more efficient Thu, 30 May 2019 18:12:00 +0100 Litelink Technologies (CSE:LLT) CEO Ashik Karim joined Steve Darling from Proactive Investors on Skype to talk about the deal they signed with InstaPay that dramatically changes the way truck drivers are paid.

Karim telling Proactive how it will work and what the company has planned to roll it out. 

]]> EnWave Corp sees record revenue numbers with a number of verticals doing very well Thu, 30 May 2019 14:56:00 +0100 Enwave Corporation (CVE:ENW) President and CEO Brent Charleton joined Steve Darling in the Vancouver studio of Proactive Investors to talk about their Q-2 numbers that are very good. Charleton saying the company is seeing record revenue.

Charleton also talked about their deal with Aurora Cannabis and how that will play in the company's future growth. 

]]> Fertoz releases organic water-efficient fertiliser product for water delivery systems Tue, 28 May 2019 07:30:00 +0100 Fertoz Ltd (ASX:FTZ) chief executive officer Pat Avery speaks to Proactive Investors about the company's latest product, a new organic fertiliser that is water efficient and environmentally friendly, as well as recent company developments. 
He says along with Australia, the key market of North America is growing at about 10 percent a year, with consumers increasingly focused on what they should or shouldn't eat and how it impacts their health.
Avery is in Australia to meet local investors and address investors at an annual general meeting.
]]> Capstone Turbine revvs into the Indy 500 with grandson of late NY Yankees owner Fri, 24 May 2019 21:53:00 +0100 Capstone Turbine Corp (NASDAQ:CPST) EVP of Sales & Marketing Jim Crouse and George Steinbrenner IV, Owner of Harding Steinbrenner Racing and grandson to the late New York Yankees Owner George Steinbrenner III tell Proactive Investors the microturbine company is sponsoring Indy car #88 with one of the sport's hottest drivers behind the wheel.

Crouse says the Capstone logo will be featured on the car and crew uniform, driven by Colton Herta. Steinbrenner adds in order to win, it is just a matter of executing, with a little bit of luck.

]]> MTI Wireless Edge 'an excellent growth company' with further re-rating potential Fri, 24 May 2019 09:55:00 +0100 Capital Network's Ed Stacey says results for the first quarter of 2019 for MTI Wireless Edge (LON:MWE) showed continued strong progress.

Revenues increased by 16% year-on-year and operating profits 66%. We maintain our full-year (FY) 2019 forecasts, with FY revenue growth of 10% and earnings per share (EPS) growth 27.8%.

]]> Golden Saint Technologies agrees deal to build data centre in Thailand Fri, 24 May 2019 09:54:00 +0100 Golden Saint Technologies Limited's (LON:GST) Pierre Fourie and Tone Goh discuss with Proactive London a Letter of Intent that's been signed with Siam Motors to build a tier three data centre facility in Pattaya and/or Chonburi Province in Thailand.

Siam is Thailand's longest established automotive industry group but also has wide-ranging interests in other sectors.

]]> Deep Sentinel launches Jeff Bezos-backed AI-powered security system Thu, 23 May 2019 18:01:00 +0100 Deep Sentinel Corp CEO David Selinger tells Proactive Investors the privately-held company has launched its home security technology using artificial intelligence.

Selinger, who has previously worked in AI at Inc (NASDAQ:AMZN), says Jeff Bezos is a seed investor in the California-based company. The company recently raised financing, and will look to raise another round of funding later this year.

]]> Hot desking is a perfect fit for Saas software model says Smartspace's Beechinor Thu, 23 May 2019 10:28:00 +0100 There is a huge market for Smartspace Software Plc’s (LON:SMRT) agile working app, chief executive Frank Beechinor told Proactive Investors.

More and more companies are introducing hot desking, while Smartspace also offers wayfinding (navigating your way around an office complex), room booking, and self-service reception among its modules.

Saas or software-as-a-service is the model and Beechinor is convinced as soon as a company sees the benefits its app brings, the attractions speak for themselves.

Corporate real estate has traditionally been seen as a fixed overhead but we add ‘a bit of flex’ to this cost,  he says.

]]> Immotion Group approaching the 'tipping point' as headset rollout accelerates Thu, 23 May 2019 09:03:00 +0100 Immotion Group PLC's (LON:IMMO) Martin Higginson discusses with Proactive London's Andrew Scott a recent contract they've signed that will see them make three exclusive immersive experiences for Dutch entertainment group, iP2Entertainment.

''We now know what works and have dropped anything that doesn't work'', Higginson says.

''It's all about focus''.

''What we've said to the entire team is that this is about focusing in on the stuff that we're getting good results from ... every day that goes past we get more and more evidence of what we're doing is right''

''This is a tipping point business - once we hit that break-even then everything else just flows straight to the bottom line''.

]]> Shopify bags share price gains after favourable broker research stampede Wed, 15 Feb 2017 20:53:00 +0000 Endeavour Silver coverage from Canaccord on bullish market prices Wed, 26 Oct 2016 18:28:00 +0100 PayPal stock downgraded as growth factors are passe Mon, 19 Sep 2016 21:30:00 +0100 Some clouds might have a silver lining, according to Wedbush Thu, 01 Sep 2016 21:50:00 +0100 Broker spotlight – AB Foods, Ophir Energy, Enquest, Premier Oil, BHP Billiton, Rio Tinto Fri, 29 May 2015 08:57:00 +0100 Northland Capital Partners View on the City Rockwell Diamonds and Nektan Fri, 29 May 2015 07:14:00 +0100 Rockwell Diamonds (TSE:RDI) – CORP: FY15 results

Market Cap: CAD$12m; Current Price: 23c

Saxendrift to wind down as Remhoogte/Holsloot wind up

  • Loss for the year attributable to equity holders of parent Co. (14.0) (9.4) 49
  • Source: Northland Capital Partners estimates
  • Rockwell expects to close the acquisition of the Remhoogte/Holsloot Project at the end of May 2015 as all the conditions precedent have been met.
  • The declining grades at Saxendrift mean that Rockwell is planning to reduce operations at the Mine and redeploy the plant at its other development projects.
  • Forecasts, rating and price target remain under review.

NORTHLAND CAPITAL PARTNERS VIEW: Wednesday’s announcement was the start of what we hope will be the rebirth of Rockwell Diamonds. FY15 has been difficult year for Rockwell with a 54% increase in total income for the Company YoY outweighed by a 52% increase in total costs, resulting in a 49% increase in the attributable loss YoY. During the financial year the Company closed the Saxendrift Hill Mine, put Niewejaarskraal on care and maintenance while the geological model is refined and the processing capacity is increased and is now looking to close operations at the flagship Saxendrift Mine due to the declining grades. The securing of a bridge financing facility (27/05/15) is a major development for Rockwell Diamonds that allows the Company to close the acquisition of the Remhoogte/Holsloot Project, associated fleet and three plants. Once Rockwell closes the transaction with Bondeo, expected at the end of May 2015, and owns the projects outright it should then be easier for the Company to secure a longer term finance facility. The acquisition of the Remhoogte/Holsloot Project will be a transformational event giving the Company a higher margin operation that should move Rockwell forward.


Nektan (LON:NKTN): Financing

Market Cap: £37m; Current Price: 166p

£8m financing complete 

  • Nektan raised a further £0.9m through the fundraising over-allotment which will be used to further support the growth strategy. The amount consists of £0.75m non-VCT convertible loan notes at the same terms as the previous notes announced on 28 April 2015. Furthermore, a total of 89,552 new ordinary shares have been placed at 167.5p (£0.15m) makes up the remainder.
  • This takes the total funds raised to £8m including the financing of c. £6.7m from existing, new institutional and private shareholders announced on 28 April 2015, of which a proportion to the value of £4.7m was comprised of convertible notes at c. 167.5p and a DTL loan facility for a further £0.6m. DTL has agreed to exchange £0.45m of the remaining £0.6m drawdown under the loan facility for a subscription of non-VCT notes of equivalent value.
  • The funding will support the Company’s expansion in the US tribal and commercial casino market where it has now signed 18 contracts and/or letters of intent with licensed casino operators. Furthermore, the funding will support the continued growth of the Company’s European business where 16 white label partners have gone live on the Evolve platform with a further 14 contracts signed in the past 90 days and finally the funding will enable the business to launch its partnership with The Sun in the UK where it will operate white-label real money gaming from the end of the current financial year (June 2015). 

NORTHLAND CAPITAL PARTNERS VIEW: As alluded to previously despite the funding (£8m) being secured at what looks to be a c. 29% discount to the IPO price in November 2014, the additional funding not only puts the business in a good position to execute on recently signed contracts in the US and white-label solutions in Europe but also provides additional firepower for further growth so the news should be well received by the market in this regard.     

]]> Avago Agrees to Buy Broadcom for $37 Billion Fri, 29 May 2015 07:04:00 +0100 Avago Agrees to Buy Broadcom for $37 Billion 

This article by Dana Mattioli, Dana Cimilluca and Shayndi Raice for the Wall Street Journal. Here is a section:

Neither Avago nor Broadcom has the kind of dominance over individual markets that better-known rivals such as Intel Corp. and Qualcomm Inc. enjoy, and a merger could help address that. In addition to consumer applications, Broadcom supplies the vast majority of chips used in the latest networking switches found in corporate data centers, a fast-growing business that could enhance Avago’s communications-focused revenue stream.


Researcher Dealogic estimated before the deal was announced that an acquisition of Broadcom valued at $35 billion would be one of the largest semiconductor takeovers ever, coming amid a burst of deals among such companies. So far this year, there have been more than $26 billion in semiconductor deals announced globally, not including the tie-up between Broadcom and Avago, according to Dealogic. That is more than double the volume in the same period last year and the largest year-to-date total since Dealogic started keeping records in 1995.

Eoin Treacy's view 

With interest rates so low and corporate spreads no longer contracting there has seldom been such an opportune time to borrow money. The flip side is that prices have increased in line with increased activity. Nevertheless demand for chips remains robust as the number of connected devices remains on a secular growth trajectory in line with the Internet of Everything theme.

Broadcom had been confined to an almost 15-year base and it took an acquisition to push it to new recovery highs. This helps to illustrate how focused the bull market has been on a select group of companies. As prices increase it is inevitable investors will look for promising companies that have not yet rallied which may represent catch-up potential.

Avago remains in a reasonably consistent uptrend and while somewhat overextended relative to the 200-day MA at present, a sustained move below $110 would be required to question medium-term scope for additional upside.

The results of this Chart Library Filter of the Nasdaq Composite Index highlight that there are a number of shares with similar long-term base formation completion characteristics. 


What Google Just Announced Is a Bombshell 

This article by Joshua Topolsky for Bloomberg may be of interest to subscribers. Here is a section:  For instance, while listening to music in Spotify you can search for more info on an artist, or if you're talking about a restaurant in WhatsApp, Google can pull up data on the place and even help you make reservations. And this is not a feature of the app itself, rather a helper that lives inside of the entire operating system.

This is a major move for two reasons. The first is that it really brings Google back to a place of dominance as the glue that holds your digital life together. The web has thrived and grown in no small part because of Google's ability to track, organize, and understand all of its disparate pieces. Now it's able to do the same thing with every app running on your phone. It allows Google to get back into the search game by speaking the common language of apps. It gives the company a second life with access to user behavior and needs.

But secondly, it starts to show how Google can be an interconnecting layer between the apps themselves — a kind of neutral staging ground between one action and another. This is a sea-change for how we use our mobile devices and how mobile apps interact with one another. Currently, we use OS-defined tools which let apps interact with each other (with rules defined by the OS-makers, not developers). But imagine if developers didn't have to think about how their work connects to the rest of your world? Imagine if Now on Tap is aware enough of the core functions of those apps that it can predict what you'd most likely want to do with them, and then execute on those needs?

Eoin Treacy's view 

We have become somewhat inured by Google’s announcements of what can realistically be described as vanity projects; plans for a massive new headquarters which had to be shelved being the most recent. However today’s release is important because it takes Google back into where it makes the vast majority of its money. I downloaded the Google search app onto my phone last week. The linking together of various different elements of search results is a positive development in my opinion. I’ve been using it more as a result and this type of user engagement should be beneficial for the company’s bottom line. 


China Most-Wanted: Nabbed in New Jersey 

This article from Bloomberg News may be of interest to subscribers. Here is a section: China’s most-wanted fugitive, an official accused of embezzling more than $40 million, is in U.S. custody, according to the Communist Party’s anti-graft agency.

Yang Xiuzhu, who fled China in 2003, was detained after entering the U.S. using a fake Dutch passport last year, according to the party’s Central Commission for Discipline Inspection.

In the first confirmation of Yang’s whereabouts in a decade, the commission’s International Cooperation Department said she escaped from detention in the Netherlands in May 2014 - - after being rejected for political asylum and before she could be sent back to China.

Eoin Treacy's view 

Considering the vast sums of money that change hands within state owned organisations my first reaction to this news was “Is that all?” $40 million might sound like a lot of money but is in fact very little when one thinks about the personal and family wealth accrued by the ruling cadres.

Nevertheless this is a PR coup for the Chinese administration. China’s anti-corruption chief and Politburo member Wang Qishan announced in March he will be visiting the USA this summer. Following today’s news we can now put that visit in a wider context. The Party wishes to throw media attention on members who have absconded with millions of Dollars while ensuring that the process of internal reform sustains the status quo. 


The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  I think all investors will benefit from guest speaker David Brown’s new presentation. I learned from it, not least how to assess some familiar data more clinically.  In other words, he shows us how to think a little more clearly, particularly in terms of identifying bear markets near their tops.  This is never easy given all the emotions involved.  Many people jump the gun, as you will have seen over the last few years, which can leave them susceptible to overstaying when the important and often overlooked warning signs are flashing.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  

]]> Broker spotlight, including Direct Line, Admiral, Zoopla and Intertek Thu, 28 May 2015 08:03:00 +0100 Broker heavyweight JP Morgan Cazenove has its sights on UK insurers and has dialled up Direct Line (LON:DLG) with an upgrade.

It moves the shares to 'overweight' from 'neutral' prevously, while the target is punted up to 349p from 240p.

"UK non-life insurers are facing a tough environment at the moment, with all the profit drivers (i.e. underwriting, investment income and ancillary income) under pressure," says analyst Ashik Musaddi.

But  any hint of rising pricing would be good for any pure play motor insurers such as Direct Line, Admiral, and Esure.

Admiral (LON:ADM) has its target driven upward to 1,388p from 1,134p while the rating remains 'underweight'.

Esure (LON:ESUR) is kept at 'overweight' with  the target lifted to 299p from 280p.

US broker gives property portal Zoopla (LON:ZPLA) a kick today, raising the target to 400p from 269p and repeating a 'buy'.

"In our view, the acquisition of uSwitch has raised the bar with respect to the services offered by property portals and enhanced the customer journey. We also believe that this enhanced offering will be very difficult for its competitors to replicate or match. We expect the acquisition to be significantly earnings enhancing," it said in a note.

On the downgrade front today, Deutsche is downbeat on Intertek (LON:ITRK), downgrading the stock to 'hold' from 'buy'. The target price is also reduced to 2654p from 2725p.

"We believe that there is a considerable opportunity for the incoming CEO, André Lacroix, to effect a degree of cultural change in the business (more focus on cross selling, possible changes to incentive structures) but that this may take sometime to effect and is now partly priced in," the broker said.

]]> Northland Capital Partners View on the City Arian Silver, Mariana Resources, MotifBio, DiamondCorp and others Thu, 28 May 2015 07:14:00 +0100 Motif Bio plc (LON:MTFB) - BUY*: FDA minutes confirm Phase 3 programme

Market Cap: £21m; Current Price: 33p; Target Price: 89p 

FDA meeting minutes confirm iclaprim Phase 3 clinical development programme

  • Motif announced today that it received the official meeting minutes from the U.S. Food and Drug Administration (FDA) guidance meeting which was held on 14 April 2015. 
  • The minutes confirm the FDA's agreement with Motif's Phase 3 clinical development programme for iclaprim - Motif’s flagship broad-spectrum antibiotic designed to be effective against multi-drug resistant bacteria. 
  • Iclaprim is being developed as an intravenous (IV) formulation to treat acute bacterial skin and skin structure infections (ABSSSI) and hospital acquired bacterial pneumonia (HABP) - two serious and life threatening infections caused by multi‐drug resistant bacteria. 
  • The FDA confirmed that two successful Phase III trials are required for the approval of the drug. 

NORTHLAND CAPITAL PARTNERS VIEW: iclaprim is set to fill a major market void in the battle against antibiotic resistance. If approved, the drug could achieve over $1bn/year in sales. Today’s FDA minutes confirm the regulator’s support for Motif’s programme. We maintain our BUY rating and 89p price target.


DiamondCorp (LON:DCP) – BUY: Update note

Market Cap: £36m; Current Price: 11.3p; Target Price: 16.4p (from 17.7p) 

FY14 results reflect last years the progress toward production

  • Forecasts and price target downgraded to 16.4p (from 17.7p). BUY rating maintained.

NORTHLAND CAPITAL PARTNERS VIEW: DiamondCorp’s FY14 results reflect the progress towards production made last year with a LBT of £3.3m. This was higher than our expectations (£2.4m) due to a £1.7m fair value adjustment that relates to the convertible bonds that outweighed the substantial £0.9m reduction in corporate expenditure against our forecasts. The Company’s net debt position of £21.9m was noticeably higher than the £14m we had previously forecast, largely a result of the increased capital cost in FY14 associated with the changes to the development schedule for the Lace Diamond Mine combined with an increase in the carrying value of the convertible debt. While these results reflected the development of Lace from last year, this year will see maiden production from the Upper K4 kimberlite at Lace that is expected to commence in H215. The extraction of diamonds during the ramp of production from the Upper K4 kimberlite is being treated as a credit to capex and not revenue. As a result, our headline forecasts do not reflect the cash generative nature of the business with Lace generating US$5.8m to fund development capital expense. We have made a number of changes to our valuation DiamondCorp following the FY14 results and the net effect is a downgrade to 16.4p (from 17.7p). In our view, the Company is still significantly undervalued with our revised price target offering 46% upside to the current price of 11.3p.


Arian Silver (LON:AGQ) – CORP: Q115 results

Market Cap: £10m; Current Price: 30.5p 

Q115 reflect the development of the San José Mine 

  • PBT for Q115 increased to US$1.9m compared to a LBT of US$1.1m in Q114, due to a US$3m fair value adjustment in relation to the derivative liability associated with the Quintana loan note and BMPA.
  • Net debt increased to US$24.5m in Q115 from US$21.7m in Q114.

NORTHLAND CAPITAL PARTNERS VIEW: The Q115 results reflect the significant transition Arian Silver has gone through in the first part of 2015. During Q115, Arian was focused on the continued development of the San Jose Mine and commissioning of the silver-lead circuit La Tesorera processing plant. In Q215, we expect first production from the zinc circuit as part of the commissioning process. Arian expects to start recognising production and revenue as part of the ramp up phase of operations during Q215 at it moves the mine towards commercial production.


Rockwell Diamonds (TSE:RDI) – CORP: FY15 results

Market Cap: CAD$11m; Current Price: 21c 

From yesterday: Secures bridge finance for the Remhoogte/Holsloot acquisition 

  • Rockwell expects to close the acquisition of the Remhoogte/Holsloot Project with Bondeo 140cc at the end of May 2015 as all the conditions precedent have been met and regulatory approvals granted.
  • The cost of the acquisition has been lowered to US$21.9m (from US$29m) through the exclusion of some of the earth moving fleet being acquired and the deferment of the acquisition of the Bo-Karoo property pending regulatory approval. The revised transaction will comprise of US$12.2m for the mineral rights and three processing plants and US$9.7m for earth moving fleet. Rockwell will also sell the Saxendrift Extension property to the vendors of Remhoogte/Holsloot for $0.5m.
  • Rockwell has secured a bridging loan for US$16.5m from key shareholders Diacore (US$15m) and Rockwell’s Chairman Mark Bristow (US$1.5m) to meet the revised purchase consideration and working capital. The initial term of the loan is three months, extendable for a further month. Interest is payable at 1.25% per month for the first period.
  • Rockwell plans to refinance the bridging loan in Q215. Should Rockwell not be able to refinance the by the end of August 2015 the providers of the bridging loan will be repaid from 25% of the sales of rough diamonds and 100% of the beneficiation income until the loan is fully repaid.
  • Forecasts, rating and price target remain under review.


Mariana Resources (LON:MARL) – SPECULATIVE BUY: FY14 results

Market Cap: £19m; Current Price: 2.5p

LBT in line with FY13

  • LBT of £6.8m in FY14 is comparable with £6.9m in FY13.
  • Net debt of £0.6m in FY14 was compares to net cash of £2.7m in FY13. 
  • No change to rating.

NORTHLAND CAPITAL PARTNERS VIEW: Nothing unexpected in Mariana Resources’ results from last year. Since the period end the Company completed a £1.8m placing in February providing what should be sufficient cash for the year. Mariana is currently focusing its attention on the 10,000m drill programme at the Hot Maden project located in North eastern Turkey that has continued to deliver exciting results. At its other projects in Peru, Suriname, Argentina and Chile Mariana has re-prioritised work to ensure that the Company has a cash buffer in the near term. This ensures that Mariana will be able to finance its share of the next phase of exploration at Hot Maden, post the 10,000m drill programme that is being funded by joint venture partner Lidya as part of its earn in to the project.

Connemara Mining Company (LON:CON) – CORP: Inishowen update

Market Cap: £0.9m; Current Price: 1.6p 

Initial results from Inishowen Gold Licences

  • Initial results from sampling of quartz vein boulders at the Inishowen Gold Project, located near Donegal, Ireland, returned grades including; 15.35g/t Au, 6.99g/t Au, 4.52g/t Au and 5.42g/t Au.

NORTHLAND CAPITAL PARTNERS VIEW: Positive initial results from Connemara Mining Company demonstrating the project justifies further work. Prospecting work is ongoing and the Company expects that Geophysics and additional sampling will be required to identify potential drill targets.

]]> EC Official Denies Greek Government Statement That a Deal Is Close Thu, 28 May 2015 07:12:00 +0100 EC Official Denies Greek Government Statement That a Deal Is Close 

This article by Nikos Chrysoloras, Eleni Chrepa, Rebecca Christie for Bloomberg may be of interest to subscribers. Here is a section:  The euro gained 0.2 percent to $1.0889 as of 4:58 p.m. London time. Greek two-year notes rose, pushing the yield 114 basis points lower to 23.77 percent. Greek shares also climbed, with the benchmark Athens Stock Exchange gaining 3.6 percent at the close of trading.

“Everyone was scared Greece was close to leaving the euro zone,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “Just some hope is pushing the market up. They seem to be trying to do anything possible to keep Greece in the euro zone.”

U.S. Treasury Secretary Jacob J. Lew, who spoke Wednesday with Tsipras for the second time in less than a week, said he’ll push for movement in the standoff at a Group of Seven gathering of finance ministers and central bank governors in Germany.

“It’s time for everyone to park the rhetoric on the side and look for that sensible place where accommodation can be found,” Lew said at an event in London. “No doubt the worst and deepest consequence would be to Greece. But it’s profoundly in the interest of the European and global economy for the accident to be avoided.”

Eoin Treacy's view 

How the Europeans are going to resolve the Greek tragedy is still weighing on sentiment. Since they have patched over disputes at the last minute on every other occasion the market is beginning to price in the potential that this time will be no different.

Greece’s ability to make the next payment to the IMF is contingent on funds being released from their bailout package to fund it. This is a robbing Peter to pay Paul strategy but is unfortunately the reality of the Eurozone’s approach to the crisis. It means that the reforms demanded of Greece are where the crux of the argument lies and they will have to deliver if they are to expect leniency. 

Yen slides to lowest level in nearly 8 years 

This article from the Nikkei News service may be of interest to subscribers. Here is a section A weak yen used to provide a shot in the arm when Japan's economy depended heavily on exports. With production shifted offshore, the country has moved to an investment-driven growth model. Yet the weak currency still serves as a tail wind for exporters. Heavy machinery maker IHI assumes a rate of 115 yen to the dollar for the year through March 2016. If the yen remains weaker than this, operating profit will likely end up higher than the projected record high of 90 billion yen ($733 million).

But Honda Motor offers a contrast. Exports at the automaker accounted for a measly 3% in fiscal 2014, making currency fluctuations a small matter. Panasonic also has moved manufacturing overseas, particularly for products marketed there, shrinking the impact of foreign exchange rates to less than one-fifth the company's previous level.

"Exports are having a hard time growing in terms of volume, while its effects on capital investment and jobs are weak," said Masaaki Kanno at JPMorgan Securities Japan, referring to the yen's recent slide.

Nonetheless, publicly traded companies here expect combined pretax profit to grow 9% for fiscal 2015 to a second-straight all-time high. A weaker yen may even send profit growth into double digits.

Eoin Treacy's view 

The US Dollar completed a six-month range yesterday to break out to new recovery highs against the Yen, unwinding just about all of the credit crisis devaluation in the process. This remains a consistent trend and a sustained move below ¥120 would be required to begin to question medium-term scope for continued outperformance. 


Barrick deal fulfills Thornton aim of forging China link 

This article by Simon Casey for Bloomberg may be of interest to subscribers. Here is a section Barrick said Tuesday that Zijin will buy 50 percent of its interest in a Papua New Guinea mine for $298 million. Looking ahead, Toronto-based Barrick and Zijin will evaluate opportunities for future cooperation, including the potential to jointly construct mines. Barrick said it may take advantage of Zijin’s access to “low-cost capital from Chinese institutions.”

“A twenty-first century mining company with global reach and the intention to become an industry leader must, by definition, have a distinctive relationship with China,” Thornton said Tuesday in a statement.

Even before Thornton took over as chairman last year, succeeding Barrick founder Peter Munk, he was looking to build links with China. That’s a recognition of the nation’s growing importance not just as a user of key commodities but also as a producer. While Barrick has long been the world’s largest gold producer ranked by sales, Zijin is catching up fast and is now the second-biggest, according to data compiled by Bloomberg.

Eoin Treacy's view 

China is among both the largest consumers and producers of gold so it makes sense for Western companies to wish to gain access. They have an added incentive as access to additional capital for either acquisitions or expansion dwindles. Meanwhile Chinese companies are well capitalised and have access to attractive borrowing terms.

Barrick Gold needed this deal more than Zijin and the response of the respective share prices bears this out. Barrick has been ranging between $10 and $13.30 since November and pulled back from the region of the 200-day MA last week. It will need to sustain a move above that level in order to signal a return to demand dominance beyond the short-term  


Email of the day on how to make best use of the Service 

I am trialing your service. You speak in the daily service about your and David's favourite views. Could you tell me where I can find these and also could you recommend how I can get the best understanding of value from your site. Many thanks.

Eoin Treacy's view 

Thank you for taking the time to trial our service. FullerTreacyMoney is content rich so we understand that it may be overwhelming for new subscribers to figure out how best to use what we offer.

Every day we post a number of articles in Comment of the Day which we believe are of interest either in themselves or because they related to major issues or investment themes. We record a daily audio commentary to put what happened that day in context and to point our short-term movements in the market. As someone just getting acquainted with the Service I would suggest listening to one of the Friday Audios. This is when we put forward our longer-term outlook for the various different asset classes and would be the most accessible way of figuring out where we stand on various topics.   

I would also suggest playing around with the Chart Library. Add instruments you are interested in to your Favourites so you can monitor your portfolio and watch list. Our comprehensive globally oriented Chart Library is updated daily with close to 15000 stocks, bonds, indices, funds, currencies and commodities.

We also tell you exactly what we are doing with our own money both from a trading and investment perspective as it happens.

We spend a great deal of time identifying investment themes and have a strong record of being early. If you click on the Investment themes tab in the main menu (located in the middle of the black bar) you will be presented with two different category searches. Every article we write is categorised by whether it falls into one of our major themes (Energy, Technology, Precious Metals/Commodities, Autonomies, China, India, Japan etc.) as well as into individual “Tags”.

For example if you are interested in the broad China sector. The vast majority of the articles we write relating to the topic can be found under the China tab. If you are interested in an individual subject or company such as Citic Securities you can search the Tags for the name of the company or subject. You can also browse the Tags by clicking on one of the letters on the Investment Themes page.  


The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  I think all investors will benefit from guest speaker David Brown’s new presentation. I learned from it, not least how to assess some familiar data more clinically.  In other words, he shows us how to think a little more clearly, particularly in terms of identifying bear markets near their tops.  This is never easy given all the emotions involved.  Many people jump the gun, as you will have seen over the last few years, which can leave them susceptible to overstaying when the important and often overlooked warning signs are flashing.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  

]]> Broker spotlight - Tesco, Sainsbury, Morrison, Weir, Beazley, Hiscox, Homeserve Wed, 27 May 2015 07:50:00 +0100 JP Morgan Cazenove upgraded niche insurers Beazley (LON:BEZ) and Hiscox (LON:HSX); both are now rated as ‘overweight’.

Beazley’s target price increases to 308p from 255p, and for Hiscox it is lifted to 950p from 801p.

Amlin’s (LON:AML) rating is left unchanged at neutral by the broker, though the price target is nudged slightly higher to 475p from 470p.

Homeserve (LON:HSV), the emergency repair firm, meanwhile, had its price target increased to 490p from 440p by Citigroup. A ‘buy’ rating was repeated.

Energy sector engineer Weir (LON:WEIR) was downgraded to ‘hold’ from ‘buy’, by Deutsche Bank.

Nomura’s shopping list remained unchanged as it assessed the supermarkets, though there were some minor adjustments.

Tesco (LON:TSCO) and Sainsbury (LON:SBRY) remain as ‘neutral’ picks though the targets mover up slightly to 195p and 220p respectively, while Morrison (LON:MRW) remains a ‘buy’ and its target increases to 280p from 260p.

]]> Northland Capital Partners View on the City Hummingbird Resources, Premier African Minerals, MotifBio, Rame Energy and others Wed, 27 May 2015 07:15:00 +0100 Motif Bio plc (LON:MTFB) – BUY*: Initiation of coverage

Market Cap: £20m; Current Price: 31p; Target Price: 89p

  • We initiate coverage with a BUY rating and 89p price target  
  • Global antibiotic resistance crisis: antibiotic resistance has become a major public health concern, with close to 50,000 deaths annually across Europe and the US attributed to the problem. Despite this looming crisis, the global pipeline of novel antibiotics is insufficient, creating an opportunity for specialist drug developers, such as Motif.
  • Iclaprim addresses desperate need for novel antibiotics: Motif’s flagship late-stage antibiotic, iclaprim, targets an underutilised mechanism of action making it less susceptible to developing antibiotic resistance. The drug has already been tested on over a thousand patients, providing considerable evidence to support its safety and efficacy. Iclaprim is expected to commence phase 3 trials in H2-2015. 
  • Grossly undervalued: we believe that Motif is grossly undervalued. Our risk-adjusted DCF analysis indicates a fair value of 89p/share, indicating 187% upside to the current share price. Moreover, Motif’s closest peer, NASDAQ-listed Paratek, trades at a substantial premium to our target value for Motif.

NORTHLAND CAPITAL PARTNERS VIEW: In the wake of a major global public health crisis driven by rampant antibiotic resistance, Motif’s late clinical-stage antibiotic, iclaprim, is set to fill a major market void. Having already been tested on over a thousand patients, iclaprim’s safety and efficacy is well supported. If approved, the drug could achieve over $1bn/year in sales. We initiate coverage with a BUY rating and 89p price target.  


Premier African Minerals (LON:PREM) – SPECULATIVE BUY: Initiation

Market Cap: £13m; Current Price: 2.4p

  • Production expected in June

NORTHLAND CAPITAL PARTNERS VIEW: Premier African Minerals (Prem) is now fully funded to move the RHA Tungsten Project, located in Zimbabwe, into production in June 2015. The open pit will have an estimated life of twenty-two months producing around 120,000mtu of tungsten. The funds generated from the open pit operation will be used to cover corporate overheads, delayed capex and as a contribution towards the cost of developing the larger underground operation at RHA. This underground operation is expected to result in the production of around 100,000mtu per annum for over twelve years. Based on the near term nature of production, the low operational and capital cost of the RHA project we initiate coverage of Premier African Minerals with a SPECULATIVE BUY rating.


Rame Energy (LON:RAME) – CORP: Raki/Huajache update

Market Cap: £9.1m; Current Price: 9p

  • Final grid certification pending; positive wind data on next projects
  • Certification for the final grid connection for the 15MW Raki/Huajache wind projects (where Rame has a 20% stake) is pending. The nature of the Raki/Huajache projects (they are electrically separate for qualification under the Chilean renewable energy regulations (PMGD) but share a newly built collector substation onsite) has led to a slight delay – this is the first such situation in Chile and has necessitated more legal definition and technical input. The minor modifications to the substation required are expected to be completed shortly.
  • EKA, the counterparty to the PPA, has agreed to delay the PPA start date to allow for the final completion. The JV partners (Santander Investment Chile Limitada and Rame) have now agreed on completion dates tied to a final commercial account with the EPC contractor Vestas. The agreement is still subject to final approval within Santander, which is imminent, and anticipates commencement of energy sales in the middle of June. 
  • Rame has been gathering further wind data at the next potential project sites in the Santander portfolio (133MW total). Following the installation of taller masts (112m) the actual data gathered over seven months indicates a ≥25% increase in annual energy production against previous assumptions for the next two projects (totalling 54MW). This could correspond to a significant increase in the NPV of the projects. The new data is being analysed to conclude turbine selection and Rame has started the consultation programme with local government and nearby communities.

NORTHLAND CAPITAL PARTNERS VIEW: The Raki/Huajache project is now nearing completion with the close out of the EPC contract and the modifications to the substation required to meet the PMGD regulations to gain certification. The project has been a learning curve for various parties and will mark Rame’s transition from an EPC to a niche Independent Power Producer (IPP) targeting 300MW in three years. The additional wind data on the next 54MW of projects suggests higher levels of energy production and hence a higher NPV on the next two projects. As previously argued, there is considerable funding interest in the Chilean renewables market and Rame has proven experience and expertise and a large portfolio of projects at various stages. This progress and potential is not reflected in the current price.


Hummingbird Resources (LON:HUM) – BUY: FY14 Results

Market Cap: £33m; Current Price: 35p; Target Price: 82.4p

  • Change in year end
  • Hummingbird Resources has changed its financial year-end to bring it in line with its subsidiary companies. It will move from the 31st May to the 31st December. As a result, the Company reports in these results as seven months to the 31st of December 2014. 
  • LBT for the seven months to 31st December 2014 was US$3.4m, which appears in line with the results for the twelve months to 31st May 2014. Net debt or the seven months to 31st December 2014 was US$20.6m, which is up from US$10.4m in the results for the twelve months to 31st May 2014.
  • Our forecasts will now be updated to bring them in line with the new year-end. Rating and price target maintained.

NORTHLAND CAPITAL PARTNERS VIEW: It is difficult to give a detailed review of these results compared to our forecasts due to the change in year-end but these results appear broadly in line with our expectations.


DiamondCorp (LON:DCP) – BUY: FY14 results

Market Cap: £35m; Current Price: 10.8p

  • From yesterday: FY results reflect development progress at Lace
  • LBT of £3.3m for FY14 was up from £2.6m in FY13 and higher than our forecasts of £2.4m largely due a £1.7m fair value adjustment that outweighed a reduction in corporate expenditure.
  • Net debt increased to £21.9m in FY14 from £11.6m in FY13 noticeably higher than the £14m we had forecasts due to increase in capex associated with a change in the development schedule.
  • Forecasts and price target under review. BUY rating maintained.

NORTHLAND CAPITAL PARTNERS VIEW: While these results reflected the development of Lace during last year, this year will see maiden production from the Upper K4 kimberlite at Lace that is expected to commence in H215. The impressive growth profile for DiamondCorp’s production will see production increase 547% in two years from around 68,000cts in 2015 to 440,000cts in 2017. We continue to believe the Company looks undervalued.

]]> Bond Traders Uncover Secret to Rates That Fed Just Does Not Get Wed, 27 May 2015 07:06:00 +0100 Bond Traders Uncover Secret to Rates That Fed Just Does Not Get 

This article by Daniel Kruger for Bloomberg may be of interest to subscribers. Here is a section:  That pessimism has been reflected in yields on the 10-year note, which are still well below their most recent peak of 3.05 percent last year. They were at 2.18 percent as of 6:30 a.m. in New York on Tuesday, according to Bloomberg Bond Trader data.

“The Fed has opinions; the market has positions,” said Jack McIntyre, who helps oversee $45 billion at Brandywine Global Investment Management in Philadelphia. “If the data doesn’t show marked improvement soon, they’re going to get pushed back into 2016.”

Fed Chair Janet Yellen said Friday she still expects to raise rates this year if the economy meets her forecasts, with a gradual pace of tightening to follow.

Eoin Treacy's view 

Everyone seems to be talking about when the Fed’s first rate hike will be. However I don’t think this is the most relevant question. The bigger question is when the Fed’s second rate hike will be. The economy is doing a bit better and wages are beginning to rise. One the other hand the disinflationary pressure of lower commodity prices and the stronger Dollar has so far stayed the Fed’s hand. 

The Fed will need to begin to remove monetary accommodation if it wishes to avoid inflating an asset price bubble. This might be the deciding factor in whether they decide to raise rates in September or not. Following the first hike they will then probably wait and see what effect it has on asset prices. It could be a while before they raise rates again and it is reasonable to assume the pace of the advance will be slower than what we saw from 2003 onwards. 


IMF Says Yuan No Longer Undervalued Amid Reserve-Status Push 

This article by Fion Li for Bloomberg may be of interest to subscribers. Here is a section:

The yuan still has some way to go before it can become a major reserve currency, former Federal Reserve Chairman Ben S. Bernanke said Tuesday in Taipei. The IMF requires that a currency is “freely usable” to be included in its SDR basket.

Endorsement by the Washington-based lender would lead to about $1 trillion being switched into Chinese assets over the next five years, according to an estimate this month from Standard Chartered Plc. AXA Investment Managers estimated some 10 percent of the $11.6 trillion of global reserves would flow into yuan assets, though it didn’t give a timeframe.

China should allow greater flexibility in its exchange rate, with intervention limited to avoiding disorderly market conditions or excessive volatility, said the IMF’s China mission, which is led by the lender’s deputy director of Asia and Pacific Markus Rodlauer. The statement said it contains the views of the IMF staff involved and has not yet been endorsed by the institution’s board.

The yuan rose 0.6 percent versus the dollar in the past 12 months, while Brazil’s currency dropped 28 percent and Russia’s slid 32 percent. China’s productivity will probably rise more rapidly than the rest of world so its exchange rate will need to appreciate to take account of that, David Lipton, the IMF’s No.2 official, said at a briefing Tuesday in Beijing.

Eoin Treacy's view 

By remaining relatively steady against the Dollar over the last year, the Renminbi has appreciated against a wide basket of other currencies not least the Euro, Yen and Korean Won which account for more of its trade than the US Dollar. The currency has unwound almost the entire 1993 devaluation suggesting that the CNY6 level relative to the US Dollar is probably about as strong as the Chinese want to see the currency. 


Email of the day on London housing prices 

Dear David, As you are based in London and well placed to view the situation do you agree with Jim Mellon's opinion that the London real estate sector is both overheating and over leveraged? He is also positive on Some areas of European property which is probably fairly consensus due to the current global QE game of pass the parcel from USA/UK to the EU. I can personally report from Spain a notable pick up in real estate activity from foreign buyers and the re emergence of many high street estate agents (closed since 2008/9) which is almost always a leading indicator on property activity (in both directions as I saw in Dublin 2008). I am currently happily invested in Foxtons which is still benefiting from the election feel good factor but watching it like a hawk (AKA Estate agent). best regards

Eoin Treacy's view 

David is on holiday at present in the beautiful Welsh countryside but I’ll bring your email to his attention when he returns. Here are my thoughts:

As a truly global capital London property has benefited from its attraction to foreign investors, the proximity of the City with its outsized pay structure, low interest rates on a global basis, an expanding population and the absence of a building boom have all contributed to London’s high price environment.

This chart of London property prices highlights the fact they have risen by 140% in 13 years from 2002. They have paused over the last year in what is so far a reasonably gradual process of mean reversion. 

This chart of UK Nationwide Average House Price Index has been largely rangebound since 2007 and will need to hold the £180,000 level if the breakout to new highs is to be given the benefit of the doubt.


Email of the day on robotics and the Eoins Favourites section of the Chart Library: 

Regarding your optimism of the robotics and tech story and the prospects of the likes of FANUC in Japan, could you recommend a UK based investment vehicle to access FANUC and its peers? Also could you explain the criteria on the "Eoin’s favourites" section of the chart library?, I am assuming that they are favourites as in best of class as opposed to just favourites/watchlists from a both long and short perspective? Best regards

Eoin Treacy's view 

Thank you for these questions which I’m sure will be of interest to subscribers. Let me take them in reverse order. 

Over the years every time I have posted a review of a stock market sector I created a section in my Favourites so that I could easily return to the list in future. At The Chart Seminar I use my Favourites to go through examples of Commonality and to review sectors of interest to delegates. One of the most common requests in the feedback we get is that subscribers would like to have access to my Favourites list rather than recreating their own. With that in mind I started recreating the various sections from my Favourites in the main Chart Library about six months ago.

All of my lists of Dividend Aristocrats, Dividend Champions and Dividend Contenders can be found here.  

The Eoin’s Favourites section contains the lists I have so far entered. It’s not complete yet but it is meant to function as a resource rather than a recommendations list. 


Audi claims first synthetic gasoline made from plants 

This article by Eric Mack for GizMag may be of interest to subscribers. Here is a section: In late 2014, Global Bioenergies started up the fermentation unit for a pilot program to produce gaseous isobutane from renewable biomass sugars such as corn-derived glucose. Gaseous isobutane is a sort of raw material for the petrochemical industry that can then be refined into a variety of plastics, fuels and other applications.

The next step in the process was to run the material through a conditioning and purification process, allowing it to be collected and stored in liquid form under pressure. Some of it was then sent to Germany to be converted into isooctane fuel, creating a pure, 100 octane gasoline.

"To me this is a historic moment," says Global Bioenergies CEO Marc Delcourt. "It is the first time that we have produced real gasoline from plants."

Isooctane is currently used as an additive to improve fuel quality, but could also be used a stand-alone fuel. Audi calls the final, refined form of the fuel "e-benzin" and claims that it burns clean due to its lack of sulfur and benzene. Also, its high grade enables it to power engines using high compression ratios for more efficiency.

Audi will test the fuel composition and conduct engine tests to see how it performs before eventually trying it out in vehicle fleets. Delcourt says he could see it being used in consumer cars on a large scale "very soon."

"We thinking we're bringing green-ness to a field that desperately needs green-ness," says Rick Bockrath, vice president for chemical engineering at Global Bioenergies. "It's basically how we're moving away from an oil-based economy towards something that has a renewable, sustainable future to it."

Eoin Treacy's view 

This follows a story from a month ago talking about how Audi produced a diesel fuel from air and water through a chemical process. Today’s story is a further iteration of this concept.

In the last month we have also learned that artificial photosynthesis has been achieved. Here is a section from an article by Lynn Yarris for Lawrence Berkeley National Lab: 

Scientists with the U.S. Department of Energy (DOE)’s Lawrence Berkeley National Laboratory (Berkeley Lab) and the University of California (UC) Berkeley have created a hybrid system of semiconducting nanowires and bacteria that mimics the natural photosynthetic process by which plants use the energy in sunlight to synthesize carbohydrates from carbon dioxide and water. However, this new artificial photosynthetic system synthesizes the combination of carbon dioxide and water into acetate, the most common building block today for biosynthesis.

“We believe our system is a revolutionary leap forward in the field of artificial photosynthesis,” says Peidong Yang, a chemist with Berkeley Lab’s Materials Sciences Division and one of the leaders of this study. “Our system has the potential to fundamentally change the chemical and oil industry in that we can produce chemicals and fuels in a totally renewable way, rather than extracting them from deep below the ground.”


Email of the day on posting webinars 

I enjoyed your presentation on Webinar very much, very interesting and relatively easy for me to follow. Is it possible you and David can post this type of visual and audio presentation daily, or at least on Friday's for the big picture long term outlook, instead of audio only presentations you do at the moment. Thanks for a great service, from a veteran subscribe.

Eoin Treacy's view 

Thank you for your kind words. I agree that creating a chart illustrated talk would be helpful and we just need to work out the mechanics. One of the greatest impediments would be making sure the audio is captured as a separate file so that it can be uploaded for subscribers who only wish to listen to the mp3 while on the go. I’ll look into how to generate a screencast and save it as a link we can make available to subscribers. If anyone has suggestions on how this might be achieved I be happy to hear them.


The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  I think all investors will benefit from guest speaker David Brown’s new presentation. I learned from it, not least how to assess some familiar data more clinically.  In other words, he shows us how to think a little more clearly, particularly in terms of identifying bear markets near their tops.  This is never easy given all the emotions involved.  Many people jump the gun, as you will have seen over the last few years, which can leave them susceptible to overstaying when the important and often overlooked warning signs are flashing.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  

]]> Broker spotlight including DCC, Royal Mail, Burberry and Glaxo Tue, 26 May 2015 08:24:00 +0100 Energy distributor DCC (LON:DCC) gets an upgrade from analysts at German bank Berenberg today, who lifted the target price on the shares to £5,850 from £4,780.

It comes after the group's acquisition of Butagaz, France’s second largest LPG business and DCC’s largest acquisition to date.

"We believe the lower oil price is putting increased pressure on oil majors to dispose of downstream assets and view DCC, the market leader in Energy distribution in Europe, as a likely beneficiary," said the broker, rating the shares 'buy'.

Royal Mail (LON:RMG) was delivered an upgrade from City firm Cantor, which lifted the rating to 'hold' from 'sell'. Shares in the London-listed postal giant did well in early trades.

Cantor also rose its target price on the shares to 500p from 440p.

Heavyweight JP Morgan Cazenove repeated an 'underweight' rating on GlaxoSmithKline (LON:GSK) and lowered its target to 1,320p from 1,380p previously.

Fashion group Burberry (LON:BRBY) gets its target price slashed to 2,319p today from 2,513p by Goldman Sachs.

Last week, the group's full year results got a disappointed reaction from investors.

Positives on revenues and pre-tax profit were overshadowed by a 1.1% drop in adjusted profits, with FX costs weighing, and a cautious outlook statement.

]]> Northland Capital Partners View on the City: Mariana Resources, Premier African Minerals, W Resources and Melrose Resources Tue, 26 May 2015 07:04:00 +0100 Mariana Resources (LON:MARL) – SPECULATIVE BUY: Hot Maden update

Market Cap: £19m; Current Price: 2.5p 

  • Discovery of another zinc zone and extension gold-copper zone to the south
  • Mariana Resources and its joint venture partner Lidya has completed the first four holes of the Phase II drill programme and is reporting the assay results of the first two holes at the Hot Maden project.
  • The gold-copper shoot appears to be steeply dipping to the west and plunging to the south. Work to date has defined a strike of 225m and it remains open at depth and along strike.
  • HTD-08 was drilled to the north of the two Phase I discovery holes HTD-04 and HTD-05 and has discovered another area of zinc mineralisation located to the west of the gold-copper shoot. The hole then passes below the plunge of gold-copper shoot in to the area of zinc mineralisation to the east of the shoot. Results from the zinc mineralisation to the west of the shoot in HTD-08 include 90.9m at 0.78% Zn. Results from below the gold-copper shoot in HTD-08 include 7.2m at 2.1g/t Au and 1.6% Cu and 8m at 1.8% Cu. Results from the zinc mineralisation to the east of the shoot include 2m at 11.9% Zn.
  • HTD-09 was drilled between the two phase 1 discovery holes. This hole also appears to have also drilled below or on the margin of the plunge of the main gold-copper shoot but still returned relatively positive results that include 22m at 3.1g/t Au and 1% Cu.
  • HTD-10 was drilled between HTD-09 and HTD-05 to further test the continuity. Assay results are currently pending but a visual inspection of the core by the Company and its joint venture partner includes 66m of chalcopyrite and pyrite mineralisation in brecciated andesites with an additional 80m of sulphide bearing andesites.
  • HTD-11 was drilled to the south of the HTD-05 to test for a southern extension to the mineralisation. Assay results are also pending for this hole. However, a visual inspection of the core appears to indicate 125m of chalcopyrite and pyrite mineralisation located within brecciated andesite.
  • No change to rating.

NORTHLAND CAPITAL PARTNERS VIEW: These results are another positive development for Mariana Resources from its Hot Maden project, located in Turkey. HTD-08 has resulted in the discovery of another large area of zinc mineralisation to the west of the gold-copper shoot, with 90.9m at 0.78% Zn (Figure 1). This zinc mineralisation seems to be forming a halo around the gold-copper shoot that now appears to be plunging towards the south. As a result of the shoot’s plunge, it appears that the gold-copper shoot comes to surface between hole HTD-04 and HTD-08 and the gold-copper mineralisation observed in this hole is therefore narrower and lower grade. HTD-09 appears to have been drilled below the plunge of the gold-copper shoot (Figure 2) and a visual inspection of the core from HTD-10 also appears to confirm this with two larger zones of visually inspected sulphide mineralisation. The visual inspection of the core from HTD-11 is a further exciting development that appears to demonstrate the extension of the high grade gold-copper shoot to the south. Based on all the information to date the gold-copper shoot is steeply dipping to the west and also plunges to the south and extends over at least 225m. The mineralisation remains open along dip and along plunge towards the south, so there is further room for further upside.


Premier African Minerals (LON:PREM) – CORP: RHA update

Market Cap: £11.2m; Current Price: 2p 

  • Construction on schedule
  • Processing plant has been delivered to site on schedule
  • Management team induction has been completed.
  • Appropriate Process Technologies, the plant manufacturer, expects to be commissioning the plant by the 03/06/15.
  • Mining continues to progress well.

NORTHLAND CAPITAL PARTNERS VIEW: Premier African Minerals continues to stay on track for its ambitious production target of June for its 45% owned RHA Tungsten Project. With production imminent, Prem looks good value at these levels. 


W Resources (LON:WRES) – BUY: FY14 Results

Market Cap: £8.9m; Current Price: 0.28p 

  • From Friday: Maiden revenue of £1m
  • Maiden revenue of £1m during FY14. LBT increased to £0.6m in FY14 compared to £0.3m in FY13, as a result of the operational loss at La Parrilla and an increase in administrative and finance costs. Net debt of £0.6m in FY14 compared with net cash of £1m in FY13.
  • Company expects to receive approvals for the fast track mine development at La Parrilla in Q415.
  • AGM to be held on 19/06/15
  • Forecasts and price target remain under review, rating maintained.

NORTHLAND CAPITAL PARTNERS VIEW: No surprise in the FY14 results from W Resources. The weaker APT prices during the second half of the year lead the Company to complete a strategic review of its tailings operations with fast track development of hard rock operations at both La Parrilla and Régua cited has the best routes for the Company to achieve its objective of becoming a sizable tungsten producer. The Company is currently advancing its portfolio of projects in Spain and Portugal and further updates are expected shortly.


Management Resource Solutions (LON:MRS) – CORP: Financing update


From Friday: First replacement offer of debt financing received

MRS has received the first replacement offer of debt financing and anticipates receiving further competitive proposals within the next week. This follows the default by Halcyon Capital Management Pty on its contracted obligations to provide the funding for the acquisition of D&M Group.

The facility under negotiation is significantly less than that contracted from Halcyon, reflecting the lower level of equipment financing to be replaced, significantly reduced transaction costs and a smaller working capital facility. MRS and the vendors have also agreed in principle to revise the consideration structure so that c. 52% of the purchase price will be paid on completion (AUS$4m) with the balance deferred up to three years. As a result, the working capital position of MRS post acquisition should be improved on March’s terms.

The lending proposal from an established Australian bank is subject to a number of pre-conditions and the entering into of definitive agreements but it is anticipated that MRS will be able to complete the acquisition by the first week of July.

Given the focus on completing the acquisition, MRS has not been in a position to identify new directors and hence Murray d’Almeida has agreed to defer his retirement as non-executive chairman for the immediate future.

]]> Broker spotlight - BP, BHP Billiton, Daily Mail & General Trust, QinetiQ, Amur Minerals Fri, 22 May 2015 10:05:00 +0100 Investors becoming convinced bond yields have seen their lows? again! Fri, 22 May 2015 07:15:00 +0100 Investors becoming convinced bond yields have seen their lows? again! 

Thanks to a subscriber for this report from SocGen which may be of interest to subscribers. Here is a section: 

An integral part of our Ice Age thesis has been to overweight longer dated government bonds as deflation becomes an ever more immediate threat. That strategy has produced superior returns, even relative to global equities. Clearly at some point this 33 year bull market in government bonds will end, but why are market commentators just so keen to pronounce its demise? It is because the continued bond bull market mocks the paucity of the recovery with its accompanying deflation, thereby threatening the asset class they really want to be bullish about ? the equity market.

I have read a lot of very convincing commentary in recent weeks to the effect that we have seen the lows for 10y+ government bond yields with various explanations surrounding the dollar?s recent decline and the recovery in the oil price, etc., etc. And to be sure we did certainly enter some sort of twilight world recently when German 10y yields sank to 0.05%. The sharp dip in German yields below Japanese yields, even at the 30y end of the curve, was also accompanied by a bizarre dive in Spanish yields well below the US ? a curious state of affairs indeed. All that has happened though over the past few weeks is that some sort of normality has been restored (see chart below).

I do not see this as the end of the bull market for long government bonds. Despite the oil price rise, core inflation remains extraordinarily low at a time when the global economy is still struggling to gain traction. Aside from continued growth disappointments in the West, the outlook for the oil price and the Chinese economy will be key. And on that latter score we remain far more concerned about China than most market commentators. And notwithstanding the (over)-confidence evident among central bankers, Europe and the US remain only one recession away from outright deflation. 

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

This is a big question and it wouldn’t be a market without some disagreement but we rely on the price/yield action to justify our view. If we look at the economic data we are presented with, it would be easy to conclude that there are deflationary pressures and yet if we look around there is evidence of new wage demands which are a major source of inflationary pressure. If I think about the people I know who have moved jobs, it was not because they had to move but because they were enticed with a better pay offer elsewhere. With so much debate I believe it is more important than ever to have some long-term perspective. 


OPEC Preview & Revising Down 

Thanks to a subscriber for this report from the team at DNB. Here is a section:

As written above, Saudi Arabia see no reason to let higher cost producers continue to produce while themselves, a low cost producer, should cut oil production in a supply driven downturn. If you cut your output when demand is dropping you do not give your market share to someone else, but if the price drop is due to a supply growth story the situation is different. There were stories also leading up to the last OPEC meeting in November that meetings were held with non-OPEC producers in order to gather support for production cuts also from countries outside of OPEC. It turned out that there was no appetite to contribute from any non-OPEC nations then. The situation may of course however be different this time since now all oil exporting countries have felt the pain of lower prices while that was really not the case last autumn.

Again we are seeing in front of the OPEC meeting, which will be held on June 5, that some OPEC countries are trying to rally support from several non-OPEC producers to contribute to production cuts. Algeria and Venezuela are reportedly in dialog with Azerbaijan, Kazakhstan, Mexico and Oman in order to achieve a collective cut in production between OPEC and non-OPEC producers. The key is however Russia, which is still the world’s largest crude oil producer at 10.7 million b/d. A tiny percentage cut from Russia is more worth than a large percentage cut from Oman to put it that way.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

There is no sign yet that the Baker Hughes Rig Count has stopped falling despite the fact that oil prices are now trading in the region of $60; having been closer to $45 in March. As a result we don’t yet know what price will encourage fresh expenditure on drilling but we can conclude it is higher than $60. As a result it is still too early to conclude at what point the market will return to equilibrium. If the Saudi Arabians feel the same way they have no incentive to curtail supply.


CalAmp and the Internet of Things 

Thanks to a subscriber for this note from Canaccord Genuity on CalAmp which may be of interest to subscribers. Here is a section: 

We hosted upbeat investor meetings with CalAmp CEO Michael Burdiek on April 29th, in the mid-Atlantic region. Following our meetings, we maintain our belief CalAmp is well positioned for solid long-term growth in the Industrial IoT market through both organic initiatives that include entering new markets and through potential acquisitions. In fact, we believe CalAmp’s recent $150M low-interest rate convertible offering provides the company with increased financial flexibility for its M&A strategy focused on accretive acquisitions in targeted IoT verticals. We remain impressed with management’s longer-term strategy to build upon its strong hardware portfolio and offer an increasing mix of higher-margin recurring revenue solutions. Finally, as evidenced by the strong Q4/F2015 results, we believe CalAmp’s Wireless DataCom business is well positioned to drive strong F2016 and F2017 sales and earnings growth driven by ramping sales to Caterpillar, growing insurance telematics sales, ramping international sales, a growing product portfolio, an increasing list of new customer opportunities, and anticipated steady growth of higher-margin recurring revenue sales. We maintain our BUY rating and $26 PT. 

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

The Internet of Things represents a myriad group of themes often with little relation to one another. CalAmp for example focuses on automobile connectivity particularly for those with large fleets of vehicles they need to monitor. On the other hand Sensata Technologies produces the sensors that allow diesel vehicles in particular to run self-diagnostics. Both are leveraged to the auto sector and both are in the sensor and enhanced communication segments that contribute to the Internet of Things theme but they are not strictly related. 


Email of that day on investing in the Global Corporate Autonomies Fund 

Just a note 

I managed to get this investment done via Davy's stock brokers in case you have any other Irish clients who might be wondering ... 

I have a self-administrated pension and as part of pension trust I have an authorised stock trading account with Davy's 

Davy's completed the set-up of the Autonomies fund a few weeks ago on their system for me and completed the purchase of the Autonomies fund for me through my pension structure... 

All good. I am very pleased to have you on board as the fund manager steering the ship :) 

Do you have an expected return you would like to be returning on a yearly basis? 

Do you have a chart in the chart library that tracks the fund?

Eoin Treacy's view 

Thank you for letting me know and thanks also for your interest in the Global Corporate Autonomies Fund. The fund holds 100 of the 146 Autonomies we have identified at any one time and is reweighted quarterly. In line with the most up to date research from the Cass Business School the fund adheres to an “equalish” weighting so that winners are run for longer and losers are given a little more room to recover. 

We invest in consistent trends for as long as they remain consistent and the Autonomies have provided plenty of those over the last number of years.  A systemic approach is taken to reweighting so that the fund remains diversified between sectors. Overextensions relative to the MA of more than 30% are viewed as opportunities to lighten while reversions to the mean are viewed as buying opportunities. It is envisaged that the fund will outperform the MSCI World by a few percent per annum. I’ve added both the Accumulation and Income versions to the Library. 


Speaking Engagement 

Eoin Treacy's view 

Here is the link to the presentation I delivered at the Round-the-Clock-Trader webinar event this afternoon. 

]]> Broker spotlight - M&S, Burberry, Hargreaves Lansdown, Zoopla Thu, 21 May 2015 08:21:00 +0100 Analysts topped up their targets for Marks & Spencer (LON:MKS) this morning after the retailer’s full-year results on Wednesday.

The figures were pleasing from the high street giant and Marc Bolland’s outlook was confident, as Jefferies noted.

“We believe M&S is still fundamentally in the early stages of a multi-year recovery,” said the broker, which raised its share target price by 35p to 660p

Barclays joined in and scrapped its ‘underweight’ rating on M&S and lifted its target price by a hefty 210p to 600p. 

Share in M&S were changing hands for 587p apiece at the time of writing.

Burberry (LON:BRBY) remains in fashion with RBC Capital Markets, despite yesterday’s cautious outlook from chief executive Christopher Bailey.

However, the broker did knock 50p off is 1900p share price target.

“We like Burberry's leadership in digital, outwear and scarves,” RBC said.  

“But 2016 is shaping up to be another year of pedestrian earnings growth for Burberry, which should put a lid on the shares.”

Nomura nudged up its target for Zoopla (LON:ZPLA) shares by 35p to 285p.

The online estate agent Zoopla (LON:ZPLA) yesterday reported record revenues in the first half of the year.

However, it noted said it had experienced a membership slide due to increased competition from new rival

JP Morgan stayed ‘neutral’ on Hargreaves Lansdown (LON:HL.) after Wednesday’s results from the financial services firm, which showed profits were 0.2% lower, despite record net inflows of £2.75bn.

The broker added 50p onto its original 1050p target price for Hargreaves shares. 


]]> Northland Capital Partners View on the City Ferrex Plc, Safestyle UK, Stratex International and Lombard Risk Management Thu, 21 May 2015 07:25:00 +0100 Stratex International (LON:STI) – BUY*: Goldstone Resources update

Market Cap: £5m; Current Price: 1p; Target Price: 6.8p 

  • Auger programme defines two new target zones
  • Goldstone Resources (GRL.L), a company where Stratex owns a 33.45% interest, has announced an operational update at its Homase/Akrokerri Gold Project, located in Ghana. Goldstone has completed a 1,332 hole auger sampling programme over eight high-priority gold targets located along strike from the 602,000oz Au Homase/Akrokerri gold deposit.
  • Results have defined two target zones (Figure 1): 1) a 1,500m anomaly at the AK02 prospect, located to the southwest of the Homase/Akrokerri gold deposit; 2) a 800m anomaly, the AK04 prospect that may be an extension of the AK02 anomaly. Both targets appear to occur over a flexure of the structural zone that hosts the existing resource to the northeast.
  • Three lines of shallow reverse circulation drilling (1998-1999) may have intersected part the AK02 zone, with results including 5m at 1.3g/t Au from 39m (99AKRC083), 6m at 1.6g/t Au from 24m (98AKRC028) and 2m at 3.1g/t Au from 21m (98AKRC021). However, the results from the auger programme suggest that the strongest anomalies have not been drill tested to date.
  • Historic RC drilling over the 800m AK04 anomaly only took place over 100m of strike and had mixed results that include 1m at 8.4g/t Au from 20m (00AKRC109) and 3m at 2.3g/t Au from 40m (00AKRC104). 700m strike of the anomaly has yet to be tested. Close-spaced infill auger sampling is now underway to support drill target definition.
  • No change to forecasts, rating or price target.
  • Figure 1: Map of the Homase/Akrokerri Gold Project

NORTHLAND CAPITAL PARTNERS VIEW: It is positive to see that Stratex’s acquisition of a 33.45% interest in Goldstone Resources already demonstrating the potential for further upside at its Homase/Akrokerri Gold Project. The initial resource of 602,000oz Au at Homase/Akrokerri forms an important base for Goldstone to build on by discovering additional proximal satellite orebodies, creating a larger resource base on which an economic operation can be established. The Company is focusing its efforts on establishing near surface gold oxide mineralisation that can be combined with the existing 100,000oz Au oxide resource and mined and processed at low cost, creating a potentially high margin operation.


Ferrex (LON:FRX) – CORP: Nayega update

Market Cap: £6.88m; Current Price: 0.6p 

  • Completion of the DFS for the accelerated start up
  • Ferrex has completed a Definitive Feasibility Study (DFS) for an accelerated start up and defined a maiden Ore Reserve at its Nayega Manganese Project, located in northern Togo.
  • The DFS sees a reduction in both capital and operational costs combined with an accelerated start-up of a 250,000t operation, improving the project’s economics.
  • A maiden Ore Reserve of 8.48mt at a grade of 14% manganese (Mn) has been defined.

NORTHLAND CAPITAL PARTNERS VIEW: The completion of the Definitive Feasibility Study and the establishment of a maiden Ore Reserve at the Nayega Manganese Project, located in Togo, are major milestones for Ferrex. The updated study results in the simplification and modularisation of the plant but other elements of the study remain largely unchanged. A third party review of the DFS is currently underway as part of the financing due diligence, and further details of the DFS will be published once the review is completed and the mining permit is issued.


Safestyle (LON:SFE): Trading Update

Market Cap: £154m; Current Price: 198p 

  • Current trading in line with expectations 
  • Following on from the positive statement at the time of finals in March, the business appears to have made a good start to the new financial year where order intake was +2.7% YoY in the first four months and this compares to strong prior year comparatives. 
  • Alluding to cost increases relating to glass prices and costs relating to regulatory requirements however a sales price increase was introduced in January 2015 which helped offset some of these cost pressures so the Board is confident in delivering growth in revenue and profits in the current year. 
  • In FY14, the business delivered +9% YoY revenue growth to £136m on the back of increasing the average unit sale prices and average order value, and combined with a 7% reduction in operating costs the business produced PBT of £16.8m, +10% YoY and c. 3% ahead of consensus forecasts. Consensus is looking for c. 4% PBT growth in FY15. Given the positive start to the new year, this looks achievable. 

NORTHLAND CAPITAL PARTNERS VIEW:  The share price has performed well since the final results in March +14% and since listing in December it is +87%. The stock rating has improved and the shares now trade on c. 11.5x consensus FY15 EPS from below 10x previously, and still not overly demanding in our view. With a prospective dividend yield of c. 5% the story should continue to attract attention in our view. 


Lombard Risk Management (LON:LRM) – Prelims

Market Cap: £30.0m; Current Price: 11.4p 

  • FY results in line; departed founder and CEO returns as NED
  • Revenue +5.4% to £21.5m (recurring flat at 42%). Licence revenue +1% and recurring revenue +5.8%. Adj. EBITDA down 23.3% to £4.6m; PBT down 47.7% to £2.3m and basic EPS down 58% to 0.87p. Capitalised R&D spend was £5.1m (FY14: £5.3m).
  • Net cash down fractionally at £2.2m with cash generated from operations of £5.7m (+£0.5m) offset by capitalised R&D, loan repayments (£0.7m) and dividends (£0.2m). Proposed final dividend of 0.045p bringing the FY DPS to 0.08p (+6.7%). 
  • Outlook: Positive with further initiatives from the European Banking Authority with more revenue from ALMM and LCR expected. First contract delivered for the new US Federal Reserve reports FRY-14 and more revenues expected in FY16 along with the IOSCO changes. Further growth expected from the Compliance area. Larger contribution from the partner channel. Record recurrent revenue at c. £9.5m and order book at £5.9m.
  • Following the announcement that John Wisbey, founder, CEO and major shareholder (38%), was stepping down with immediate effect (19/05/15), it has been announced that he will continue to serve as a NED. John McCormick has stated his intention to resign as a NED. Philip Crawford will act as Executive Chairman on an interim basis.

NORTHLAND CAPITAL PARTNERS VIEW: Results overshadowed by the sudden departure of John Wisbey, founder, CEO and major shareholder, on Tuesday and his return as an NED today. Wisbey has indicated no immediate intention to reduce his holding (38%) but he is likely to be perceived as overhang in the market. Unsurprisingly, Lombard Risk has been closely identified with Wisbey and hence the selection of a new CEO is key. FY results were in line with forecasts that were revised down in March following some regulatory delay that resulted in some contract deferrals. The level of capitalised R&D spend remains considerable and there was also a noticeable spike in operating costs in H2. We would look for a return on that investment. 

]]> Big, Old and Ugly Stocks Look Pretty to Bank of America Thu, 21 May 2015 07:10:00 +0100 Big, Old and Ugly Stocks Look Pretty to Bank of America 

Here is the opening of this topical column from Bloomberg: Go after the ones “active” managers won’t touch

At best, you would hope the consultant you hired to help pick out mutual funds had your specific investment goals and risk tolerances in mind. Or at worst, you would hope the consultant had something more in mind than a raging desire not to get fired.

But that's the delightfully cynical theory being floated by Bank of America Merrill Lynch strategist Savita Subramanian. In her assessment, the key motivation by consultants may be to justify their existence by making clients believe they are getting something for their money when they invest in an active fund with way higher fees than passive funds that simply track benchmark indexes.  

"Signs of reluctance to take career risk in the financial services industry are popping up everywhere," Subramanian wrote in a report. The fear-of-firing could be driven by the last financial crisis, she wrote, or the difficulty of picking individual stocks in a macro-driven world,  "or the convergence of headwinds facing active equity investors over the last few years." 

Much has been written about those headwinds facing active managers, who have watched investors pull money from their funds for nine straight years while piling into passive funds. Only 21 percent of active U.S. stock funds beat their benchmark last year, the worst rate on record at Morningstar. 

David Fuller's view 

The first graph in Bloomberg’s article says it all in terms of investor preferences.  


The Weekly View: Trends and Counter-Trends 

My thanks to Rod Smyth for his ever-interesting letter, published by RiverFront Investment Group.  Here is a brief sample:

US bond yields bottoming: We have argued for a year (most recently in our March 2nd Weekly View) that US bond yields need to be understood in a global context and that the US yields were being held down by German yields.  The sharp rise in German yields (10-year yields have risen from ) to ).8% in just two weeks) has led to a rise in US yields despite the weaker economic data.  Reflecting on the chart below, which shows the yields on the highest quality US corporate bonds, we believe that the low in early 2015, which matched the low in mid-2012, could mark the bottom for this cycle.

David Fuller's view 

Subscribers will be able to see that chart in The Weekly View, but here are some government yields to keep an eye on: USA 30Yr, UK 30Yr, German 10Yr, Swiss 10Yr and Japan 30Yr.  My guess is that they have all bottomed for the cycle, but inevitably one never has confirmation of that until well after the event and yields are considerably higher. 

This item continues in the Subscribers’ Area, where The Weekly View is also posted.  


Email of the day 

On mean reversion towards the MA:

“Dear David, Thank you for your service. I note your recent decision to open a long in the H Shares index. You have consistently mentioned that the best time to enter longs is after mean reversion to the 200 day moving average, however the H Shares index is still considerably above the 200 DMA, and I wonder why you felt confident in opening the long here. Best wishes,”

David Fuller's view 

I am delighted that you appreciate the service and thank you for a very interesting question, certain to be of interest to a number of other subscribers.

This item continues in the Subscribers’ Area.


Good News America: Saudi Vies for Great Satan Status in Iran 

My thanks to a subscriber for this informative article by Roula Khalaf for The Financial Times.  Here is the opening:

It’s not quite the Great Satan — at least, not yet. But it’s an enemy that the Iranian regime and the people can unite against

Now that Iran’s Islamic government is close to a nuclear deal with the US and other world powers, the traditional “death to America” slogan is losing its lustre but the loathing of Saudi Arabia is gaining appeal.

Though this is happening by accident more than design, driven by a stand-off in Yemen between Iranian and Saudi proxies, it is blissfully convenient for Iran’s rulers.

Iranians never learnt to hate America despite their leaders’ best efforts to whip up resentment. It certainly won’t grow easier to convince them of devious American plots if a nuclear accord is signed.

When it comes to Saudi Arabia, however, Shia Iranians are happy to bash their Sunni neighbour. Persian-Arab enmity goes back centuries; Iranian-American hostility is only a few decades old. “People in Iran love Americans, and Saudi Arabia is the one country that everyone hates,” one political analyst tells me. “If it’s not the Great Satan it’s only because it’s not that important.”

Indeed, in my own meetings in Iran, there are sometimes awkward moments: someone casually drops a disparaging remark about Arabs then realises I come from Lebanon and reassures me Iranians love the Lebanese but less so Gulf countries. In Lebanon, of course, Iran has Hizbollah, its most prized proxy.

I heard Saudi leaders denounced as “immature children” who bomb fellow Muslims in Yemen and join hands with jihadi terrorists in Syria and Iraq. It’s impossible to convince anyone that the Islamic State of Iraq and the Levant (Isis), which threatens the Saudi regime possibly even more than it threatens Iran, is not a Saudi creation. The notion that Saudi Arabia should reject an Iranian role in the affairs of other Arab states also meets with incredulity. A common language (Arabic) doesn’t give one country the right to claim authority over another, say Iranian officials.

David Fuller's view 

Thanks to technology, the USA no longer has the same vital interests in the Middle East, although it would understandably like to prevent the region’s wars and terrorism from spreading westward.  If ongoing Sunni-Shia conflicts threaten the Middle East’s oil production, the USA can quickly ramp up its shale oil output, avoiding a repeat of recessions caused by earlier energy crises.  

Many other countries could do the same.  If they follow the USA’s energy policies, from shale oil and gas to solar-led renewables, in 20 to 30 years time the Middle will have the luxury of consuming all of its own oil and gas.

The FT article is posted in the Subscribers' Area.    


The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  I think all investors will benefit from guest speaker David Brown’s new presentation. I learned from it, not least how to assess some familiar data more clinically.  In other words, he shows us how to think a little more clearly, particularly in terms of identifying bear markets near their tops.  This is never easy given all the emotions involved.  Many people jump the gun, as you will have seen over the last few years, which can leave them susceptible to overstaying when the important and often overlooked warning signs are flashing.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  


Chart Library Filter System Release 

Eoin Treacy's view 

We’d like to thank subscribers for their patience in waiting for the release of the Chart Library Filter System. We introduced it last night and you will find the Filter button next to the Search in the black menu stripe across the top of the Chart Library homepage.


PayPal Will Pay $25 Million to Resolve CFPB Bill Me Later Claims 

This article by Carter Dougherty for Bloomberg may be of interest to subscribers. Here it is in full: 

PayPal Inc., a unit of EBay Inc., will forfeit $25 million in restitution and fines to settle Consumer Financial Protection Bureau claims that it illegally enrolled customers in an online credit product.

“PayPal illegally signed up consumers for its online credit product without their permission and failed to address disputes when they complained,” CFPB Director Richard Cordray said in a statement Tuesday. “Online shopping has become a way of life for many Americans and it’s important that they are treated fairly.”

PayPal, which announced plans to split from EBay last year after activist investor Carl Icahn said the parent firm was slowing its growth, often signed up customers for its credit product without their consent, CFPB said. The company also failed to post payments properly, lost payment checks and didn’t resolve billing disputes.

In particular, CFPB said, PayPal used deferred-interest promotions, which push off payments to a later date, to rope in customers. The company then made it difficult to avoid the deferred fees, which customers can typically do by paying off a loan before a specified date, the agency said.

Amanda Miller, a spokeswoman for PayPal, said the company “takes consumer protection very seriously.”

“We continually improve our products and enhance our communications to ensure a superior customer experience,”

Miller said in an e-mail. “Our focus is on ease of use, clarity and providing high-quality products that are useful to consumers and are in compliance with applicable laws.”

PayPal agreed to refund $15 million to consumers who were unjustly charged and pay $10 million in penalties.

Eoin Treacy's view 

When the Treacy family were signed up for a PayPal credit account with a $1000 limit it came as a surprise since we were not consulted in any way and only found out about it when the first bill arrived. It struck us as an aggressive marketing strategy but since we pay the balance on our credit accounts at the end of every month anyway, it did not discomfort us in any measurable way. Online forum comments suggest that other people did not have the same experience. 


Los Angeles Lifts Its Minimum Wage to $15 Per Hour 

This article by Jennifer Medina and Noam Scheiber for the New York Times may be of interest to subscribers. Here is a section: 

The increase, which the City Council passed in a 14-to-1 vote, comes as workers across the country are rallying for higher wages and several large companies, including Facebook and Walmart, have moved to raise their lowest wages. Several other cities, including San Francisco, Chicago, Seattle and Oakland, Calif., have already approved increases, and dozens more are considering doing the same. In 2014, a number of Republican-leaning states like Alaska and South Dakota also raised their state-level minimum wages by ballot initiative.

The effect is likely to be particularly strong in Los Angeles, where, according to some estimates, almost 50 percent of the city’s work force earns less than $15 an hour. Under the plan approved Tuesday, the minimum wage will rise over five years.

Mayor Eric Garcetti of Los Angeles, right, on Monday. He said in an interview on Tuesday that “we’re leading the country.” Credit Nick Ut/Associated Press

“The effects here will be the biggest by far,” said Michael Reich, an economist at the University of California, Berkeley, who was commissioned by city leaders to conduct several studies on the potential effects of a minimum-wage increase.

“The proposal will bring wages up in a way we haven’t seen since the 1960s. There’s a sense spreading that this is the new norm, especially in areas that have high costs of housing.”

Eoin Treacy's view 

One might argue that California’s low tax on property, at 1% of value, has done more to inflate the cost of housing than any other single factor. However that is not up for conversation since real estate is one of the primary avenues for family wealth accumulation. It is more politically expedient to push for higher wages and not just a little higher. $15 is among the highest minimums in the world.

Restaurants have been experimenting with drones for delivery, iPads for ordering and slimming down the number of waiting staff. A doubling of the wage base over the next five years will act as a major incentive to reduce headcount and to maximise productivity per worker. We can expect to see a lot more robots in the customer service sector not least in the food preparation sector. 


Email of the day on adjusting BHP Billiton price chart after the demerger 

I trade BHP Billiton (BLT) from time to time. This morning, as I was looking at trade setups, I noticed that the historical prices for BLT provided by your service (and the Daily Telegraph, which has as its source AJ Bell), compared to prices provided by Bloomberg (and the Financial Times), are very different. For example, as shown in the attachment, your service has the December and January lows at just below 1300, whilst Bloomberg have them below 1200. Also, the March and April 2015 lows in BB are at approximately 1300 compared to your 1400. In fact, all the numbers seem to out by about 100. The current price is the same, so perhaps there is an historical adjustment made as a result of the demerger of South32 in one data service and not another. Could I ask you to look into it and let me know whether that is in fact the case, or if there is another reason at work?

Eoin Treacy's view 

Thank you for your detailed email and I can confirm that the price charts have now be rebased to alleviate the step which occurred as a result of the demerger. 


Speaking Engagement 

Eoin Treacy's view 

I’ve agreed to give at talk for the upcoming Round-the-Clock-Trader webinar event on Thursday. The topic of my talk will be currency volatility and its role in equity market returns which I anticipate taking 35mins. Since I’ll be the last speaker, starting at 8:00pm British Summer Time, we’ll have plenty of time to talk about whatever it is delegates are interested in. It’s free to sign up just follow this link.  

]]> Finsbury gets its Just Desserts A bright year for LiteBulb Wed, 20 May 2015 10:27:00 +0100 BLU Financial and Operational Results, BLV Acquisition, CBUY Contract Win, FIF Proposed Acquisition, FITB Final Results and New Kiqplans, FXI Contract Win, IDOX Trading Update, LBB Final Results, MARL Drilling Progress and Metallurgical Results, MXO Criteria and Final Results, NOP Completion of Farm Out, PPIX Patent Application, PROX New Contract, PLI Agreement and Q1 2015 Results, RSTR Final Audited Results, STR Admission to AIM and Raise £10m

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.


BELLUS Health, a drug development company focused on rare diseases, reported its financial and operating results for the first quarter ended March 31, 2015. Enrolment completed for the KIACTA™ Phase III Confirmatory Study in AA amyloidosis, with a total of 261 patients participating in the study; approximately 75 percent of the required events to complete the KIACTA™ Phase III Confirmatory Study have occurred; the study is on track to conclude in 2016. The company concluded the quarter with a cash position of $11.5m, which should enable the Company to finance its operations beyond the end of the Phase III Confirmatory Study for KIACTA™. Revenues amounted to $0.79m for Q1 2015, (Q1 2014:$0.47m). The increase is primarily attributable to sales-based royalty revenue received in 2015 in relation to the VIVIMIND™ license agreement with FB Health. The increase is also attributable to higher revenue recognised for accounting purposes in 2015 in relation to the service agreement with Auven Therapeutics for KIACTA™. R&D expenses amounted to $0.32m for Q1 2015, (Q1 2014 $0.46m). The decrease is primarily attributable to lower expenses incurred in relation to the development of Shigamab™ during the first quarter of 2015. Net finance income amounted to $0.24m for Q1 2015, (Q1 2014:$0.17m). The increase is primarily attributable to an increase in the foreign exchange gain that arose from the translation of the company's net monetary assets denominated in U.S. dollars, due to the appreciation of the U.S. dollar versus the Canadian dollar during Q1 of 2015.

Belvoir Lettings (LON:BLV)

Belvoir Lettings, one of the UK's largest lettings franchises, announced the joint franchisees of the existing Belvoir Oldham and Bury offices have completed the acquisition of Rayson Wilshaw, a leading estate and lettings agent in Bury. Total consideration will be £0.25m, of which 50 percent will be being paid in cash funded by Belvoir Lettings and the remaining 50 percent to be paid as a deferred consideration over a 4 year period. Having opened the Belvoir Bury office in January 2013, this franchise has gone from strength to strength, acquiring the neighbouring Oldham office in January 2014 and winning the 2014 Belvoir New Franchise of the Year award.  This acquisition will more than double the size of their business, expanding their lettings portfolio to over 1,000 properties and enabling them to gain a firm foothold in the estate agency market in Bury. This acquisition further reinforces Belvoir's strategy to support franchisees to grow the Belvoir brand across the UK in lettings and estate agency. As a result of the acquisition the Company's managed service fee revenue is projected to increase by £33,000 per annum and interest on the loan will be charged at 8.95 percent.

cloudBuy (LON:CBUY)

cloudBuy, the global provider of cloud-based e-commerce marketplaces and B2B buyer and supplier solutions, announced the signing of an agreement with the Ministry of Economy of a Middle Eastern state to provide a cloudBuy investor website and marketplace. The initial contract value is $0.85m with further potential as 40 additional eligible government organisations have the opportunity to join once the solution is live.  The investor website is similar in scope to cloudBuy's existing Invest Northern Ireland website with the addition of a cloudBuy marketplace for local business and government agencies. It will support businesses seeking to set up and trade in the region, facilitate B2B trading and provide a single point of contact for individuals and organisations to book and attend trade shows and other events. The first phase of the system is planned to go live this summer.

Finsbury Food Group (LON:FIF)

Finsbury Food Group, a leading UK specialty bakery manufacturer of cake, bread and morning goods for both the retail and foodservice channels, announced the proposed acquisition of the business, production assets, stock and customer list of Johnstone's Just Desserts from administrators FRP Advisory. Johnstone's, a supplier to the leading national coffee shop chains, produces cake, including its renowned caramel shortcake. This proposed acquisition signals the escalation of Finsbury's entry into the foodservice cake channel and in particular the high growth national coffee shop segment. This is in line with the Group's channel diversification strategy, indicated at the recent acquisition of Fletcher's in 2014. Completion of the acquisition is conditional on the finalisation of property lease details which both the Group and FRP are working on to complete as soon as possible. Finsbury will provide staff in relation to manufacturing and finance, to serve the purpose of ensuring a smooth integration process until completion Finsbury intends to work with the Johnstone’s management team at its existing site in East Kilbride to build on its strong customer relationships and market position and drive growth focusing on its high quality, well respected, coffee shop product ranges. 

Fitbug Holdings (LON:FITB)*

Fitbug Holdings, the provider of online personal health and wellbeing services, provided its final results for the year ended 31 December 2014. The company has successfully capitalised on the rapidly growing B2C market for wearable technology: Sales agreements signed with international blue chip retailers, including Sainsburys, Target, BestBuy and Amazon. Product offering developed to include pioneering digital coaching service - "Kiqplan™"- received positively by industry participants leading to a range of high profile sales and marketing opportunities: Integrated into the Samsung Digital Health platform - included as one of the strategic partner applications in Samsung's S Health platform, available globally and included as an inaugural member of the Jawbone Marketplace which features best-in-class devices and apps spanning categories including fitness, sleep and food. There was a 208 percent increase in revenues to £2.3m, but a loss after tax of £3.7m, which reflects the significant investment in development and marketing. The company also announced that it has expanded its pioneering Kiqplan offering through the launch of four new training programmes (Sun's Out Guns Out, Bikini Hot, Your first 5k and 10k run ready), which work together with wearable health technology to help users achieve their health and wellness goals. This launch, which brings the total number of Kiqplans to ten, complements the Company's existing range of digital health solutions which are focused on encouraging a healthy lifestyle through the provision of an integrated and quality service.   

Fusionex International (LON:FXI)

Fusionex, an international provider of software specialising in Analytics and Big Data, announced its latest Fusionex GIANT win with Brother Industries, a multi-national electronics and electrical equipment company headquartered in Nagoya, Japan and listed on the Tokyo Stock Exchange. The contract, which is on a multi-year basis, is the 25th win for GIANT and demonstrates the increasing traction of the Group's Big Data product. Established in 1908, Brother Industries produces communications and printing equipment, including printers and all-in-ones, at manufacturing and sales facilities in more than 40 countries and regions worldwide, allowing it to implement global business strategies and activities. Brother Industries will leverage Fusionex GIANT to keep track of its daily operations across different geographies and time zones; transforming real-time operational data into actionable insights that promote better and more well-informed decision making. In tandem with this, Brother Industries will also utilise Fusionex's data platform to maintain close ties with, manage and enhance its customer engagement experience with its global network of agents and customers. The comprehensive Fusionex GIANT platform will help Brother Industries understand the 'journey', preferences and other aspects of its partners' and customers' profiles, so that Brother Industries is able to plan more effectively with better insight and foresight.


Idox, a leading supplier of specialist information management solutions through its two divisions, Public Sector Software and Engineering Information Management (EIM), announced a trading update for the six months to 30 April 2015. Public sector sales, which accounts for three quarters of group revenues, were up 14 percent, but EIM revenues were down 28 percent, resulting in group revenues being flat when compared to the first half of 2014.  Net debt was £9.7m compared to £15.8m at 31 October 2014.  The Public Sector division has continued to grow its managed services and hosting offering with two significant contract wins; Pendle and Watford, and has made further market share gains replacing 24 competitor systems.  Over £2m in revenues have been achieved from outsourced service delivery for the UK General Election. The public sector team has embarked on a new national initiative to be launched in July which will open up new revenue opportunities. The Digital Spirit acquisition has been successfully integrated and will deliver its synergies as planned in the second half. In response to the downturn in market conditions in the engineering business, the division was restructured at the turn of the year, resulting in approximately £3.0m in annualised saving across the Group.

Litebulb Group (LON:LBB)

LiteBulb, the branded product developer, announced audited results for the year ended 31 December 2014, a year of transformational growth and investment to establish a solid platform for future growth and profitability. In addition, trading in the first four months of 2015 is ahead of budget with revenue for the four months to 30 April 2015 up 152 percent to £5m (from £2m in 2014). In line with the trading statement of 27 January 2015, revenue increased 170 percent to £21.9m (2013: £8.1m) - and H2 delivered a positive EBITDA of over £2m. There was a gross profit of £7.9m (2013: £3.3m), leading to an EBITDA loss reduction of £0.2m to £0.4m (2013: £0.6m) and cash at bank as at 31 December 2014 of £4.2m (2013: £1.8m). The group acquired Go Entertainment (April 2014) and Concept Merchandise (December 2014), and produced strong organic revenue growth across existing divisions: Litebulb Studios (formerly Rizon Studios) up 67 percent to £1.0m (2013: £0.6m), Bluw up 34 percent to £5.5m (2013: £4.1m) and Meld up 10 percent to £7.8m (2013: £7.1m). The current trading - ahead of budget saw revenue for four months ended April 2015 up 152 percent to £5.0m (2014: £2.0m) and a strong response from retailers to new 2015 product ranges.

Mariana Resources (LON:MARL)*

Mariana Resources, the exploration and development company with projects in South America and Turkey, announced the completion of the first two holes (HTD-08 and HTD-09) of the Phase II drill program, carried out by JV partner Lidya Madencilik Sanayi ve Ticaret A.S. and the receipt of preliminary metallurgical testwork results from Lidya, at the Hot Maden gold-copper project in eastern Turkey. Drill hole HTD-08 was collared approximately 50m to the north of the high grade gold-copper mineralisation intersected in HTD-04, drilled at 60 degrees to the east to a depth of 273m.  Quick logging has identified a primary sulfide-bearing stock work / breccia zone between 123m and 169m downhole, with a massive sulfide zone (chalcopyrite-pyrite) from 131m to 136.7m downhole.  In parallel, logging and sampling of drill hole HTD-09, a 50m step-back hole under HTD-04 drilled to 361m, has commenced.  A second drill rig is now operating on site and is expected to accelerate the advancement of the Phase II drill program. The preliminary metallurgical testwork was performed on crushed drill core obtained from the Phase I drill program, with the initial testwork including: basic leach analysis on selected intervals from all drill holes (SGS's analytical technique BLE563), modal analyses on samples from drill holes HTD-01, HTD-04, and HTD-05, and a bench flotation test on one composite sample sourced from drill holes HTD-01, HTD-04, and HTD-05.   Key results include: a basic heap leach resulted positive gold recoveries, however a flotation process appears preferential to recovering gold and copper. The primary sulfide phases from modal mineralogical analysis are chalcopyrite, pyrite/marcasite, sphalerite, galena, and trace bornite. Importantly, no arsenic-bearing phases such as enargite were detected.  Gold occurs either as free grains, or is associated with pyrite, and is fine grained (20 to 75 microns) from Scanning Electron Microscope images. High (93 percent) copper recovery was achieved from a rougher concentrate prepared from the composite sample.  The test indicated a "clean" concentrate free of deleterious elements could be produced. (Conditions used for the test were 85 percent of material at -75 microns, pH of 11.5, with reagents 50 g/t 3418A and 10 g/t MIBC).


MX Oil, the oil and gas investment company announced that the pre-qualification criteria have now been released by the National Hydrocarbons Commission for mature onshore conventional fields in Mexico.  This is the third phase of Bid Round 1 and part of Mexico's energy reform, which is intended to boost domestic oil and gas production by enabling foreign companies to invest in Mexico's Energy industry, ending a 76 year old state monopoly.  MX Oil's joint venture company with local operator partner Geo Estratos is anticipated to make an application to pre-qualify for Phase 3 in the coming weeks and, given the announced criteria, is confident that this can be achieved without the need to bring in a production partner. As part of Phase 3, a total of 26 Land Contract Areas in the states of Chiapas, Nuevo Leon, Tabasco, Tamaulipas and Veracruz will be awarded to companies that satisfy the pre-qualification requirements and win the subsequent tender process.  MX Oil is primarily focussed on Type 1 blocks, which include onshore fields with estimated resources of around 100 mmboe.  The key criteria for the award of Land Contract Areas applicable to the JVCo include: Minimum equity of $5m for each Type 1 block and Joint ventures that do not comply with the $5m equity threshold will qualify with a minimum equity threshold of $3m. The company also notes the recent statement made by the relevant departments of the Government of Mexico, including the National Hydrocarbons Commission, that details of the tender and contract models for the extraction of hydrocarbons under the third phase of Bid Round 1 (Phase III) will be announced on 12 May 2015.  Phase III is focused on the tender for mature onshore conventional fields in Mexico, which MX Oil intends to participate in. The Group reported an operating loss of £0.85m (2013: £92,000) and made a net loss from continuing activities of £1.15m (2013: £51,000) during the year to 31 December 2014. Net cash outflow from operating activities was £o.65m (2013: £0.22m), with net cash outflow from investing activities at £0.77m (2013: £o) and net cash inflow from financing activities of £2.83m led to cash and cash equivalents as at 31 December of £1.52m.

Northern Petroleum (LON:NOP)

Northern Petroleum confirmed that, further to the announcement on the 5thMarch 2015, the farm out of the Italian onshore permit, Cascina Alberto, to Shell Italia E&P, a wholly owned subsidiary of Royal Dutch Shell, completed on the 7th May 2015. The Italian regulatory authorities have approved the transfer of 80 percent of the permit interest to Shell and Shell has paid to Northern Petroleum $0.85m as agreed under the farm out agreement. The work programme has started with the re-processing of existing seismic data to determine whether there is a requirement for further seismic acquisition to help delineate a proposed target for an exploration well. Shell will carry Northern Petroleum for the costs of the exploration campaign, which will include a carry on the acquisition of any new seismic until the seismic costs reach $4m and a carry on an exploration well until the well costs reach $50m.

ProPhotonix (LON:PPIX)

ProPhotonix, a designer and manufacturer of LED illumination systems and laser diode modules with operations in Ireland and the UK, announced that it has filed a patent application on its unique heat sink for optical modular array assemblies. The invention is a water-cooled heat sink design suitable for a range of different optical module arrays and sizes that allows for easy replacement of individual optical modules.  Design features include precise orientation of the optical modules to ensure an exact electrical connection to an external driver circuit.  In addition, the thermal management capacity allows a large density of optical modules, which enables high optical output for many applications. The invention allows for easy removal and replacement of modules in the field by non-technical personnel, thus alleviating the need for skilled technicians for repair. Importantly, the heat sink has been designed to ensure that the "back end" of the optical module (e.g., the end of optical module where the emitter is located) is circumferentially orientated within a given opening. This allows for light sources of optical modules to be precisely connected to an external circuit every time, even when optical modules are being replaced. In conjunction with optical modules, typical applications for this invention include computer-to-plate printing, maskless lithography and laser marking.

Proxama (LON:PROX)

Proxama, the international mobile commerce company specialising in proximity marketing and provider of end-to-end payment solutions for card issuers, announced that it has been awarded an exclusive contract with Exterion Media UK, Europe's largest privately owned out-of-home media owner. Proxama is also delighted to announce that it has been awarded a £1m grant by Innovate UK as part of their aim to support the UK's high streets. Proxama's proximity marketing division, which focuses on connecting consumers to retailers and brands via Bluetooth Beacon technology, will provide Exterion with a managed service to deliver proximity marketing services to consumers' smartphones, whilst using public transport.  The contract is for up to three years and the first phase will look to build on the successful trial conducted on buses in Norwich late last year, with a roll-out to UK major cities. Exterion has a nationwide portfolio of advertising environments in the largest urban areas in the country. They also own media sites in numerous high footfall locations in London and are the sole providers of advertising space on Transport for London's bus and Underground services.

ProMetic Life Sciences (TSX:PLI)*

ProMetic Life Sciences, a biopharmaceutical company with globally recognised expertise in bioseparations, plasma-derived therapeutics and small-molecule drug development, announced that it has entered into a strategic manufacturing agreement with Emergent BioSolutions. The long-term manufacturing agreement provides ProMetic with access to additional cGMP capacity in an FDA-licensed facility, located in Winnipeg, Canada. ProMetic will use this capacity for the development and manufacture of plasma-derived biopharmaceuticals using ProMetic's proprietary plasma purification platform, known as Plasma Protein Purification System. The additional product manufacturing capacity will provide the ability to process up to 250,000 litres of plasma annually with the potential for further expansion should the parties agree. This 15-year manufacturing agreement involves an initial annual minimum payment of approximately $4m per year, rising to $7m per year in 2018 and to $9m per year by 2021, for an aggregate total of minimum fees exceeding $100m over the life of the contract. The agreement allows for a flexible approach for the use of resources up to that value, and any additional resources used beyond that minimum cost will be charged on an as-used basis. ProMetic generated a net loss of $20.4m in Q1 of 2015 (Q1 of 2014:$8.7m). Of the $20.4m net loss incurred in Q1 of 2015, approximately $9.5m comes from the variation in fair value of the warrant liability and the loss on debt extinguishment which do not affect cash. In addition, the corporation increased its investment in R&D costs incurring a total of $9.9m in the Q1. Total revenues for Q1 of 2015 were $1.9m compared to $5.7m for Q1 of 2014. Revenues from the sale of goods amounted to $1.4m compared to $3.2m for the same period in 2014. Service revenues were $0.5m for the quarter ended March 31, 2015 compared to $2.5m for the quarter ended March 31, 2014. The decrease is due to lower product sales and the fact that services billed to NantPro are being eliminated upon consolidation due to its acquisition from a control perspective in May 2014.

Rightster Group (LON:RSTR)

Rightster Group, the online video distribution and monetisation network, announced its preliminary results for the twelve months ended 31 December 2014. The company has shown significant growth over the course of the year including the completion of two strategic acquisitions and noteworthy additions to its client roster. Total Transaction Value has risen from £11.0m in 2013 to£16.9m in 2014; net revenue has increased from £6.2m in 2013 to £8.7m in 2014 and gross profit has grown from £0.6m in 2013 to £3.9m in 2014. Average monthly video views have risen to 1.2bn in H2 2014 (369 percent growth from H2 2013) and content owners have increased from 850+ to 2,500+. Publishers have grown from 7,500+ to 10,500. Highlights in Q1 of 2015 include the following: Average monthly video views for Q1 2015 estimated at 1.6bn and by the end of Q1 2015, the company surpassed 72m subscribers and reached 124m unique users worldwide across its YouTube Network (the latter being a 125 percent increase from the end of Q1 2014). The group also secured a partnership with Microsoft Lumia and extended its global partnership with 20th Century Fox, to include 10 additional international territories. The group also provided an update on its proposed placing announced on 30 April 2015, each at 18 pence per Placing Share to raise approximately £5m before expenses. The Loan Notes will, when issued and subject to the satisfaction of certain conditions, be convertible into new ordinary shares at a price of 18 pence per new ordinary share.

Stride Gaming (LON:STR)

Stride Gaming, the multi-branded online bingo-led operator, announced its intention to raise at least £10m and seek admission of its ordinary shares to trading on AIM. Stride Gaming is a UK focused, real money, bingo-led online operator, using its proprietary and purchased software to provide online bingo and related gaming activities to players. The group operates a multi-branded strategy which includes the online bingo brands Kitty Bingo, Lucky Pants Bingo, Bingo Extra, Jackpot Café, Jackpot Liner, King Jackpot, together with the online casino brands  Spin and Win and Magical Vegas. The Group has experienced significant organic growth of its proprietary brands with NGR up 40 percent between Q1 to Q4 2014. Additionally, the group has been acquisitive with the acquisition of the business and assets of Table Top Entertainment in September 2014. The group also owns an Italian online gaming business, Baldo, which has an Italian gambling licence, as well as a 24.5 percent interest in a licensed Spanish operator, QSB Gaming Limited. The directors believe there are a number of growth opportunities for the group, both organically and through acquisition. The overall UK gambling market is substantial and is forecast to pass £3bn of NGR by 2016. The UK online gaming market is estimated to grow approximately £1.6bn of NGR by 2016 with bingo-led online gaming estimated to account for 32.3 percent of the UK online gaming market. With the implementation of the point of POC tax in the UK, and the general increase in regulation, the directors believe that a number of smaller-scale online bingo operators will suffer a significant impact to their margins from the POC tax that will make it difficult for them to continue operating. The directors also believe that with bingo generally attracting a predominately female demographic, the pressure on margins created by the POC tax will also lead to the larger multi-product online gambling operators prioritising their marketing spend more towards their core product leaving opportunity for a bingo-led business to increase market share both from organic growth and through acquisition.

]]> Broker spotlight - Babcock, Crest Nicholson, Aberdeen Asset Management, Tate & Lyle Wed, 20 May 2015 08:00:00 +0100 Public sector outsourcer Babcock (LON:BAB) received a double broker boost today.

Analysts from Citi and Deutsche Bank both upped their share price targets for the business, which reported a 32% jump in annual underlying pre-tax profit this week.

Citi scrapped its ‘underweight’ rating on the the engineering and support services group to a ‘hold’ and ramped up its target price by 50% to 1850p.

Deutsche Bank – with its ‘buy’ rating - now expects the shares to reach 1200p, up from its earlier target of 1150p. Shares currently trade at 1100p. 

Crest Nicholson (LON:CRST) is also in favour with Deutsche Bank.

The house builder reported a jump in first half sales yesterday and the broker reckons shares are worth 402p.

Goldman Sachs no longer has a ‘buy’ stance on Aberdeen Asset Management (LON:ADN).

The heavyweight broker has a ‘neutral’ rating on the fund manager.

Aberdeen has experienced hefty outflows from its funds recently  amid uncertainty over emerging markets.

However, the firm still posted a 25% rise in half-year profits earlier this month.

Elsewhere, Exane BNP Paribas turned sour on sugar company Tate & Lyle (LON:TATE). 

Analysts at the French firm now have an underweight rating on Tate’s shares and a target price of 550p.

]]> Northland Capital Partners View on the City Amphion Innovations,Rame Energy, Sunrise Resources, Amino Technologies and others Wed, 20 May 2015 07:24:00 +0100 Rame Energy (LON:RAME) – CORP: Financing update

Market Cap: £8.3m; Current Price: 8.25p

  • Financing of Cerro Coihue (Cerro Bayo) complete
  • Executed binding terms with Anden Re. Capital SpA regarding the $4.7m funding facility (as announced 13/03/15) for the Cerro Coihue (previously described as Cerro Bayo) off-grid wind project in Chile that is to supply power to a producing mine owned by TSX listed Mandalay Resources.
  • All conditions have been satisfied including final agreement and execution of the EPC contract and the signing of a revised PPA to reflect the revised project timescales. Project completion is now expected in Q4. Rame is acting as the EPC contractor and construction has commenced. Three Vestas V44 600kW wind turbines have been purchased and will be fully refurbished and optimised for local conditions. The other components are ready for overhaul whilst new power electronics, that will improve power quality and delivery, have been delivered.
  • Anden Re has invested $3.5m of equity for a 75% holding. In addition, it has provided Rame with a $1.2m debt facility to fund Rame’s equity participation. The parties are also moving towards terms for a broader relationship for potential financing of Rame’s off-grid and smaller on-grid project portfolio.

NORTHLAND CAPITAL PARTNERS VIEW: Important step in the process for the Cerro Coihue (previously known as Cerro Bayo) off-grid wind project but potentially more generally for Rame’s off-grid and smaller on-grid project portfolio. The relationship with Anden Re complements Rame’s framework agreement with Santander Investment Chile Limitada for larger projects. The companies have co-financed the 15MW Raki and Huajache projects, where Rame has a 20% equity participation, that are mechanically complete. There is considerable funding interest in the Chilean renewables market and Rame has proven experience and expertise with a large portfolio of projects at various stages. This is not reflected in the current share price.

Amphion Innovations plc (LON:AMP) – CORP; Appointment of broker

Market Cap: £9.6m; Current Price: 5.75p

  • From yesterday: Appointment of Northland Capital Partners as broker
  • Yesterday, Amphion Innovations plc, the developer of medical and technology businesses, announced the appointment of Northland Capital Partners Limited as joint broker to the company.

NORTHLAND CAPITAL PARTNERS VIEW: Amphion Innovations specialises in developing companies in the medical and technology sectors. The group has a significant shareholding in seven partner companies developing proven technologies targeting substantial commercial marketplaces. Two of these companies have recently listed on AIM, namely Motif Bio plc and Kromek Group plc.


Clontarf Energy (LON:CLON) – Corp: FY14 results

Market Cap: £3.5m; Current Price: 0.75p

  • No surprises in FY14 results
  • LBT decreased to £0.3m in FY14 from £3.2m in FY13, which included £2.5m of impairments.
  • Net debt of £0.4m in FY14 compares with £1.9m in FY13 with the reduction largely the result of the conversion of a £0.6m loan into equity and proceeds of £0.6m from equity financing in FY14.

NORTHLAND CAPITAL PARTNERS VIEW: No surprises in this set of results from Clontarf Energy as it continues to engage with the parties concerned regarding its interest in the Tano 2A Block located in offshore Ghana. Its other projects in Peru and Bolivia remain lower key in the current sector environment. The Company has also engaged with a number of intermediaries to seek to fund and develop the Company and will provide further updates in due course.


Sunrise Resources (LON:SRES) – CORP: H115 results

Market Cap: £1.5m; Current Price: 0.2p

  • Sunrise continues to use capital efficiently
  • LBT of £0.15m for H115 was slightly down from £0.16m in H114. Net cash decreased to £0.24m in H115 compared to £0.53m in H114.
  • At the County Line Diatomite Project, deeper sampling is scheduled for the summer and a review of commercial options for future development is ongoing.
  • At the Bay State Silver Project, drill permitting has been initiated.
  • At the Cue Diamond Project and Bakers Gold Projects, Native Title and drilling programmes have been delayed by heavy rains, this work is now expected to commence in H215.

NORTHLAND CAPITAL PARTNERS VIEW: Sunrise Resources continues to make progress across a portfolio of projects at a minimal cost. The Company continues to be one of the more efficient explorers on AIM for its use of capital. Near term production from the County Line Diatomite project would be a transformational event for the Company, as the cash flow generated from this operation could then be used towards the discovery and development of other mineral deposits, reducing dilution for shareholders.

Amino Technologies (LON:AMO) – BUY: Acquisition

Market Cap: £70.9m; Current Price: 132p; Target Price: 150p

  • Acquisition expands offering into ‘TV everywhere’
  • Acquisition of Booxmedia Oy, a cloud TV platform, for an initial €7.9m (€7.2m in cash and €0.7m in shares) and performance based deferred consideration (50/50 in cash/shares) of up to €2.6m over the next three years. Booxmedia’s FY14 (Dec) revenue was €1.4m and EBIT of €0.2m with c. 54% of recurring revenue and €0.5m net cash on the balance sheet. Booxmedia is based in Helsinki with 18 staff and management will stay with the business post acquisition.
  • Acquisition provides Amino with a proven cloud-based platform that can enable the delivery of ‘TV everywhere’ to a full range of IP connected devices, including smartphones, tablets, games consoles, STBs and home gateways. It also expands Amino’s addressable market to include mobile operators, OTT providers, media companies and broadcasters. Existing Booxmedia customers include Finnish quad play operator DNA Oy (also a shareholder prior to the acquisition) that offers a ‘TV everywhere’ smartphone and tablet service.
  • Given Booxmedia’s relatively early commercial status, the acquisition has limited impact on P&L forecasts for FY15 and FY16 but cash is adjusted down (FY15: £16.9m from 21.7m; FY16: £19.5m from £24.8m). BUY rating and 150 price target remained unchanged.

NORTHLAND CAPITAL PARTNERS VIEW: Acquisition broadens Amino’s product offering as well as its addressable market. The consumption of content is becoming increasingly fragmented across multiple device types (TV, tablet, smartphone etc) and Amino needs to be able to offer its customers a comprehensive solution. The consideration price looks reasonably full, reflecting Booxmedia’s relatively early stage of commercialisation, but Amino remains comfortably capitalised to fund the progressive dividend policy and other bolt on acquisitions. We maintain our BUY rating and 150p price target.

]]> Roger Bootle: More Markets and Less Government Should Be At the Heart of Cameron Economic Agenda Wed, 20 May 2015 07:16:00 +0100 Roger Bootle: More Markets and Less Government Should Be At the Heart of Cameron Economic Agenda 

Here is a section of this excellent article from The Telegraph, and a PDF version is in the Subscribers' Area:

Like Lady Thatcher, David Cameron’s first administration was dominated by an overarching macro objective, the need to stabilise the public finances.

Of course, there is much more work still to be done on this. But the debt ratio will soon peak. I know, it will still be too high. But all the markets require is confidence that it will be coming down. They will have it. Whisper it quietly only among friends, but the fiscal crisis is over.

Yet man cannot live by fiscal stability alone – and neither can governments. The second administration, while carrying on the work of fiscal stabilisation, should have at its heart something different. It should be about markets: allowing them greater rein where they work well, introducing them where they don’t currently exist and, yes, intervening to reform them where they work badly.

What’s more, there should be a moral tone to this objective. One of the most galling aspects of Labour’s election campaign was its assumption of moral superiority. The implication was that business was tainted because it was selfish, while state spending, regulation and interference were “caring” and altruistic. Labour is yet to appreciate that markets have a better record of delivering the goods for ordinary people.

The Conservative Party knows this – but it still has a long way to travel. The areas where markets need to be helped to work better are headed by the labour market. The previous government made huge strides, but there is more to be done.

Reducing the cap on welfare payments and increasing the tax-free allowance will continue to tip the balance of incentives in favour of work.

Tightening up the requirements for trade unions to gain support before calling strikes, and enabling employers to employ temporary replacement labour, will tilt the balance against damaging strike action which penalises the many to promote the interests of the few.

In addition, there needs to be major action on tax structures as well as levels. Reducing the top rate may bring few plaudits but it is necessary to reverse Gordon Brown’s cynical and destructive rise, and to make plain the commitment to keeping talented people in this country. This, too, has a moral aspect. Except in times of national emergency, the government has no right to take virtually half of a person’s income in tax. Concede this point to the Left and the overall battle will be lost.

David Fuller's view 

This is excellent advice, and not just for David Cameron’s economic agenda.  Any aspiring economy would benefit from Roger Bootle’s guidelines, not least those of Europe.  


Vortex bladeless turbines wobble to generate energy 

My thanks to a subscriber for this fascinating article from Gizmag.  Here is the opening: Looking somewhat like a giant reed gently swaying in the wind, the new Vortex bladeless wind-driven generator prototype produces electricity with very few moving parts, on a very small footprint, and in almost complete silence. Designed to reduce the visual and aural impact of traditional spinning-blade turbines, this new device takes advantage of the power contained in swirling vortices of air.

Many opponents of spinning wind turbines point to their supposed danger to birds and other flying animals, as well as their rather noisy operation and – particularly in commercial installations – their enormous size. Though these may well be excuses by those who prefer to stay with older electricity generating technologies that they know and trust, standard wind-driven turbines do have these issues and this tends to hold back their universal acceptance and use.

This is where the creators of the Vortex bladeless believe that their device has the advantage. A relatively compact unit, it relies on the oscillation of its reed-like mast in reaction to air vortices to move a series of magnets located in the joint near its base to generate electricity.

Though obviously not as efficient as a high-speed, directly wind-driven turbine, this is offset by the fact that the Vortex has fewer moving parts and is, according to the creators, up to 80 percent more cost effective to maintain. Coupled to the notion that it supposedly has a greater than 50 percent manufacturing cost advantage and a 40 percent reduction in its carbon footprint compared to standard wind turbines, the system also seems to offer direct economic advantages.

We've explored a number of bladeless wind-turbines before – the Solar Aero turbine being one (though, by definition, not really bladeless as it merely covered the spinning blades with a housing) and the Saphonianbeing another. The latter being more of a true bladeless "turbine," it still required hydraulic actuation of pistons to generate electricity, so its efficiency was probably not all that great (and, to be perfectly frank, it was not strictly a turbine either as it had no spinning parts).

The Vortex, on the other hand, is purported to take advantage of the swirling motion of wind and not direct force like the aforementioned units. This means that it can generate energy from the repeating pattern of vortices (known as the Kármán vortex street), which are generated as the air separates to pass by a blunt body, such as the Vortex structure itself.

This also means that groups of Vortex units can be huddled closer together as the disruption of air movement in the wind stream is nowhere near as critical as it is when positioning standard, blade-driven wind turbines. This will also help ameliorate the inherent efficiencies in each unit as they can be grouped much closer together than their standard turbine counterparts and, therefore, potentially generate more power per square meter.

David Fuller's view 

For years I have ranted about contemporary windmills and wind farms, because of their expense, maintenance costs, inefficiencies, noise, ecological damage to birds and other wildlife, and visual blight on the landscape.  In contrast, the vortex bladeless turbines are a vast improvement. 

What never ceases to amaze me, although I comment on it all the time, is the incredible inventiveness of people all over the world, in response to a needs-must requirement to protect ourselves and our planet from potential calamities such as manmade global warming and ‘peak oil’.  In fact, only a decade ago it was still fashionable to assume that the cost of crude oil would continue to rise remorselessly, ruining our economies in the process.  Today, thanks to technology, ever higher oil prices are only an OPEC pipedream. 

This item continues in the Subscribers’ Area.


Email of the day 

On an ETF for industrial commodities:

“Hello David/Eoin Is there an etf for industrial commodities? Many thanks,”

David Fuller's view 

Thanks for an interesting question.  You will see a number of ETFs in the ‘Funds’ section of our dropdown menu in the Chart Library, and it really depends on exactly what you are looking for.

This item continues in the Chart Library.


How Is India Doing? 

My thanks to a subscriber for these bullet points from Goldman Sachs.  Here is the opening:

The long-term positive macro story is still largely intact

We met with a number of technocrats in place in key ministries who seem

well in command of their brief. We heard no complacency as yet on the need

for reforms.

Quiet progress on longer-term structural reforms in some areas (National

Infra Fund, reducing energy subsidies, direct transfer of subsidies).

Significant progress on increasing coal production and dealing with

transport/environment clearance bottlenecks.

Recognition that the MAT was an 'own goal' and committed to defusing the


Feeling that corruption levels are diminishing and ease of doing business is


Strong conviction that some big-ticket reforms will in fact occur, especially

GST, where we heard widespread agreement that if passed, this would have

significant positive impact.

 Near-term progress has been slower than expected

Passing reform legislation through Parliament is proving an obstacle (the

opposition is focusing on polarizing issues like land reform, and retain control

of the Upper House)

Lack of progress in addressing balance sheet problems for PSU banks and

corporates, limiting appetite for private investments

General sense that onshore monetary conditions are tight and, in our view,

over-optimism about near term RBI easing

Rural incomes/spending under stress due to weak commodity prices and

lower government spending, with no obvious near term relief

David Fuller's view 

These and the other points mentioned sound reasonable to me.  India (weekly & daily) from the time Narendra Modi threw his hat into the electoral ring in September 2013, before peaking at 30000 in early March of this year.  I have maintained that it would experience a well deserved consolidation before eventually moving higher. 

This item continues in the Subscribers’ Area, where the list of bullet points is also posted..


The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  I think all investors will benefit from guest speaker David Brown’s new presentation. I learned from it, not least how to assess some familiar data more clinically.  In other words, he shows us how to think a little more clearly, particularly in terms of identifying bear markets near their tops.  This is never easy given all the emotions involved.  Many people jump the gun, as you will have seen over the last few years, which can leave them susceptible to overstaying when the important and often overlooked warning signs are flashing.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  

Euro Drops After ECB Official Pledges to Speed Up Bond Purchases 

This article by Rachel Evans for Bloomberg may be of interest to subscribers. Here is a section: 

Improving economic data from the euro area has fueled speculation policy makers may curtail asset purchases before a September 2016 end date, lifting the euro from a 12-year low.

ECB President Mario Draghi attempted to quell such talk last week, saying the program would be implemented “in full.”

The euro fell versus 15 of 16 major peers as Coeure’s comments about injecting money more quickly into the euro-zone economy emerged early Tuesday in the text of a speech delivered in London the day before. ECB Governing Council member Christian Noyer said separately in Paris on Tuesday that the central bank is ready to extend Q

“The euro has lookeE if needed.

d pretty shaky after those comments, especially that they’re front-loading the effort of QE,” said Fabian Eliasson, head of U.S. corporate foreign-exchange sales at Mizuho Financial Group Inc. in New York. “The overall direction is fairly skewed toward the downside.”

Eoin Treacy's view 

Having embarked on an 18-month process of re-expanding its balance sheet, it would be cavalier of the ECB to think that it had achieved success in reigniting economic activity after only three months. There is little prospect of the ECB ceasing its purchase program as long as the size of the balance sheet is still below €3 trillion but they may alter the types of instruments they purchase. 


Musings From the Oil Patch May 19th 2015 

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report. Here is a section: 

It is possible that what is happening in China with respect to EVs and hybrid vehicles is a precursor of how America’s vehicle sales and distribution models will work. In response to air pollution and vehicle congestion in major cities, China has begun a strategic initiative to build EVs and is encouraging foreign manufacturers and their partners to join the effort. China expects as many as 40 new EV models go on sale in the country this year, triple the number of new EV models available two years ago. As described in an article in Business Week, Toyota Motors (TM-NYSE) will only market an EV in China as it is committed to hydrogen-powered vehicles as a better alternative to EVs elsewhere. In fact, its dedication to hydrogen-powered vehicles is why Toyota ended its all-electric Rav4 EV crossover partnership with Tesla Motors, Inc. (TSLA-Nasdaq).

China has new emission guidelines that call for a 28% improvement in average per vehicle fuel consumption by 2020, something that likely requires manufacturers to embrace plug-in EVs. Since China controls the permitting of new manufacturing facilities, automakers are almost forced to embrace EVs if they want to have plants capable of manufacturing new vehicles. According to an analyst with A.T. Kearney in Shanghai, China, all the new EV models coming to market may enable the industry to get 1-2 million EVs and other new energy vehicles on the country’s roads by 2020. That achievement, however, will still fall well short of the government’s target of five million EVs being on the road.

While China may be the model, the technology still is short of delivering a reasonably-priced EV with a traveling range similar to that of an ICE vehicle, or roughly 200 miles on a single charge. There is also the issue with fast charging of EVs, as drivers will measure charging times against the length of time they must spend at the gas pump filling up their ICE vehicle. Environmental concerns are an important consideration for EVs, but they were largely bought by people more interested in impressing their neighbors with their statement about environmental concern than their economics. The fact these clean-fuel vehicles are now being traded in for conventionally-fueled vehicles at an accelerating rate suggests that economics are clearly trumping environmental considerations. Whether this is a good thing or not remains to be seen, but the fact it is happening tells us how powerful the pocketbook is for consumer purchasing decisions. It also tells us that auto manufacturers need to address the shortcomings of EVs and hybrids if they want them to become a competitive auto market segment. Then again, those manufacturers may just elect to let the draconian U.S. fuel-efficiency standards force consumers to buy these less desirable vehicles.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

As the world’s largest car market, China’s regulatory structure will make waves around the world. If China is insisting on electric vehicles in order to contain pollution then car manufacturers will have little choice but to build them. 

An additional thought with regard to range anxiety: A large number of people, at least in Southern California lease they vehicles. In order to get the best price for the vehicle at the end of the lease, mileage has to be kept low. This means that many people rent a car for long trips and use their own car for commuting. I wonder if it is conceivable that the same model will expand beyond SoCal with the advent of electric vehicles which may or may not have overcome their range issues within the next decade. 


BHP left with $2.8bn of reject assets after spinoff 

This article by David Stringer for Bloomberg may be of interest to subscribers. Here is a section: 

Despite BHP Billiton’s spin off and sale of about $15 billion of unwanted assets over the last three years, the biggest miner remains saddled with a portfolio of even harder-to-shift rejects.

A total of nine assets — from a US thermal coal mine to UK oil and gas platforms — haven’t made the cut for a new slimmed-down parent or the demerger company South32.

The unloved operations, valued at more than $2.8 billion according to RBC Capital Markets, are hampering Chief Executive Officer Andrew Mackenzie’s quest to halve the size of BHP’s core portfolio to focus on big ticket earners including crude oil, iron ore and copper.

“They did the big clean up with South32 and these are what are left,” said Michelle Lopez, a Sydney-based investment manager at Aberdeen Asset Management Ltd., which holds BHP shares. “I’m sure they’ve been on the sale slate for a long time. It’s a disappointment.”

Global mining companies are trimming portfolios to focus more closely on their most profitable operations as commodity prices have tumbled and amid a drive to reduce costs.

BHP, Rio Tinto Group and Glencore Plc have agreed the sales of $14.3 billion of assets since 2012, according to data compiled by Bloomberg.

An attempt to sell one of BHP’s reject assets, the Nickel West unit of mines and facilities in Australia, ended in November after it failed to attract a suitable bid. BHP has taken $1.8 billion in writedowns on the operation since 2012.

Eoin Treacy's view 

BHP Billiton has a market cap of approximately £78 billion. South32, which represents the spin-off of industrial metal businesses not least alumina, has a market cap of over £6 billion so the additional assets the company could neither sell nor spin-off represent a comparatively small proportion of the overall business. I have added both the UK and Australian listings of South32 to the Chart Library. 

]]> Broker spotlight, including HSBC, Plus500, Rio Tinto, ITV, Reed Elsevier... Tue, 19 May 2015 10:23:00 +0100 US broker Bernstein has downgraded HSBC (LON:HSBA) as the risk/reward balance is evenly matched at the Asia-focused bank.

Potential upside drivers such as the yield and US rate rises are priced in, but they also provide downside support leaving the shares with little place to go.

“We don’t see any clear avenues for management to break out of this deadlock now – especially in an environment where income is sluggish.

“Looks like a slog to keep income and costs flat and continue to build capital.” 

‘Market perform’ in the new rating with a 650p target price. 

Spread bet firm Plus500 (LON:PLUS) tumbled yesterday as it froze 55% of UK accounts due to money laundering checks.

Liberum remains a buyer following the decline, but says how many clients it loses and the longer term brand damage are the key issues. 

Its price target is under review but fair value is 490-570p, says the broker. digital entertainment (LON:BWIN) has been kept as ‘underperform’ by Credit Suisse with a target price of 80p despite the recent outbreak of bid interest.

The broker says there is strategic rationale for the potential acquisition of by GVC or 888 Holdings, with significant synergy potential.

But the broker sees limited upside to the current share price, even in a scenario where a deal completes. 'Fair value' from a deal is 114p, Credit Suisse adds.

US broker Jefferies remains switched on to broadcaster ITV (LON:ITV), rating the shares a 'buy' and lifting the target price to 291p from 231p.

"ITV remains a focused way to play the UK..," says analyst David Reynolds, who add that the broker thinks it's uniquely positioned to leverage international syndication opportunity.

"The M&A debate continues to rage and ITV looks more attractive not less as Crozier's business model transformation sustains."

In another upgrade, heavyweight Goldman raises its rating on information provider Reed Elsevier (LON:REL) to 'buy' from 'neutral'. 

The broker note boosted the shares, which were up 2.1% making the company  the second biggest gainer on Footsie.

Sage Group (LON:SGE) was given a price target upgrade by Jefferies to 650p, from 575p, and the recommendation was a repeated 'buy'.

Among the big losers was miner BHP Billiton (LON:BLT) which shed 2.84% to 1,431p.

HSBC moved its rating on the group to 'reduce' from hold, while JP Morgan Cazenove also had the daggers out.

It lowered the target price to 1,425p from 1,600p and retained a 'neutral' stance.

Rival mining giant Rio Tinto (LON:RIO), meanwhile,  has finally signed off the huge underground development plan for the Oyu Tolgoi copper mine in Mongolia. 

Bank of America Merrill Lynch say it is good news though it had already included underground production commencing in 2019, in its forecasts, hence the target price remains 2,700p and the rating ‘underperform’.

Satellite communications group Inmarsat (LON:ISAT) should not be affected longer term by the rocket failure that delayed its latest satellite launch, Merrills said.

The rocket would have launched I-5 F3, the satellite required for global mobile coverage, but the delay is expected to have a small negative effect on 2015 earnings. Buy says the broker.

]]> Northland Capital Partners View on the City Entertainment One, Caledonia Mining and Advanced Oncotherapy Tue, 19 May 2015 07:14:00 +0100 Advanced Oncotherapy (LON:AVO) Completion of key milestone 

Market Cap: £132m; Current Price: 9.9p

  • Successful RF Power testing of the first CCL unit
  • Advanced Oncotherapy (AVO) announced that the Radio Frequency (RF) Power tests of the first Coupled Cavity Linac (CCL) unit have been successfully completed at the Company's testing facility at CERN in line with expectations.
  • The RF Power units generate the high-power needed to accelerate protons to speeds whereby they can effectively target cancer cells.
  • This announcement follows the successful completion in January of the LIGHT system's first CCL unit, an accelerating structure that consists of a series of cells that accelerate protons from energies of 37.5 Mega-electron Volts (MeV) to the full 230MeV required to treat all radiosensitive tumours.

NORTHLAND CAPITAL PARTNERS VIEW: AVO continues to progress the development of its flagship LIGHT system. Notably, the company reiterated that it expects the first unit to be installed in Harley Street, London, by the end of 2016 and first patient treatments expected in 2017.


Entertainment One (LON:ETO) – Prelims

Market Cap: £942m; Current Price: 381p

  • Substantial growth aspirations
  • Underlying EBITDA +16% to £107.3m (+11% to £117.2m on a pro forma basis) and adj. PBT +13% to £88.8m – in line with consensus – on revenue down 4% to £793m (pro forma) with a strong performance in Television (+32%) offset by lower revenue in Film (down 13%). Adj. free cash flow of £41.0m (FY14: £18.8m). 10% increase in dividend to 1.1p. Adj. EPS +12% to 23.5p.
  • Substantial growth in Television Production & Sales content anticipated with the first full-year contributions from Paperny Entertainment and Force Four Entertainment resulting in >850 half hours of content in FY16 (572 in FY15). Pro forma investment in acquired content and productions increased 3% to £285.5m. Annual independent valuation of ETO’s library has increased 22% to $801m.
  • Going forward, the The Mark Gordon Company (where ETO acquired a 51% stake in January) will be fully consolidated rather than treated as a JV. Since the acquisition, two new series have been green-lit by US networks for first seasons. 

NORTHLAND CAPITAL PARTNERS VIEW: Strong set of financials with the diversified nature of the business meaning that Television Production & Sales and Family divisions were able to offset the revenue weakness in Film. The latter is expected to pick up in 2015 and the Film Division is scheduled to release 250 films in FY16. The management continues to execute on its aggressive expansion plan (to double the size of the Group within five years) through organic growth and via acquisition with the focus on getting closer to the creation of content. Shares trading on 12.8x FY16. 


Caledonia Mining Corporation (LON:CMCL): Resource upgrade

Market Cap: £22m; Current Price: 43p

  • Moving 86,391oz Au at a grade of 5.47g/t Au from Inferred to Indicated category
  • Caledonia Mining Corporation has upgraded 86,391oz of gold (Au) at a grade of 5.47g/t Au from Inferred to Indicated Resource category as well as adding a further 4,599oz Au at a grade of 3.05g/t Au to the Indicated Resource category. This upgrade is based on drilling completed at depth below the AR Main and Blanket Sections of the Blanket Gold Mine located in Zimbabwe.

NORTHLAND CAPITAL PARTNERS VIEW: It is positive to see Caledonia Mining Corporation increasing confidence levels in its resource base at its 49%-owned producing Blanket Gold Mine. The upgrade of 86,391oz Au is around two years of production based on last year’s production rate, so is a significant development for the Company. Caledonia now expects to further increase the pace of exploration drilling with additional drill rigs that have now been commissioned.

]]> Microsoft Windows 10 is on board the Spark Platform Tue, 19 May 2015 07:03:00 +0100 Microsoft Windows 10 is on board the Spark Platform 

This press release caught my attention over the weekend. Here is a section: As a 3D printing platform, Spark brings the power of 3D printing into other technologies. By pairing with Microsoft, Spark will enable Windows 10 users to directly access optimized and more reliable 3D printing experiences. Additionally, Microsoft's worldwide developer community can freely access Spark's APIs and development platform to create 3D printing enabled applications for the Windows platform. 

Steve Guggenheimer, Corporate Vice President of Developer Platform & Evangelism and Chief Evangelist for Microsoft explains it this way:

"We’re approaching a tipping point with 3D printing, which means there is a huge market opportunity waiting for companies developing applications for Windows 10. By providing the 3D printing building blocks found in the Spark platform and optimizing it for Windows 10,

Autodesk has empowered our global developer community to confidently enter this new world of additive manufacturing.”

All of this means that the steps between ideation, design, and physical creation in additive manufacturing have just become quite a bit more streamlined. The future is now, and it’s powered by Spark. 

Eoin Treacy's view 

Autodesk is making a big push to become the go-to company for 3-D printing. As a major manufacturer of Computer Aided Design (CAD) software one could argue that producing the tools necessary to take 3-D printing to the next level is a natural progression. Early 3-D printer manufacturers rallied impressively from 2012 and into 2013 but had to engage in an aggressive M&A battle to maintain their top position. Not only have they had difficulty integrating all of the companies they bought, but 3-D Systems and Stratasys now run of the risk of being left behind by evolving technological innovation they have no part in. 


The Big Golden Book 26 Gold Stocks in the One Report 

Thanks to a subscriber for this report from Morgan Stanley focusing on the Australian gold mining sector. Here is a section: 

Our gold price outlook remains relatively subdued:

A strengthening USD, rising US interest rates and a muted inflation outlook are all headwinds to gold prices, though geopolitical tensions (such as rising concerns around Greece’s debt position) and extensions to consensus views on timing of US rate tightening have added volatility. Under this backdrop, equity selection is critical.

Reduced capital spend has been the collective approach: 

Within the ASX gold miners discussed in the Big Golden Book, total cash costs have declined ~7% since the last Golden Book six months ago, while production is up 4%, implying relatively flat absolute operating costs over the period. The “cost-out” trend continued to include some capital spend reductions, particularly from Newcrest following completion of Cadia East and Lihir investments, but capex reduction trend looks to have slowed, with improved sector free cash generation appearing to now include real cost reductions at the operating level. 

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

Australian gold miners have faced a number of the same issues as their counterparts elsewhere but have been insulated somewhat by the weakness of the Australian Dollar. The price of gold in Australian Dollars dropped from A$1800 to A$1400 between 2011 and early 2013. It broke out of a yearlong range in January and has returned to test the upper side of the underlying base near $1500. A sustained move below that level would be required to question medium-term scope for additional upside.  


Ivanhoe, First Quantum lead the pack 

This article by Kip Keen for Mineweb may be of interest to subscribers. Here is a section: 

Leading the pack is, hands down, First Quantum: up 50%. It had pretty close company, however. Copper Mountain Mining, Imperial Metals, Lundin Mining, and Turquoise Hill all zoomed ahead between 30-40%. Not far behind with 20-30% gains were Sherritt, Capstone, Freeport, Hudbay, and Southern Copper. Thereafter came Antofagasta, Trevali, Taseko and Nevsun between 10% and 20%. Then in the single digits, were BHP Billiton, Rio Tinto and Vedanta. Among a selection of leading base metal resource developers – 19 of the larger cap juniors on the TSX or TSX-V – the impact was more muted but still positive (see chart below). There were three heavy losers during the period: Highland Copper (-33%), Pilot Gold (-32%) and Panoro (-25%). Continuing up the ladder, but still in negative territory, were Rathdowney (-9%), North American Nickel (-8%), NGEx (-2%). Drawing more or less even was Western Copper and Gold

Eoin Treacy's view 

Mining companies have been among the most unloved of any sector over the last few years as major declines in iron-ore and coal contributed to investor malaise while other sectors such as biotech took off. This forced them into major periods of consolidation where costs were cut, expansion cancelled and cashflow optimised. A number are now completing medium-term bases.  


Email of the day on an ETF for industrial commodities 

Is there an ETF for industrial commodities? Many thanks. 

Eoin Treacy's view 

Thank you for this question which others may have an interest in. We have categorised all the funds in the Chart Library by domicile, currency, objective, type, geographic focus and theme. For commodity related funds look under the Fund Objective folder, then the Industrial Metals or Materials folders. 


Speaking Engagement  

Eoin Treacy's view 

I’ve agreed to give at talk for the upcoming Round-the-Clock-Trader webinar event on Thursday. The topic of my talk will be currency volatility and its role in equity market returns which I anticipate taking 35mins. Since I’ll be the last speaker, starting at 8:00pm British Summer Time, we’ll have plenty of time to talk about whatever it is delegates are interested in. It’s free to sign up just follow this link.  

]]> Broker spotlight, including, 888 Holdings, Royal Mail Group, SABMiller and BHP Billiton Mon, 18 May 2015 07:49:00 +0100 Online betting group (LON:BP.Y) was in the news this morning and received an upgrade from banking group Exane BNP Paribas, which raised the stock to 'neutral' from 'underperform'.

It came as 888 Holdings (LON:888), itself the subject of a failed £700mln takeover bid by bookmaker William Hill in February, confirmed market talk that it had made a takeover proposal to Bwin.

Elsewhere, postal group Royal Mail (LON:RMG)  was sent positive vibes from the investment bank Investec, which moved to 'buy' from 'reduce' on the stock.

Earlier this month,  the group was boosted after Dutch-owned postal firm Whistl, formerly TNT, has suspended deliveries after private equity backer LDC pulled its funding to help expand the business.

JPMorgan Cazenove is upbeat on brewer SABMiller (LON:SAB), repeating an 'overweight' stance and the share price target lifted to 4,100p from 4,000p. Last week, it announced it was quenching its thirst for craft beers with a move to buy London-based brewer Meantime.

The biggest loser on Footsie was diversified mining giant BHP Billiton (LON:BLT), down 4.21%, to 1,467p. It was  downgraded to 'hold' from 'buy' by Morningstar.

Another notable downgrade on Monday was BP (LON:BP.), which was lowered to 'sell' from 'neutral' by heavyweight Goldman.

]]> Northland Capital Partners View on the City Starcom Plc Mon, 18 May 2015 07:21:00 +0100 Starcom (LON:STAR) – CORP: Prelims Market Cap: £5.0m; Current Price: 5.87p From Friday: Difficult 2014 but up to date product set gaining traction

  •  Revenue under the revised revenue recognition policy was $5.0m down 14% against the restated FY13. In April, management announced the decision to change the policy regarding ‘bill and hold’ contracts and not recognise revenue relating to bill and hold prior to the delivery of goods. Recurring revenue from Starcom Online was flat at $1.3m.
  •  Gross margin increased to 50% (FY13 restated: 39%) and gross profit increased 7.0% to $2.5m but increased operating costs led to an adj. operating loss of $1.4m (FY13 restated: $0.9m). On top of this, there were provisions for doubtful debts of $1.3m, including $770k from the Ukrainian distributor who has been forced to cease trading given the local political situation. This customer is looking to re-establish his business elsewhere and continues to promise eventual repayment of this debt. 
  •   Cash was flat at $0.2m but net debt increased to $1.1m (FY13: $0.8m) with operating cash outflow offset by last February’s placing (£2m). The buy and hold contracts secured in H2 FY14 resulted in an $0.6m increase in inventories to $3.4m (as inventory has reverted to the company) but there was an $1.1m reduction in trade receivables (to $1.9m) and a $1.2m reduction in trade payables. This shift in working capital has placed a short term cash strain on finances but it is anticipated that the inventory will be realised through new sales during 2015. Management is considering a number of proposals regarding its cash requirements. 
  •   The product set is now fully developed and is being actively promoted globally. The endorsement of Helios by the major distributor of Porsche cars in Germany has provided an important reference site. The smaller Helios TT designed for the motorcycle market is making initial sales. Triton has been successfully tested by a major pharmaceutical company and a large shipping forwarding agency and revenues are now starting to flow. A new version of Watchlock, jointly developed by partner Mul-T-Lock (part of Assa Abloy), is scheduled to be launched in Q4. Year end Dec Revs ($m) Adj. EBITDA ($m) Adj. PBT ($m) Tax (%) Adj. EPS (c) PER (x) Div (p) Net cash ($m) Yield (%) 2013A 5.8 -0.7 -1.9 - -0.02 NEG - -0.8 - 2014A 5.0 -0.9 -1.5 - -0.02 NEG - -1.1 - 2015E Forecasts under review 2016E SOURCE: Northland Capital Partners Limited. 
 NORTHLAND CAPITAL PARTNERS VIEW: A difficult 2014 with the impact of the loss of the Ukrainian customer (that accounted for c. 20% of 2013 sales) and the slower than expected uptake of the WatchLock product. The decision to adopt the more conservative revenue recognition policy impacted the top and bottom lines for FY14 and FY13 but also reduced Trade Receivables and increased Inventories. As a result, the balance sheet is stretched in the short term and management are considering a number of options. On the positive side, Starcom has a range of up to date products and is generating revenues from multiple sources. It has also geographically diversified the business with wins in multiple territories. As these new products gain traction, we anticipate the business returning to growth and profitability.

]]> #TEST Fri, 15 May 2015 14:50:00 +0100 Broker spotlight - TalkTalk, Merlin Entertainments, SSE, BHP, Antofagasta Fri, 15 May 2015 08:12:00 +0100 Analysts were at opposite ends of the line on TalkTalk (LON:TALK) this morning.

Barclays topped up its share price target on the telecoms provider by 60p to 380p.

RBC Capital Markets, meanwhile, despite remaining keen, lowered its prediction for TalkTalk shares by 10p to 410p.

It comes after broadband, fixed-line and mobile provider raised its revenue targets yesterday after reporting solid full-year figures.

The group is continuing to shift to a “quad-play” strategy under chief executive Dido Harding - bundling mobile, broadband, TV and home phone deals as standard.

However, it is under pressure from rivals BT and Sky and Harding has been voicing her competition concerns to regulations lately, specifically around BT’s takeover bid for EE.

Elsewhere, Barclays was also keen on Legoland owner Merlin Entertainments (LON:MERL), which told investors yesterday it made a ‘satisfactory’ start to the year.

It did warn of a weaker euro, which could affect UK visitor numbers, but Barclays stayed ‘overweight’ on the theme park operator and added 60p onto its original 450p target price.

Deutsche Bank decided to send out a note on UK energy utilities at the end of the week.

The broker believes SSE (LON:SSE), like Centrica, is likely to enjoy higher energy retail margins under a Tory majority government than it would have done under Ed Miliband

“As with Centrica (Hold, TP 250p), we increase our assumed energy retail margin for SSE from 4% to 5% following the election of a Conservative majority government.”

It now reckons SSE shares are worth 1560p, up from its earlier 1460p verdict.

Onto oil - and Jefferies still rates BHP Billiton (LON:BLT) a 'hold' although the broker slashed 150p from its target price today, which now stands at 1450p. 

Shares in BHP are currently changing hands for 1,555p.

Miner Antofagasta (LON:ANTO) also suffered a downgrade on Friday. 

Liberum Capital now has a ‘sell’ rating on the copper producer and wiped 100p from its original 800p target.


]]> Draghi Says ECB Policy Potent as Low-Rate Risks Monitored Fri, 15 May 2015 08:05:00 +0100 Draghi Says ECB Policy Potent as Low-Rate Risks Monitored 

Here is the opening of this informative report from Bloomberg: Mario Draghi said the European Central Bank’s non-standard measures have proven effective, and low interest rates haven’t yet led to financial imbalances.

Unconventional actions “have proven so far to be potent, more so than many observers anticipated,” the ECB president said in a speech in Washington. “While a period of low interest rates will inevitably result in some local misallocation of resources, it does not follow that it has to threaten overall financial stability” and “there is little indication that generalized financial imbalances are emerging,” he said.

The ECB cut its benchmark interest rate to a record-low 0.05 percent in September and has relied on a range of non-standard stimulus to resuscitate the 19-nation economy. Policy makers have provided banks with loans designed to fuel credit supply and started buying government bonds in March, while urging governments to push ahead with structural reforms.

“Structural reforms that increase confidence in economic prospects and encourage entrepreneurs to capitalize on today’s extremely accommodative financing conditions will make our policy commensurately more powerful,” Draghi said in his speech on Thursday.

He said that such reforms are essential to ensure the ECB’s policies have their desired impact.

“It is ultimately only a combination of policies, that are complementary and mutually consistent, that will allow our policy to reap its full effects –- and to bring about a lasting return of both prosperity and stability for the whole euro area,” he said.

Draghi reiterated that the ECB is committed to implementing its 1.1 trillion-euro ($1.2 trillion) asset-purchase plan “in full,” and “in any case” until inflation has recovered lastingly.

“While we have already seen a substantial effect of our measures on asset prices and economic confidence, what ultimately matters is that we see an equivalent effect on investment, consumption and inflation,” he said.

David Fuller's view 

Super Mario Draghi is the best thing that has happened to the EU since the 2008 financial crisis.  Moreover, having won his long battle to determine his own ECB monetary policy last year, he is becoming bolder in urging governments to implement structural changes.  The requirement for this is so obvious to anyone with a modicum of insight regarding what enables economies to prosper, but will any of the EU’s bureaucratic socialists pay attention?  I certainly hope so and there are quiet capitalists in the EU but socialism remains a form of religion for too many. 

This item continues in the Subscribers’ Area.  


S&P 500 Rises to Record on Weaker Dollar, Easing of Bond Selloff 

Here is the opening of a short-term summary report from Bloomberg:

U.S. stocks rose for the first time this week, with the Standard & Poor’s 500 Index topping its closing record, as a weaker dollar boosted multinational companies and a bond-market selloff showed signs of easing.

The Standard & Poor’s 500 Index increased 1 percent at 3:03 p.m. in New York. The gauge has climbed 1.8 percent since falling to a one-month low May 6. Apple Inc. and Microsoft Corp. jumped more than 2 percent. The Bloomberg Dollar Spot Index retreated 0.3 percent, headed for a fifth weekly decline. The yield on 10-year Treasuries fell five basis points to 2.24 percent while German bund rates slipped two basis points. Gold rose to the highest since February.

The Bloomberg dollar gauge has retreated from its highest level in data back to 2005 as economic reports undermine prospects for higher borrowing costs. An unexpected drop in wholesale prices fueled doubt about whether inflation is high enough to warrant a rate increase. Declines in the currency have generally boosted shares of the biggest U.S. companies on speculation they make American products more attractive.

The S&P 500’s record was its first since April 24. The gauge fell as much as 1.8 percent through May 6, amid concern the Fed would raise interest rates even with worsening economic data. Stocks have whipsawed between gains and losses in the past six weeks as investors weigh whether a first-quarter slowdown in growth was temporary. It is 0.2 percent higher this week.

David Fuller's view 

Corporate growth has been much stronger than national growth, on average, since 2009.  However, looking ahead the global economy is now likely to do somewhat better, due to increasing confidence, continued monetary policy accommodation and low commodity prices which are now just beginning to recover.

This item continues in the Subscribers’ Area. 


These 10 Pieces of Art Just Sold for Almost $800 Million 

Here is the opening of this informative article from Bloomberg:

The art market is on such a tear even the insiders are scratching their heads. Since New York’s spring sales started last week, at least $2.1 billion of art has been sold at Christie’s and Sotheby’s, with the top 10 lots accounting for almost $800 million.

Christie’s said collectors from 35 countries were bidding at its May 11 sale while Sotheby’s said clients from more than 40 countries were out in force the next evening. They jockeyed for Impressionist, modern, postwar and contemporary art.

“There’s a lot of money out there and people are chasing great works,” said Mera Rubell, who, along with her husband, Don, runs a private museum in Miami showcasing their collection. “Now the young artists are selling for millions.”

That means bargain hunters will be sorely disappointed: Picasso and Monet may be at record highs, but prices for living (if not quite young) artists are nipping at their heels. The 60-year-old Christopher Wool’s canvas spelling “Riot” in chunky black letters sold for $29.9 million — the same price paid for a 1948 Picasso portrait of his lover Francoise Gilot.

Records were smashed. In just 11 minutes, bidding for a Picasso surged from $100 million to $160 million before settling at $179.4 million, the most expensive work ever purchased at auction. The value of the work increased by 462 percent.

David Fuller's view 

These astonishing art prices tell us several things.  1) What we already knew is that leading stock markets have done very well.  2) Liquidity is abundant.  3) The deflation that we are experiencing is mostly positive and created by technology.  4) Confidence among wealth creators is very high.  5) The global economy is much more likely to expand than contract. 

What could go wrong?

This item continues in the Subscribers’ Area.


The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  Markets remain fascinating and guest speaker David Brown returns with a new subject certain to be of interest to every hands-on investor.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  


DoubleLine Presentation: Summer insects 

Thanks to a subscriber for inviting me to Jeff Gundlach’s presentation yesterday down the street in Beverly Hills. The presentation was an updated version of the talk he gave in May with a number of additional slides on debt issuance. I posted that presentation in Comment of the Day on May 7th.  

Eoin Treacy's view 

The title of yesterday’s talk “summer Insects” is in reference to a quote from the Chinese philosopher  Zhuangzi “You can’t discuss ice with a summer insect” This is in reference to the fact that almost everyone active in the bond market today has no experience of trading in a secular bear market. This is a point I have made repeatedly over the last few years not least at The Chart Seminar. If you started out in your career in 1980 and bought the dips in Treasuries for the next thirty five years you would be a wealthy person today and will have cruised into late middle age without experience of a secular bear market. 


Google reveals lessons learned (and accident count) from self-driving car program 

This article by Francis X Govers III for Gizmag may be of interest to subscribers. Here is a section: 

Urmson's statements came in the form of a post on Backchannel, which followed an Associated Press report revealing the accident count in the wake of a new California law requiring Google and others to report accidents involving its self-driving cars to the state. Google reported three accidents between May 2014 and May 2015, while Delphi, which has its own version of a self-driving car, an Audi SQ5, reported its vehicle was struck while waiting to turn at an intersection and not under autonomous control.

In his post, Urmson details that the Google Cars were rear-ended seven times by other cars, side swiped twice, and hit once by a car running a stop sign, with the majority of the accidents occurring on city streets rather than highways. The 1.7 million miles (2.7 million km) the cars are reported to have traveled combines the distance traveled autonomously and under manual control.

Eoin Treacy's view 

The more data that is recovered from self-driving cars, the more confidence we can have that they are approaching commercial utility. Last week’s announcement that Nevada is pressing ahead with legalising autonomous vehicles is a major step forward for companies like Daimler and Google pioneering the rollout of this technology. 


Solar and Silver 

Eoin Treacy's view 

David posted an article from the Telegraph on Monday highlighting the role silver plays as a conductor in solar cells. Considering the fact that silver suffered from a loss of demand with the demise of photographic film, the potential for growth in another industrial sector is a potentially important bullish catalyst. In order to gain some additional perspective on just how much of a growth sector this might represent for sliver there are two key considerations. The first is demand growth projections which are bullish and second the capacity for technological innovation which is potentially bearish.

]]> Northland Capital Partners View on the City Circassia Pharmaceuticals and Richoux Group plc, Eastbridge Investments and Richoux Group plc Fri, 15 May 2015 07:40:00 +0100 Eastbridge Investments (LON:EBIV) – CORP: Placing

Market Cap: £1.2m; Current Price: 0.85p


  • Placing for funds to invest in the property and real estate sector
  • Placing to raise £100k at 0.87p/share with new investors. The funds will be used to make investments in line with Eastbridge’s Investing Policy in the property and real estate sector.
  • The Board has already identified a number of investment opportunities and the funds will enable it to accelerate the evaluation and execution of those prospects. 
  • Upon Admission, Eastbridge will have a total of 208.1m shares in issue, of which 51.3m are held in treasury.



Circassia Pharmaceuticals Plc (LON:CIR) Intended acquisitions and fundraise  

Market Cap: £606m; Current Price: 320p


  • Intention to acquire Aerocrine and Prosonix
  • Circassia announced that it intends to acquire Aerocrine and Prosonix.
  • Aerocrine, is a Swedish listed company focused on the development and commercialisation of medical diagnostic products for use in the diagnosis and management of patients with asthma.
  • Circassia made an all cash offer for Aerocrine of up to SEK 1.78 billion (approximately £139 million) in total consideration.
  • Prosonix, is a privately-held specialty pharmaceutical company focused on the development of product candidates for the treatment of asthma and/or chronic obstructive pulmonary disease (COPD).
  • Circassia made an offer for Prosonix of an aggregate cash consideration of up to £100 million.
  • Circassia separately announced today that it proposes to raise £275 million, through a Placing and Open Offer.


NORTHLAND CAPITAL PARTNERS VIEW: Circassia is rapidly becoming a self-sustaining specialty biopharmaceutical company. These acquisitions enhance the group’s ability to commercialise its late-stage pipeline of potential new allergy and asthma products once approved. 


Richoux Group plc (LON:RIC): Finals

Market Cap: £18m; Current Price: 19.5p

  • Healthy revenue and EBITDA growth
  • Revenue was +10.4% YoY at £12.7m as the business benefited from the new restaurant openings in 2013. Adj. EBITDA was +10% YoY after adjusting for opening costs, impairment and onerous lease provisions at £1.6m. No dividend recommended.
  • There are currently seventeen restaurants which operate under Richoux, Dean’s Diner, Villagio and Zippers brands. As at the end of FY14, the business had c. £4m of net cash on the balance sheet with which to further expand into new sites. 
  • Outlook statement reads positively where FY15 has started well and management reports that trading in the new year is in line with expectations. There are further plans afoot to open a new Richoux restaurant off Gloucester Road in central London and a more measured roll-out of Dean’s Diner is planned with a further two site openings towards the later part of FY15, in Orpington and Hempstead Valley, Kent.

NORTHLAND CAPITAL PARTNERS VIEW: The business produced a creditable performance in FY14 where growth in underlying EBITDA matched growth in revenue and there is sufficient cash on the balance sheet with which to add more sites as alluded to above. There are no forecasts in the market for the business but we estimate the stock trades on c. 8.8x EV/EBITDA for the financial year to December 2014, which doesn’t appear overly demanding in our view. The additional Richoux and Dean’s site openings will also add to the scale of the business. 

]]> Broker spotlight - Mondi, Compass Group, Royal Mail, SABMiller Thu, 14 May 2015 08:16:00 +0100 Brokers pushed up their targets for paper maker Mondi (LON:MNDI) this morning after the group’s results were packed full of positives.

Shares soared yesterday as the South African firm reported an operating profit of €236mln in the three months to March – 29% above the comparable period last year.

Wood costs, paper for recycling, resin, energy and chemicals costs were all lower than last year, while currency movements also helped out.

Today, Credit Suisse upped its target price for the shares by 145p to 1630p with an ‘outperform’ rating. Shares currently trade at 1433p.

Deutsche Bank also chipped in. It already rated Mondi as a ‘buy’ but raised its share price forecast by 130p today to 1640p.

Elsewhere, catering company Compass Group (LON:CPG) received an upgrade from Societe Generale.

The French broker reckons shares are now worth 1190p after Compass reported an increase in first half earnings on Wednesday.

It also said full-year guidance remains "positive and unchanged. Compass shares were trading hands for 1,117p this morning.

Credit Suisse posted a more positive note on Royal Mail (LON:RMG).

Despite keeping its ‘underperform’ rating on the postal group intact, the Swiss broker added 40p to its share price target, which now stands at 410p. 

Share in Royal Mail currently trade at 480p. 

Nomura, meanwhile, stayed neutral on SABMiller (LON:SAB) but added 200p onto its share price target.

The broker now reckons shares in the brewing giant are worth 3,600p after it beat full-year estimates yesterday.

]]> Northland Capital Partners View on the City Churchill Mining, Lookers PLC, Ideagen plc and ValiRx Thu, 14 May 2015 07:47:00 +0100 Churchill Mining (LON:CHL) – CORP: Placing

Market Cap: £19.8m; Current Price: 16p

  • Placing to raise £850k
  • Placing to £850k at 10p/share plus a one for two warrant exercisable at 15p/share and expiring on 30th June 2018. The placing shares represent c. 6.4% of the enlarged issued share capital.
  • The proceeds will be used to continue the progress of its international arbitration claim against the Republic of Indonesia at the International Centre for Settlement of Investment Disputes (ICSID) in Washington DC.
  • Directors (David Quinlivan, Fara Luwia and Nicholas Smith) have subscribed for 2.55m shares in the placing. Cause First Ventures has subscribed for 1.65m shares and currently holds 15.9m (12.8%) of the share capital. Its holding will increase to 13.2% post placing.
  • Northland Capital Partners acted as broker to the placing and will receive warrants to subscribe for 100,000 new shares on the same terms as the placing warrants.
  • Placing shares to be admitted on 19th May and the enlarged share capital will consist of 132.7m shares.


ValiRx plc (LON:VAL) Development update 

Market Cap: £8m; Current Price: 0.21p

  • Completion of pre-clinical studies at ValiSeek
  • ValiRx issued a development update on the progress of pre-clinical studies at ValiSeek Limited.
  • ValiSeek was formed to progress the novel cancer treatment drug, VAL401, towards Clinical Efficacy trials for the treatment of lung cancer and other oncology indications.
  • ValiSeek reported on the completion of its pre-clinical toxicology and pharmacokinetic studies. 
  • Preclinical efficacy of VAL401 in the treatment of adenocarcinoma tumours has been confirmed in pancreatic and non-small cell lung cancer models in addition to the prostate cancer models previously run by Tangent.
  • The newly reported pancreatic data shows VAL401 to demonstrate comparable anti-tumour activity to clinical drug Gemcitabine in an adenocarcinoma model.  
  • Preclinical toxicology and pharmacokinetic studies have been completed to the required regulatory standards confirming safety, tolerability, distribution and metabolism of VAL401.
  • Prototype manufacturing of encapsulated VAL401 in the oral clinical format has been completed and formal stability studies are underway. 
  • Clinical-based regulatory planning has commenced with a first Science Advisory Meeting taking place between ValiSeek and the Medicines and Healthcare Products Regulatory Agency. This meeting initiates the regulatory process for clinical trials.

NORTHLAND CAPITAL PARTNERS VIEW: VAL401 is rapidly moving into the clinic. Moreover, the newly reported pancreatic cancer data presents a further area of high unmet medical need, further enhancing the commercial value of VAL401.


Lookers PLC (LON:LOOK): Interim Statement

Market Cap: £616m; Current Price: 157p

  • Strong 1Q15 performance 
  • Motor division delivered a robust performance with gross profit from new cars +4%. Furthermore, investment in the fleet sector is paying off where gross profit from new fleet cars was +12% though at similar margins to the prior year. 
  • In used cars, gross profit was +10% and margins also improved on the back of focusing on stock management and sourcing quality cars which helped improve volumes and margins. Volume in used cars also benefited from increasing leads generated online and the business is focusing on enhancing its online presence. 
  • In aftersales, turnover was +7% YoY and gross profit in aftersales was +9% YoY as volumes and margins benefited from an increasing proportion of customers choosing to enter service contracts as well as improving customer retention. 
  • Outlook reads positively and management believes the business is in a good position to meet current market expectations. Consensus is looking for PBT of £66.7m, earnings of 13.3p and a dividend of 3.1p for FY15 despite marginal downgrades to forecasts over the last month. 

NORTHLAND CAPITAL PARTNERS VIEW: The statement reads well and the business has a strong balance sheet with net debt/EBITDA remaining below 1x. Operational and net cash flow levels are ahead of budget and there are high levels of unutilised bank facilities to draw upon should this be needed to help grow the business organically or through M&A in both the motor and parts divisions. The stock currently trades on 11.8x FY15 consensus earnings, not particularly demanding and not too dissimilar a multiple to that of Pendragon (PDG.L) though the prospective dividend yield of c. 2% is lower compared to that of PDG. However, investors should be encouraged by the strong performance in the early part of FY15.


Ideagen (LON:IDEA) – Pre-close

Market Cap: £62.2m; Current Price: 35p 

  • FY in line
  • FY results in line with expectation with both organic growth and contributions from the EIBS and Gael acquisitions. Revenue expected to show growth of c. 59% to £14.3m and adj. EBITDA +42% to c. £4m. Net cash at the end of April was £5.2m (H1 FY15: £2.8m) and it will at further acquisitions.
  • Strong contribution from Gael. Integration is well underway and a number of existing Ideagen customers have upgraded to the enlarged product set. Ashley Marron, CEO of Gael, has been appointed Group COO.
  • Good levels of contracted work in progress, a growing recurring revenue base and a strong pipeline. Growth across Manufacturing, Life Sciences, Aviation and Banking as well as renewed momentum in the NHS, post-election.

NORTHLAND CAPITAL PARTNERS VIEW: Positive pre-close with performance in line with estimates at the top and bottom line. The Gael acquisition (January 2014) was substantial (£18m in cash) but has made a substantial difference to the business in terms of the product set and customer base, strengthening Ideagen’s position in the healthcare, manufacturing and aviation sectors. Demand for Governance, Risk and Compliance software continues to grow as regulation increases in volume and extends to additional sectors. Shares are trading on 16.7x FY15 and 13.0x FY16 – reasonably undemanding for the sector.

]]> Bond Market Meltdown Deconstructed: Five Charts That Explain Why Thu, 14 May 2015 07:42:00 +0100 Bond Market Meltdown Deconstructed: Five Charts That Explain Why 

Here is the opening of this topical report from Bloomberg: More than $450 billion has been wiped out across global bond markets in the past few weeks and, for many people, there doesn't seem to be any particular reason why.

Sovereign-bonds yields had fallen so far that in order for them to make sense, investors would have needed to see persistent deflation and European recessions. For a while, that seemed like a real possibility, as oil went from more than $100 a barrel to less than $50 and many forecasters were predicting $30. Well, that didn't happen, and oil started to rise at the same time as evidence of incipient inflation and economic growth in Europe.

That sparked speculation -- proven to be unfounded -- that the European Central Bank could even end its bond-buying program early. Against that backdrop, holding bonds with yields close to zero made little sense, causing investors to unwind one of the most crowded trades in all of markets. So, next time someone says "we don't really know," don't buy it. Here are a few reasons that explain why.

David Fuller's view 

No disrespect to Nick Gartside of JPMorgan who is interviewed in Bloomberg’s Audio at the beginning of this article above, and asked if the bond market bubble has burst?  He replies: “It’s a correction, not a reversal in bonds.” 

How does he know this?  He may feel the odds are still on his side because that answer would have been correct on every other setback in bonds during the last 35 years.  However, with signs that the global economy may now be responding to stimulus efforts from central banks, notably in the EU, and with the US Federal Reserve hoping to lift rates in September, the exceptionally low yields seen earlier this year is a risky background.

A more objective answer to the question above would be, and I am quoting Eoin on this: “So far, it is a correction…”  Personally, I question whether CIOs of fixed income departments are the best people to ask if the bond bull market, probably the best in history, is ending or over.  No one knows for certain but they will understandably have more conflicting emotions on this subject. 

Meanwhile, we can look at the latest technical evidence, from two perspectives, to help you decide what you think.

This item continues in the Subscribers’ Area.


Email of the day 2 

The influence of government bonds on corporate bonds:

“As a follower of your excellent service for many years, I am watching the current moves in US Treasuries. I fully understand the reasons for these movements but could you explain why any increase in treasury and bund yields may have a follow-on effect on corporate bond values? Forgive me if I haven't quite grasped the nettle on this.”

David Fuller's view 

I thank you for your long interest in our service and for this question which will also be of interest to some other subscribers.

This item continues in the Subscribers’ Area.


The Weekly View: Stocks Rally as Payrolls Rebound 

My thanks to Rod Smyth for his excellent letter, published by RiverFront.  Here is a brief sample:

At RiverFront, we believe asset allocation (the choice between asset classes, such as stocks versus bonds/cash, or US stocks versus international stocks) is by far the most important decision an investor makes.  Since there is no ‘index’ that is customized for an investor’s risk tolerance and retirement needs, some active decision regarding asset allocation is necessary, in our view.  In recent years, ‘target date’ products that are marketed to meet a retirement date have become extremely popular because the concept is simple.  We are alarmed by the high percentage allocation to bonds, as the retirement date approaches, within many target date products.  In the current interest rate environment and with life expectancy expanding, we think bonds are much less appropriate than they used to be when rates were higher, especially relative to inflation.  

David Fuller's view 

I agree, and I think the risk of a panicky spike in bond yields, as one-way traffic reverses, is uncomfortably high.     

The Weekly View is posted in the Subscribers' Area.


The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  Markets remain fascinating and guest speaker David Brown returns with a new subject certain to be of interest to every hands-on investor. Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  


Pareto Securities on Pretium Resources 

Thanks to a subscriber for this report which may be of interest to subscribers. Here is a section

We expect Brucejack to have sizeable production and free cash flow

Based on Pretium Resources' June 2014 feasibility study and starting from 2018, we believe the Brucejack deposit has the ability to produce average annual life-of-mine (LOM) gold production of 404.1koz at an all-in sustaining cost (AISC) of CAD 500/oz for 18 years, post an initial capital cost of CAD 811.9m.

We initiate with a BUY rating and a target price of CAD 10.88/share.

Our target price is based on a sum-of-the-parts valuation composed of the following: 1.0x NPV9% of our LOM assumptions for the Brucejack project, balance sheet items, the after-tax PV9% of general and administration and exploration costs, PV7% of the after-tax interest costs, financing assumptions and in-the-money (ITM) instruments.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber;s Area.

The post credit crisis environment has been difficult for explorers as energy prices surged, access to credit was restricted and gold prices fell from their 2011 peak. More recently the outlook has improved not least because energy prices no longer represent so much of a headwind and gold prices have stabilised. The rationalisation that has purged the sector of wildcat investors has resulted in leaner, more disciplined and cheaper operations. This is reflected in the valuation of the Gold BUGS Index relative to the bullion price. 


7 Top Futurists Make Some Pretty Surprising Predictions About What The Next Decade Will Bring 

This article by Jacqueline Howard for the Huffington Post may be of interest to subscribers. Here is a section:

Dr. Ray Kurzweil, inventor, pioneering computer scientist, and director of engineering at Google:

"By 2025, 3D printers will print clothing at very low cost. There will be many free open source designs, but people will still spend money to download clothing files from the latest hot designer just as people spend money today for eBooks, music and movies despite all of the free material available. 3D printers will print human organs using modified stem cells with the patient's own DNA providing an inexhaustible supply of organs and no rejection issues. We will be also able to repair damaged organs with reprogrammed stem cells, for example a heart damaged from a heart attack. 3D printers will print inexpensive modules to snap together a house or an office building, lego style.

Eoin Treacy's view 

Technological innovation is accelerating at an exponential pace. Fashion is already largely online and Amazon delivers within two days so the merit of 3D printing a garment which has a low incremental cost to begin with is questionable. However, printing items with high incremental value that once took days, weeks or were previously impossible is another story entirely. It is already possible to have a dental crown manufactured within an hour of scanning and advances are regularly announced in the medical field. 


Sure-Fire Loser Aussie Turns Winner as RBA Seen Ending Rate Cuts 

This article by Netty Ismail for Bloomberg may be of interest to subscribers. Here is a section

After the Reserve Bank of Australia chose not to comment last week on whether it would keep cutting interest rates, hedge funds erased bets on an Aussie decline and strategists boosted forecasts for the first time in months. The currency responded by climbing above 80 U.S. cents, moving further away from the 75-cent level RBA Governor Glenn Stevens favors to keep the economy competitive.

Stevens’s reluctance to pursue ever-looser monetary policy for fear of inflating a real-estate bubble leaves the Aussie at the mercy of investors lured by the highest government-bond yields of any top-rated nation. That means his only hope of a weaker currency may be a surge in the U.S. dollar fueled by the Federal Reserve’s plan to raise interest rates this year.

“Australian interest rates, whichever way you cut it, are still well above comparable global rates and that attracts money to the Australian dollar,” said Shane Oliver, head of investment strategy ion Sydney at AMP Capital Investors Ltd., which manages $124 billion. “That problem won’t be eliminated

until the interest-rate differential is closed.”

Eoin Treacy's view 

The RBA played a pivotal role in weakening the Australian Dollar as it balanced supporting the export sector with the risk of further inflating the property market. As the resources sector stabilises, the need to continue to set all-time new lows for rates is less compelling and there is no denying that property prices around the major conurbations are not cheap. 


]]> Broker spotlight - easyJet, Experian, Randgold Resources, Mytrah Energy, Patagonia Gold ... Wed, 13 May 2015 10:51:00 +0100 Analysts are still on board with easyJet's plans (LON:EZJ), although estimates were lowered for the airline after yesterday’s cautious update.

Boss Carolyn McCall said on Tuesday that third quarter revenue per seat will likely fall by four percentage points, hurt by French air traffic strikes.

Responding today, broker Jefferies stuck with its ‘buy’ rating, but knocked 50p off its share  price target, which now stands at 1800p. 

“Soft summer yield comments were disappointing, but we believe EZJ's structural advantages will sustain its outperformance in this low fuel cost  environment.”

Cantor Fitzgerald also kept its ‘buy’ rating on the low-cost carrier intact but placed its 1900p target price under review.

“For prudence, we trim our forecasts for 2015-17. That said, EZJ’s fundamentals remain strong, demand in Europe is recovering .”

Elsewhere, JP Morgan listed Randgold Resources (LON:RRS) as a gold stock with the potential to recover in a 'lower-for-longer' gold price environment.

The Wall Street heavyweight now has an ‘overweight’ rating on the miner and upped its target price by 300p to 6900p.  Randgold shares currently trade at 4,769p. 

On oil, JP Morgan lifted its price target on Cairn Energy (LON:CNE) shares this morning by 5p to 211p.

The broker gave special mention to Cairn’s early stage Senegal operations.

Last year Cairn made two significant discoveries off the Atlantic Margin. Its SNE-1 discovery, off the coast of Senegal, was recognised as potentially the largest global oil discovery in 2014.

The US broker also upgraded FirstGroup (LON:FGP) to its most preferred pick in the UK transport sector.

There were no ratings changes but the bus and train group now has the most upside to the broker’s price target of 159p and near-term catalysts.

Go-Ahead (LON:GOG 'overweight') moves up to number 2 on balance sheet upside and more rail catalysts.

Also this morning; credit specialist Experian’s (LON:EXPN) share price target was nudged up by Nomura.

Signs of growth in Latin America helped push Experian shares higher on Tuesday, even though its full-year profits were hit by foreign currency moves.

“Given some recovery in US lending, the core credit growth rate could be in the high single digits,” said Nomura analysts.

“LatAm is capable of the same if the consumer business can start firing again when the lending environment improves.”

The broker raised its target price on Experian's shares by 50p to 1200p and kept its ‘neutral rating’ in place.

Down a division, Argentina-focused miner Patagonia Gold (LON:PGD) remains a buy for Northland after the latest drilling up date from Cap-Oeste. 

Assays showed bumper grades, which could go some way to boost the resource base to make the project viable.

While this work goes on at Cap Oeste, production continues at Lomada and Northland reiterated its 4.5p price target.

Predictions of severe disruption this year from the El Nino weather pattern have hit shares in companies based around the Pacific Ocean.

India-based renewable groups Mytrah Energy (LON:MYT) and Greenko (LON:GKO) both fell sharply yesterday on the warning from the Aussie Met office, but Cantor Fitzgerald said the reaction was excessive.

Indeed, Cantor is more concerned abut a convertible debt overhang at Greenko, hence a ‘hold’ recommendation and 86p target,  but Mytrah remains attractive and undervalued and it remains a buyer with a 130p target price. 

Uruguay miner Orosur Mining (LON:OMI) has updated on progress at its San Gregorio mine, where exploration of the development stage SG Deeps has resulted in a new resource estimate and Northland says buy with a 32p target price.

]]> Northland Capital Partners View on the City Quarto Group Wed, 13 May 2015 09:59:00 +0100 Quarto (LON:QRT) – FD retirement and trading update

Market Cap: £38.7m; Current Price: 196p

  • Q1 trading on track; FY15 more H2 weighted
  • Prior to yesterday’s AGM, management provided a brief trading Q1 update. Q1 revenue was down 3.4% to $28.4m in what is the company’s traditionally quietest quarter. As flagged in March’s FY results, FY15 results will be more H2 weighted. Net debt reduced $3.5m to $77.6m YoY but increased $11.6m on FY14 position – reflecting the usual seasonal cashflows. 
  • Today, Mick Mousley, Quarto’s long standing CFO, has announced his retirement after 28 years with the company. He will continue in his role until a successor can start. The search has commenced.
  • Management believes the Group is on track to meet its expectations of organic growth and debt reduction for this year.

NORTHLAND CAPITAL PARTNERS VIEW: Mick Mousley will leave after a very significant contribution as CFO. He provided continuity after the departure of founder Laurence Orbach in 2012 and has been instrumental in the strategy of bringing greater focus to the Quarto business. Reassuring Q1 update in what is a seasonally quiet quarter and given the investment made in product and imprints during FY14, we would anticipate organic growth to come through during the rest of the year as well as the contribution from the The Ivy Press acquisition. As previously argued, the level of debt will continue to deter some investors (and helps to explain the anomalous PER rating: 6.0x FY15 and 5.2x for FY16) but Quarto’s focus on ‘evergreen’ titles provides asset-backing for the debt that was refinanced in February for a further four years ($95m revolving credit and term loan). The headroom in the facility provides scope for further bolt-on acquisitions as Quarto pursues its expansion in Children’s publishing, a growth market. 

]]> Greene King, Royal Mail, Thomas Cook, Standard Chartered, eg Solutions… Tue, 12 May 2015 11:08:00 +0100 Royal Mail (LON:RMG) should get a boost from competitor Whistl suspending its operation, but JP Morgan suggests competitive pressures may still be on the rise.

The US broker has raised its price target by 6% to 535p following Whistl’s decision, but notes Royal Mail shares had already done well in anticipation.

Regulator Ofcom remains keen to cultivate an environment supportive of competition, it says, though the pressure may come through later than previously forecast.

Goldman Sachs added that for Royal Mail should see an  immediate increase in volumes in its downstream network, although the final impact will depend on the strategic review of Whistl’s operations. Buy with a 585p target is its view.

In a sector wide review of UK Pubs, JP Morgan has upgraded Greene King (LON:GNK) and Young's (LON:YNGA) to ‘Overweight’ while Marston's (LON:MARS) and Mitchells & Butlers (LON:MAB) remain neutral.

For all its challenges, UK pubs offers good exposure to the consumer environment, said the broker with generally stable predicable cash flows, attractive yields and potential to grow through consolidation. 

Credit Suisse is keen on travel group Thomas Cook (LON:TGC) where the target price rises to 180p from 153p while the rating is now 'outperform'.

The Swiss broker said earnings expectations have stabilised, the UK outlook is improving, Nordic capacity risks have reduced, the fuel and foreign exchange cost outlook is the best for 10 years, the Fosun deal supports the product plans and refinancing can boost earnings 2017 by 8-15%.

Meanwhile, Macquarie downgraded Standard Chartered (LON:STAN) from ‘neutral’ to ‘underperform’. Investec also this morning that it still has a ‘sell’ rating on the bank’s shares.

“Despite an “election bounce”, STAN’s share price has still declined by 8% over the past 2 months (in which the FTSE100 index has continued to rise), we remain sellers,” said Investec’s Ian Gordon. 

Marketing group Cello's (LON:CLL) AGM Statement indicates good progress with strong revenue growth driven by Health.  The VAT issue has not progressed although was expected given the  public sector pause during the election. Cello’s core value driver, Health,is making good progress. Buy says N+1 Singer. 

eg solutions (LON:EGS) has had an encouraging start to current year with a number of new contract wins with existing blue chip customers across a range of verticals; from financial services to local government. 

This, together with new product launches for mobile and forecasting solutions scheduled in September, gives management confidence for the year. Buy with a 105p target.

Europa Oil's (LON:EOG) long-anticipated CPR covering its offshore Ireland licences has been issued.  The gross mean prospective resources have increased by 20% to 1.49bn boe from 1.25bn boe previously. 

The licence has also seen a lead upgraded to a prospect which has been named Shaw. This licence is now drill ready and awaiting a drilling decision from the operator, Kosmos Energy. 

The target price remains a punchy 44.3p compared to a market price of 6.4p.

]]> Northland Capital Partners View on the City W Resources, Sportech plc, MotifBio and Anite Group Tue, 12 May 2015 07:30:00 +0100 Motif Bio plc (LON:MTFB) – CORP: To present at leading industry event

Market Cap: £21m; Current Price: 32.5p

  • Motif Bio to present at leading biotech event, the 2015 BIO International Convention
  • Motif Bio announced that it has been selected to present at the 2015 BIO International Convention, a leading global event for the Biotechnology sector. 
  • BIO International is the world's largest biotech meeting, regularly attracting c. 15,000 biotechnology and pharmaceutical players from 65 countries, offering unparalleled business partnering and networking opportunities. 

NORTHLAND CAPITAL PARTNERS VIEW: Motif continues to aggressively pursue its marketing strategy of finding a potential partner to support the further development of its flagship antibiotic, iclaprim. Commercial interest in antibiotics has taken off, with the announcement of several mergers and partnering deals in the space in recent years. By featuring at the Bio International Convention, Motif further positions itself to capitalise on this interest.


W Resources (LON:WRES) – BUY*: Update

Market Cap: £8.7m; Current Price: 0.3p

  • Update on CAA/Portalegre
  • Completed scout diamond drilling programme at the CAA/Portalegre gold and base metal exploration licence in Portugal, with encouraging results from the five holes drilled. 
  • In the 1058m drilling campaign, Hole CAAD-05 insected 16m of gold at 1.37g per tonne between 124m and 140m – the most significant in the CAA programme. The results include: 
  • 16m at 1.37g per tonne from 124 metres in CAAD-05
  • 2m at 4.32g a tonne from 128m in hole CAAD-05
  • 2m at 3.83g a tonne from 138m in hole CAAD-05
  • 16m at 0.44g a tonne from 66m in hole CAAD-04 
  • Initial analysis indicates continuity between Hole CAAD-05 and Hole CAAD-04 and the trenching results from October 2014. Potential for extensions to the South East at depth.
  • Holes CAAD-01 and CAAD-03BIS and BIS2 reported low grade zinc and silver with scope for exploration. 
  • Maintain BUY rating. Forecasts and price target remain under review.

NORTHLAND CAPITAL PARTNERS VIEW: Encouraging results at CAA/Portalegre with the potential for extensions at depth and to the South East with apparent continuity between two holes in this campaign and the 2014 trenchingassay results. Management is now considering its next steps including the farming out of the gold and base metals project over the coming months. This would enable management to focus on its tungsten assets.


Anite (LON:AIE) – BUY: Pre-close

Market Cap: £255m; Current Price: 84.8p; Target Price: 120p

  • FY in line
  • Q4 trading in line with expectation with trends reported earlier in the year continuing. As a result, FY revenue (NCPe: £120.2m) and adj. EBIT (NCPe: £21.8m) expected to be in line. Net cash better than expected at £36.9m (H1 FY15: £29.8m and NCPe FY15: £29.8m).
  • Device & Infrastructure Testing (previously Handset Testing) good progress was made with Interoperability Testing and Propsim Channel Emulators. Network Testing saw a strong initial contribution from Xceed acquisition (October) and growth from the recently launched Invex II benchmarking platform.
  • Upgrade to cash forecasts but otherwise unchanged. Maintain BUY rating and 120p price target. FY results expected July 1st.

NORTHLAND CAPITAL PARTNERS VIEW: Positive outturn to the year given the traditional Q4 weighting with P&L expected to be in line with forecast and a beat on cash. Outlook statement is reasonably encouraging with spend across both divisions and contributions from recent acquisitions. We maintain our BUY rating and 120p price target.


Sportech plc (LON:SPO): Trading update

Market Cap: £140m; Current Price: 68p

  • Expect to be in line with full year expectations
  • In Racing & Digital key customer contracts were successfully renewed with Mountaineer Gaming, Emerald Downs and Parx racing and the business is progressing with several potential new customers. However amounts wagered in the four months was -3% on prior year. Furthermore, the digital business has suffered from the loss of two significant and profitable customers. 
  • In Sportech Venues, the severe winter weather has caused race day cancellations and temporary venue closures as well as the rebuilding of a major venue meant overall betting volumes were -9% YoY in venues.
  • In Football Pools the business is performing in line with management expectations and new players to date in 2015 were 10% higher YoY. Furthermore, online customers were being acquired at a much lower cost which is encouraging for the bottom line in the pools business. The Board also confirms that it had received an approach for the pools business which was rejected.      

NORTHLAND CAPITAL PARTNERS VIEW: Sportech is a quality business with a large fully regulated gaming footprint from licensed markets which is not necessarily reflected in the rating of c. 14x FY15 consensus earnings. However today’s reference to lower betting volumes in the first four months, specifically in venues which was -9% and accounts for almost a third of revenues, would imply lower profit expectations, though management expects trading will be in line for FY15.

]]> Miners balance out rough day for banks on ASX Tue, 12 May 2015 07:20:00 +0100 Miners balance out rough day for banks on ASX 

This article by Max Mason for the Sydney Morning Herald may be of interest to subscribers. Here is a section:  The bad performance of the banks on Monday was more or less balanced by a strong day for the big miners.

BHP Billiton lifted 1.7 per cent to $31.82 and Rio Tinto pushed 0.3 per cent higher to $58.62, while iron ore miner Fortescue Metals Group gained 2.8 per cent to $2.57.

Miners were enjoying a strong run, thanks to a 30 per cent jump in the price of iron ore over the past weeks to $US61.40 ($77.76) a tonne, Metal Bulletin said.

However, UBS was forecasting iron ore to fall back to $US45 a tonne in the second half, thanks to increasing supply and China's economy continuing to soften.

This is more likely to affect the smaller miners, who have higher costs and lower-quality ore.

"We have back-calculated our company net present values to the current share price in order to determine what iron ore price the equity market is currently factoring in," UBS analyst Glyn Lawcock said.

"Our analysis suggests an average implied price of $US51.50 per tonne, which suggests the market is still implying discount to spot."

Eoin Treacy's view 

At The Chart Seminar in Sydney last year delegates were at pains to highlight that fact that just about all of them had positions in Australian banks because it had been the go-to sector since the resources sector peaked not least because the banks continue to have full franking on top of attractive dividends.  

The sector has outperformed since 2009 but has pulled back sharply over the last month and is now testing the relative uptrend and the upper side of the underlying congestion area. This is now an important point for Australia¡¯s banks since they are approaching potential areas of support. Westpac is representative and will need to find support within the next $1 if the medium-term progression of higher reaction lows is to hold. 



Zulily Shares Jump After Alibaba Raises Stake in Online Retailer 

This article by Kristen Haunss and Spencer Soper for Bloomberg may be of interest to subscribers. Here it is in full:  Shares of Zulily Inc. rose as much as 24 in premarket trading after Chinese e-commerce company Alibaba Group Holding Ltd. increased its stake in the U.S. online retailer.

Alibaba bought $56.2 million of stock, according to a regulatory filing. That brought the Chinese company¡¯s stake to 11.5 million shares, or 9.3 percent, according to filings and data compiled by Bloomberg. Alibaba Chairman Jack Ma has set a goal of getting 50 percent of sales from outside China as the nation¡¯s economy is projected to grow at its slowest pace since 1990.

Shares of Zulily -- which sells clothing, home decor and related items, mostly to women -- rose as high as $16.45 percent 8:25 a.m. in New York on Monday.

The stock had dropped 82 percent since its all-time closing high of $72.75 on Feb. 27, 2014, after a November 2013 initial public offering. The shares dropped to a record low close of $10.82 on May 6 and then rebounded in the following two days as Alibaba added to its stake.

At the end of March, Zulily had 5 million customers who had made at least one purchase in the previous year, up 35 percent from the previous year. More than half of all the Seattle-based company¡¯s sales are on mobile devices. 

Eoin Treacy's view 

Zulily succeeded in the flash sale sector where may before it failed but has run into trouble as it grew because of its zero inventory business model. This means that the end user who successfully purchases items in one of its "events" may wait three weeks or longer to receive the goods. It is not yet apparent whether the company has come to terms with its logistics issues but its database of 5 million potential customers has obvious appeal for a potential acquirer.

The share bounced on Friday from the region of $10 and a sustained move below that level would be required to question additional potential for a closing of the overextension relative to the 200-day MA.  


World Equity Market Valuations Tables May 11th 2015  

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

Most months I highlight the cheaper markets on a P/E basis within these tables. However this month I thought the performance of Germany's TecDAX was worthy of mention.

The rise of electricity storage Something for everybody 

This article by John P. Banks for the Brookings Institute may be of interest to subscribers. Here is a section:  In sum, there is great potential for storage both in front of the meter and on the customer side of the meter. Costs need to come down, but the longer-term trajectory indicates that this will happen, and policies and regulations to incentivize storage need to continue to be implemented to spur the creation of markets. The DOE's QER is a step in the right direction, calling for the establishment of a framework and strategy for storage and flexibility. 

In the near-term, it is likely that most of the market development and storage capacity deployed will be at the grid-scale in competitive markets such as PJM, but the SCE procurement certainly highlights the impact of supporting policy and regulation in spurring competitively procured PPA-type arrangements. In addition, California's investor owned utilities have initiated the first round of storage auctions in response to the state's mandate, with final project selection and submission to the California Public Utilities Commission for approval this coming fall.  

In the longer-term, solar-plus-storage could become increasingly economic on the customer side. Indeed, as Hamilton of the Electricity Storage Association described, the three biggest storage markets in the residential sector are California, Arizona, and Hawaii and what they all have in common is lots of solar. But beyond selected markets, residential-scale storage systems such as Tesla's PowerPack won't likely lead to mass defection from the grid in the next five to 10 years. The important point, however, is that Tesla's announcements and all the other recent news is exciting because it shows the progress and potential of a technology with multiple applications and benefits across the grid, providing something for everybody. 

Eoin Treacy's view 

In my review of utility grade energy storage companies last week, I highlighted that the sector has been in existence for a number of years but it is Tesla's high profile into the sector that has ignited media interest. We are still in the very early stages of this evolution and it is likely to persist into the lengthy medium term. 

]]> Broker Spotlight: Centrica, Man Group, Hikma, JD Sports, Mariana Resources... Mon, 11 May 2015 11:51:00 +0100 The pressure is off Centrica after Labour failed to gain power in the recent election, prompting HSBC to abandon its bearish outlook. Meanwhile, views converge on hedge fund manager Man, but SocGen downgrades Aberdeen Asset Mgt.

]]> Northland Capital Partners View on the City Action Hotels, Mariana Resources and Cyan Holdings Mon, 11 May 2015 08:12:00 +0100 Mariana Resources (LON:MARL) – SPECULATIVE BUY: Initiation

Market Cap: £19.2m; Current Price: 2.5p 

Hot Maden living up to its name with the hottest drill results of 2015

NORTHLAND CAPITAL PARTNERS VIEW: We have just returned from a site visit at Mariana Resources Hot Maden Project, located in eastern Turkey. While we were on site the drill rig was turning, testing the northern extension of the high grade copper-gold and zinc-silver mineralisation that was defined during the phase I drill programme (12/02/15). The high grade nature of the poly-metallic mineralisation defined to date means that even a relatively small deposit could generate significant value. Mariana has no near-term financial commitment at the project and is also getting paid by its joint venture partner Lidya Madencilik as the project advances. Lidya has to spend an additional US$1,800,000 on exploration and make payments of US$350,000 to Mariana to earn a 70% interest in the project. Despite the large amount of excitement surrounding the Hot Maden project, Mariana should not be viewed as a “one trick pony” and its portfolio approach to exploration means it has several other projects that hold much promise for further upside. Based on the exceptional results and potential of Hot Maden to deliver significant shareholder value, alongside the exploration potential of Mariana’s projects in Turkey, Peru, Suriname, Argentina and Chile we initiate coverage with a SPECULATIVE BUY rating.


Action Hotels (LON:AHCG): Finals

Market Cap: £86m; Current Price: 58.5p 

  • Finals slightly below but dividend in line 
  • Revenue was +26% to $38m on the back of a 9% increase in the average daily rate (ADR) to $113, a 5% increase in revenue per available room (RevPAR) to $84 and average occupancy increased by 1% to 78% on a l-f-l basis YoY. Although a commendable performance where Adjusted EBITDA increased by 34% YoY to $11.3m this was c.6.5% below consensus for FY14. Final dividend increased by 126% to 1.45p taking the total to 2.17p and in line with expectations and points to a dividend yield of c.3.7% at the current price. 
  • 1Q15 has started well where ADR was +3% YoY to $111 though marginally below the FY14 ADR of $113 we ascribe this to seasonality and expect ADR to increase throughout the year. Revenue was +22% compared to the same period in the prior year. Consensus is looking for c.57% YoY revenue growth which implies the business has a lot to do in the remainder of the year in order to meet forecasts for FY15.  
  • The group also appointed a new CFO, Krish Sundaresan, who comes with a wealth of experience in senior finance positions at international companies in the Middle East, Singapore, Japan, Australia and India. These are also key areas of expansion for the group. 

NORTHLAND CAPITAL PARTNERS VIEW: The hotel portfolio continues to expand in high growth regions though the share price is not particularly undemanding at c. 18x FY14 EV/EBITDA in our view. Finals are slightly below expectations though the business still produced a strong performance and finally an improving dividend at current price levels implies a yield closer to 4% which should attract attention.  


Cyan Holdings (LON:CYAN) – Prelims

Market Cap: £13.0m; Current Price: 0.29p 

  • Commercial progress on a number of fronts
  • Revenue +40% to £194k but with R&D spending +25% to £1.8m, operating losses remained flat at £3.3m. Year end cash of £2.3m (+43%) following £3.5m in new funding (gross) during the year. 
  • Commercial orders from Tata Power Mumbai and Essel Utilities in India, participated in multiple pilots in India and Brazil and received an order for smart street lighting in China. John Cronin has taken on a more substantive role as Executive Chairman; appointment of Peter Mainz and Harry Berry to the board and strengthened sales and marketing function with appointment of Mark Coyle.
  • Post period end, Cyan received a smart metering purchase order worth c. £1m from Enzen Global Solutions (India) for 21k smart meters, announced that Tata Power in India has successfully deployed the Cyan smart metering solution and confirmed presence in South Africa through distribution agreement and proof of concept order. Submitted R&D tax credit cash refund claim of £401k (FY13: £270k).

NORTHLAND CAPITAL PARTNERS VIEW: Commercial progress on a number of fronts with commercial orders secured for both advanced metering and lighting products and in multiple territories (India and China) and as well as the participation in a number of pilots. The commercialisation of Cyan’s technology is still at an early stage, however, as evidenced by the modest revenues but Cyan is dealing with large utilities and accelerated adoption of smart metering by existing customers or the conversion of pilot customers would transform the company’s P&L. As previously argued, the demand drivers for Cyan’s product set are strong with significant energy loss in its target markets and Cyan’s technology offers a low cost smart metering approach. The accelerated deployment at Enzen is encouraging but utilities tend to move slowly and the business will be loss making and cash consuming for this year at least.

]]> Xtract at the inflexion point Fri, 08 May 2015 14:45:00 +0100 This week has seen two announcements from Xtract Resources that have led to increased investor interest and relatively large trade volume. Xtract Resources focus on precious and base metal projects with near term cash flow potential. Last year the company acquired the Chepica Gold and Copper mine in Chile. Earlier this week on 6th May the company announced an increase in concentrate gold grades at this project, followed by a further announcement on 8th May. This highlighted a £3m fundraise having identified two significant acquisition opportunities that the management team believe could transform Xtract into a mid-tier producer.

Recent exploration work at Chepica has opened up a major gold bearing reef close to surface. Processing this reef is a simple, low cost process and will compliment current underground operations. The expectation that this would impact positively on recovered grades has become reality with gold concentrate grades increasing 10 fold from 40 to 400 grams per tonne. A further programme has been initiated to identify more high grade shoots that can be mined from surface. The £3m raised will be used in part for acquisition opportunities and working capital for further development at Chepica. It will also enable them to negotiate a significant discount on its outstanding option payments at Chepica and agree an option on a surface deposit close to the mine that would substantially boost the resource and mine life.

Small mining companies are exposed to a number of risks - exploration, development, operational and commodity prices to name a few. Xtract is no different but they have delivered on their promise of returning the mine to profitability and we look forward to further news flow with regards acquiring new assets and the planned increase in profitability.





]]> Busy week for Rosslyn Fri, 08 May 2015 13:50:00 +0100 It has been a busy week for Rosslyn Data Technologies with two announcements that have caught the eye. Rosslyn is a leader in cloud-based data analytics. They have developed a cost effective, scalable, cloud based solution versus traditional on premise, slow and expensive solutions. Their platform RAPid enables companies to simply collect, cleanse, enrich and analyse data from numerous sources. 

On the 5th May the company announced a partnership with PricewaterhouseCoopers. The launch of a joint business relationship with PwC brings in fresh and new data services to companies around the world. As detailed in the announcement, PwC and Rosslyn will help clients by collaborating on existing solutions and developing offerings in three areas:

Help companies succeed by leveraging PwC’s business insights along with Rosslyn’s suite of cloud-enabled data technologies. Companies can therefore use the data more efficiently to reduce costs and risks, improve productivity and improve customer services.

Use the combined power of PwC’s analytical acumen and Rosslyn’s platform to help businesses make the most of technology and information and be better equipped to compete and creating new services to reinvent and optimise operations.

Optimise and improve companies’ innovation, guiding then to break new ground in their businesses.

Further encouraging news followed on the 8th May with two contract wins with a Fortune 500 provider of services and technology and a FTSE 250 Strategic Outsourcing Company. The multi-year deals are worth $375,000 and £170,000 respectively and both clients are likely to be live in a matter of weeks, highlighting the time benefits of using Rosslyn’s platform.  

The new business wins indicate that momentum is building at Rosslyn as they progress towards breakeven. House broker, Cenkos Securities, forecast this will be achieved in the next fiscal period. The company must continue revenue growth and maintain good cash husbandry to achieve this without requiring further funds. Operating in a competitive market provides other headline risks. Recent developments suggest that the business proposition is being de-risked and we look forward to hearing more from Rosslyn.

Charles Clark, CEO said that this week’s contract wins “underpin our strategy of land and expand where, through our self-service big data cloud analytics platform, we are able to rapidly deliver value and deepen our relationships. Clients of all sizes are now able to rapidly exploit their large and complex data sets whilst seamlessly expanding into multiple other business areas from one centralized platform.” 

]]> Broker spotlight – Election results, Babcock, Dixons Carphone, BHP Billiton, Randgold, Real Estate ... Fri, 08 May 2015 11:40:00 +0100 The more decisive election result, and a better than expected outcome for the Conservative party, is ‘probably positive’ for public sector outsourcing groups - says JP Morgan

]]> Northland Capital Partners View on the City Pendragon Group Fri, 08 May 2015 08:25:00 +0100 Pendragon PLC (LON:PDG): Trading Statement

Market Cap: £526m; Current Price: 36p

  • Good performance in the 1Q15 
  • Strong performance from PDG where underlying profit before tax was +10.4% YoY on the back of not only an increase in online visits to, and +25.6% in the quarter but also the new ‘click and collect’ service which launched in February has helped used vehicle sales increase by over 8%, outperforming the market. 
  • Aftersales gross profit was +3.6% on a l-f-l basis on the back of technology enhancement. Used vehicle gross profit was +2.9% on a l-f-l basis which included benefit from the ‘click and collect’ service whilst new vehicle sales gross profit was +9.9% on a l-f-l basis as the business benefited from double digit revenue growth in Evans Halshaw and Stratstone.
  • Balance sheet remains in strong shape where underlying net debt to EBITDA ratio remains below the target range of 1x to 1.5x. The outlook remains positive and given the strong start to FY15 management are comfortable in meeting expectations. Consensus PBT forecasts imply 7.5% PBT growth for FY15 to £64.7m, however given that the 1Q15 was 10.4% or 300bps higher we expect there should be positive changes to forecasts.

NORTHLAND CAPITAL PARTNERS VIEW: The share price has been slightly weaker in recent months down c.12% since the early part of March. Today’s news should be well received so we expect the shares to trade well today. The stock trades on c. 11x FY15 consensus earnings which does not appear demanding in our view and with potential upgrades to follow the multiple looks less demanding. A prospective dividend yield of c. 3% doesn’t appear overly attractive. However, investors should be encouraged by the performance in the early part of FY15.

]]> U.K. Conservatives to Win Most Seats, Election Exit Poll Suggests Fri, 08 May 2015 08:10:00 +0100 U.K. Conservatives to Win Most Seats, Election Exit Poll Suggests 

Here is this topical report from Bloomberg: David Cameron is on course to remain prime minister at the head of a minority government after the U.K. general election, an exit poll showed. The pound jumped.

The prime minister’s Conservatives were forecast to win 316 of Parliament’s 650 seats, with Ed Miliband’s Labour Party trailing on 239 seats, according to the survey of voters published shortly after polling stations closed Thursday.

The forecast, based on interviews at voting centers in 140 districts across Britain, put the Scottish National Party in third place with 58 seats and Deputy Prime Minister Nick Clegg’s Liberal Democrats fourth with 10, almost wiping out the 57 seats they won in 2010.

“We haven’t had an incumbent government increase its majority since 1983,” Conservative Chief Whip Michael Gove told the BBC. “If it is right, it means the Conservatives have clearly won this election and Labour has lost it.”

The pound rose 1.1 percent to $1.5418 as of 10:02 p.m. London time. Sterling strengthened 1 percent to 73.15 pence per euro.

The first results from electoral districts will start coming in from about 11 p.m. London time, with the final seat not due to declare until Friday afternoon.

David Fuller's view 

If true, and the exit polls cannot be entirely wrong, this is an unexpectedly large triumph for David Cameron and all the Conservative Party.  


Brexit Threat Looms Over UK Election and European Fate 

Here is the opening of this insightful analysis by Ambrose Evans-Pritchard for The Telegraph: Chanceries, political elites and business federations across Europe, regardless of whether they are on the Left or the Right, are hoping theConservative Party loses this week's general election.

All the better if a motley Labour government is strapped to a bloc of triumphant Scottish Nationalists, guaranteeing a double-lock against any further flirtations with Brexit. Or so goes the argument.

They should be careful what they wish for. David Cameron is perhaps the only man who can ultimately prevent Britain breaking away from the EU, and therefore prevent a fatal body blow to an ailing project that lost its emotional hold over Europe's people long ago and no longer has a plausible claim to economic legitimacy.

Lest we forget - carried away by a short-term cyclical rebound - the eurozone is only just beginning to recover from an economic slump that has proved deeper and more intractable over the past six years than the Great Depression, with four sovereign insolvencies and mass unemployment to match. Nor should we forget either that the second leg of this episode was entirely caused by policy blunders and the unworkable structure of EMU governance.

A Labour-SNP arrangement would be inherently weak and unstable, like the string of Gladstone governments dependent on the swing vote of the Irish Home Rule movement in the late 19th century.

There might be no referendum on EU withdrawal in 2017, but that would settle nothing. "While a Labour victory might reduce the prospect of Brexit over the next five years, it could increase them over the next 10," writes the think-tank Open Europe.

A Tory defeat would flush out the last EU dreamers and leave a post-Cameron party with even less tolerance for the posturing of Commission chief Jean-Claude Juncker, who this week accused the Anglo-Saxon world of trying to destroy the euro and vowed to stop Britain imposing its "exclusive agenda on all the other member states of Europe”.

There is a high likelihood that such a party would let it rip on euroscepticism while in opposition and then come roaring back in five years time, led by Boris Johnson if the bookies are right, fully-immunized against the illusionary seductions of europhilia by his childhood in Brussels.

His economic report on the pros and cons of Brexit concluded that the City of London could continue to flourish in a free-trade world outside the EU. Such an outcome might not be ideal - he argued - but the worst of all worlds would be for Britain to stay shackled to a political construction that failed to reform. This is a warning shot.

David Fuller's view 

A voluntary alliance of previously independent nations in a single currency is bound to lose support within member countries which are weakened by that union over lengthy periods.  For the EU, this becomes inevitable if GDP growth persistently underperforms and there is no federal system to support the weakest countries. 

Mario Draghi’s ECB is a monetary lifeline for the EU but it cannot change Greece’s economic policies or those of any other state.  ‘Brexit’ will eventually occur if there is no political and economic reform within the EU.  Wolfgang Schauble’s comments on this point, which you can find a little further along in the article above, are telling.  In fact, I strongly recommend the entire article to anyone interested in this topic.

A PDF of the article is posted in the Subscribers’ Area.


My personal portfolio 

A trade opened

David Fuller's view 

Details and charts are in the Subscribers’ Area.


Greece Faces Deadline Next Week as ECB Eyes Haircut Option 

This article by Nikos Chrysoloras and Ian Wishart for Bloomberg may be of interest to subscribers. Here is a section:  Most members of the ECB’s Governing Council, led by President Mario Draghi, argued Wednesday that it would be unfair to restrict access to liquidity before the outcome is clear from Monday’s meeting of euro-area finance ministers, one of the people said. For now, governors are content to keep Greek banks’ liquidity for as long as they are solvent and have adequate collateral, according to a so-called “terms of reference” unofficial document read to Bloomberg News.

“In the interest of all parties involved, one shouldn’t expect spectacular results on Monday,” German Finance Minister Wolfgang Schaeuble told reporters in Berlin. Handing aid to Greece without reforms in the country is a “bottomless pit that doesn’t make sense,” he said. 

Eoin Treacy's view 

While the current focus of attention is on how Greece will manoeuvre through what is a difficult few weeks, there are some additional considerations that are also coming to bear. For traders, the funding mechanism for trades and the fact that bonds trade on a relative value basis are important right now. 

The combination of the Euro’s decline, the ECB’s newly found expansionary zeal and ultra-low interest rates created the conditions for a powerful carry trade from May 2014. As the Euro declined the inverse relationship with the stock market evolved and bond prices surged. 


To Raise, or not Raise? That is the Question 

Thanks to a subscriber for this report by Jeff Gundlach at DoubleLine Capital. There are some really interesting charts in this presentation, not least those pertaining to European equity yields relative to bonds as well the maturity schedule for Treasury and Covenant Light debt. 

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

The Euro STOXX 50, an index of Eurozone Blue Chips, yields 3.38%. Spanish debt yields less than 2% and Bund yields are much lower. 

This chart of the Index redenominated to US Dollars highlights just how much of a role the Euro’s weakness has had on the Index’s nominal performance. This is a similar situation to Japan when it embarked on its QE program in 2012. It took a while for earnings expectations to catch up with the benefit that accrues from the competitive advantage of a sharply weaker currency. 


Alibaba Shares Surge as Chinese E-Commerce Giant Replaces CEO 

This article by Lulu Yilun Chen and Tim Culpan for Bloomberg may be of interest to subscribers. Here is a section: Alibaba Group Holding Ltd. shares surged the most intraday since September as the company named a new chief executive officer, nine months after a record initial public offering.

China’s biggest e-commerce operator posted a 45 percent increase in revenue.

Daniel Zhang will become CEO on May 10, replacing Jonathan Lu, who will remain on the board as vice chairman, the company said Thursday. The change was announced as Alibaba’s sales rose to 17.4 billion yuan ($2.8 billion) in the three months ended in March, beating analysts’ estimates.

Zhang hopes to build a global platform beyond China, part of a strategy that is “a long journey,” he said in an interview Thursday on Bloomberg Television.

Alibaba’s market value had plunged as much as $90 billion from a November peak amid concern about slowing economic growth and criticism from the Chinese government about its business practices. Billionaire Chairman Jack Ma elevated Zhang after the chief operating officer helped turn the Nov. 11 “Singles’ Day” shopping promotion into the company’s biggest sales day.

“Perhaps Jack is sending a signal to the capital markets and the regulator that he’s willing to make changes,” said Mike Clendenin, managing director of RedTech Advisors.

Eoin Treacy's view 

Alibaba’s honeymoon period is over. Investors are now focusing on the success of its business model in delivering on the promise of international domination. One of the issues it faces with competing internationally is the long shipping times required to move goods from China to the end customer. Solving this challenge requires a great deal of investment in logistics and local warehousing within target markets. As a result progress is slow. 

]]> Broker spotlight - Imperial Tobacco, Home Retail, Genel Energy, Rightster, Motif Bio... Thu, 07 May 2015 12:03:00 +0100 Imperial Tobacco (LON:IMT) remains a buy for the scribes at UBS despite the problems it is suffering in Iraq.

Another wrinkle is the uncertainty over the deal between US rivals Reynolds/Lorillard, which if it goes through would see a raft of brands sold to Imperial to get regulatory clearance.

UBS says while the deal is not certain to happen, Imperial’s current valuation offers an attractive risk/reward trade-off, especially if eventually it does consolidate all its US cigarette production into Lorillard’s Greensboro factory.

Earnings could get an US $800m boost from that, while leverage, cheap debt and a tax shield means this would translate into a 25% uplift in Imperial’s free cash flow.

Imperial’s yield meanwhile limits the downside if the deal does not go through. The target price 3,350p.

Peel Hunt likes Acacia Mining (LON:ACA), the former African Barrick but said the share price may be getting ahead of itself.

With a heavy second half weighting, the company should trade at one times NAV ahead of this key production period, which has prompted a downgrade to' hold' from 'buy' despite the NAV estimate rising to 300p.

Cenkos analyst Simon French has resumed his coverage of online video specialist Rightster (LON:RSTR) - after the AIM firm arranged a new £5.3mln funding - with a ‘buy’ recommendation.

French highlights that Rightster is one of the larger participants in the global online video market, which he says is forecast to grow by 29% (CAGR), between 2014 and 2017, to US$23bn. 

He adds that the company is already YouTube’s largest partner in Europe and said its multi-territorial approach provides it with significant global reach.

Motif Bio’s (LON:MFTB) newly unveiled three-pronged funding strategy for the clinical development of its lead antibiotic candidate, called iclaprim, can maximise shareholder value, says Vadim Alexandre, analyst at Northland Capital.

“Given the overwhelming recent interest in antibiotic drug development by multiple stakeholders globally, including governments, major foundations, healthcare providers and the pharmaceutical industry, we estimate that Motif Bio’s three-pronged funding strategy allows the group considerable flexibility in how best to proceed with iclaprim,” he said in a note.

In the mining sector, meanwhile, Alexandre’s colleague Dr Ryan Long described Mariana Resources (LON:MARL) latest exploration results from the Hot Maden project as ‘positive’.

Long, who is currently visiting the site, said he has been impressed by the potential scale of the project and noted several other targets outside the current area of focus which he believes could add further upside for Mariana.

Home Retail Group (LON:HOME) is in for a tough year, Exane BNP Paribas reckons.

Analysts at the French broker think the shares will ‘underperform’ and knocked 20p off their 180p target this morning.

At Argos, the transformation program is behind plan, according to the firm, while store closures at Homebase present additional execution risk and operational headwinds.

“Some investors who regard Home Retail  as a geared top-line recovery story, now find themselves geared into near term forecast risk,” said the broker.

“In our view caution will continue to weigh on forecasts and valuation.”

Looking ahead, BNP Paribas reckons Homebase looks set to face a reinvigorated competitor in B&Q. 

Argos, meanwhile, continues to lack pricing power  and its competitive advantage for convenience is being eroded by online peers.

Elsewhere, Citi analysts tucked into Just East (LON:JE.) after the company’s first quarter trading update this week.

Just Eat lets customers  order food from over 40,000 different restaurants and takes a commission of about 10%.

Total orders for the 3 months to 31 March were up 51% and Citi upped its price target for the shares by 35p to 550p. 

“We continue to believe this premium valuation is justified, given the early-stage evolution and strong current earnings growth trajectory,” said the broker.

Barclays topped up its share price predictions for FTSE 100 insurance giant Prudential(LON:PRU).

The broker now has a target price of 1877p on the company’s shares with an ‘overweight’ rating.

Oil firm Genel (LON:GENL) suffered a downgrade this morning. 

Broker Jefferies cut its target price for the shares from 757p to 705p, but adds it is the only stock trading below core NAV (639p) due to the overhang from continued Kurdistan (KRI) export payment uncertainty. 

Clarity on this situation is a catalyst out there but with no certainty on timing. 

]]> Yellen Says Stock Valuations Quite High, Bond Yields Low Thu, 07 May 2015 08:27:00 +0100 Yellen Says Stock Valuations Quite High, Bond Yields Low 

Here is the opening and a latter section of this topical article from Bloomberg: Federal Reserve Chair Janet Yellen, surveying the financial landscape for signs of bubbles after more than six years of near-zero rates, warned that both stocks and bonds are richly valued.

“I would highlight that equity-market valuations at this point generally are quite high,” Yellen said in Washington on Wednesday in response to a question at a forum on finance. “Now, they’re not so high when you compare the returns on equities to the returns on safe assets like bonds, which are also very low, but there are potential dangers there.”

Yellen said bond yields “could see a sharp jump” when the Fed raises its benchmark interest rate. Most Fed officials predict that will happen this year for the first time since 2006.

The prospect of an adverse market reaction could make the Fed wary about raising rates too soon and too rapidly, said Thomas Costerg, an economist at Standard Chartered Plc in New York.


Yellen said that after holding rates near zero since December 2008, the Fed must be on the lookout for threats to financial stability. She spoke in response to questions from International Monetary Fund Managing Director Christine Lagarde during a panel discussion at the “Finance & Society” conference sponsored by the Institute for New Economic Thinking.

She said she sees signs of “reach for yield” in the market for leveraged loans, and that bond yields could jump when the central bank raises its benchmark rate.

“Long-term interest rates are at very low levels,” Yellen said. “We could see a sharp jump in long-term rates” after liftoff.

“We saw this in the case of the taper tantrum in 2013, where there was a very sharp upward movement in rates,” she said in reference to the episode in the middle of that year, when then-Chairman Ben S. Bernanke suggested that the Fed could start tapering its bond purchases in the next few meetings.

David Fuller's view 

What is the single word that springs to mind when someone asks you to describe a 35-year bull market?

Yes, I agree, it is BUBBLE!

Institutional investors have been buying US Treasuries for over three decades, wisely because inflationary pressures were coming down.  They received an additional fillip from QE.  However, is it still appropriate to refer to “safe assets like bonds”, as Dr Yellen does above?  Not in this context, I suggest. 

(See also yesterday’s ‘Interesting charts of the day.)   

This item continues in the Subscribers’ Area. 


Cameron Might Just Win After All, Bookmakers Say on Eve of Vote 

Here is the opening of this topical report by Bloomberg: Ed Miliband might want to hold off measuring for curtains in No. 10 Downing Street just yet as Conservative incumbent David Cameron stages a comeback in the betting market on the eve of the election.

William Hill Plc, the biggest U.K. bookmaker, gives Labour leader Miliband and Cameron the same chance to be prime minister, with the odds on both at 10-11, meaning a successful 11 pound ($16.70) bet wins 10 pounds. Last month, William Hill had Miliband as favorite, as did Betfair, which now gives both an even shot.

Opinion polls indicate neither Cameron nor Miliband will win enough seats tomorrow to govern the U.K. without the support of smaller parties. Odds show the most likely next government is a Labour minority, given the Scottish National Party has offered to support Miliband. Yet the Conservatives will win the most seats and votes, odds show.

David Fuller's view 

I think Cameron needs at least 15 more seats than Miliband, taking him over 300, to be sure of forming the next government.  Polls are not reflecting this but they can be inaccurate.  Betting shops are a fraction closer, as are the UK’s financial markets which have remained stable.

Conservatives underestimated Miliband’s energy for the campaign and this could be costly.  Also, Conservatives lost the word game.  All leftwing types now describe the most socialist policies as ‘progressive’.   Conservatives were branded as the ‘austerity’ party and until the last few days only George Osborne seemed to talk about responsible governance. 

I found it a depressing campaign, woefully short of leadership, not to mention humour with the exception of Boris Johnson who will surely be the next leader of the Conservative Party.      


My personal portfolio 

A trade closed

David Fuller's view 

Details and charts are in the Subscribers’ Area.


Indian Stocks Slump to Five-Month Low as Foreigners Extend Sales 

Here is the opening and also the last paragraph of this report from Bloomberg: Indian stocks tumbled, with the benchmark index falling to its lowest level this year, after block deals in index futures and foreign funds extended the longest selloff in local shares this year.

Bharat Heavy Electricals Ltd., the top power-equipment maker, was the biggest loser on the S&P BSE Sensex, while NTPC Ltd., the largest utility, fell the most in eight weeks. ICICI Bank Ltd. slid to a three-month low, sending a gauge of lenders its sharpest loss since April 27. The yield on sovereign bonds due 2024 climbed to a four-month high and the rupee weakened.

The Sensex plunged 2.6 percent to 26,717.37, the lowest close since Dec. 17. The gauge briefly extended losses to more than 10 percent from its Jan. 29 record, meeting the definition of correction, as more investors seek more evidence that the government’s efforts to bolster growth will lead to a revival in company profits. Foreigners sold $475 million of shares on Thursday and Monday, and have been sellers of CNX Nifty futures since April 23.


The Sensex has dropped 2.8 percent this year and trades at 14.8 times projected 12-month earnings, the cheapest since December. The MSCI Emerging Markets Index is valued at 12.5 times, data compiled by Bloomberg show

David Fuller's view 

Markets are volatile and this remains a lengthy consolidation of earlier strong gains for India.  That is a normal process which allows valuations for this fast-growing market to catch up.

Charts for India are in the previous section above. 

]]> Northland Capital Partners View on the City Mariana Resources and MotifBio Thu, 07 May 2015 08:15:00 +0100 Motif Bio plc (LON:MTFB) – CORP: Strategy update 

Market Cap: £21m; Current Price: 32p

  • Three pronged approach to fund approved trials
  • Motif Bio issued an update on its strategy to fund its FDA approved Phase 3 clinical development programme for the Company's lead antibiotic candidate, iclaprim.  
  • The Company anticipates commencing Phase 3 trials in the second half of this year.
  • The group will apply a three-pronged approach to fund the trials, including: 
  • Strategic partnerships with other pharmaceutical companies; 
  • Non-dilutive government funding from grants; 
  • Market funding should the valuation of the Company be supportive.  

NORTHLAND CAPITAL PARTNERS VIEW: Given the overwhelming recent interest in antibiotic drug development by multiple stakeholders globally, including governments, major foundations, healthcare providers and the pharmaceutical industry, we estimate that Motif Bio’s three-pronged funding strategy allows the group considerable flexibility in how best to proceed with iclaprim and thereby maximise shareholder value. 


Mariana Resources (LON:MARL) – CORP: Hot Maden update

Market Cap: £21m; Current Price: 2.75p

  • Phase II drilling progress and initial metallurgical results
  • Mariana Resources’ joint venture partner Lidya has completed the first two holes (HTD-08 and HDT-09) of the 10,000m Phase II drill programme at the Hot Maden project, located in Turkey.
  • Drill hole HTD-08 was collared c. 50m north of previous drill hole HTD-04 (103m at 9.0 g/t Au & 2.2 % Cu from 25m) and intersected a primary sulphide stockwork/breccia zone between 123m and 169m down hole with massive sulphide between 131m and 136.7m down hole. Core is now at the ALS laboratory in in Izmir with results expected shortly.
  • Drill hole HTD-09 was a c. 50m step back hole to drill under of previous drill hole HTD-04 to a depth of 361m. The core is currently being logged and sampled.
  • A second drill rig is now on site and should speed up the drill programme.
  • Initial metallurgical work has been completed on the deposit, but it is very preliminary in nature. There appears to be no deleterious elements such as arsenic or mercury and the gold is mostly free or associated with pyrite and fine grained in nature (20 to 75 microns).
  • A quick leach on a small sample from the Phase I drilling returned positive preliminary results for gold with a rougher concentrate returning 93% recovery on the copper. Though at this stage much more detailed testing is required including gravity separation tests on the gold.
  • Assay results are expected in May and will continue to be released throughout the drill programme.

NORTHLAND CAPITAL PARTNERS VIEW: Positive results from the initial follow up drill programme at Mariana’s Hot Maden project with visual inspections of the core from HTD-08 demonstrating the continued presence of a brecciated sulphide stockwork. Initial metwork is also positive with good recoveries of both the copper and the gold. We are currently in the final day of our site visit to the project and have been impressed by the potential scale of the project and note the presence of several other targets outside the current area of focus that could provide further upside.

]]> Broker spotlight - BHP Billiton/South32, Zoopla, Asos, Sky, DP Poland... Wed, 06 May 2015 12:37:00 +0100 Shareholders vote today on the demerger of BHP Billiton’s (LON:BLT) unwanted assets into South32 and the mining giant has been busy showing analysts around the assets on their way out.

JP Morgan sees cost savings rather than improved production or longer mine lives as the driver of the rag bag of aluminium, silver, lead and manganese operations

The staff also generally seemed supportive said the broker despite the prospect of job cuts.

JPM estimates BHP's underlying earnings will fall around US$2bn post the deal, with net debt largely the same, leaving a slightly tighter balance sheet. 

Neutral is the broker’s rating with a 1,600p price target.

Zoopla’s (LON:ZPLA) move to buy energy  comparison site uSwitch was praised by Berenberg this morning.

Last week, the online property portal announced the £160mln acquisition. Boss Alex Chesterman said the move would create a “single resource for customer’s property needs.”

According to analysts at Berenberg, Zoopla is now one step ahead of Rightmove (LON:RMV) in expanding its portal to include other businesses  related to the home.

“We are raising our price target of Zoopla to 2600p (from 2500p) as a result of the growth potential of the newly acquired company ,” said the broker.

JP Morgan raised its target price on online fashion retailer ASOS (LON:ASC) by 400p to 4000p this morning.

ASOS showed clear top-line momentum through the second quarter which we expect to have continued into Q315,” said JP Morgan’s Georgina Johanan.

"Whilst we are only half way through the current quarter, we raise our full-year PBT forecasts by 4% to reflect our confidence on the top line. 

“With the shares  now 14% below recent highs, we take this opportunity to reiterate our 'overweight' recommendation.”

After reporting its results yesterday, Aberdeen Asset Management (LON:ADN) had its share price target cut by RBC Capital Markets.

The broker reckons the stock will underperform and now has a 440p target price on the shares.

Despite reporting a £270mln profit, Aberdeen was hit by heavy fund outflows as investors bailed out of emerging markets.

Jefferies, meanwhile, kept its ‘hold’ ratings on Sky (LON:SKY) and Vodafone (LON:VOD) but decided to up its share price target by a fraction on both.

House broker Peel Hunt has given drug distributor and developer Clinigen (LON:CLIN) a bullish write-up following its acquisition of Idis for £225mln.

The deal is strategically compelling, argues the broker, strengthening its competitive advantages in all three of its existing divisions, with the potential for revenue synergies to benefit each. 

Idis also adds a new division supplying unlicensed medicines on demand, opening up a large (possibly US$5bn plus) market opportunity for the company.

Greater critical mass meanwhile, gives Clinigen the clout to capitalise on the opportunity and the potential means a punchy new price target of £10 against 717p previously. Clinigen is also Peel Hunt’s top pick in the sector.

Peel Hunt is also upbeat on DP Poland (LON:DPP), another client, where the progress made by the Domino’s pizza delivery business last year has continued into the first quarter. 

DPP is the master franchise holder for Poland and like-for-like gross profit rose by 29% in the quarter, while system sales rose by 17%.

With a market cap of just £18mln, Peel Hunt said the upside is substantial if the group delivers as expected, with seemingly no pun intended.

Akers Bioscience's (LON:AKR) target price remains unchanged at 310p at finnCap follwoing the appointment of InstaNatural as its online marketing partner with exclusive rights for Amazon representation for the company’s METRON breath ketone test.

]]> Positive vibes from Thalassa Fitbug signs healthy contracts AB Dynamics measures for growth ServicePower powers into new growth Wed, 06 May 2015 08:38:00 +0100 C21 Contract Win, ABDP Interim Results, AFHP Acquisition, AVCT Interim Results, CDOG Final Results, CRE Trading Update and Acquisition, ECK Trading Update, FDBK Trading Update, FITB* Partnership, MARL* Trading Update, MSG* Trading Update, MPAY Preliminary Results, MXO* Update, PTSG Final Results, SVR Contract Wins, THAL New Contracts

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.

21st Century Technology (LON:C21)

21st Century Technology, the specialist provider of CCTV and monitoring systems to fleet and network operators in the bus and rail industries, announced that it has been awarded a new contract with a technology supplier to provide advanced CCTV services to 125 integrated and connected vehicle systems.   The works will see the company provide design, installation, commissioning & validation services and will be carried out on vehicles operated by Nobina, one of the Nordic region's largest public transport fleet operators. While small in terms of financial value the contract represents a breakthrough as it gives 21st Century the opportunity to demonstrate its expertise to a new customer which currently boasts approximately 3,400 vehicles in its fleet. The services provided under the contract encompass advanced on-board technology for mobile communication, positioning, driver performance, vehicle monitoring, CCTV and Automatic Passenger Counting systems.

AB Dynamics (LON:ABDP)

AB Dynamics, a designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, announced its interim results for the six month period to 28 February 2015. Revenues increased by 13 percent to £7.56m (H1 2014: £6.69m), which led to profit before tax increase of 30 percent to £1.51m (H1 2014: £1.16m). Net Cash at 28 February 2015 of £7.03m (H1 2014: £4.55m), and the board proposed an interim dividend increase to 1.1p per ordinary share (H1 2014: 1.0p). The company received its first Brazilian order for its Suspension Parameter Measurement Machine (SPMM), and the company now has an established office in Japan to serve all company product lines in the region. AB Dynamics was awarded a conditional grant of up to £2.3m from UK government Regional Growth Fund.

AFH Financial Group (LON:AFHP)

The board of AFH, a leading financial planning led investment management firm, announced the acquisition of Independent Financial Service Limited (IFS), a national firm of IFSs based in Stroud, Gloucestershire, which was completed on 30 April 2015. This marks the company's largest acquisition to date and the tenth since its June 2014 AIM listing, taking the company's total FUM to approximately £1.7bn. IFS have 35 Independent Financial Advisers and numerous national Affinity Group relationships.  For the year ended 28 February 2015, IFS's revenue amounted to £3.09m, of which £2.6m was recurring, and profit before tax amounted to £0.23m. The net assets of IFS as at 28 February 2015 were £0.24m. Under the terms of the acquisition, the maximum consideration payable by AFH is £4.1m based on the performance of IFS over the next 30 months and it is estimated that a further £0.5m of restructuring and integration costs will be incurred by AFH in the current financial year.

Avacta Group (LON:AVCT)

Avacta Group, a global provider of innovative diagnostic tools, consumables and reagents for human and animal healthcare, announced its interim results for the period ended 31 January 2015. The total order intake for custom Affimers to the date is £0.25m and the total order book for custom Affimers to the date of this report is £0.20m. Avacta Animal Health total revenue was £0.73m (2014: £0.82m), with Avacta Animal Health new test revenues increasing to £0.03m (2014: £0.02m). The group has seen significant progress towards operational targets for the financial year for Affimer product development and production capacity. Commercial traction for Affimers has been established with a consequent rapid growth in sales pipeline, there has been strong interest in Affimers as a therapeutic platform technology and several strategic partnerships established.

CDialogues (LON:CDOG)

CDialogues, the provider of mobile marketing solutions to Mobile Network Operators (MNOs), announced its audited final results for the year ended 31 December 2014. This was a pivotal year for the company, which successfully built on its admission to AIM by diversifying its geographical footprint as well as growing revenues, pre-tax profits and cash balances. Revenues were up 117 percent to €9.92m (2013: €4.58m), with subscription revenues accounting for 76 percent of total revenues (2013:79 percent). EBITDA was up 87 percent to €2.94m (2013: €1.57m), leading to a profit before tax increase of 89 percent to €2.61m (2013: €1.38m). After a successful admission to trading on AIM on 27 June 2014, there has been significant diversification of revenue base both by number of clients and geographical sources. During 2014, the company operated a total of eight mobile marketing projects in five countries across the Middle East and the delivery of Mobile Marketing projects totalled a subscriber base of 35m customers (2013: 15m) which attracted more than 5.5m unique subscribers and gross billings in excess of €50m.

Creston (LON:CRE)

Creston, the marketing communications group, provided an update on trading for the year ended 31 March 2015 ahead of its preliminary results for the period. Following a positive second half, the group's preliminary results for the period are expected to be in line with consensus, showing growth in revenue, headline PBT and headline diluted EPS. Revenue is expected to be £76.9m (2014: £74.9m), with cash of £8.3m as at 31 March 2015. Creston also announced the acquisition of 51 percent of the share capital of How Splendid Ltd, a London-based digital design and development consultancy. On completion there is an initial cash consideration payment of £8.7m funded from Creston's existing cash resources and Splendid is expected to retain net current assets of £2.1m, including cash of £1m. A balance sheet surplus payment may be made of up to £0.5m for any excess net current assets in the completion balance sheet in excess of the pre-agreed minimum requirement. There will be a further final cash consideration payment of up to £7m in June 2017 for the 51 per cent holding, based on average profit before interest and tax from April 2015 to March 2017.

Eckoh (LON:ECK)

Eckoh, the global provider of secure payment products and customer service solutions, announced that trading for the twelve months ended 31 March 2015 was a year of significant growth, in line with market expectations. During the year, strong sales and margin momentum has underpinned an increase in adjusted operating profit of over 50 percent at the same time as investing in establishing the group's US operations. This performance has primarily been driven by the organic growth of Eckoh's proposition in the UK, where they have secured over 20 new contracts during the year as well as successfully renewing 100 percent of all significant contracts that came up for renewal. In the US market they have also made encouraging progress with sales of their secure payment proposition, and since the contracts update issued on March 31st they have announced that the Group has secured an additional US contract.  This agreement for a CallGuard On-site installation is with a leading provider of customer experience, engagement and growth solutions and is another indication of the ongoing strength of their US pipeline. In view of this growth, and the significant opportunity that is available for their payment proposition in the US, they have accelerated their US investment plans with their headcount now standing at six US employees. 

Feedback (LON:FDBK)

Feedback, the medical imaging software company, noted that Tetrad, its texture analysis software product will be used by Imaging Endpoints II, LLC, its exclusive partner, for imaging core lab purposes in a forthcoming drug trial in the United States. A Stage IIIc study of colorectal cancer patients will shortly be commenced with either Regorafenib or Standard of Care (No Treatment) after adjuvant FOLFOX. The Sponsor is US Oncology Research and the Collaborator is Bayer Healthcare Pharmaceuticals Inc. Bayer Schering Pharma. Revenue for the current financial year ending May 2015 is expected to be in line with market expectations however due to contractual settlement costs, the product sales mix and the timing of the revenue recognition from the new TexRAD sales, the loss for the year will be higher than the current market expectations. The board continue to seek to broaden the company's profile in the medical imaging software sector and are in active discussions with a number of potential customers for research versions of the TexRad product.

Fitbug Holdings (LON:FITB)

Fitbug Holdings, the provider of online personal health and wellbeing services, announced that it has entered into a partnership with Towers Watson, a leading global professional services company, and Australia-based HealthLogix, to develop HealthVantage, a comprehensive online health management solution. Developed by Towers Watson in response to growing client demand for healthier workforces, HealthVantage incorporates new technology, including wearable devices and online applications for smart devices, to give an organisation's workforce a full health "refresh". HealthVantage will initially be launched to all Towers Watson clients in the Asia Pacific region. Fitbug also announced that it has entered into a partnership with Punter Southall Health & Protection Consulting Limited (PSHPC), one of the strongest and most innovative health and protection advisers in the UK. Fitbug will provide its wearable health technology for the first group income protection solution being launched under PSHPC's Havensrock brand. Havensrock is a UK-based provider of unique employee benefit insurance products with bespoke group life assurance solutions for the professional services sector and trustees. Havensrock Income Protection is underwritten by Aviva Life and Pensions UK Limited and will provide the Fitbug Orb to policy holders as part of its new wellness programme.  This aims to uniquely combine employee wellness with traditional income protection to not only financially and emotionally support employees that become too ill to work but also improve the overall health of all staff and help tackle the UK's falling productivity.

Mariana Resources (LON:MARL)*

Mariana Resources, the exploration and development company with projects in South America and Turkey, announced that JV partner Lidya Madencilik Sanayi ve Ticaret A.S. has notified Mariana that drilling has recommenced at Hot Maden Gold-Copper project in North Eastern Turkey, with the aggressive Phase II work program including up to 10,000 metres of diamond drilling. The first hole of Phase II, HTD-08 has been collared approximately 50m north of HTD-04 and will commence testing of the northern extension of the significant high grade Gold-Copper zone and high grade stratabound Zinc-Lead zone discovered by holes HTD-04, HTD-05 and HTD-06. The initial two significant scissored gold-copper discovery holes, 100m apart, at the Hot Maden project, where JV partner Lidya is earning a 70 percent interest, included: HTD-04: 103m @ 9.0 g/t Au & 2.2 percent Cu from 25m downhole, including a higher grade interval of 18.3 g/t Au & 3.3 percent Cu over 33.4m from 79.8m downhole HTD-05: 82m @ 20.4 g/t Au & 1.9 percent Cu from 147m downhole, including a bonanza 13m @ 88 g/t Au & 2.5 percent Cu from 150m downhole.

Milestone Group (LON:MSG)*

Milestone, the provider of digital media and technology solutions, presented a trading update for the 6 months to 31 March 2015. The company has now begun generating brand new revenue streams through the "Passion Project".  Since 1 October 2014 it has recorded revenues of £0.39m through sponsorship and corporate membership in the project and has attracted 9 fee-paying members of the Passion Project.  The project will now also start to generate additional revenues by successfully placing young people into work. According to the programmes industry partners these revenues are expected to scale between £2 - 5k per successful candidate along with other significant digital and advertising revenue opportunities. In addition the Company has generated circa £50,000 of revenues for successfully delivering "Disorder" magazine employment and industry skills training for young unemployed people and their digital media unit, Relative, is continuing to grow. The board is pleased with this progress and has better visibility of future earnings, which come from a more diverse portfolio of opportunities than in previous years. 

Mi-Pay Group (LON:MPAY)

Mi-Pay Group, the leading provider of mobile payment solutions to Tier 1 Mobile Network Operators and Mobile Virtual Network Operators, presented its preliminary results for the 12 months ended 31 December 2014. Total Revenue fell to £2.7m for the year (2013 - £3.3m), which was a combination of Transaction Services Revenue of £2.0m (2013 - £2.4m) and Professional Services Revenue of £0.7m (2013 - £0.9m). Operating loss for the year was £4.7m and adjusted operating loss was £2.9m (2013 - £1.8m). On 29 April 2014, the Group successfully relisted via the completion of the reverse takeover of AimShell Acquisitions, an AIM listed cash shell and on 9 March 2015, raised additional investment funding of £1.75 million. The delivery of an internally developed fraud solutions in December 2014 improved the group's fraud management services and will provide a 7 percent increase in Transaction Services gross margins. Five new clients were taken on board during the year, including live service delivered in the Philippines, opening access to 20m existing pre-paid consumers.


MX Oil, the oil and gas investment company focused on the re-opening Mexican energy sector, notes the recent comments made by the President of the National Hydrocarbons Commission, Juan Carlos Zepeda, with regards to the prequalification criteria for the third phase of Bid Round 1.  This is focused on the tender for mature onshore conventional fields in Mexico, in which MX Oil intends to participate in, and is the latest step in Mexico's move to allow foreign companies to own and produce oil, ending a 76-year-old state monopoly. For the third phase of Bid Round 1, those companies that can demonstrate extensive experience in either working with PEMEX, the state owned oil company, or a proven track record of developing onshore fields will be prioritised.  This differs from the first two phases of Bid Round 1 where the main criteria were technical and financial.   The third tender is focused on 20 and up to 40 onshore fields in the oil strip around the Mexican South East, a number of which have already been discovered and will be put out for tender for development.  

Premier Technical Services Group (LON:PTSG)

PTSG's results for the year ended 31 December 2014 showed very strong growth and reports their highest levels of turnover, gross profit and underlying profit before taxation since the group's formation in 2007. Turnover increased by 30 percent to £18.0m (2013: £13.9m).  Gross profit increased by 23 percent to £10.3m (2013: £8.4m) and underlying profit before tax also increased by 22 percent to £3.7m (2013: £3.0m).  Adjusted earnings per share increased by 39 percent to 3.77p (2013: 2.71p).  Net debt at 31 December 2014 was £5.0m which was an increase of £0.4m from the previous year end and which reflects the increased levels of working capital necessary to fund the larger scale of the group together with £0.9m of capital payments to acquire businesses, plant and equipment, net of asset disposals. Profit before taxation after adjusting items was £1.2m.  2014 was an important year for PTSG for two reasons.  First, they took an important step in establishing a high level cleaning division following the acquisition of the trade and certain assets of Acescott Management Services Limited - a leading high level cleaning, rope access and working at height specialist based in London.  Second, they undertook the majority of work necessary to take PTSG public and they were formally admitted to AIM on 11 February 2015 as a result of a successful IPO process.

ServicePower Technologies (LON:SVR)

ServicePower Technologies, a market leader in field service management technology, announced that it has signed a contract with a leading US based manufacturer and marketer of automotive appearance protection products, PermaPlate Inc. It also announced contract extensions with a leading UK loss adjusting and claims management company, and a global fire protection and security solutions firm. PermaPlate, manufactures and distributes appearance protection products that protect the interior and exterior surfaces of vehicles; it also underwrites vehicle appearance warranties. PermaPlate will use ServiceOperations to intelligently dispatch work to contractors in markets where service is required, as well as create robust claims payment authorisation processes for its experienced technician network. A leading UK loss adjusting and claims management company, and long standing client of ServicePower, has extended its contract to include additional ServiceScheduling licenses. A market leader in the global fire protection and security solutions industry also recently renewed and extended its ServiceScheduling contract with ServicePower. The renewal represents the first in an expected series of license increases needed to support new business units targeted for deployment in the second and third quarters of 2015. 

Thalassa Holdings (LON:THAL)

The board announces that the company's subsidiary, WGP Group Ltd, entered into a contract to provide seismic services to TGS-NOPEC Geophysical Company ASA, a provider of multi-client geo-science data products to the oil and gas industry listed on the Oslo Stock Exchange (TGS.OL). WGP will be acquiring High Resolution 3D (HR3D) data sets in the South East Barents Sea region utilising a 3D P-CableTM system for the project, which is expected to mobilise this month and last up to a maximum of five months. The contract is for an initial three month fixed term.

]]> Northland Capital Partners View on the City AdEPT Telecom, DiamondCorp, Hummingbird Resources, Mariana Resources and others Wed, 06 May 2015 08:15:00 +0100 Stratex International (LON:STI) – BUY*: Turkey update  

Market Cap: £6.2m; Current Price: 1.3p; Target Price: 6.8p (from 6.4p)  

From yesterday: Muratdere feasibility study improved and Altintepe development delayed 


  • Heavy rainfall continued until mid-April and as a result the final construction of the leach pad will commence shortly. The construction of the crushing plant and ADR plant is well advanced and commissioning of the ADR plant is expected to commence in late June. Production now expected in Q415.
  • Altintepe Madencilik has appealed against a recent court decision to uphold the exclusion of a small part of the licence that overlies the Kayatepe Zone from the current permitted area based on the identification of minor items of archaeological interest. Should the appeal fail there will be no impact to the current production forecasts at the area lies outside the current mine plan.
  • Following the previously reported challenges to the EIA, a court-appointed expert visited the site in March. The timing of the expert’s report is currently unknown.


  • Revised base-case model using a re-structured capital deployment and current metal prices (US$6,0000/t Cu, US$ 1,200/oz Au and US$17/oz Ag) delivers a post-tax return for the project of US$90m, NPV7.6 of US$35.9m and an IRR of 29% for the project.
  • The revised capex is now US$44.7m, of which US$28.7m will be pre-production capex, US$16.1m for operating capital and US$5m for VAT that would be recoverable. Opex expected to be US$15.3/t.
  • Stratex and joint venture partner Lodos are in discussions regarding the best way to advance the project.


  • Exploration underway with drilling expected to commence as soon as the forestry permit has been received. Exploration is to be funded by joint venture partner Andolu Export. Andolu will pay Stratex US$500,000 should a indicated JORC-compliant indicated resource of 50,000oz Au be established, plus a 1.5% NSR.Bullet 1.
  • Forecasts updated, rating maintained and minor increase to price target.  

NORTHLAND CAPITAL PARTNERS VIEW: The improvements to the Muratdere feasibility study have a positive effect on our valuation of Stratex International that slightly outweighs the delay in maiden production from Altintepe. As a result, we have updated our forecasts, increased our price target to 6.8p (from 6.4p) and maintain our BUY rating. Stratex continues to look significantly undervalued.  


Tavistock Investments (LON:TAVI) – CORP: Acquisition  

Market Cap: £7.2m; Current Price: 2.5p  

Acquisition provides hub in South West  

  • Acquisition of Duchy Independent Financial Advisers, an IFA with offices in Truro and St Austell, Cornwall, for an initial £220k in cash and £130k in shares (at 7.5p/share). A performance based deferred consideration of up to £156k may be satisfied through cash or shares (at 7.5p/share).
  • Under certain circumstances, if Tavistock’s share price has not risen to 7.5p by May 2017, a further ‘adjustment’ consideration may be payable in cash or shares that would adjust the issue price per share to the highest average closing price of Tavistock’s shares over any five consecutive trading days.
  • Duchy’s unaudited results for the twelve months to 5th April indicate net assets of £195k and a PBT of £182k.  

NORTHLAND CAPITAL PARTNERS VIEW: The acquisition forms part of the company’s buy and build strategy provides a regional hub in the South West. In February Tavistock acquired Standard Financial Group and Tavistock has more than 300 advisers and an estimated £3bn in assets under advice.


Akers Biosciences, Inc. (LON:AKR) Wellness test to be sold on Amazon  

Market Cap: £16m; Current Price: 307.5p  

  • Akers signs agreement to sell its breath ketone test online via Amazon
  • Akers appointed InstaNatural, LLC as its online marketing partner for the company's consumer-focused METRON® breath ketone test - which targets the wellness and weight-loss markets. 
  • InstaNatural, LLC will have exclusive rights for Amazon representation.
  • The METRON® breath ketone test is a disposable breath-based diagnostic device that rapidly determines if the subject is in the optimal fat-burning state for weight loss, known as ketosis. 
  • Achieving a state of ketosis is a goal of many individuals following low carbohydrate diets.   

NORTHLAND CAPITAL PARTNERS VIEW: The major online wellness and weight-loss markets provide a new opportunity for Akers. This agreement opens a major new channel for the business, particularly as its main focus will be on the Amazon marketplace. 


Summary forecasts: May 2015 

Outlook lukewarm but buybacks continue and inflows support equities

There was a noticeable sell-off in European government bonds during the second half of April that raised concerns that the benefits of the Eurozone QE programme might be wearing off. The German 10-year Bund had appeared to be moving inexorably towards a zero yield but spiked at the end of the month. Eurozone equities were also weak (for the first month this year) and the € strengthened against the dollar. That said, the ECB is committed to a €60bn-a-month programme until September 2016 and this should cap € appreciation and bolster the interest in Eurozone equities. Greece remains an area of considerable concern, however, with a number of deadlines pressing. The US Q1 earnings’ season turned out to be much better than feared with the S&P 500 expected to deliver 2.0% growth against a forecast of a 2.3% decline. Revenue is expected to contract 2.6%, however, and this is not just a feature for energy companies. This suggests a lack of momentum in the US economy and beyond – a view backed by a range of supply manager surveys at the start of May. With a lukewarm growth outlook and minimal interest rates, companies are deploying their considerable excess cash in buybacks and dividends. This year, these are expected to top $1tn for the first time in the US. At the other end of the spectrum, minimal interest rates are driving retail investor interest in micro and nano cap stocks with Venture Capital Trusts reporting a strong fund raising season and record amounts being raised via the plethora of crowfunding sites. The discrepancy between supply and demand is likely to support share prices as focus remains on secondary trading. 

Mining: April has been a watershed month for London listed mining and exploration companies with 60% seeing their share prices increase. This is the largest positive monthly movement since before the start of 2013 and compares with an average 20% for both 2014 and 2013. Could this month finally be indicating a recovery in investor sentiment or a temporary positive blip? There is clearly a lot of value to be had in the mining sPace right now, but there hasn’t been the volume of deals and delistings, so this may be only a relatively short term positive swing - we hope to be proved wrong. This month we made small upgrades for DiamondCorp (LON:DCP) and Hummingbird Resources (LON:HUM). DiamondCorp has benefited from the closure of the loss making tailings operations while the results of the open offer reduced our forecast net debt position for Hummingbird. We have added coverage of Mariana Resources (LON:MARL), Thor Mining (LON:THR), Botswana Diamonds (LON:BOD), Connemara Mining (LON:CON) and Ferrex (LON:FRX).

Healthcare: Due to our extensive reliance on antibiotics and their associated widespread use, many of the organisms they target have developed resistance to the drugs. This issue has become a serious public health concern. Despite a looming crisis, the pipeline of new antibiotics is lacklustre. Motif Bio plc (LON:MTFB) is a clinical stage biopharmaceutical company specialising in developing novel antibiotics. The group’s particular focus is on developing antibiotics designed to be effective against serious and life-threatening infections caused by multi-drug resistant bacteria. Northland Capital acted as broker to the group’s listing on AIM on April 2nd 2015. The company’s shares are up by 75% since the first day of dealings.

Consumer/Leisure: TechFinancials Inc. (LON:TECH) a financial trading platform provider, has since IPO in March launched live on Cantor Exchange as an Independent Software Vendor (ISV). As outlined at the time of the IPO, entry into the US market represented a key strategic objective and the Directors believe this is a market with high growth potential. In addition to this, the business has also signed eight new software contracts - seven brokers plan to focus their activities on the regulated European market, a current key region for TECH, and the eighth will focus on the Arabian Gulf region, a new region for TECH.

TMT: The acquisition of Centrix by AdEPT Telecom (LON:ADT) represented a significant step in the company’s stated strategy of increasing its proportion of larger customers, expanding its Public Sector presence and reducing its reliance on calls and line rental. Centrix is a long established and highly profitable business and AdEPT’s management team secured a keen deal. The acquisition is immediately earnings’ enhancing and drove FY16 and FY17 upgrades and a new price target of 201p (from 175p). There was positive read across in the recommended offer for Pace (LON:PIC) by ARRIS Group to the smaller Amino Technologies (LON:AMO). We moved our price target to 150p.

]]> The Economy Should Rebound After the Election Wed, 06 May 2015 08:04:00 +0100 The Economy Should Rebound After the Election 

Here is the opening of this informative article by Roger Bootle for The Telegraph: Economic forecasting is not a science. Indeed, its critics are sometimes more scathing and put it on a par with astrology. Last week, some figures were published that required economists to practise their black arts with the greatest skill. In the UK, GDP in the first quarter was shown to have grown by only 0.3pc, well down from growth in the previous year and well below expectations.

On its own, this might be nothing to write home about. After all, macro-economic data is notoriously unreliable and the GDP figures are frequently revised – usually upwards.

Nevertheless, it was striking that the first quarter was also shown to be pretty weak in the United States, with growth also well down from previous quarterly figures and below expectations.

Moreover, economic reports from China, and for much of South East Asia, continue to be on the weak side – although Japanese data have been mixed. Meanwhile, the Russian economy is set to contract this year by 5pc, and in Brazil the economy has ground to a halt.

Ironically, the only bit of the world economy which seems to be a bit perkier is the eurozone, where Q1 growth looks like coming in at about 0.4pc, for once putting it ahead of growth in the US and the UK. Mind you, even in the eurozone things aren’t exactly set fair. Figures from the beginning of the second quarter have been on the soft side, suggesting that there, too, the economy may be succumbing to the slowdown.

What on earth is going on? It may well be that there are umpteen different factors making for slower growth in different parts of the world. Yet it is always intellectually unsatisfying to rely on a series of ad hoc explanations. We should look for some common factor that unites, if not all the evidence, then at least a good part of it. Is there such a thing?

There is one good candidate – lower oil prices. If this is the reason for weaker growth, it would be surprising, to put it mildly. You could argue that lower oil prices should make no overall difference to the economy. In the jargon, they are a zero-sum game. In fact, most economists, including yours truly, have argued that lower oil prices should give a major boost to the world economy because oil consumers have a greater propensity to spend their income than oil producers.

David Fuller's view 

In addition to “oil consumers have a greater propensity to spend their income than oil producers”, I would add that lower oil prices will also improve confidence among all who consume this commodity in its various forms.  My guess is that we will see evidence of this in the second half of this year. 

Moreover, accommodative monetary policies, cheaper oil prices and generally less expensive food combine to provide a stimulus to economic recovery.  This will help to reduce the negative deflation caused by six years of deleveraging by individuals and corporations, which also reduced government tax revenues. 

Judging from Roger Bootle’s last paragraph in his full article, he is expecting a Conservative victory on Thursday. 

(See also - Letters: The universal message after May 7 has to be that Britain is open for business)   


52 Words That Could Decide Who Is the Next Prime Minister of Britain 

Here is the opening of this informative article from The Telegraph: What decides who becomes prime minister after the general election? No, it’s not voters. It’s this document: the Cabinet Manual.

The Manual is one of most important bits of our constitution. It covers all sorts of issues around the formation and conduct of government. That includes what happens in the event of a hung parliament like the one most people expect this week.

And if that happens, the following paragraph could just become the subject of an almighty political row that will decide who ends up governing.


Where an election does not result in an overall majority for a single party, the incumbent government remains in office unless and until the Prime Minister tenders his or her resignation and the Government’s resignation to the Sovereign. An incumbent government is entitled to wait until the new Parliament has met to see if it can command the confidence of the House of Commons, but is expected to resign if it becomes clear that it is unlikely to be able to command that confidence and there is a clear alternative.

In two sentences, that paragraph does lots of things, things that could be very, very important after the election.

The first sentence makes clear that unless Labour wins a clear majority, David Cameron gets to stay in Downing Street for a little while longer. In 2010 when Gordon Brown remained as PM after the election, Tories talked about him “squatting” in defiance of the electorate. In fact, he was acting quite properly, just as Mr Cameron will be by staying in No 10 on Friday morning.

That much is clear and largely accepted by all sides. It’s the second sentence where things could get heated.

Let’s suppose that the election numbers work out something like this: CON: 285 LD: 25 LAB: 265 SNP: 50 DUP: 8 UKIP: 2 OTHER 15

That could allow Mr Cameron to piece together a Conservative/Lib Dem/DUP/Ukip deal that would have 320 votes: not enough for a majority, but potentially enough to argue that he should stay in office to put a Queen’s Speech to the Commons, then dare Labour and the SNP to try to muster the votes to reject it then defeat him in a confidence vote. He’d doubtless argue that it would be unacceptable for a second-placed Labour Party to seek to oust the party that won the most seats and votes; I expect the phrase “coalition of losers” would figure in his arguments.

David Fuller's view 

There is a lot to play for in the last two days but if the number of seats held by different parties resembles what we see above, the UK is in for a very unsettled post-election period.  Currently, odds shown by Betfair in the second half of the article above show Conservatives gaining the most seats but well short of an overall majority.  Betfair also shows Labour having the best odds of forming a government, despite trailing the Conservatives in seats likely to be held.  This is because the Scottish Nationalists, who want to leave the UK, have said they will support a minority Labour government to keep the Conservatives out.     

My guess is that Conservatives will receive the most votes and more seats that the 285 figure shown above.  However, the probability is that they still fall short of the 326 seats required for an overall majority, mainly because Liberal Democrats in the current coalition government voted with Labour in 2013 to block a redrawing of Commons boundaries to reflect population shifts.  Consequently, Conservative votes are diluted because many more people live in their constituencies, rather than Labour’s.      


Interesting charts of the day 

Price charts show the money flows

David Fuller's view 

The US 30-Yr Treasury Bond Yield (weekly 5Y & weekly 10Y) saw a climactic downward acceleration to its low at 2.2190% on 30th January.  This was followed immediately by a bullish upward dynamic.  Moreover, the yield failed to maintain its break beneath the 2008 and 2012 lows.  This looks like a V-bottom with right-hand extension base formation, as taught at The Chart Seminar.  The yield has now pushed above its March high and also the 200-day (40-week) MA, indicating further recovery scope over the medium to longer term.  

This item continues in the Subscriber’s Area.


The Weekly View: Oil: A Bottoming Process. The Euro: A Counter-trend Rally 

My thanks to Rod Smyth for his ever-interesting investment letter, published by RiverFront Investment Group.  Here is a brief sample:

We think this time the shape of the recovery may be different.  We think that if oil were to recover to around $70 per barrel, production would quickly come back on line, limiting further price gains.

David Fuller's view  

This comment makes sense to me.  Reports indicate that some shale producers have already drilled the necessary horizontal wells and could therefore bring them into production very quickly.

Note: Rod Smyth is talking about WTI crude which is currently almost $10 below $70 and may need some consolidation, being in its eighth consecutive week of gains.  

The Weekly View is posted in the Subscribers' Area.

]]> Broker spotlight - Lloyds, BT, RBS Whitbread, Gemfields... Tue, 05 May 2015 10:52:00 +0100 Liberum looks at the house builders, Barclays downgrades the European insurance sector and Jefferies turns bullish on Lloyds. 

]]> Northland Capital Partners View on the City Paragon Diamonds, ReNeuron, GVC Holdings, Connemara Mining and others Tue, 05 May 2015 09:17:00 +0100 Paragon Diamonds (LON:PRG) – BUY*: Acquisition

Market Cap: £14.5m; Current Price: 5.2p; Target Price: 12.9p 


  • MOU to acquire Mothae Kimberlite project from Lucara
  • Paragon Diamonds has signed a Memorandum of Understanding with Lucara Diamond Corporation to acquire its 75% interest in the Mothae Kimberlite project, located in Lesotho, for US$8.5m. The remaining 25% interest is owned by the Government of Lesotho.
  •  Mothae has a combined indicated & inferred mineral resource estimate of 39mt at a grade of 2.7cpht with an assumed diamond value of US$1,060/ct. Paragon plans to focus its initial operations (13 years) on a +20mt section of the kimberlite pipe in the southwest/southcentral lobe of the resource demonstrated to contain a higher grade and contain higher value diamonds.
  • n  Paragon plans to engage independent consultants to re-calculate the reserve and resources status of the southern lobe. A c. 0.6mt bulk sample demonstrated the presence of large and high value diamonds from the Mothae kimberlite with fourteen stones between 10.6-56.5cts with average dollar per cart values between US$5,482 and US$41,869.
  •  Paragon estimates that it will require an additional US$5m to refurbish the existing processing plant and US$3m for working capital to bring Mothae back into production to process 0.75mt per annum (Stage 1) but further capital will be required for a larger standalone processing plant designed to recover larger stones and to take production to 2mt per annum (stage 2). Paragon is already working with the existing plants designers to incorporate the latest X-ray Transmission Technology to increase recoveries in the existing plant.
  • All costs associated with the acquisition will be funded by a loan from International Triangle General Trading. The terms of the financing have been agreed and are subject to contract. This funding is in addition to the US$12m debt and equity package for the development of Lemphane.
  • Paragon has defined attractive economics with a NPV12 of US$115m and an IRR of 116% based on the mine life for stage 1 and 2 of 13 years.
  • Paragon will retain all Mothae senior and mid-level Lesotho based management.
  •  As a result of this acquisition Paragon has re-evaluated its development time frame for both projects to ensure that both assets are advanced in the most cost efficient manner and is targeting production from both projects in Q315.
  • Paragon has also signed an MOU with Northern Fissure Limited (NFL) to dispose of its Motete Dyke Project. NFL will spend US$1.5m on definitive evaluation work over two years to take the project to feasibility stage and being awarded a mining licence, with Paragon retaining a free earn-in right of up to 10%. The proposed acquisition of Mothae is subject to funding, governmental and regulatory approval.
  • No change to forecasts, BUY rating and 12.9p price target.
  • Source: Northland Capital Partners Limited. * Northland Capital acts as Nomad and Broker


Northland Capital partners view: The acquisition of Mothae is a major development for Paragon Diamonds, adding 39mt to the 48mt currently undergoing evaluation at Lemphane, also located in Lesotho. Importantly, Mothae’s potential for high values stone has been demonstrated in a previous bulk sample. Size frequency distribution analysis on diamonds recovered from the southern lobe indicate that 15% of the diamonds are expected to be larger than 10cts and 2% above 100cts, comparable to Lemphane where 12% of diamonds are estimated to be larger than 10cpht and 1% larger than 100cts. As a result, the acquisition fits with Paragon’s focus on high value investment grade diamonds. While developing two operations simultaneously presents logistical challenges, the synergistic benefits and cost savings would far outweigh the risk of any potential development issues. Paragon’s retention of the management team in Lesotho provides not only continuity benefits for Mothae but also the efficient use of quality personnel for Lemphane. Our valuation is based on Paragon’s existing asset base and we would expect the completion of the acquisition of Mothae to result in significant upside to our current 12.9p price target.


GVC Holdings (LON:GVC): AGM & Update

Market Cap: £273m; Current Price: 445p


  • Strong trading continues on from 1Q15 Outlook
  • Ahead of the AGM today and passing of a resolution where the Board recommended a €15.5c (including a special dividend) to be paid tomorrow, management also provides an update on trading in the first 120 days of FY15.
  • The strong trading referenced at time of final results in March continued into the early part of the 2Q15. Sports wagers continue to grow strongly at €4,590k per day and +21.4% YoY in the first 120 days of FY15. Despite a lower sports margin of 8.75%, 87bps lower YoY as results favoured customers in the 1Q15, sports net gaming revenue per day (NGR) was +15.2% YoY to €311k and an improvement on the +10% at time of the final results in March. Gaming NGR though +19.7% YoY to €347k per day looks to have slowed compared to the +27% at time of finals in March.
  • Overall NGR per day was +17.5% YoY to €658k as higher Sports NGR offset slightly lower Gaming NGR per day, though the overall performance looks to be in line with the overall performance in the current trading statement at time of final results. 


Northland Capital partners view: It is encouraging to see the strong performance from the 1Q15 continue into the early part of the 2Q15 which in our view not only leaves the business well positioned in meeting current consensus forecasts but an outperformance would also imply good news in terms of the dividend in our view. The stock trades on c. 7.4x FY15 consensus EBITDA which doesn’t appear demanding and the healthy dividend yield should continue to attract investors in our view.


ReNeuron Group plc (LON:RENE) Approval to commence phase I/II trial

Market Cap: £81m; Current Price: 4.5p


  • ReNeuron receives US-FDA approval to commence a Phase I/II clinical trial in retinitis pigmentosa
  • ReNeuron received regulatory approval from the US Food and Drug Administration (FDA) to commence a Phase I/II clinical trial in the US with its human Retinal Progenitor Cell (hRPC) therapy candidate for retinitis pigmentosa (RP). 
  • The trial design is an open-label, dose escalation study to evaluate the safety, tolerability and preliminary efficacy of the hRPC stem cell therapy candidate in up to 15 patients with advanced RP. Preparations for the study have commenced and ReNeuron expects the study to begin in the second half of this year. 
  • The group’s cell therapy candidate for RP, hRPC, has been granted Orphan Drug Designation in both Europe and the US by the European Commission and the FDA, respectively. RP is a group of hereditary diseases of the eye that lead to progressive loss of sight due to cells in the retina becoming damaged and eventually dying.


Northland Capital partners view: This approval brings a third programme into the clinic for ReNeuron. Moreover, it will be the first time the group’s hRPC cell line is tested on patients.


Botswana Diamonds (LON:BOD) – CORP; Change of Advisor

Market Cap: £2.5m; Current Price: 1.05p

  • From Friday: Appoints Northland Capital Partners as Nomad and Joint Broker

Northland Capital partners view: Northland Capital Partners has been appointment as Nomad and Joint Broker to Botswana Diamonds. Botswana Diamonds is a diamond exploration company focused on Botswana. The Company has a joint venture with Alrosa, the largest producer of diamonds by carats, that has a very successful history in diamond discoveries and is using its unique exploration technology in Botswana for the first time as part of this joint venture.


Connemara Mining (LON:CON) – CORP; Change of Advisor

Market Cap: £0.7m; Current Price: 1.25p

  • From Friday: Appoints Northland Capital Partners as Nomad and Joint Broker

Northland Capital partners view: Northland Capital Partners has been appointment as Nomad and Joint Broker to Connemara Mining. Connemara is a diversified exploration company focused in Ireland. The Company holds 35 licences covering an area of 1,350km2 that is prospective for gold, zinc and lead. It has two joint ventures at present with Teck Resources and Hendrick Resources.

]]> Elon Musk Challengers Jostle to Solve Riddle of Energy Storage Tue, 05 May 2015 09:02:00 +0100 Elon Musk Challengers Jostle to Solve Riddle of Energy Storage 

If the storage breakthrough is coming, it seems obvious it would happen in California, which has long led the U.S. in supporting alternative energy. The state has the most demanding fuel-efficiency standards for cars, as well as incentives that have made it the biggest market for solar power in the U.S.

California “is often a lab” for the rest of the country, said Brian Warshay, an analyst at Bloomberg New Energy Finance. It will “continue to be so on the storage front.”

Older methods of trying to store power have existed for decades, including pumped hydropower facilities in which water is sent to higher elevation reservoirs and released through lower turbines to produce electricity when demand is high.

Eoin Treacy's view

Here is a link to Tesla’s website where they highlight some of the key features of the Powerwall battery. Perhaps the most important consideration today is that almost no one has a battery in their home and that in a decade it could be commonplace. I reviewed the residential battery sector on April 23rd.

As much as smoothing out supply and demand curves for electricity use in the home are interesting, the industrial and utility sectors are just as exciting.  


Gundlach Bet-Against-German-Debt Plan Has One Very Big Problem

This article by Lisa Abramowicz for Bloomberg may be of interest to subscribers. Here is a section: 

“The mechanics are challenging,” Gundlach wrote in an e- mail on April 29. Earlier this week, the chief executive officer of DoubleLine Capital said in an interview on Bloomberg Television that he’s thinking of amplifying a wager against 2- year German notes using leverage.

“It seems to me there’s almost no way to lose,” he said in that interview. “I wonder why people don’t leverage up negative bonds.”

There are legitimate reasons why everyone isn’t. For one, there appear to be no negative-yielding derivatives contracts tied to this debt. And Europe closely regulates short-selling of government bonds. Then, even if you could do it, you may have to park cash at some point in European bank accounts, which make you pay to hold your money because the region’s deposit rates are negative.

“You can actually lose money being short negative yielding debt,” said Ashish Shah, the New York-based global head of credit strategies at AllianceBernstein Holding LP. “People charge you even more in the short term to hold cash.”

Eoin Treacy's view

Governments have engineered a system that makes shorting the securities they issue a risky proposition. This is despite the fact that paying the government to take your money could only look sensible is some sort of alternative reality.


Mean reversion and the Dollar 

Eoin Treacy's view

The US Dollar was among the strongest currencies in the world in the first quarter. It spent the last month unwinding much of the short-term overbought condition it had developed against a wide basket of currencies. While the majority of market participants tend to look at the Euro/Dollar cross, the Dollar’s relative strength in a wider context is perhaps more relevant. 

Weekend Reading May 1st 2015

Thanks to a subscriber for this list of mostly academic reports which we can reasonably conclude constitute at least part of the weekend reading for policy makers. 

Eoin Treacy's view

Two charts from Torsten’s Chart Book, the first one important, the second one….

]]> Broker spotlight - Barclays, Apple, Shire, Glaxo, William Hill, Summit... Fri, 01 May 2015 11:41:00 +0100 Berenberg has chopped its rating on Barclays (LON:BARC) to ‘sell’ even though it has the potential to emerge as a long-term winner in the sector. 

Alas, the broker sees that eventuality moving further way following the latest update as the problems at the investment bank seem to have got worse.

The price is now price target to 200p as the broker sees it as unlikely that the core 12% return on equity target will be hit.

UBS has trimmed its estimates for Apple (NASDAQ:AAPL) watch sales in 2016 to 31mln from 40mln.

Internet search interest has been much lower than for the iPhone and iPad it says, while UBS sees 7% rather than 10% of the expected iPhone 5/6 users as buyers.

Longer term it remains bullish and says Apple is right to go slowly as it sees the wrist as a natural place to put Apple technology.

Summit Therapeutics’ (LON:SUMM) receipt of a US patent for  the use of SMT 19969 in the treatment of C. difficile infection strengthens the group’s IP portfolio says N+1 Singer.

Top line data from a Phase II trial is expected in the second half of  2015, while the group’s other clinical programme, SMT C1100 for DMD, is currently in a modified diet Phase Ib clinical trial and on track to deliver top line data in the third quarter. 

Virgin Money (LON:VM) is probably 10 years ahead of the market in terms of distribution channel and digital offering, enabling the business to generate positive operating leverage as the business grows, says Canaccord.

Growth prospects for the franchise are good given the low reliance on base rate rises to achieve NIM growth. Strong retention rates post the recent deposit re-pricing are encouraging. Buy with a 445p target price.

Drug company Shire (LON:SHP) is in good health , Jefferies reckons.

The stockbroker upped its target price on Shire shares this morning by 6% to 6150p and stuck with its ‘buy’ rating.

It comes after the FTSE 100 company reported rising profits and sales in its first quarter earlier this week.

The pharmaceutical giant was helped by a US approval of its hyperactivity drug to treat binge-eating disorder.

“We foresee numerous pipeline catalysts this year to drive potential earnings upgrades , more than offsetting the relatively anaemic, by Shire's standards, growth in the coming quarters,” said Jefferies. 

GlaxoSmithKline (LON:GSK), meanwhile, had its share price target upgraded  by Berenberg analysts on Friday from 1560p to 1615p.

The note was sent out prior to a Glaxo announcement this morning, which said the US Food and Drug Administration has approved Breo Ellipta for the treatment of asthma in patients over the age of eighteen

Elsewhere, Jefferies lowered its expectations for shares in Ladbrokes (LON:LAD), William Hill(LON:WMH), it now thinks they’re worth 110p and 380p respectively.

Deutsche Bank kept its ‘buy’ stance on Kaz Minerals (LON:KAZ) but cut its share price target on the Kazakhstan-focused copper miner by 11p to 334p.

]]> Northland Capital Partners View on the City AdEPT Telecom, Eleco and Sage Group Fri, 01 May 2015 08:18:00 +0100 AdEPT TElecom (LON:ADT) – BUY*: Acquisition

Market Cap: £38.7m; Current Price: 173p; Target Price: 210p (from 175p)

Centrix acquisition significantly expands offering and business

NORTHLAND CAPITAL PARTNERS VIEW: The Centrix acquisition represents a significant step in AdEPT’s stated strategy of increasing its proportion of larger customers, expanding its Public Sector presence and reducing its reliance on calls and line rental. Centrix also brings long term relationships with Avaya and Medusa with the scope for system sales. Centrix is a long established and highly profitable business and AdEPT’s management has secured a keen deal. The acquisition, funded out of the recently agreed £15m facility, is immediately earnings’ enhancing and drives FY16 and FY17 upgrades and a new price target of 210p (from 175p). There remains headroom for further accretive acquisitions in the fragmented reseller market as well as cross-selling opportunities. We maintain our BUY rating. 

  • Acquisition increases customer depth and product breadth:  Centrix brings c. 300 new customers with more than 95% qualifying as AdEPT ‘Premier’ customers. It also substantially increases AdEPT’s presence in the Public Sector and Healthcare. In terms of products, Centrix is a well-established Avaya unified communications system and managed services provider and the leading vendor of Medusa, a product for multi-tenanted buildings. Centrix has long term relationships with its customers and c. 80% recurring revenues.
  • Keen price drives upgrades to the top and bottom line. Centrix is a highly profitable and asset light business and the valuation implied by the consideration (initial £7m and up to £10.5m) compares favourably to AdEPT’s own rating and other recent sector transactions. As a result, there are material upgrades at the FY16 revenue (+25%), EBITDA (+22%) and EPS (+20%) lines in spite of conservative assumptions on Centrix’s performance going forward and no assumptions made on cost/revenue synergies. Applying the sector rating to FY16 EPS indicates an increased target price of 210p. We maintain our BUY rating.


Week Ahead (04/05/15)

View from the trading desk

Next week UK markets will be dominated by the final run up to the General Election followed by picking through the results to work out the likely shape of the next Government. This, plus a shortened trading week, means markets are likely to struggle to find much direction or enthusiasm. 

There was a noticeable sell-off in European government bonds during the week that pushed up borrowing costs and raised concerns that the benefits of the Eurozone quantitative easing programme might be wearing off. The German 10-year Bund had appeared to be moving inexorably towards a zero yield and a number of shorter dated bonds had moved into negative territory. The reverse may suggest expectations for inflation and growth. Eurozone equities were also weak (for the first month this year) and the Euro strengthened against the dollar. That said, the ECB is committed to a €60bn-a-month bond-buying programme until September 2016 and this should cap euro appreciation and bolster the interest in Eurozone equities. 

The US economy seemed to stumble with Q1 GDP numbers coming in at a very sluggish 0.2% on an annualised basis, compared with expectations of 1% and the Q4 reading of 2.2% and 5% in Q3. Poor weather, port strikes, the strength of the dollar and the drop in oil-related investment were all cited as reasons. This could result in a further pushing out of the first interest rate increases. 

Sales & Research thoughts

TMT: The results schedule looks fairly light in the shortened trading week. Sage (LON:SGE) is due to report interim results on Wednesday. In January’s Q1 trading update the company reported organic revenue growth of 5.3% and management declared it was still comfortable with the target of 6% organic revenue growth and a 28% operating margin for FY15 with an acceleration in H2. Organic recurring revenue grew 7% in Q1 and this included 29% growth in software subscriptions (albeit from a small base). Growing this part of the business is key to Sage’s long term success as more business moves to the cloud. We would also expect updates on payments in North America and Europe Enterprise, particularly France, that were singled out as areas of weakness. 

Eleco (LON:ELCO) is set to release its first set of results since reclassifying as a software company on Tuesday following a substantial restructuring. The company is a provider of software for the architectural, engineering and construction industries and specialising in project management, visualisation, estimation, BIM and CAD/design. In H1, it reported revenue +4% to £8.6m in spite of a £0.5m negative FX impact. £2.9m was raised during the period to reduce debt that was expected to be £2.2m in October.

Mining: Next week we will travel to eastern Turkey to visit Mariana Resources’ (LON:MAR) Hot Madan project. The results of the phase I drill programme took everyone by surprise, including the Company, with exceptional intercepts for gold-copper including 103m at 9g/t gold (Au) and 2.2% copper (Cu) from 25m (HTD-04), 82m at 20.4g/t Au and 1.9% Cu (HTD-05) from 147m, along with large and high grade intercepts of zinc-lead mineralisation 31.5m at 1.8% zinc (Zn) and 0.6% lead (Pb) (HTD-05) and 28m at 1.28% Zn and 0.08% Pb from 41.7m and 27m at 2.3% Zn and 0.2% Pb from 75.5m (HTD-06). Mariana’s joint venture partner Lidya is funding the phase II drill programme that is currently under way. The first hole in phase II is testing the potential for a northern extension to the gold-copper and zinc-lead mineralised zones. In our view, the high grade nature of mineralisation defined to date means that even a small orebody could be highly valuable and we look forward to getting our boots on the ground and seeing the exciting drill core from phase I.

]]> Lenovo to Introduce Tablet Sold at Wal-Mart in Growth Push Fri, 01 May 2015 08:14:00 +0100 Lenovo to Introduce Tablet Sold at Wal-Mart in Growth Push 

Here is this informative article from Bloomberg: Lenovo Group Ltd. will introduce a new tablet to be sold at Wal-Mart Stores Inc., as it seeks to double its market share in North America.

The tablet expands the company’s existing product line, Aymar de Lencquesaing, president of Lenovo North America, said Thursday in an interview. He declined to specify pricing, but said it would be less than an iPad from Apple Inc. Full-size iPads cost from $399 to $829 depending on capacity and features, according to Apple’s website.

“I look at market penetration in the U.S. and we have a lot of room to grow into consumer,” he said.

Worldwide shipments of tablets and 2-in-1 devices declined 5.9 in the first quarter to 47.1 million, the second consecutive year-to-year quarterly decline, International Data Corp. said Thursday in a report. Lenovo’s unit sales increased 23 percent in the quarter, one of the few makers to experience growth in the period, and had 5.3 percent of the market, IDC said. Apple holds the top spot with 27 percent followed by Samsung Electronics Co. with 19 percent, IDC said.

Lenovo, the world’s largest maker of personal computers, already sells its products through, and the tablet is a way to enter stores and reach customers more directly, Lencquesaing said. It also presents an opportunity as consumers increasingly view tablets as addition to computers rather than a replacement, he said.

Seeking to build its name recognition for the product, the Chinese company is also increasing social media engagement and marketing efforts, Lencquesaing said.

David Fuller's view 

China may still be listed as a developing market but it is progressing rapidly, benefiting from a well educated middleclass and also globalisation, which enabled it to become a top manufacturer for the world. 

Commentators point out that China’s rising wages are pricing it out of manufacturing within Asia.  That is only true in terms of low level assembly production.  China has moved up market, evidenced by its manufacturing of Apple products, from computers to smart phones and now smart watches.

This experience of assembling the world’s top products provides China with the fastest learning curve, enabling it to launch its own products in competition with the world’s leading manufacturers.

This item continues in the Subscribers’ Area and contains an additional article.  


Saudi Arabia Is Burning Through Its Foreign Reserves at a Record Pace 

Here is the opening of this informative report from Bloomberg: Saudi Arabia is burning through foreign reserves at a record Pace as the largesse of the new king and regional turmoil ratchet up pressure on public finances already hurt by the oil price slump.

The kingdom spent $36 billion of the central bank’s net foreign assets -- about 5 percent of the total -- in February and March, the biggest two-month drop on record, data released this week show. The fall was in part due to King Salman’s order to give government employees and pensioners a two-month bonus after he ascended to the throne of the world’s biggest oil exporter in January.

The early months of Salman’s rule also saw a sharpening of the country’s rivalry with Iran -- most strikingly over the Saudi-led air offensive in Yemen -- and mounting security threats at home, challenges that had already led to a surge in military spending in 2014. The 48 percent drop in oil prices last year has prompted the government to use reserves and borrow from domestic banks to maintain spending on wages and investments.

“This is going to be an exceptional year in terms of the drop in reserves,” Monica Malik, chief economist at Abu Dhabi Commercial Bank PSJC, said in an interview in Dubai on Thursday. “Even if oil stabilizes between $70 to $80 a barrel next year, there has to be some rationalization of spending objectives to limit a further deterioration in the fiscal position.”

David Fuller's view 

That chart of Saudi Arabia Foreign Reserves, which you can copy and paste on a blank page to see more clearly, is based on quarterly figures.  Therefore, the other dip in reserves for approximately two years occurred in 2008/9. 

This item continues in the Subscribers’ Area.


Interesting charts of the day 

Price charts enable you to view money flows on a global basis

David Fuller's view 

The CRB Commodity Index (daily & weekly) has continued to range higher since it recorded a low on 18th March with an upside key day reversal (note: if you do not know what that is, treat yourself to The Chart Seminar).  CRB is now testing psychological resistance from the February highs, but a close back beneath the last low near 220 would be required to confirm more than a brief hesitation near the 230 region.  Moreover, the weekly chart shows base formation development in the region of the important 2009 trough.

This item continues in the Subscribers’ Area. 


Wages in U.S. Show Signs of Picking Up as Job Market Improves 

This article by Michelle Jamrisko and Victoria Stilwell for Bloomberg may be of interest to subscribers. Here is a section: 

Six years after the recession ended, unemployment may now be low enough to start prompting companies to compete against each other for staff. Bigger paychecks, a missing piece of the expansion, would make it more likely that the slowdown in economic growth last quarter will be fleeting, bearing out Federal Reserve policy makers’ assessment.

“You can feel somewhat more constructive on consumer spending in the next quarter or so given that wages have picked up and given that claims are so low,” said Michelle Meyer, deputy head of U.S. economics at Bank of America Corp. in New York. “There’s still further ammunition for consumers to spend.”

Eoin Treacy's view 

With Wal-Mart and McDonalds raising wages in a bid to avert even more aggressive pay demands later, there is evidence that the slack in the employment market has tightened. 

The introduction of the Affordable Care Act has also contributed to the rise in wages. Depending on a worker’s personal circumstances, I believe $34000 is the cut-off, it is possible they would be worse off working because they would no longer qualify for the healthcare subsidy. As a result, working mothers in particular have left the workforce. Wages would have to rise in order to encourage them back. 

In addition, radio ads in California continue to talk about the minimum wage rising to $15 an hour by 2020. It is still open to debate whether that can pass through the state legislature and it would obviously have an impact on inflation and demand for workers, but it speaks to a wider issue of rising living costs. 


US listed China 

Eoin Treacy's view 

The opening of the Shanghai-Hong Kong Stock Connect has acted as a catalyst for the revival of interest in the Chinese stock market since November. Since then the mainland administration has followed with market support measures including lower bank reserve requirements, cutting interest rates, removing obstacles to property speculation, opening the market for equity options as well as a politicians talking the market higher. 

The Shanghai A-Share Index began to rally from July and surged higher in October led by brokers, insurance companies, banks and railroads. Following consolidation between January and March it has rallied for the last eight consecutive weeks and is increasingly susceptible to consolidation of those gains. 

While Hong Kong had similar valuations to mainland China it did not rally in line with the mainland. Part of the reason for this is because of the civil unrest that roiled investor sentiment late last year. In fact while the stock connect is a two-way channel between the mainland and Hong Kong and has been open for six months, the mainland to Hong Kong avenue only hit its limit for the first time this month. Hong Kong is now playing catch up with the mainland listed market. 


Kiwi Slides as Wheeler Hints at Rate Cut, Dollar Weighed by Fed 

This article by Chikako Mogi for Bloomberg may be of interest to subscribers. Here is a section: 

New Zealand’s dollar slumped after the central bank said it would cut interest rates if inflation pressures decline and called the currency’s strength while key export prices drop “unwelcome.”

The kiwi fell against all its 16 major peers, tumbling more than 1 percent versus the greenback after the Reserve Bank of New Zealand kept the official cash rate at 3.5 percent. Governor Graeme Wheeler said the currency is unjustifiably high on a trade-weighted basis. A gauge of the U.S. dollar held losses near a two-month low after growth in the world’s largest economy slowed, clouding the outlook for Federal Reserve policy.

“The RBNZ moved to an easier bias,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. Wheeler’s language on the currency’s level was slightly stronger than in the past, Tuck said.

The kiwi slumped 0.8 percent to 76.18 U.S. cents at 12:01 p.m. in Tokyo after sliding as much as 1.1 percent.

Eoin Treacy's view 

New Zealand’s has been willing to tolerate the strength of its Dollar for quite some time but that policy now appears to have changed, not least as generous interest rate differentials are expected to contract.  

]]> Broker spotlight - Tesco, Sainsbury's , RBS, Standard Chartered, Green Dragon Gas... Thu, 30 Apr 2015 12:10:00 +0100  

]]> Northland Capital Partners View on the City DiamondCorp, Globo, Thor Mining Thu, 30 Apr 2015 08:34:00 +0100 Thor Mining (LON:THR) – CORP: Acquisition of 100% of Spring Hill

Market Cap: £2.1m; Current Price: 0.07p


  • Acquires additional 49% of Spring Hill to increase ownership to 100%
  • Thor Mining has acquired an additional 49% of the Spring Hill project increasing its ownership to 100%.
  • Thor Mining has agreed to pay the receivers and manages of Western Desert Resources £109,000 (A$210,000) plus Chess Depository Interests (CDI’s) to the value of A$100,000 payable on transfer of the title.
  • The acquisition cost will be funded by an extension to the February 2013 loan from a private Australian investor. The loan has a 7% interest rate is secured on both the Spring Hill project the Molyhil project. Additional terms include that if Thor sells the project within two years the investor receives 5% of the proceeds of the sale. If Thor sells the project after two years the investor will receive 5% of the proceeds of the sale plus a 1% royalty on revenue minus opex. If Thor develops the Project the investor will receive a 1% production royalty.


NORTHLAND CAPITAL PARTNERS VIEW: A positive update from Thor Mining with the Company acquiring the balance of the Spring Hill Gold Project, located in Australia’s Northern Territory, taking its ownership up to 100%. The Spring Hill project currently has an Indicated JORC compliant mineral resource estimate of 450,000oz Au at a grade of 1.4g/t, of which 190,000oz is in oxide at a grade of 1.28. The course grained nature of the gold mineralisation at Spring Hill means that the mineral resource estimate could be a significant under representation of the contained ounces and re-assaying using screen fire assays on samples to date has averaging a 37-57% increase in grade.

DiamondCorp (LON:DCP) – BUY: Lace update

Market Cap: £31m; Current Price: 9.8p; Target Price: 17.4p


  • Production on schedule for H215
  • Development of Upper K4 Block is on schedule with the commencement of commercial mining expected in H215, which is around four months ahead of the original plan.
  • 21 underground holes totalling 3,321m have defined 2mt of additional higher grade Upper K4 kimberlite above the 370m level. This will be included in an updated mineral resource estimate that will be completed following a bulk sample to give further detail on the grade due to be completed in Q215.
  • The K6 kimberlite from the development of the production drives is now being processed and a 19.83cts clear white gem diamond has been recovered, the largest from the underground to date.
  • The conveyor is 91% fabricated and 51% installed and is on schedule to be commissioned ahead of the mine ramp up but several weeks behind schedule.
  • Development costs are slightly ahead of budget in Rand terms averaging SAR38,961/m compared to a budget of SAR37,000/m.
  • Legal due diligence on the US$7m royalty financing with Acrux is nearing completion and expected to be finalised in Q215.
  • As the tailings reprocessing the operations are marginal they will no longer recommence as previously expected until sufficient processing water storage has been finalised.
  • DiamondCorp is investigating the use of high volume optical and x-ray waste sorter ahead of the dense media separation plant.
  • No impact on rating and price target. Forecasts updated with the removal of tailings production.


NORTHLAND CAPITAL PARTNERS VIEW: A positive development from DiamondCorp with commercial production still on track for H215 and the recovery of a 19.8 carat white gem stone demonstrating the potential for large and higher value stones. The overspend in development costs per meter in Rand terms at Lace is largely a result of an increase in operating costs associated with the underground fleet because of the long haul distances for dump trucks from the Upper K4 Block to surface. To combat this, DiamondCorp has prioritised the completion of the tunnels and an underground loading chamber required for the commissioning of the underground conveyor. This is expected to reduce load and haul costs by SAR6,800/m, a significant cost saving. The potential for the use of a high volume x-ray waste sorter at Lace could add major upside to the project economics by removing a large amount of waste prior to sorting, reducing water and electricity consumption and allowing much more kimberlite to be processed that the current budget of 220t per hour. If this test work is successful the Company would be able to install a unit prior to the ramp up of the first block cave. We have removed all tailings production from our model but the marginal nature of the operations has no material effect on our price target of 17.4p per share or forecast earnings. With production imminent and the potential for larger stones DiamondCorp looks significantly undervalued compared to its peers.


Globo (LON:GBO) – Prelims

Market Cap: £175m; Current Price: 47p


  • Positive performance at top and bottom line
  • Results ahead of consensus forecast with revenue +49% to €106.4m with GO!Enterprise revenue +94% to €57.9m and Consumer (CitrongGO! and GO!Social) +11% to €38.5m. Organic growth was 42%. North American sales +334% to €15.5m. EBITDA +41% to €50.9m and PBT +30% to €35.7m. Free cash flow +€2.1m to €7.3m and year end net cash of €40.4m down €2.4m reflecting the acquisition of Sourcebits (July for €9.1m that contributed €2.1m). Notify Technology (acquired October 2013) contributed €3.0m in revenue.
  • Management cites a cash conversion relative to EBITDA of 72% but this excludes the capitalisation of development costs (€23.5m) that is included in the purchase of tangible and intangible assets of €24.4m (+52%). Depreciation and amortisation of previous development spend increased 57% to €13.5m.
  • Momentum of 2014 has continued into 2015. Main focus is the expansion of the US revenue and market presence through growth and acquisitions. 


NORTHLAND CAPITAL PARTNERS VIEW: FY results marginally ahead of February’s trading update with good progress in the company’s expansion into the US market and positive contributions from recent acquisitions. Outlook upbeat and business is well capitalised to continue its organic and inorganic growth. Scale of capitalised development spend remains something of a bugbear and there was a substantial increase (77%) in trade receivables to €50.8m. Shares continue to trade at the bottom end of the spectrum at 4.8x FY15 EPS.

]]> Fed Says Economy Slowed in Winter as June Liftoff Odds Drop Thu, 30 Apr 2015 08:32:00 +0100 Fed Says Economy Slowed in Winter as June Liftoff Odds Drop 

This article by Christopher Condon for Bloomberg may be of interest to subscribers. Here is a section: 

Fed officials have said they expect to raise rates this year for the first time since 2006 as the economy nears full employment, and that their decision will be guided by the latest data. A report earlier Wednesday showed growth almost ground to a halt in the first quarter, held back by severe winter weather and slumping business spending and exports.

“Although growth in output and unemployment slowed during the first quarter, the committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace,” the Fed said.

Stocks and U.S. Treasuries pared earlier losses after the announcement. The Standard & Poor’s 500 index was down 0.5 percent at 2,104.62 as of 2:10 p.m. in New York after earlier falling as much as 0.8 percent. Ten-year Treasury notes yielded 2.04 percent, up 4 basis points from Tuesday.

The Fed repeated it will raise rates when it sees further labor-market improvement and is “reasonably confident” inflation will move back to its 2 percent goal over time. The decision was unanimous.

Eoin Treacy's view 

The bullish argument for the Dollar rests on the predominance of the USA’s recovery relative, to Europe in particular but, just about every other major economy. However we also know that the Dollar’s rally has already achieved much of the tightening that might have occurred by raising interest rates. 


Gross Sees No Liquidity in Bonds as Small Trades Move Market 

This article by Madeline McMahon and Lisa Abramowicz for Bloomberg may be of interest to subscribers. Here is a section: 

While the U.S. government bond market has almost tripled since 2007 to $12.5 trillion at the end of last year, average annual trading volumes have fallen 11 percent in the period, according to data compiled by the Securities Industry and Financial Markets Association. Activity has slowed as central banks hoard the debt and Wall Street firms use less of their own money to facilitate bigger trades.

Regulators are growing increasingly concerned that the U.S. Treasury market, which sets benchmark rates for everything from mortgages to corporate debt, is more vulnerable to unpredictable swings. On Oct. 15, yields on 10-year Treasuries plunged the most since 2009, without an obvious catalyst.

After data was released today showing slower growth in the U.S. than analysts expected, yields on the debt rose 2.9 percent, much to the confusion of many analyst

Eoin Treacy's view 

The regulatory environment for insurance companies and pension funds has changed beyond recognition since the financial crisis. There are very strict rules on what constitutes Tier 1 capital and how much of it needs to be held. This means there are heavy penalties for not holding government bonds so investors have an incentive to hold onto positions. Add to this the increasingly massive size of central bank holdings and it is not difficult to understand that the market for Treasuries and other benchmark bonds might be illiquid. 


Email of the day on solar cell manufacturers 

This was a useful update on the solar industry and Canadian Solar in particular. CSIQ's chart pattern seems to show 1 year range between $20 and $40. Maybe time for a breakou

Eoin Treacy's view 

Thank you for this topical article. . Here is a section: 

Along with government incentives to combat global warming, a more natural economic process in the marketplace is driving quick growth in demand for solar power. Cheaper panels and cheaper batteries mean that not too long from now consumers will simply put solar panels on their roofs because that is cheaper than buying electricity off the grid.

The U.S.-based Rocky Mountain Institute warned earlier this month that utilities in the U.S. Northeast stand to lose as much as half of residential sales by 2030 as customers install solar and battery-storage systems and generate their own power.

To keep up with this increase in demand, Canadian Solar plans to almost double its own panel capacity from 2013 levels, Qu said. Along with supply from original equipment manufacturing, total capacity will reach more than 4 gigawatts, he said. 


Interesting charts April 29th 2015 

Eoin Treacy's view 

If the Dollar acted as a headwind for Wall Street while it was surging, its decline should help to act as a support. The S&P 500 was relatively inert today against a sharp decline in Europe. A sustained move below 2040 would be the minimum required to begin to question potential for continued higher to lateral ranging. 

]]> Broker spotlight - Coca-Cola HBC, Sky, Vodafone, Tullett Prebon Wed, 29 Apr 2015 12:04:00 +0100 US broker Citi put some fizz into Coca-Cola HBC (LON:CCH) today - topping  up its rating on the group -  the world's second-largest Coca-Cola bottler in terms of volume.

Shares in the London listed group added 2.88% to 1,428p.

The group sells more than 2 billion unit cases annually and Citi expects good volume growth in its first quarter.

Numbers should be boosted by extra trading days, early Easter and easy comparisons, the broker reckons.

It now has a target price of 1,450p for the shares, up from 1,150p but stuck with its ‘neutral’ rating.

The group's  first quarter results are reportedly due out on May 15.

The same broker repeated a 'buy' on drugs major AstraZeneca (LON:AZN) and repeated a £54 target price, saying investors should stay focused on the long term.

"We think long-term investors should use

potential near-term share price weakness on pending CTLA4/PDL1 data at ASCO or asset externalisation/EPS quality concerns to add exposure," said analyst Andrew Baum.

Heavyweight JP Morgan sees a mix of upcoming events which look set to help broadcasting behemoth Sky (LON:SKY).

“An agreement with Sky Italia may add revenue in a geography that has had little growth,” said analyst Mark O’Donnell.

He also expects price rises to continue in the UK and sees Sky differentiating itself in the UK mobile space via content. 

“We expect Sky to continue to focus on adding content, connected services, and extra products to help drive growth,” JP Morgan’s O’Donnell added.

The broker raised its target price on the broadcaster’s shares this morning by 205p to 1170p. 

Mobile phone and comms group Vodafone (LON:VOD), meanwhile, had a boost from German  bank Berenberg as it raised its ‘hold’ rating to a ‘buy’, upping its target price from 214p to 270p. 

Vodafone is cheap versus Deutsche Telekom and Telefónica,” Berenberg said in a note.

“We think that improving European operating trends will continue, underpinned by mobile data growth and an improving customer mix shift.” 

Analyst Paul Marsch noted that Vodafone shares had not performed well since the Verizon distribution (end-March 2014) due to currency weakness, spectrum costs and fears of a Liberty Global deal. 

There was also an upgrade for interdealer broker Tullett Prebon (LON:TLPR).

Liberum analysts have raised the FTSE 250 stock from ‘sell’ to ‘hold’ on the back of strong 2014 results.

Those numbers were driven by aggressive cost-cutting and a first quarter update from competitor Compagnie Financiere Tradition (CFT SW), said the broker.

More follows.....

]]> Northland Capital Partners View on the City Premier African Minerals and Thorntons Wed, 29 Apr 2015 08:29:00 +0100 Premier African Minerals (LON:PREM) – CORP: RHA funding

Market Cap: £12.8m; Current Price: 2.4p

  • Additional Darwin loan note for £1.65m
  • Premier African Minerals has signed a subscription agreement with Darwin Strategic Limited for 66 loan notes secured over assets of the Company that have a face value of £25,000 totalling £1,650,000, of which Prem will receive 90% of the par value (£1,485,000).
  • The notes will be repayable at a rate of seven per month from 01/10/15, at a cash price of 105% of the par value, if Prem fails to repay the notes they will be converted at 90% of the ruling market price at 105% of the par value.
  • Darwin has been issued 16,673,684 warrants with an exercise price of 2.96875p in addition to the 40,000,000 warrants issued previously (03/02/15) from the £1m Darwin loan note at an exercise price of 1.25p.
  • The notes will be issued in three tranches based on certain milestones. Tranche 1 has a par value of £450,000 and is payable on signing of the Subscription Agreement. Tranche 2 has a par value of £750,000 and is payable on 03/05/15 subject to APT, the plant manufacturer, confirming to Darwin that the plant is ready for shipment. Tranche 3 has a par value of £450,000 and is payable on 01/06/15 subject to Prem, demonstrating that the plant has been delivered to site and has been commissioned.
  • The notes also have certain conversion triggers that allow Darwin to convert at 100% of the par value for as long as they remain breached: 1) The processing plant is not producing by 01/07/15, 2) The APT price quoted on Bloomberg is below US$230/mtu for five trading days or at a lower price mutually agreed between the Company and Darwin subject to the Company securing sales contracts or off-take contracts at discounts less than 35 per cent of the spot price, 3) the WO3 content of the monthly concentrate is below 60%.
  • Prem and Darwin have entered into a put agreement with George Roach over the Company’s 2m shares in Circum Minerals Limited at a price of $1/share. Should Prem default on the terms of the loan note, George Roach will have to purchase the Circum shares for $2m with the proceeds used to settle all outstanding loan notes.

NORTHLAND CAPITAL PARTNERS VIEW: Premier African Minerals has secured the funds required to move the RHA Tungsten project into production. This £1.65m (gross) facility from Darwin is in addition to the £1m (gross) facility also from Darwin, announced (03/02/15). Importantly with this latest Darwin facility, Prem has the potential to repay the debt thereby avoiding further equity dilution. Another benefit is that there is also no risk of a default as the loan notes will be converted into shares, should Prem not be able to repay them.


Thorntons PLC (LON:THT): 3Q Update

Market Cap: £57m; Current Price: 83p

  • UK Commercial still affected by reduced order levels
  • Trading in the 15 weeks to 25 April continues to be affected mainly by the issues referred to in the 2Q and Interim Updates within UK Commercial in the FMCG business. Sales declined by 6.7% YoY and by 9.9% for the YTD. The decline does however show an improvement over the quarters as 1Q FMCG sales was -12.8% and 2Q FMCG sales was -10.3%.
  • In the Retail division L-f-L sales were better, +0.1% for the 3Q and +1.5% YTD on the back of stronger Consumer Direct sales. Within Retail, five stores were closed during the period so the business had 243 own stores at the end of the quarter.  

NORTHLAND CAPITAL PARTNERS VIEW: The share price has recovered somewhat from its lows in February, however today’s news shows the issue within UK Commercial (FMCG business) where reduced order levels from one customer remains an issue for the business and has continued into the 2H of the year. The stock currently trades on 12.7x FY15 consensus earnings falling to 9.3x FY16 which is not particularly demanding when compared to the retail sector in general however given the difficult trading environment within UK Commercial investors may still be cautious on the stock. 

]]> This Time the Economy Will be Crucial to Election Battle Wed, 29 Apr 2015 08:16:00 +0100 This Time the Economy Will be Crucial to Election Battle 

Here is a latter section of this informative article by Roger Bootle for The Telegraph: What the market economy is really about is the power of incentives. This is precisely what Labour does not seem to accept, or wants to repress. At the lower end of the income scale, people are clearly responding to the shift in the incentive to work created by the cap on welfare payments (which Labour opposed) and the Coalition’s tax policy. There is still more progress to be made here.

At the upper end, the key issue concerns rates of personal taxation. It is pretty clear that in all those parts of the economy where people can vary the intensity of their effort – entrepreneurs, the self-employed, those with small businesses, professionals and skilled workers – at some rate of tax people will simply not work so hard.

It is striking that politicians now refer continually to our NHS. (Interestingly, it is still the deficit.)

Labour appears also to think that your income is “ours”. But you can be allowed to keep a “fair” proportion. The success of an economy is down to the people in it. Penalising, alienating and then perhaps driving out your hardest working, most talented and most successful people is really not the way forward.

This country has suffered, more or less simultaneously, from the effects of three major adverse forces: the financial crisis which resulted in recession across the industrial world and left banks everywhere reeling; the ramp-up in oil prices that squeezed living standards; and a significant fiscal tightening to stabilise public finances.

Although we are not through all of these yet, we are well on the way. Yes, there is more austerity to be undergone to fulfil the Conservatives’ plans for the deficit, but this is likely to take place against the backdrop of a growing economy and, at last, rising real incomes and living standards. Having been through all this, and now with good times finally within sight, it is bizarre to be contemplating a return to policies that nearly brought us to our knees in the 1970s.

David Fuller's view 

Good economic governance is the key to GDP growth in a diversified economy.  Labour is redistributive but this will never help their core supporters for long because there will soon be less to distribute and more debt to service.  


Why Is a Hated Man Speaking for Greece? 

Here is the opening from this informative article from Bloomberg: Most of us have been in a business or strategy meeting where the outcome turned on the personalities in the room, rather than the logic or merits of the subject under discussion. The latest twists in Greece's negotiations with its creditors suggest a similarly unhelpful dynamic is at work among euro area finance ministers. The solution might be to change the cast, rather than keep hoping the drama will have a happy ending.

Yanis Varoufakis, Greece's finance minister, was variously called a time-waster, a gambler and an amateur at Friday's meeting of the euro zone finance chiefs. Here's what Varoufakis tweeted about himself on Sunday, channeling U.S. President Franklin Roosevelt from 1936:

"They are unanimous in their hate for me; and I welcome their hatred." A quotation close to my heart (& reality these days

Roosevelt was trying to win an election, railing against what he described as "the old enemies of peace -- business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering." That context makes Varoufakis's commentary upon his own situation both wildly inappropriate and deeply saddening; he still seems inclined to treat his creditors as sworn enemies.

When the new Greek government took power in January and Varoufakis became finance chief, much was made of his academic background in game theory. But this isn't a game. All too often, the Greek finance minister sounds like he's focused only on winning over his domestic audience. His fellow finance ministers across Europe have become sufficiently annoyed that they no longer seem willing to negotiate with him at all.

The Greek people are pretty clear about what they want. A weekend poll by Kappa Research for the To Vima newspaper showed 72.9 percent want to stay in the euro, 71.9 percent see reaching a deal as the best solution for the country's woes, and 68.8 percent view exiting the euro as a real danger. A separate survey by Alco for Proto Thema newspaper showed similar results; it also indicated a 55 percent approval rating for Varoufakis even as 52 percent said they're dissatisfied with the government. If only he was as popular with his peers, who happen to control the euro purse strings and who therefore have more sway over Greece's destiny than its electorate.

David Fuller's view 

I believe Varoufakis has been at least temporarily removed from the negotiations.  However, these bitter negotiations will not be forgotten easily by Greece, or more importantly, its EU partners.

Meanwhile, we know that Greeks want to stay in the Euro, sensing that they will be worse off on their own.  Considering their political leadership and its victim mentality they may be right. 

We know that most of the EU’s officials want Greece to remain in the Eurozone, although probably not due to any strong feelings of solidarity with this struggling country.  Instead, EU officials remain idealists who fear the precedent of possible ‘Grexit’ in terms of the single currency’s appeal to both current and prospective member states.  They also fear closer ties between Greece and Putin’s Russia, and for good reason.  


My personal portfolio 

Asian trading profits rolled forward

David Fuller's view 

Details and charts are in the Subscribers’ Area.


Interesting charts of the day 

Price charts are your eyes on the world.

David Fuller's view 

The US 10-Yr Treasury Bond Yield (daily & weekly) has encountered support in the region centred on 1.8% for the third time since last October.  Moreover, it has proved to be a region of support since yearend 2008.  However, the consensus view among many commentators is that 10-Yr T-Bonds yields will move lower due to demand from European and Japanese investors, who have even lower yields on their government bonds.  We will see if this is correct over the medium to longer term.  Meanwhile, an extended break above 2% would increase the possibility that we are witnessing a slowly developing Type-3 base formation (ranging time and size, as taught at The Chart Seminar).  This would be coinciding with the gradually recovering US economy. 

This section continues in the Subscribers’ Area.


Tensions building 

Thanks to a subscriber for this report from Deutsche Bank focusing on the European region. Here is a section: 

Resolution of the Greek crisis did not take a definitive step forward with the finance ministers meeting in Riga. The controversial move to secure cash reserves from local governments buys Greece several weeks, but the ECB appears increasingly uncomfortable with its rising ELA exposure to Greece. At the same time, Alexis Tsipras’ popularity is starting to wane. The clock is ticking. Our baseline remains unchanged but the risks are high and rising. 

Keep an eye on Italy over the next two weeks – the country faces a relatively low risk of a high impact event. The final vote on the new electoral law in the Lower House is a key fork in the road for PM Renzi’s institutional reform process and probably for the future of his government. We think that the balance of probability is largely in favour of PM Renzi and that the electoral law should pass. The risks are not negligible, however.

Finland’s Centre Party will lead the formation of the new government. A coalition of three parties is probably required to facilitate a coherent reform agenda, which could include the EU-skeptical Finns party. We would downplay the risks to Greece as the Finns party has toned down its rhetoric and is keen to join the government. At worst, Finland could be a source of delay.

The April Flash PMIs disappointed with the euro area composite falling 0.5 points to 53.5 (market expectation: 54.4). Both France and Germany missed expectations by a non-negligible margin. However, the euro composite remained above Q1 levels and is consistent with GDP growth slowing only marginally from 0.5% qoq in Q1 to 0.4% in Q2, in line with our expectations. Other euro area data surprised to the downside too and SIREN-Surprise fell into negative territory for the first time in four months. Nevertheless, SIRENMomentum appears to confirm upside risk relative to our (1.4% yoy) and Bloomberg consensus projections (1.4% yoy) for 2015.

Next week sees the first April CPI prints in the euro area. The risks are to the downside of consensus. We see scope for inflation to rise in H2. There is evidence of the weaker currency in imported inflation, but we don’t expect the impact on producer and consumer prices to be evident until H2.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

The ECB has taken on a great deal of additional responsibility in the last decade but its one core mandate is to target an inflation rate of close to but below 2%. Inflation figures can’t but surprise to the downside considering the decline in energy prices and the knock-on effects this has for prices of other goods. However we also know that these factors will wash out of the statistics within six months. At that point the likelihood of deflationary pressures easing, not least because the ECB has reversed monetary policy, will improve. 

There is not a great deal of evidence to suggest QE supports economic growth. On the other hand we have ample evidence to support the view that it inflates asset prices and puts downward pressure on the respective currency. 


Takeaways from RSA 2015; Next Generation Threats Putting Jet Fuel in the Cybersecurity Engine for 2015/2016 

Thanks to a subscriber for this note from FBR Capital Markets which may be of interest to subscribers. Here is a section: 

This week, we attended the RSA Conference 2015 in San Francisco where hundreds of cybersecurity vendors (and tens of thousands of attendees) were present, with the core focus being the next generation threat environment. Coupled with data points in the field in recent months and solid 1Q earnings results so far, our conversations at the RSA conference this week have left us incrementally positive on the next-generation cybersecurity space as a whole. Security vendors of all shapes and sizes are seeing massive demand in the field, given a sense of urgency at the enterprise to upgrade legacy systems in order to protect against network vulnerabilities and avoid the reputational damage of becoming another high-profile attack (e.g., Anthem, Sony, JPMorgan, etc.). To this point, we picked up data points indicating a likely discernible step-up in cybersecurity budgets and potential deal sizes, as our conversations with key enterprise and government IT decision makers (CIOs, etc.) indicate they plan to increase security spending by an estimated ~28% in 2015. One CISO from a large Fortune 100 financial organization told us, "I came here to RSA with double the security budget I had last year to figure out how we can finally protect our network and cloud infrastructure. Our CEO wants me to call him tonight with an update." With enterprise and government customers seeing a massive uptick in threats, malware, and attacks on networks, we are seeing a clear changing of the mindset. Many CIOs have focused significantly more resources toward this "epidemic," as one IT product manager from Europe told us. Overall, we come away from the RSA Conference increasingly confident in the advanced security software space, as we believe next-generation cybersecurity spending is "white hot" as the spotlight on these technologies appears to be accelerating focus on protecting the enterprise/cloud/ big data and leading CIOs to spend in this high-priority area.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

When the President of the United States’ personal email is hacked we can conclude the situation is serious. This follows high profile events that cost companies fortunes as well damage to their reputations and hackers even averted the opening of a movie. It is reasonable to assume that companies will be boosting their defences. 

The government and corporations will need to increase spending to help avoid the threats that exist today. However these threats are constantly evolving so the growth of the security sector represents a major development theme within the technology sector. 


African revival shifts east 

Thanks to a subscriber for this report from Deutsche Bank which may be of interest to subscribers. Here is a section:

Among the oil producers, support for reforms that proved elusive when revenues were booming may now be forthcoming. Last month’s election of Muhammadu Buhari in Nigeria on a strong anti-corruption platform could prove to be an opportunity in this regard. Lower oil revenues are intensifying the momentum to diversify the oil economies, particularly in Angola and Nigeria.

Most countries in Africa are energy importers and will benefit from lower oil prices. Many are also largely producers of soft commodities, which should be less sensitive to the slowdown in capital spending in China.

On balance, we think that the region’s centre of economic gravity will shift towards the less resource-intensive countries of east Africa, including Ethiopia, Kenya, Mozambique, Tanzania, and Uganda. They are economically more diverse and beginning to form a relatively large and well-integrated regional market. Investment flows, including from China, have already begun to shift in this direction.

These countries likely stand a better chance of delivering the structural transformation that will be needed to create jobs. This will be critical as half of the one billion new workers set to join the global labour force over the next twenty-five years will do so in frontier Africa.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

There is no doubt that the run up in commodity prices has been of benefit to African countries not least farmers since agriculture continues to account for the majority of employment. As the above report highlights falling oil prices represent an opportunity for energy importers particularly in East Africa. In many respects, this is a story from the last decade. Africa’s demographics are what is likely to animate investor interest over the next few decades. 


First Malaria Vaccine May Be Available as Early as October: Scientists 

This article from NDTV Gadgets may be of interest to subscribers. Here is a section:  "Despite the falling efficacy over time, there is still a clear benefit from RTS,S/AS01," Greenwood said.

"An average 1,363 cases of clinical malaria were prevented over four years of follow-up for every 1,000 children vaccinated, and 1,774 cases in those who also received a booster shot. Over three years of follow-up, an average 558 cases were averted for every 1,000 infants vaccinated, and 983 cases in those also given a booster dose."

"Given that there were an estimated 198 million malaria cases in 2013, this level of efficacy potentially translates into millions of cases of malaria in children being prevented," Greenwood said.

The RTS,S/AS01 vaccine was developed for use in sub-Saharan Africa where malaria still kills around 1300 children every day.

The phase-3 randomised trial enrolled 15,459 young infants (aged six to 12 weeks at first vaccination) and children (five to 17 months at first vaccination) from 11 sites across seven sub-Saharan African countries (Burkina Faso, Gabon, Ghana, Kenya, Malawi, Mozambique and United Republic of Tanzania) with varying levels of malaria transmission.

In 2014, initial phase-3 results at 18 months showed vaccine efficacy of about 46 percent against clinical malaria in children and around 27 percent among young infants.

Eoin Treacy's view 

Malaria represents a heavy burden in terms of the drag it imposes on the growth potential for afflicted countries. Any measure to lessen the impact can only be considered positive. As such the invention of a malaria vaccine is an enabling development for African countries reaching their productive capacity. 

]]> Broker spotlight - Gulf Keystone, Apple suppliers, William Hill, Tate & Lyle, Hayward Tyler... Tue, 28 Apr 2015 11:51:00 +0100 Apple’s latest quarter smashed market expectations, but has made less of an impression on Liberum’s views on the suppliers to the iconic mobile phone and computer maker.

Second quarter revenue grew 27% year-on-year to $58bn and was ahead of consensus of $56bn. Second quarter earnings of $2.33 were 40% higher.

Liberum says Imagination Technologies (LON:IMG) is the most exposed to Apple at 35% of revenues, Laird (LON:LRD) is about 20%, chip designer ARM (LON:ARM) is less than 10% and Infineon less than 5%.

The broker’s view is to ‘buy’ Imagination (with a 275p target price), ‘hold’ Laird (TP 350p) and ‘sell’ Arm (700p TP).

Cantor Fitzgerald has kept its buy recommendation after wading through Gulf Keystone Petroleum’s (LON:GKP) annual report.

The practise of recognising export revenues on a cash receipts basis has resulted in crude sent for export of US$100mln being owed, but not yet recognised, it notes. 

Operationally, GKP made strong progress at its flagship Shaikan field in 2014, producing 6MMbbl (2013: 0.5MMbbl) with significant growth expected this year, despite well documented civil unrest in the region. 

Current production in excess of 37,000bopd is being delivered against the pre-payment received for Shaikan crude oil sales last month, with further payments of a similar nature anticipated. 

Recent encouraging results from Shaikan-10, in addition to the completed Shaikan-11 well, put the company on track to meet its 100,000bopd phase 1 target, once a decision is made on further investment.

The target price is 101p.

Whitbread’s (LON:WTB) full year results were strong as were the new 2020 milestone targets for Premier and Costa, but chief executive Andy Harrison also announced his departure.

Panmure Gordon said while management remains ambitious on expansion, it is cautious as the capex required to achieve this as it will increase debt and drag down returns. Sell.

Carpetright (LON:CPR) has been given a very bullish upgrade by Citigroup, which sees 75% upside in the share price from the current level on a best case basis.

Recent management changed should act as the catalyst to revive Carpetright’s trading performance. 

The recovery story highlights a refocused customer offer and property estate optimisation, boosted by a consumer spending tailwind. 

Operational leverage from improving like-for-like sales and more active property portfolio management can sustain 80% compound EPS growth over the next three years, with dividends resumed in 2017.

Buy with a target price 600p says Citi.

Nomura still reckons William Hill (LON:WMH) is worth a gamble, although the broker  trimmed its target price on the bookie this morning.

William Hill was slow out of the stalls in its first quarter, as higher taxes and punter friendly football results weighed.

Operating profit  fell £16bn in the 13 weeks to 1 April and Nomura said the firm has a lot to claw back in its second half.

The broker stuck with its ‘buy’ rating but cut its share price target by 22p to 443p. 

“In the medium term, the company is very well placed, with online  scale in in the UK and Australia and becoming increasingly IT self-sufficient,” said Nomura’s Richard Stuber.

The analyst  doesn’t fancy Ladbrokes (LON:LAD) though and kept his ‘reduce’ rating on the company with a target price of 96p. Shares currently trade at 103p. 

“We are cutting 2015E EPS by 10% to reflect the significant single-digit millions loss incurred in January, the broker said. 

Jefferies turned positive on Tate & Lyle (LON:TATE), upping its price target by 100p to 650p.

“Restructuring moves have put Tate back on the front foot, with Pepsi's decision to switch to Sucralose a further welcome boost,” said Jefferies analyst Martin Deboo.

Charles Stanley sent out a note on HSBC (LON:HSBA). Shares in the bank  have surged dramatically over the last couple of sessions following its threat to move its headquarters from London and head back to Hong Kong.

“The shares rose by 2.8% on Friday and then added a further 3.1% yesterday,” said Bill McNamara, technical  analyst at Charles Stanley.

“Recent move have lifted them decisively above their (well-defined) two-year downtrend. 

“Although they now look short-term overbought this improvement in the technical situation points to further upside in the medium-term.”

Peel Hunt remains a buyer of internet domain name specialist CentralNic (LON:CNIC) after results today.

“There is good upside to the strategic value of providers in this space, particularly in the Registry Services and corporate markets, as volumes increase and as the market consolidates.”. The target price is 70p.

Engineer Hayward Tyler (LON:HAYT) confirmed  growth for the year is in line with expectations, rising 10% year-on-year (with improvements seen in underlying gross and operating margins. 

Finncap has maintained its target price of 113p signalling significant upside to the shares, though the broker suggests they need a short-term catalyst.

]]> Northland Capital Partners View on the City W Resources, Premier African Minerals and Nektan Tue, 28 Apr 2015 07:58:00 +0100 Premier African Minerals (LON:PREM) – CORP: RHA update and loan facility

Market Cap: £14.6m; Current Price: 2.5p

  • Plant fabrication remains on track and US$250,000 Loan from AgriMinco
  • From Today
  • Plant fabrication remains on schedule for shipment from Johannesburg to RHA during May 2015.
  • Earthworks and civil works are scheduled for completion by mid-May 2015.
  • Construction of the mine site buildings has commenced.
  • The first run of mine ore has been stockpiled.
  • Mine recruitment is completed.
  • From Yesterday
  • Premier African Minerals has agreed terms for a US$250,000 loan facility with AgriMinco Corp to provide additional funding for the construction of the RHA Tungsten Project and working capital.
  • The loan is payable in two tranches and together with the interest (5%) will be payable in twenty-four months from the date of signing. Prem has also agreed not to request repayment of the historic CAD$218,818 owed by AgriMinco to Prem until this latest loan is repaid.
  • The loan is convertible at the fifteen day VWAP at AgriMinco’s election, and comes with one-for-one warrants at a 20% premium to the conversion price.

NORTHLAND CAPITAL PARTNERS VIEW: It is positive to see Premier African Minerals’ RHA tungsten project remaining on track with support from AgriMinco with what appears to be a bridge loan to keep the mine development on track while the Company secures the final tranche of financing for the development of the RHA Tungsten project.


W Resources (LON:WRES) – BUY: Régua drilling update

Market Cap: £9.2m; Current Price: 0.29p

  • 38m at 0.25% WO3
  • W Resources has reported the next drill result from its 1,600m drill programme at the Régua Tungsten Project, located in Portugal with 38m at 0.25% WO3 from 41.14m (RGD022)
  • The results of previously reported drill hole RGD023 have been reviewed following a lab oversight. This has resulted an increase in grade to the assay result previously announced 09/03/15 to 6.3m at 0.47% WO3 from 6.3m at 0.38% WO3.
  • Metallurgical testing and equipment selection for the project is advancing well and the Company remains on track to evaluate the mine development options.
  • Forecasts, rating and price target remain under review.

NORTHLAND CAPITAL PARTNERS VIEW: Positive assay results for W Resources that continue to demonstrate that the Régua deposit has significant potential with a higher grade core and wider halo moderate grade. The results to date have already surpassed the Company’s expectations and the mineralisation remains open at depth and in all directions.


Nektan (LON:NKTN): Financing

Market Cap: £36m; Current Price: 168p

  • New Financing of £7.1m
  • Nektan this morning announced it had secured new net financing of c. £6.7m from existing, new institutional and private shareholders in order to fund its US expansion and continued European growth. The financing comprises £4.7m of convertible notes, a placing of 1,044,774 placing shares at c. 168p and a DTL loan facility for a further £0.6m.
  • The funding will support the Company’s expansion in the US tribal and commercial casino market where it has now signed 18 contracts and/or letters of intent with licensed casino operators. Furthermore, the funding will support the continued growth of the Company’s European business where 16 white label partners have gone live on the Evolve platform with a further 14 contracts signed in the past 90 days and finally the funding will enable the business to launch its partnership with The Sun in the UK where it will operate white-label real money gaming from the end of the current financial year (June 2015). 
  • Finally in order to satisfy demand from new investors, additional subscriptions for convertible notes and placing shares for up to 10% of the share capital of Nektan may be received within the Fundraising Over-Allotment, though this is subject to shareholder approval at a General Meeting. The additional 10% at the current share price would imply further funding of c. £3.6m.    

NORTHLAND CAPITAL PARTNERS VIEW: Despite the funding round being secured at what looks to be a c. c. 29% discount to the IPO price back in November 2014, the additional funding not only puts the business in a good position to execute on recently signed contracts in the US and white-label solutions in Europe but also provides additional firepower for further growth so the news should be well received by the market.     


]]> Broker spotlight: Tullow Oil, Travis Perkins, Talk Talk, SuperGroup and Sunrise Resources Mon, 27 Apr 2015 12:14:00 +0100 Tullow Oil (LON:TLW) investors enjoyed a favourable weekend ruling by an international maritime tribunal that allowed it to continue developing its TEN oil field off the coast of Ghana.

Last month, investors became aware of a maritime border dispute between Ghana and Ivory Coast which could delay Tullow's multi-billion dollar Tweneboa, Enyenra and Ntomme (TEN) oil project.

But The Hamburg-based International Tribunal for the Law of the Sea (ITLOS) ruled on Saturday the project could continue on the condition that Ghana does not start any new drilling in the area.

Broker VSA thinks that whatever the final outcome is, Tullow will be able to pursue the development of the TEN field within either country.

“Having this project on stream by mid-2016 is important for Tullow as it would provide the necessary cash flow for the company to support its debt related payments.”

JP Morgan, meanwhile, said it anticipates a repeat of commentary on TEN in this week’s trading update from Tullow.

“We also look for an update on the status of pipeline negotiations across Kenya and Uganda and an update on the potential to increase contingent resources in the South Lokichar basin given recent drilling and ongoing extended well tests.”

The weekend DIYer may be a rarer breed these days but that isn't stopping the building trade in general making progress, if JP Morgan's upgrade to Travis Perkins (LON:TPK) is anything to go by.

It shunts the target price on the shares up to 2,300p from 2,100p before. The rating is "overweight".

The broker said the bears have been saying the construction market may slow pre- general election or see aggressive action from the competition.

"However, trading year to date suggests neither is happening; the market remains robust and the group continues to take share. Management has reiterated FY revenue guidance. The group remains committed to its expansion plans and is unconcerned by competitor rollout of similar formats," said analyst Emily Biddulph.

Also in broker land today, telecoms group Talk Talk (LON:TALK) gets a thumbs up from Credit Suisee, which raises the share price target to 425p from 300p. The rating is a repeated 'overweight'.

It reckons the firm will exceed its revenue growth guidance (driven by fibre, TV and mobile subscriber growth) and therefore get close to its implied full year March 2017 underlying earnings target of £475mln. The broker forecasts £465mln - 14% ahead of consensus.

Conversely, the same broker is downbeat on global equipment giant Rotork (LON:ROR), cutting the price target to 2,315p from 2,535p, saying oil and gas headwinds are building.

It has reduced its group 2015 EBITA forecasts by 4% to £148mln. US broker Jefferies has also taken a red pen to the shares - cutting them to 2340p.

Fashion chain SuperGroup (LON:SGP) has been given a boost in the form of an upgrade from RBC Capital. It raises the rating on the shares to 'outperform' from 'sector perform' and advances the target to 1,150p from 1,000p.

Among the small caps, recent testwork at Sunrise Resources’ (LON:SRES) County Line project in the US showed a diatomite product could be generated to commercial standards for use in  filtration, the firm told a wider update on its Nevada projects.

Diatomite is mainly used, after heat treatment with or without flux addition, in the filtration of beer, wine, fats and fruit juices and also as industrial filler.

House broker Northland Capital Partners said: "The initial production of the higher-value filtration grade diatomite product from the County Line Diatomite deposit is a very important development for the company.

“Previously the large proportion of broken diatoms from Sunrise’s preliminary testing seemed to be a potential limiting factor in the production of filter grade product.

“This latest work demonstrates that this is not the case and significantly improves the attractiveness of the project.”

Alecto Minerals (LON:ALO) has unveiled an initial non-JORC code resource of almost a quarter of a million ounces of gold at the Kerboulé project in Burkina Faso, which it acquired last year from Kaizen Discovery

The positive result was hailed by Northland, which said it demonstrates why the Company acquired the Kerboule Gold Project last year.

“In the current market conditions where assets are considerably undervalued, it makes sense for juniors acquire post discovery projects when ounces in the ground can be bought at a lower cost than would be required to drill them.”

]]> Northland Capital Partners View on the City Sunrise Resources and Tech Financials Inc Mon, 27 Apr 2015 08:10:00 +0100 TechFinancials Inc. (LON:TECH) – CORP

Market Cap: £23m; Current Price: 34p

TechFinancials Inc. (LON:TECH) this morning announced that since its IPO in March the business has signed eight new contracts with brokers licensing the company’s financial trading software, which is impressive given the listing was less than two months ago.

  • European market which is a key region for TECH and which the company alluded to at time of admission to AIM in March.  
  • TECH has also signed its first contract with a broker focusing its trading activities on the Arabian Gulf Region so this is a new region for the company to expand its B2B business into. Furthermore, an existing key customer in Asia is now offering its services to the People’s Republic of China (PRC) market through collaboration with a Chinese partner. The partnership has adopted a multi-brand strategy for the PRC market and has launched eight brands in the PRC as a result. In addition to customer expansion, TECH has also launched its own Chinese B2B desk where an experience Chinese business development professional will aid in building the B2B customer base in the PRC. In order to support this initiative TECH management intends to open an office in China in the near future to sell and support the company’s software in this market. 

Finally, the Group also announces this morning that it has strengthened its online broker management team by appointing Mr. Jonathan Shkedi as the new CEO of OptionFair. Mr. Shkedi brings a wealth of experience from sales, media and affiliate positions from a variety of online industries. A key component of the business model for OptionFair is online marketing in order to drive active customer figures.  


Sunrise Resources (LON:SRES) – CORP: 

Nevada updateMarket Cap: £1.8m; Current Price: 0.28p 

High-value filtration grade diatomite from County Line

Independently conducted testing has produced a high-value filtration grade flux calcined diatomite from the Country Line Diatomite Project. Follow up exploration planned for May   Sunrise has staked an additional seven claims in the area and now holds 118 claims.

Atwill test samples below the surface.

he Bay State Silver Project, Sunrise is applying for permits for an initial five hole drill programme. These holes will test the Chihuahua (3) and Lincoln (2) vein systems below the old mine workings. A specialist mine access company has been employed to access and sample the Chihuahua vein along the development audit behind a rock fall.

 At the Garfield Gold-Copper Project, a soil sampling programme has been completed and results are pending.

At the Junction Gold Project, a trial soil sampling programme has been completed and demonstrated that the technique can be used to determine the size of the target prior to drilling.

At Sunrise’s Australian projects, heavy rains and flooding have delayed the planned work programme.

NORTHLAND CAPITAL PARTNERS VIEW: The initial production of the higher-value filtration grade diatomite product from the County Line Diatomite deposit is a very important development for the Company. Previously the large proportion of broken diatoms from Sunrise’s preliminary testing seemed to be a potential limiting factor in the production of filter grade product. This latest work demonstrates that this is not the case and significantly improves the attractiveness of the project.

]]> Broker spotlight - Tesco, Merlin Entertainments, Lloyds Banking, Wolf Minerals, OPG Power, 88 Energy ... Fri, 24 Apr 2015 11:10:00 +0100 Tesco (LON:TSCO) won’t be appearing on Goldman Sachs’ shopping  list anytime soon.

The heavyweight broker  has knocked another 10p of its share price target for the supermarket giant.

It comes after the grocer reported a record £6.4bn pre-tax  loss for 2014 earlier this week.

Goldman reiterated its ‘sell’ rating on Tesco today and now has a 190p target for the shares, which currently trade at 223p. 

Meanwhile, Lego Land owner Merlin Entertainments (LON:MERL) fell to the bottom of the FTSE 100 after a downgrade from JP Morgan.

Shares fell 7p to 447p as the broker reduced its ‘overweight’ rating on the theme park operator to a ‘neutral’ with a 450p target price.

Packaging and paper group Mondi (LON:MNDI) moved in the other direction on the blue chip gauge as UBS bumped its rating up to a ‘buy’.

Reckitt Benckiser’s (LON:RB.) has confirmed  it is on course to meet 2015 guidance for 4% like-for-like net revenue growth and moderate to “nice” margin uplift. Buy with a 6,550p target price said Liberum.

Lloyds Banking (LON:LLOY) may have no taxpayer interest by the end of 2016, said Investec, after the sell down of the UK Government’s residual stake continued.

Over the past month, a further 0.7bn shares (worth £0.6bn) have been sold, leaving 15bn shares (20.95%) worth £11.8bn still to go. 

Under current Conservative Party proposals, a further £9bn is due to be sold over the next 12 months, including a £4bn public offer. Hold said the broker.

Among the small caps, Numis applauded Wolf Minerals (LON:WLFE) on another productive quarter.

The broker has a 23p share price  target on the miner, which is building a tungsten and tin mine in Devon.

“A very positive update,” said Numis. “Project development remains on time and budget for Q3, with construction 85% complete.”

Sanlam has met with Indian power group OPG Power (LON:OPG), who confirmed that the expansion programme to 750Mw is on target for completion by June. 

OPG also added they had the land in place, crucial in India, to expand further to over 2,000 MW, with another 600 MW possible in Gujarat and 750 MW in Chennai.

Net debt/equity is expected to be 60% at year-end, so it would be perfectly possible for the group to start paying dividends sooner than FY17, as no further capacity expansions have been announced.

With the stock trading on 6.3 times next year’s consensus earnings and one times book value, the growth potential is not priced in says broker Sanlam.

Numis likes coloured gemstones group Gemfields (LON:GEM) with production ahead of forecasts and a lower quality ruby auction in Jaipur generating revenues of $16.1m. The broker was a  buyer previously but has now raised its target price to 80p.

7digital’s update ahead of its latest annual meeting confirmed trading is in line with forecasts with several contract wins since March with a total value of £1.8mln.

These include four new customers and the expansion of two existing contracts into new territories. 

Of particular note, existing client ROK Mobile has appointed 7digital to power its UK service, while demand from radio broadcasters seeking to use their brands to create streaming music services is growing fasts.

Sales are forecast to reach £11.6mln in 2015, while the broker retains its 38p target price.

Westhouse remains a buyer of CloudBuy (LON:CBUY) with a target price as it named ASME and Visa AP as its partners in Singapore e-commerce marketplace.

The online marketplace project will enable local SMEs to trade with the region and the world plans to launch before mid-year 2015.

Three  marketplaces were expected to go live if the first half of 2015.

“These are all now progressing and with the further endorsement of Visa AP today we continue to believe that there will be a significant ramp-up in revenue and cash flows in due course,” said the broker.

88 Energy’s (LON:88E) project Icewine in Alaska remains an attractive high-risk/potentially high-reward project, said RFC Ambrian. Neighbour Great Bear is testing three similar conventional targets this year in acreage just to the north of Project Icewine. 

'Speculative buy' is the rating with A¢1.9 (0.9p) share fair value. 

]]> Northland Capital Partners View on the City GB Group, Globo, Playtech Limited, PeerTV and others Fri, 24 Apr 2015 08:29:00 +0100 GB Group (LON:GB.) – FY pre-close

Market Cap: £228.6m; Current Price: 189p

  • Positive FY outturn
  • FY revenue expected to have increased c. 37% to £57.3m – 15% organic with the balance from the DecTech and Transactis acquisitions. Adj. operating profit expected to grow 50% to £10.8m – ahead of expectations and previous guidance. 
  • Deferred revenue has increased £3.2m to £9.9m and cash balances increased £4.0m to £15.8m (H1: £13.6m) with net cash down £0.4m to £11.8m (H1: £8.6m). H1 acquisition of DecTech cost £14.1m in initial consideration with a further £6.2m subject to revenue/profit performance. H2 acquisition of Transactis cost an initial £5.0m (£4.5m in cash) with a £1.0m deferred in shares. H1 balance sheet boosted by £11.0m placing.
  • IDP (Identity Proofing) revenue increased c. 66% and IDS (Identity Solutions) up c. 20%. In March GBG was chosen as one of the identity assurance providers on the new GOV.UK Verify service. GBG will offer the service through its own brand – CitizenSafe. It has also been chosen by the Royal Mail as its ID verification partner and hence is behind two of the nine choices available.

NORTHLAND CAPITAL PARTNERS VIEW: A slightly better outturn for FY15 than the guidance provided earlier in the month (adj. operating profit of £10.8m versus ≥£10.5m) with the successful integration of the two FY15 acquisitions. Identity assurance enjoys a number of strong demand drivers and GB Group is capitalising on the opportunity. Growth is reflected in the rating (and share price performance) with an FY15 PER of 29.9x and 26.0x FY16 pre any upgrades.

Markets recovered some of their poise after last Friday’s wobble with the FTSE returning above 7,000 and the Nikkei and Hang Seng hitting multi-year highs. Support came from poor manufacturing data that may force further stimulus. Markit’s flash Eurozone composite Purchasing Managers’ index fell from 54% to 53.5% in April suggesting that the recovery may be cooling. The Chinese manufacturing data also came in light at 49.2% from 49.6% in March (expectation 49.6%). This did little to help the demand argument for resources although the iron ore price bounced almost 6% on Wednesday as BHP Billiton announced that it was slowing the Pace of expansion in iron ore production – the first major to rein back expansion plans. Brent settled above $62 and there were comments from Tony Hayward, Genel Energy CEO and ex-BP, that the oil price would recover >$80/bbl after Opec’s aggressive pricing had forced out much of the US shale production. That said, US crude oil inventories remain at their highest level in 80 years. 

UK retail sales fell 0.5% in March (expectation +0.4%) but this tends to be a volatile measure. Wednesday saw a substantial sell-off in sovereign debt with profit taking on Bunds and gilts following the publication of the BoE minutes that were more hawkish than expected. Although the vote to maintain interest rates was unanimous, two members reported that the decision was finely balanced. The Government hit its deficit reduction target for 2014-15 (although the level of government net debt continues to rise and now represents 80.4% of national income). The outcome of UK election remains very uncertain and this is likely to act as a drag on capital market activity until the dust settles.

Sales & Research thoughts

TMT: Next week sees the TV Connect trade show at London’s ExCel and it will be dominated by the recommended cash and share offer from ARRIS Group for Pace (LON:PIC), the largest set top box manufacturer by volume, at a 28% premium to the closing price. The share price reaction suggests that other bids may be forthcoming. Amino Technologies (LON:AMO) and PeerTV (LON:PTV) are exhibiting and we would anticipate some trade announcements. In the adjacent video technology market, Vislink (LON:VLK) is holding a capital markets day on Wednesday. The Broadcast segment was weak in FY14 (down 21%) but Surveillance and Public Safety grew 35% and there was a strong contribution from the Pebble Systems acquisition. We expect more details on its partnership with GoPro to add professional grade, live, HD wireless broadcast to GoPro’s HERO4 cameras.

Thursday sees prelims from Globo (LON:GBO). In February’s pre-close, the provider of Enterprise Mobility Management and mobile connectivity software flagged revenue of €106m (+48%), ahead of market expectation, and profit broadly in line. Focus will be, as ever, on the detail of cash flow generation. Management reported year end net cash of €40.3m (FY13: €42.0m) after the$12.0m and associated costs for the Sourcebits acquisition and investment in its US operations. 

Consumer/Leisure: Playtech (LON:PTEC) reports on 1Q15 trading on Monday. At the time of the FY14 results at the end of February, the current trading statement referenced a strong start to FY15 with daily average revenues for the first eight weeks of FY15 up more than 22% YoY and up more than 5% QoQ, though this included some benefit from Euro weakness as the company reports in Euro. Key to Monday’s trading update would be any improvement in the comparative growth rates referred to above. The business remains cash rich, even after recently announcing the acquisition of TradeFX for an initial of €208m in cash and additional cash consideration based on 8x FY17 Adj. EBITDA, capped at €250m. The business had €692m of cash on the balance sheet as at the end of December 2014, which provides significant firepower for further growth and it converts a high percentage of EBITDA into cash.

]]> Oil Slump May Deepen as US Shale Fights OPEC to a Standstill Fri, 24 Apr 2015 08:07:00 +0100 Oil Slump May Deepen as US Shale Fights OPEC to a Standstill 

Here is the opening of this topical article by Ambrose Evans-Pritchard for The Telegraph: The US shale industry has failed to crack as expected. North Sea oil drillers and high-cost producers off the coast of Africa are in dire straits, but America's "flexi-frackers" remain largely unruffled.

One starts to glimpse the extraordinary possibility that the US oil industry could be the last one standing in a long and bitter price war for global market share, or may at least emerge as an energy superpower with greater political staying-power than Opec.

It is 10 months since the global crude market buckled, turning into a full-blown rout in November when Saudi Arabia abandoned its role as the oil world's "Federal Reserve" and opted instead to drive out competitors.

If the purpose was to choke the US "tight oil" industry before it becomes an existential threat - and to choke solar power in the process - it risks going badly awry, though perhaps they had no choice. "There was a strong expectation that the US system would crash. It hasn't," said Atul Arya, from IHS.

"The freight train of North American tight oil has just kept on coming. This is a classic price discovery exercise," said Rex Tillerson, head of Exxon Mobil, the big brother of the Western oil industry.

Mr Tillerson said shale producers are more agile than critics expected, which means that the price war will go on. "This is going to last for a while," he said, warning that any rallies are likely to prove false dawns.

The US "rig count" - suddenly the most-watched indicator in global energy - has fallen from 1,608 in October to 747 last week. Yet output has to continued to rise, stabilizing only over the past five weeks. 

David Fuller's view 

There is no doubt that US fracking is a very adaptable business and the combination of technology and experience is making the industry much more efficient.  Nevertheless, today’s higher production will wane at current prices, as the yield from shale formations inevitably declines rapidly, necessitating additional drilling slightly further along the shale formation.  Companies will be less willing to continue drilling with WTI crude in the $50s region, especially as their hedged prices at higher levels begin to expire in 2016.  Additionally, plenty of oil industry workers have been laid off this year and it will take a little longer to get them back if the price of oil does rise.

This item continues in the Subscribers’ Area.


Taiwan Stocks Climb Most Since 2013 on China Equity Link Bets 

Here is the opening of this interesting article from Bloomberg: Taiwan’s stocks rallied the most in nearly two years as financial companies jumped on speculation the island will broaden access to China’s capital markets.

The benchmark Taiex index climbed 1.9 percent to 9,797.49 at the close in Taipei, completing its biggest advance since July 2013. A gauge of banks, brokerages and insurers surged 4.7 percent, the most since December 2011. Cathay Financial Holding Co. and Fubon Financial Holding Co., the island’s two biggest lenders by market capitalization, advanced at least 4.7 percent.

China’s securities regulator is studying setting up a stock-trading link between Shanghai and Taipei, the Economic Daily News reported Wednesday, while Taiwan’s government said it will open a cross-border stock trading platform with Singapore on July 1. Hong Kong’s benchmark equity gauge has jumped 17 percent amid record turnover since a link with Shanghai began in November.

“A flurry of news opening up the possibility of stock links with other bourses is reminding investors that financial stocks in Taiwan are undervalued,” said Parker Wu, a portfolio manager at Agriculture Bank of Taiwan in Taipei. “This will be short-lived. It takes time until we see the actual execution of the plans and Taiwan’s political community could be a hurdle.” 

David Fuller's view 

The Taiwan Stock Exchange Weighted Index (p/e 15.32 & yield 2.97%) jumped nearly 2% today.  It has been consolidating gains above 9500 in a narrow range for the last two-and-a-half months, correcting a previous short-term overbought condition. 

This item continues in the Subscribers’ Area.


Email of the day 

On yesterday’s third article:

“David - Is it really possible that one man in a bedsit in West London was single-handedly responsible [Ed: for the 2010 flash crash]?” 

David Fuller's view 

He was using high-frequency trading (HFT) software, purchased off the shelf, which he apparently modified.  So, yes, theoretically he could and this would have triggered other HFT systems. 

However, what is worrying is that he did not have expensive high-speed computers near dealing centres to achieve this mayhem.  In other words, apparently any other exceptionally bright young computer boffin could achieve the same results, flooding the market with thousands of large orders, most of which are never executed, although they are seen by other computers.

This is not a problem for unleveraged long-term investors.  However, it is a risk for highly leveraged traders.


Tesla Wants to Power Wal-Mart 

This article by Dana Hull for Bloomberg may be of interest to subscribers. Here is a section: 

Jackson Family Wines, based in Santa Rosa, has a new partnership with Tesla involving battery storage and several vehicle charging stations, according to the February issue of Wine Business Monthly. The winery declined to comment.

Mack Wycoff, Wal-Mart’s senior manager for renewable energy and emissions, said the company is intrigued by energy storage. “Instead of pulling electricity from the grid, you discharge it from the battery,” he said. “Ideally you know when your period of peak demand is, and you discharge it then.”

Mike Martin, Cargill’s director of communications, declined to provide details about how the company plans to use Tesla batteries at the Fresno plant. The 200,000-square-foot facility, one of the largest of its type in California, produces nearly 400 million pounds of beef each year.

Janet Dixon is director of facilities at the Temecula Valley Unified School District in southern California, which plans to install solar panels at 20 of its 28 schools this summer. Dixon said that SolarCity is the solar provider, and five of the facilities will have Tesla batteries.

“We spend roughly $3 million a year on electricity, and most of that is lighting and air conditioning,” said Dixon. “We are going solar to reduce our overall costs and the battery storage should help us manage our peak demand.”  

Eoin Treacy's view 

Tesla trades on aggressive multiples. Since its car sales are a fraction of even the smallest auto manufacturer, it will be quite some time before the company will compete on that front even if one assumes that large numbers of people will be driving electric vehicles 10 years from now. Batteries are a much bigger story for Tesla which is why they are investing so much capital in building a “gigafactory” which they anticipate will deliver the economies of scale necessary to drive down the cost of their products.

At the present moment almost no one has a battery in their home. As solar technology improves and the prospect of containing volatility on energy spending becomes a realistic possibility demand is likely to increase. At the present moment the solar cells companies like SolarCity are installing in homes are not particularly efficient. However, as the efficiency rates of laboratory tested products reach commercialisation the energy generation capacity of one’s home will rapidly improve. Therefore the efficiency of solar and the potential demand landscape for home batteries are linked.


Email of the day on oil prices 

Today I listened to a presentation by Torbjørn Kjus, oil analyst at DNB Markets. He has become quite a guru in the last years so it was interesting to hear what he had to say. Interestingly, after having been possibly the most bearish oil price analyst for quite some time, he is now among the most bullish forecasters, see pages 7-9 in the presentation. He believed that the oil producers would continue to cut investments and particularly exploration costs, even if we see a move to $70-80 bbl. The majors will prefer to maintain dividend payouts. This will be particularly painful for oil services. As such one should expect oil producers to gain more from any oil price rise, rather than oil service companies.

Eoin Treacy's view 

Thank you for this topical report and informative email. With oil prices stabilising above the psychological $40 level and as the Dollar unwinds its short-term overbought condition it makes sense to be more positive on the oil prices for at least as long as it takes to unwind the oversold condition relative to the 200-day MA, which at present is near $72.

Here is a summary of the arguments set out in the above report: 

High asset turnover no longer a good strategy for developers 

Thanks to a subscriber for this report from Deutsche Bank focusing on the Chinese property market. Here is a section: 

Mere sales volume recovery would not improve profitability of developers

While we expect further recovery in the physical property market, given policy relaxations, the recovery could just be a "profit-less" or profitless one for some developers (like those with expensive landbank, high gearing, high financing costs). The strategy of high asset turnover to drive earnings growth has proven ineffective as earnings growth has consistently lagged behind sales growth in the past two years. This prompted some developers to start shifting away from the high asset turnover strategy that they had been adopting in recent years. Meanwhile, we see little scope for profitability to rise significantly in the near term without a marked correction in land prices or a sharp rebound in ASPs. 

Contracted sales growth not directly translate into corresponding profit growth 

Some market participants believe that strong contracted sales growth will lead to corresponding strong earnings growth. However, by comparing contracted sales with earnings, we found that earnings growth has consistently lagged behind contracted sales growth, especially for developers focusing on high asset turnover. Contracted sales for leading developers saw YoY growth of 30% and 17% respectively in 2013 and 2014, but the corresponding core net profit growth was only 21% and -7%, while core EPS growth was lower at 19% and -10% respectively. For developers focusing on high asset turnover, the discrepancy between sales and earnings growths was more severe, reflecting the key industry challenges – land prices rising faster than home prices and rising financing costs from higher debt levels (used to drive higher growth). For example, Country Garden had contracted sales growth of 123% and 22% in 2013 and 2014 but had core EPS growth of only 16% and 10%, while Sunac had sales growth of 61% and 30% in 2013 and 2014 but achieved core EPS growth of only 17% and 4%. Adjusting for some aggressive interest capitalization, core net profits of the key developers were on average 41% and 106% below reported figures, suggesting that actual profitability is even lower 

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area. 

There has been a great deal of commentary on the outlook for the Chinese property market over the last decade as prices soared. Two of the primary reasons for the outperformance were the dearth of other investment opportunities and the availability of credit. From 2009 the government clamped down on overbuilding in an attempt to rein in excesses. This had a major impact on property developer shares which spent much of the last five years ranging. 

]]> Naked Trader '..the market heads into the election in a pretty good mood' Thu, 23 Apr 2015 15:59:00 +0100 MARKETS

Some good news: Tesco is apparently offering a great deal on its shares: buy one, get one free!

Well, the market heads into the election in a pretty good mood. I think we have to remember so many FTSE companies are overseas - maybe the election won't cause so much volatility and we will just follow the states. Who knows?

I'm carrying on as normal! Trouble is if you worry about everything - elections, Greece, Isis, the euro, then you'll never ever make a trade. Worst comes to the worst with a crap trade, dump it and take a small loss.

I've surprised myself and made quite a few trades, more than normal - not going to publish them all but here are one or two!

Quantum Pharma (QP.) looks very interesting indeed. I like the look of it and bought it twice - once live at Monday's seminar and also a spreadbet or two.

This is one that actually makes a profit - and a good one too! I like that its trading update said results which will be sometime in May (probably before I update next) will  be comfortably ahead of expectations.

On that score, the shares look very cheap. It reached a significant milestone recently by launching its first licensed medicine, Aviticol .

Quantum also has cash and is using it to acquire others - indeed it just announced it bought Lamda Labs which looks a good fit 

I think Quantum has some considerable upside and I am thinking of it as one I could make decent money on and might even be holding it in two year's time. I've had good success trebling my money and more with companies like Vectura and BTG and wonder if this could be a new super one.

I don't know yet, but I'm going to try and hold for a while ignoring volatility and see how it plays out.

I like the look of LOOK! Lookers, the car seller. All car sellers are putting out very strong sales and Lookers sales are accelerating away 

I wonder whether there is some more upside here to nearer the 200p level before the brakes come onto the share price.

Profits are way up, and the dividend is up nicely too. The last statement was bullish and I wonder about those getting hold of their pension pots heading off to their local Lookers to get a new (or used) car!

All in all looks a good one for now and I am in the driving seat for more

I also like the look of Impellam (LON:IPEL) and bought a few for the ISA. 

Profits are booming at IPEL and the share price has too.

However even after recent rises it looks cheap and I'm after a further re-rating to somewhere near the tenner mark. Net debt is low too at 15m, forecasts are bullish and directors have been buying near the higher price. 

Might take a bit of patience but suddenly one day this one could really push a lot higher.

I've taken up my rights in Optimal Payment so I'll add at the rights price of 166 which gives the website a new lot of shares (5,000). 

I've topped up in one I've already made nearly 100 points on - Energy Assets (EAS).

And I topped up on John Laing (JLG) which has turned out to be a fantastic new issue. 

Renew (LON:RNWH) also was just asking for a top up after a fall so I did! Lots of good profit in that one.

Well, it's now clear why the Tep share price had gone down this year - profits are going to be about 8-9m less than expected due in part to gas theft.

If that can come under control, then growth could be resumed - the dividend is to be pushed up a lot, and at 5% plus, that looks very nice and for the time being I'll consider it my income stock. I bought a few new ones on the day of the announcement.

Directors put out a statement saying they thought the share price fall back was well overdone and put their money where their mouths are and bought an absolute ton of shares, over a million quids worth. I would think a slow ride back to a tenner is likely and in the meantime there is a massive payout coming. The shares now look cheap and the dividend will certainly support the share price. 

DIA:  statement was a bit disappointing, however I had already reached my target and more and decided to bank my profits, making a profit of £726. Future could still be bright though and I'm already thinking of buying them back as at under 700 they have a lot of potential.

I had a great run with Hunting and after a very big rise, way above my expectations I sold taking a nice profit of £1,753.

I never really expected it to rise so much so fast, sometimes the market surprises you in a nice way! This was a pretty easy one to take profit on.

To me share dealing is just a business and I don't get emotional about it - I know sometimes something won't work out and I'll have to take a big loss. Doesn't matter, a business expense. As long as you don't hold too much of anything a couple of stinkers is fine. 

It's just when you buy something because a company said something then three months later they say the opposite then I get annoyed!

But Shoezone (LON:SHOE) in January said despite the warm weather so far they were trading in line with expectations! Three months of cold weather later they said the opposite - they HAD affected profits! Frankly I feel mugged - I bought some on the in line statement which turns out to be cobblers.

It's tempting to buy a pair of their boots and then stick one somewhere painful into whoever writes the statements. And really annoying is there were no revised profit figure to work off to try and value it. How are we expected to make a decision?   In fact I was lucky as I had been considering buying some more and lucky for me level 2 had put me off. 

Anyway I got out of some first thing and then stupidly went  to get some tea and by the time I got back the price had gone down another 15p. So I even played getting out badly. Anyway the result for the site is a loss of £912 .

However today I see house brokers reckon profits will be £10m. With that and its cash surprisingly I am pondering buying Shoe back this afternoon or tomorrow as if those figures are right then the current price looks cheap and it could head back up to the 220 level giving some nice upside from here.

Polypipe (LON:PLP) has been sitting there for a long time and actually I'd forgotten about it but it came up on a screen at the seminar. Having a good look at it the day after although statements were very good the share can't get above 180. So I took profits just below - so profits for the site on that are £602.  I'd be interested in buying this one back lower if possible. 

Pets at Home (LON:PETS) came up with a decent statement - it looks like a superb long-term investment. But I did sell a few before results day as I thought even with good results the share might fall back on results day.

Actually I got that wrong, they didn't much! Anyway I had some rather large spreadbets on it as those of you who came to the seminar saw and in real life I've made more than £15,000 on them so live on the day I did sell some, in particular some of the spreadbets.

For web purposes half are sold to bank a profit of  £1,228. However firmly hanging onto the rest and may consider re-buying ones I sold on any weakness as 300 looks possible.

So taking all web losses and profits into account and taking the losses off the profits that's a total profit of £3,397.  

Carclo (LON:CAR) announced a licensing agreement for CIT, the market liked that and the share price is heading higher again.

Telford Homes put out a great report nothing like "ahead of expectations" is there? Despite the big rise I've had in it so far this company looks very well run and so unless there is a massive downturn going to stick with it. 

Oh my goodness, a spectacular rise for Xeros Tech for me today after it announced signing up 61 channel partners for its polymer bead cleaning business. 

There's a big water shortage in California and with its system needing very little water there are going to be a lot of sign ups. All the big hotels have signed up. Could this be a giant in the making? I'm already up nearly £50,000 on these personally with a £7,000 profit for the site. I would expect a lot of volatility as they are hard to value and possibly a fund raising but if it carries on like this could it be a multibagger eventually?

Iomart has gone up nicely. The beauty of it is that Iomart shares aren't worth much less than they are now, so one can hold happily. What we are waiting for is another bid to come in, I suspect next time 300p will be enough.

It's one of those shares to put away, forget about and then one morning when you least expect it a bid announcement appears and you've gained 40% overnight. I'm waiting patiently....

The lovely GB Group put out a great statement with profits ahead of expectations - it rose nicely this week after that and looks like a bid target.

Spire's shareholder dumped again in the late 300s causing it to come back (same as last time!) If history works out again it should head back up to 380!  

Good old Dignity continues well and is now trying to stay above the 2000 mark. Already doubled on these and over the years no surprise if it doubled again, there's a lot of money in death!

Looking forward to some big dividend payments from GVC and 888.

Caretech (LON:CTH) has flown up and gone past the 240 mark  now. 

32 Red (LON:TTR) continues its strong run up. Elsewhere Sprue Aegis (LON:SPRP) hangs onto gains.  Keeps rising - it seems to stay put for a while then put on 15p which is fine by me!     Entertainment One has had a great week, and trying to conquer the 310-320 area.    a beautiful long-term winner.  

I still have the spreadbet in British Airways or consolidated something or other whatever they're called now and see I am more than 2 grand up. I only bought them as a short-term play on the ebola fears being overdone but as they seem strong I might as well turn it into a longer-term thing!

]]> Broker spotlight - Election, UK banks, Game Digital, Rolls Royce, ARM, Patagonia Gold... Thu, 23 Apr 2015 11:31:00 +0100 Brokers are now firmly focused on the likely make-up of the next government.

It was Liberum’s turn today and it reckons we are heading for some version of a Labour-led government with SNP, and perhaps Liberal Democrat, support. 

Stock winners under this scenario would be in the long to medium term it suggests. with contractors Atkins (LON:ATK) and Balfour Beatty (LON:BBY), two names it puts forward. 

On the flipside, it sees problems for Hargreaves Lansdown (LON:HL.), QinetiQ (LON:QQ,) and the building materials and housebuilding sectors generally.

UK banks are another sector that will be overshadowed by the election and Deutsche Bank expects investors to remain selective. Even US banks that reported better-than-expected results recently have struggled against a tough macro background it points out.

Lloyds (LON:LLOY) is its top pick, Barclays (LON:BARC) offers material valuation upside, Standard Chartered  (LON:STAN)  is a sell and HSBC (LON:HSBA)  and RBS (LON:RBS) are holds.

Tate & Lyle (LON:TATE), meanwhile, has problems that are unrelated to the colour or style or the UK government. Liberum welcomes its decision to pull out of European bulks, while retaining Splenda appears the least worst outcome.

The current valuation, however, places the sweeteners on a rating well above its global peers albeit on  currently depressed earnings. The broker has a target price of 545p and a ‘sell’ rating.

Glencore (LON:GLEN) is Goldman Sachs’ conviction buy in a struggling mining sector, 

There are four key reasons why Glencore should be a winner, said the US heavyweight: exposure in base metals rather than bulks; stable cash flows from marketing; a covered dividend and free cash flow; and improving credit metrics. The 12-month price target is unchanged at 340p. 

Game Digital (LON:GMD) had a tough start to 2015, but analysts at Liberum believe trading will pick up. After warning investors  in January, the video games seller posted a 1.8% dip in first half profits in March.

Margins were hit at the end of last year when it cut prices too early and too deep after it started promotions on Black Friday - a US style discounting day in November. 

“While an improved performance  over Black Friday 2015 is important, we believe that the medium term upside from Game’s strategic market positioning is under appreciated,” said Liberum’s Tom Gadsby.

The broker upped its ‘hold’ rating to a ‘buy’ and said while current trading  is soft, it sees a strong games pipeline into the autumn, and with a higher installed base of new generation consoles.

Back on the FTSE 100, Rolls Royce (LON:RR.) received two upgrades from Bernstein and JP Morgan respectively. The latter upped its share target price on the aerospace engineer from 885p to 950p.

Microchip maker ARM Holdings (LON:ARM) had its price target nudged up by RBC Capital markets after strong results on Tuesday. The broker believes shares are now worth 1330p. 

Credit Suisse stayed ‘neutral’ on Countrywide (LON:CWD) but raised its price target on the estate agency group’s shares by 54p to 552p. 

Patagonia Gold (LON:PGD) has been rated a buy with a target price of 4.5p. Times have been tough for the Argentina-based recently with the development of its flagship Cap-Oeste project put on hold. 

The mine at Lomada, though, is very much alive and the company is focused on maximising cash flows from this mine and adding reserves to extend its life.

Cameroon-based gas supplier Victoria Oil and Gas (LON:VOG) is heading towards cashflow generation with the commissioning of the Bassa and Logbaba power stations, which SP Angel said marks a watershed for the company.


“This is not to be sniffed at, as it means that the company is now in charge of its own future, and following a period of consolidation in which its cash resources can be rebuilt, it can start to make longer term plans as to what to do next.”

]]> Northland Capital Partners View on the City AdEPT Telecom, Amino Technologies, Epistem Holdings and Melrose Resources Thu, 23 Apr 2015 08:23:00 +0100 Amino Technologies (LON:AMO) – BUY: Pace acquisition read across

Market Cap: £73.9m; Current Price: 137p; Target Price: 150p (from 140p)

  • Industry consolidation remains part of the Amino investment case
  • Pace has announced a recommended cash and shares offer from ARRIS Group, a rival STB manufacturer, with an indicative value of 426p/share (132p/share cash and 0.1455 new ARRIS shares), representing a 27.6% premium to Pace’s closing price and an implied EV/adj. EBITDA of c. 8.2x. On top of this, Pace shareholders will receive the proposed final dividend of 4.75cents. 
  • Amino will also be exhibiting at next week’s TV Connect trade event at London’s ExCel.
  • No change to forecasts, BUY rating and move price target to 150p (from 140p).

NORTHLAND CAPITAL PARTNERS VIEW: Extrapolating too much from M&A activity in one part of a subsector to another can be a fairly dicey exercise but there is some read across from the proposed Pace acquisition to Amino. Although Pace and Amino are targeting different parts of the market (Pace – Tier 1; Amino Tiers 2 and 3) and are very different scale businesses (Pace’s FY14 revenue was $2.6bn), the consolidation in the STB market fits the central premise of our long term investment case for Amino – although there is some ‘cord-cutting/shaving’ with the consumption of content via the internet and on mobile devices, the STB remains a key interface between the consumer and content. With cash on the balance sheet, Amino is in the position to make some bolt on acquisitions but with an up to date OTT product set and a good customer base, it remains a potential target itself. We maintain our BUY rating and increase our price target to 150p. Applying the 8.2x EV/EBITDA multiple to FY15 would suggest a target price of 155p.


Epistem Holdings Plc (LON:EHP) Indian approval

Market Cap: £32m; Current Price: 318p

  • Indian approval of import licence for Genedrive TB molecular diagnostic test       
  • Epistem announced that the Drug Controller General of India (DCGI) has issued a formal import licence to its Indian distribution partner, Xcelris Labs, for the import of Epistem’s tuberculosis (TB) and antibiotic resistance test. 
  • The licence, which has been granted for a period of three years, enables Xcelris Labs to import Epistem’s new molecular test. 
  • Epistem and Xcelris Labs will now commence the process of preparing for the launch of Genedrive, Epistem’s flagship platform on which the test will be run, and the TB and antibiotic resistance test into the Indian and Indian-sub continent markets.  

NORTHLAND CAPITAL PARTNERS VIEW: Approval by Indian regulators of Epistem’s TB test represents a good endorsement of the group’s Genedrive platform. By providing a rapid, low cost, simple to use device with high sensitivity and specificity for the diagnosis of infectious diseases, Genedrive could become a new gold standard in this area. 

Vadim Alexandre +44 (0)20 7382 1134

AdEPT Telecom (LON:ADT) – BUY*: New banking facility

Market Cap: £38.9m; Current Price: 174p; Target Price: 175p

  • From yesterday: Larger RCF on improved terms will be used to fund acquisitive growth
  • AdEPT Telecom has signed a five year £15m revolving credit facility agreement with Barclays Bank. This longer term facility replaces the previous £5m RCF that had 18 months remaining. The flexible structure and terms have been improved.
  • The increased facility will be used to make further acquisitions within the fragmented fixed line telecom market.
  • No change to forecasts, BUY rating and 175p price target.

NORTHLAND CAPITAL PARTNERS VIEW: Management has demonstrated considerable skill in executing its buy and build strategy to grow the AdEPT business and the new facility will provide considerable additional firepower in the highly fragmented business communications market. AdEPT has a business model with minimal capital expenditure and tight working capital controls allied with the highest margins in the sector. As a result, the business throws off considerable amounts of cash and this has been used to pay down the debt built up during the initial buy-and-build phase, fund additional acquisitions, the progressive dividend policy and recent share repurchase programme. If we assume a net debt/EBITDA level of 2.5x FY15 (as discussed in our note on the interims (11/11/14)) and FY15 net debt of £1.6m and EBITDA of £4.6m (per the pre-close update (07/04/15)), this provides scope for c. £10m in spend currently. Through profitable acquisitions, this capacity would extend to the full facility. Such acquisition spend would result in material upgrades in our forecasts at the top and bottom line and by extension our valuation case. We maintain our BUY rating and 175p price target.


Management Resource Solutions (LON:MRS) – CORP; Acquisition update


  • From yesterday: Funder defaults on acquisition funding
  • Halcyon Capital Management who agreed to provide finance that would be used to satisfy the consideration for the acquisition of the D&M Group of companies has defaulted on its obligations. MRS directors consider there is little prospect of this situation changing.
  • As a result, and with the full support of the vendors of the D&M Group, negotiations have been restarted with a number of alternative funders in both Australia and the UK although this may take many weeks
  • Shares remain suspended. 

]]> Energy-Hog China Seen Sitting Out Big Global Oil & Gas Deals Thu, 23 Apr 2015 08:15:00 +0100 Energy-Hog China Seen Sitting Out Big Global Oil & Gas Deals 

Here is the opening of this informative article from Bloomberg: There are many reasons why China’s biggest oil companies should be dusting off their files on acquisition targets: cheap oil, the beginnings of global consolidation, and the nation’s rising crude consumption among them.

If it's not at the top of the priority list, it’s because state-owned giants such as PetroChina Co. and Sinopec have their hands full. Weathering government corruption probes and its plans to remake the public sector are bigger considerations for the year ahead.

Amid speculation that Royal Dutch Shell Plc’s purchase of BG Group Plc will spur a round of mega deals, China could find itself on the margins, swapping assets or buying smaller companies rather than bidding for the majors. That could prove a lost opportunity for the world’s most energy-hungry nation, as its reserves decline and import needs are forecast to rise to two-thirds of consumption by the end of the decade.

PetroChina’s president, Wang Dongjin, said in March that the company is looking at many businesses overseas, although its ambition could be limited to asset swaps to reduce transaction costs.

That thinking hasn’t changed after the Shell-BG announcement earlier this month. Buying large global rivals would be politically difficult and suck up too many resources, according to a company official who asked not to be named as the information isn’t public. Instead, China’s biggest oil and gas producer is seeking individual assets that can give immediate returns, the person said.

David Fuller's view 

In addition to the corruption probes mentioned above, I think China’s big, state-owned oil companies are wary because with Brent Crude at $62 today, we now know that they paid over the odds for oil resources during the three previous years. 

This item continues in the Subscribers’ Area.  


Email of the day 

On the yield curve chart:

“Could you please tell me if the chart of the US10Yr Treasury Bond Yield minus the US2Yr Treasury Bond Yield used by David on slide 13 of his Markets Now powerpoint presentation is available in the Chart Library as I would like to save it as a favourite?”

David Fuller's view 

No, it is not yet in the Chart Library, although we hope that it will be before long.  The Chart Library remains a work in progress and it is much easier to add price charts rather than bespoke indicators or ratios.  Meanwhile, Eoin can create it manually and we will continue to post it from time to time. 


How a Mystery Trader With an Algorithm May Have Caused the Flash Crash 

Here is the opening of this sad, scary tale, reported by Bloomberg: From a modest stucco house in suburban west London, where jetliners roar overhead on their approach to Heathrow Airport, a small-time trader was about to play a hand in one of the most harrowing moments in Wall Street history.

Navinder Singh Sarao was as anonymous as they come -- little more than a day trader by the standards of the Street.

But on that spring day five years ago, U.S. authorities now say, Sarao helped send the Dow Jones Industrial Average on the wild, 1,000-point ride that the world came to know as the flash crash. By regulators’ account, he was responsible for a stunning one out of five sell orders during the frenzy. On Tuesday, he was arrested by Scotland Yard and charged in the U.S. with 22 criminal counts, including fraud and market manipulation.

The following day, the 36-year-old Briton appeared in London court to contest the extradition bid, a move that could delay the U.S. case for years. Clad in a long-sleeved yellow t-shirt and white sweatpants, he told Judge Quentin Purdy that he wouldn’t consent to the U.S. request.

The news of his arrest left many grasping for answers. Sarao has no record of having worked at a major financial firm in the U.S. or the U.K. At the time of the flash crash, Sarao was renting space from a proprietary-trading firm and clearing his transactions through MF Global Holdings Ltd., the now-defunct firm headed by Jon Corzine, said a person with knowledge of the matter. One of Sarao’s neighbors in Hounslow, 11 miles from central London, said what neighbors so often say: He was quiet, kept to himself, never caused trouble.

That picture, according to U.S. authorities, belies a years-long history of lightning-quick computer trading that netted Sarao $40 million in illicit profits.

Sarao didn’t cause the flash crash single-handedly, authorities say. Nonetheless, Tuesday’s developments fly in the face of the prevailing narratives of what happened. Regulators initially concluded that a mutual fund company -- said to be Waddell & Reed Financial Inc. of Overland Park, Kansas -- played a leading role. Many in the industry countered that a confluence of several forces, including high-frequency trading, was probably behind the crash.

By all accounts, the flash crash was more than a mere technical glitch. It raised fundamental questions about how vulnerable today’s complex financial markets are to the high-speed, computer-driven trading that has come to dominate the marketplace.

Little is known about Sarao and his trades, beyond what was said in London court and contained in a complaint filed by the U.S. Department of Justice. A related civil suit filed by the U.S. Commodity Futures Trading Commission provides a few additional glimpses into his supposed activities. The case stemmed from a whistle-blower who brought “powerful, original analysis” to the CFTC’s attention, said Shayne Stevenson, a Seattle lawyer representing the whistle-blower.

David Fuller's view 

I regard this as a destructive case of misplaced genius.  Anyone with Sarao’s abilities could have a very lucrative future with any number of respectable high-tech firms.  Instead, he used his genius to scam the markets.

This was not a victimless crime.  Anyone who was watching the US markets on the day of the flash crash will never forget it.  Moreover, it unnerved a countless number of investors, both in the USA and far beyond, frightening them out of the markets when the current bull market was still in its foothills.   

(See also: Flash Crash Arrest Lays Bare Regulatory Lapses at All Levels)


Demographic Time Bomb in India 

My thanks to Bernard Tan for his ever-interesting letter.  Here is the opening:

The general view of India is one of a country with a burgeoning and young population (more than 1.25 billion people with a national fertility rate of 2.3), hence the prospects for growth in terms of consumption and production is usually seen as a blue skies scenario.

The devil as usual is in the details.

The fertility rates of 11 states comprising 43% of India’s population is below 2.1 (ie. below replacement rate). The least fertile states are West Bengal (1.6), Punjab (1.7), Himachal Pradesh (1.7) and Tamil Nadu (1.7). Unsurprisingly, these 11 also tend to be the wealthier and more developed states. Their average GDP per capita is nearly 110,000 rupees and literacy rates are generally well above 75%, mainly above 80% and even reaching 94% in the case of Kerala.

The fertility rate in the states holding the other 57% of the population ranges from Haryana (2.2) all the way to Bihar (3.4). And no surprise, their average GDP per capita is well below 70,000 rupees and literacy rates are generally lower, in many cases well below 70%. The major state with the lowest literacy rate is Bihar at 64%.

India’s national literacy rate is around 75%. Contrast that with Vietnam (94%), Indonesia (93%), Philippines (95%) and China (95%).

David Fuller's view 

India has a huge population of 1.3 billion, most of who live in conditions of extreme poverty.  India also has an educated and increasingly middleclass population approaching 200 million, but as Bernard Tan points out, that is only 15 percent of the total population. 

The only possible solution to this problem is strong economic GDP growth over decades, and improved education for all.  These are obviously enormous challenges.  I maintain that India has the right leader for this challenge in Narendra Modi.  Governance Is Everything.

India also has an increasing number of world-class corporations.  Those of us who have invested in India’s stock market, are backing India’s economic growth and corporate governance.  

Bernard Tan's report is posted in the Subscribers' Area.


My personal portfolio 

A trade increased

David Fuller's view 

Details and a chart are in the Subscribers’ Area.


From Frosty to Friendlier: A More Relaxed Xi and Abe Meeting 

Here is the opening of this informative report from Bloomberg: What a difference five months can make.

Despite a relationship overshadowed by Japan’s wartime past and a territorial dispute over islands in the East China Sea, the leaders of China and Japan held a 29-minute meeting on Wednesday on the sidelines of a conference in Jakarta -- and even managed to look a bit more relaxed than their last chat in November.

Dressed in suits, with Prime Minister Shinzo Abe wearing a blue tie and President Xi Jinping a light purple tie, the heads of Asia’s two biggest economies smiled at each other and shook hands firmly, even if their eye contact was a little awkward.

It was hardly an auspicious time for a meeting.

Abe this week prompted complaints from China after he sent a traditional offering for the start of the spring festival at Tokyo’s Yasukuni shine, a place that honors war dead including more than a dozen Class A war criminals.

Abe also said on Monday he did not plan to repeat Japan’s previous war apologies in a statement to mark the 70th anniversary of the end of World War II. China and South Korea have both called on Japan to do more to atone for its militarist past.

Still, the atmosphere of the meeting seemed more positive than Abe and Xi’s 25-minute conversation in November on the sidelines of the Asia-Pacific Economic Cooperationforum in Beijing. That probably reflects a more pragmatic understanding of the challenges for the major trading partners, according to Lian Degui, a deputy director of Japanese studies at the Shanghai Institutes for International Studies.

David Fuller's view 

Progressive and economically ambitious leaders of countries learn to work together.  WWII was a terrible event but it occurred and ended before either Xi or Abe and most of China’s and Japan’s current citizens were born. 

China and Japan can work together and prosper.  Alternatively, if they chose to live in the past, they can sow the seeds for WWIII.  Who benefits from that?  


Stanley Druckenmiller at The Lost Tree Club 

Thanks to a subscriber for this transcript of a speech given by Stanley Druckenmiller in January. Here are some thought provoking sections: 

In 2006 and 2007, which I think most of us would agree was not a down period in terms of speculation, corporations issued $700 billion in debt over that two-year period. In 2013 and 2014 they’ve already issued $1.1 trillion in debt, 50 percent more than they did in the ’06, ’07 period over the same time period.  But more disturbing to me if you look at the debt that is being issued, Kenny,, back in ’06, ’07, 28 percent of that debt was B rated. Today 71 percent of the debt that’s being issued in the last two years is B rated. So, not only have we issued a lot more debt, we’re doing so at much less standards. 

Another way to look at that is if those in the audience who know what covenant-light loans are, which is loans without a lot of stuff tied around you, back in ’06, ’07 less than 20 percent of the debt was issued cov-light. Now that number is over 60%. So, that’s one sign. The other sign I would say is in corporate behavior, just behavior itself. So let’s look at the current earnings of corporate America. Last year they earned $1.1 trillion, 1.4 trillion in depreciation. Now that’s about $2.5 trillion in operating cash flow. They spent 1.7 trillion on business and capital equipment and another 700 billion on dividends. So, virtually all of their operating cash flow has gone on business spending and dividends which is Okay. I’m onboard with that. 

But then they increase their debt 600 billion. How did that happen if they didn’t have negative cash flow? Because they went out and bought $567 billion worth of stock back with debt, by issuing debt. So, what’s happening is their book value is staying virtually the same, but their debt is going like this. From 1987 Greenspan took over for Volcker, our economy went from 150 percent debt to GDP to 390 percent as we have these east money policies moving people more and more out the risk curve. Interestingly, in the financial crisis that went down from about 390 to 365. But now because of corporate behavior, government behavior, and everything else, these ratios are starting to go back up. 


I’m not net short equities. I mean the stock market right now as a percentage of GDP is higher than – with the exception of nine months from ’99 to – it’s the highest it’s been in the last hundred years or any other period except for those nine months. But you know what, when you look art the monetary policy we’re running, it should be – it should be about where it is. This is crazy stuff we’re doing. So I would say you have to be on alert to this ending badly. Is it for sure going to end badly? Not necessarily. I don’t quite know how we get out of this, but is possible 

Eoin Treacy's view 

A link to the full transcript is posted in the Subscriber's Area.

The considerations in the above pieces occupied a good portion of the discussion on the 2nd day of the Sinapore Chart Seminar. Major bull markets need a story to animate investor interest and liquidity to act as fuel. Considering just how profligate central banks have been, and remain, it is reasonable to characterise the trend evident since 2009 as liquidity fueled. We might have concerns about the path of central bank policy but we can only deal with the reality provided by the market. 


Meet the Silicon Valley companies that top the list of cybersecurity innovators 

Thanks to a subscriber for this article from Silicon Valley Business Journal. Here is a section: 

The Cybersecurity Ventures second-quarter report lists Milpitas-based cybersecurity and malware protection business FireEye as the No. 1 hottest cybersecurity company. AlienVault and Norse of San Mateo also topped the list. Silicon Valley companies Splunk, Beyond Security, Palo Alto Networks, Intel Security Group, Caspira and Proofpoint also ranked in the top 30.

Cybersecurity Ventures, founded in 1999 and based in Menlo Park, is a research and market intelligence firm.

“FireEye is continuing to grow its global customer base and employee headcount, while getting kudos for its technology platform and product lineup, alliance partner integration, channel program, service and support from the entire cybersecurity community,” said Steve Morgan, CEO of Cybersecurity Ventures and editor-in-chief of the Cybersecurity 500, in a statement. “FireEye is a leader in IT and cloud security, and it's added to that by becoming a top brand in the burgeoning mobile security sector.”

Eoin Treacy's view 

As banking, retail, insurance and entertainment move increasingly online, credit card companies have been some of the greatest beneficiaries because they insure purchases against fraud. Nevertheless, identity theft is the fastest growing crime in the USA, not least because chip and PIN technology is so underused and because Trojans can reside on one’s computer for lengthy periods without detection. 

As cyber threats become more sophisticated the requirement for greater security measures remains a growth industry and one which is increasingly competitive. This is creating demand both for software and hardware solutions. 

The list of the sector’s most significant companies in the above article highlights just how many are still privately held. Clicking through the constituents of the cyber security section of the Chart Library there are clear winners and losers.   

The U.K. 10-Year Bond Yield Climbs the Most Since 2013 

This article by David Goodman for Bloomberg may be of interest to subscribers. Here is a section: 

The BOE minutes may be the last opportunity for investors to gain insight into the central bank’s thinking on policy until after the May 7 general election, with Governor Mark Carney and his colleagues on the Monetary Policy Committee in a quiet period until a government has been formed. Officials voted unanimously in April to keep the main rate at 0.5 percent for a 73rd month.

Eoin Treacy's view 

The proximity of the UK’s election is an inhibiting factor for the Bank of England’s policy makers so despite the vote being tight, the outcome was relatively assured. However since either the Bank of England or Fed will probably be the first central bank to raise rates the response of UK denominated assets to today’s news gives us a possible preview of what we might expect later this year. 

]]> Broker spotlight - ARM Holdings, GlaxoSmithKline, Sky, Hummingbird, Genel Energy... Wed, 22 Apr 2015 12:03:00 +0100 iPhone processing chip designer ARM Holdings (LON:ARM) received a decent round of comments following third quarter update.

Goldman said the 31% growth in royalties in the first quarter supports its idea that royalty growth is accelerating especially with stronger-than-expected demand for the more expensive V-8 designs.

The 12-month target is 1550p and ARM remains on the US broker’s conviction buy list.

JP Morgan was also impressed by Tuesday’s numbers. ARM beat estimates, as expected, and saw further growth in the adoption of its processor technology in its first quarter. 

It too believes second half royalty growth may be stronger than the first and raised its price target by 50p to 950p and kept its ‘neutral’ rating.

Liberum remains a seller on pharma giant GlaxoSmithKline (LON:GSK) with a target price of 1,400p.

The Novartis deal doesn’t ‘transform’ the business, it says, as pharma remains 70% of underlying earnings in 2018, while its target price also allows for any break-up value.

Liberum also cannot see GSK replicating AZN's pipeline led re-rating while “worryingly”, the dividend exceeds free cash flow for the next 3 years. 

Deutsche Bank says Genel Energy (LON:GENL) remains a buy with a 750p target price on reports Kurdistan exports have hit a new record high. Exports from Kurdistan have reached 650kb/d, up from 500kb/d at the end of last week and 450kb/d earlier this year.

Cantor Fitzgerald has lowered its target price for Africa-focused gold miner Hummingbird (LON:HUM) to 99p from 115p following on from weaker peer group metrics and a recent fundraise.

It remains a buyer, nonetheless, ahead of what it says is a critical period as the development pace quickens at the Yanfolila gold project in Mali.

Broker notes were sweet & sour for Tate & Lyle (LON:TATE) this morning.

Credit Suisse cut its rating on the sugar company’s shares today to ‘underperform’ while JP Morgan raised its share price target to 700p.

It follows yesterday’s news that Tate will dispose of its remaining bulk ingredients business in Europe and cut back on its struggling Splenda sucralose operations.

“As ever with Tate any move to improve the quality of earnings comes at a cost to the quantity,” said Credit Suisse.

“The shares  have accordingly seen their re-rating but not as investors might have wished, earnings today are lower than they were 10 years ago.”

On the flip side, JP Morgan said Tate’s plans to realign its businesses should provide better recipe for profit growth beyond 2016. 

Deutsche Bank, meanwhile, boosted its target for Sky (LON:SKY) shares to 1000p after the broadcaster reported a 20% rise in operating profit yesterday.

Elsewhere, Jefferies looked at money managers  and decided to upgrade Henderson Group (LON:HGG), Jupiter Fund Management (LON:JUP) and Schroders (LON:SDR).

Hargreaves Lansdown (LON:HL.), however, had its rating reduced to a ‘hold’ with Jefferies lowering its share price target by 67p to 1073p. 

]]> Gfinity Reaches for the Sun More friendly bugs for Optibiotix Keyword Studios upping its game ITM cleans up the Orkneys Wed, 22 Apr 2015 08:23:00 +0100 AGM Trial Results, CDOG Final results, CRA Final Results, CRAW Acquisition, EMAN Placing, GLS Final Results, Placing and Collaboration, GFIN Partnership, HZM Drill Results, ITM Tender, KWS Final Results, MARL* Site Ownership, MDZ* Business Update, MKT Acquisition, MTHP Collaboration, OPTI* Research Update, PEG* Contract Award, PHC Agreement, 

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.

Applied Graphene Materials (LON:AGM)

Applied Graphene Materials (AGM), the producer and manufacturer of specialty graphene materials, reports positive preliminary findings following independent performance testing on graphene reinforced polyurethane coatings using graphene produced by the group. Polyurethane coatings are used in a wide range of industries including automotive, aircraft and general industrial coatings. Although the extensive test programme is continuing, the initial results demonstrate that low loading levels of the group's graphene nanoplatelets substantially enhance the scratch resistance and ultimate tensile strength of a polyurethane clearcoat, and critically with minimal impact on transparency or colour. This opens up the route to further development for commercial applications in numerous high performance paints and coatings. AGM will be sharing the findings of the test programme with its coatings industry partners and also engaging with other interested parties when at the European Coatings Show in Nuremburg, between 21 April and 23 April 2015.

Cdialogues (LON:CDOG)

The provider of mobile marketing solutions to Mobile Network Operators announced final results for the year ending 31st December 2014, including the declaration of a 2p maiden dividend. In its first set of full year results since listing the company reported a 117

per cent increase in revenues to €9.92m of which 76 per cent were subscription generated. Profit before tax was up 89 per cent to €2.61m. Earnings per share were up 77 per cent to €0.43m. Free Cash Flow was up 108 per cent to €1.22m, and net cash as of 31 December 2014 was €2.42m from €0.64m. Building on a year that saw significant new business wins and diversification of clients, the outlook stated that the company is well placed to continue to grow customer numbers under existing contracts and also to add new customers in new geographies.

Corac Group (LON:CRA)

Corac, the specialist engineering group focused on the aerospace & defence and energy & process industry sectors, announces final results for the year ended 31 December 2014. Revenue increased by 12 per cent to £21.7m (2013: £19.3m) and operating losses were reduced by 10 per cent to £3.9m (2013: £4.3m). Adjusted EBITDA losses reduced by 27 per cent to £2.1m (2013: £2.9m) and the group's cash closed at £9.6m (2013: £13.7m). There were major defence contract wins with long-term revenue visibility, with additional projects in renewable energy and power generation. Corac have completed heat exchangers for a major refinery project in Saudi Arabia, high temperature chemical processing in Wales and multiple cooling towers in Europe. The group also negotiated terms for manufacturing and commercial exploitation of steam expander technology.

Crawshaw Group (LON:CRAW)

Crawshaw Group, the fresh meat and food-to-go retailer, announces that it has acquired 100 per cent of the share capital of Gabbotts Farm Limited for £3.9m utilising existing cash resources on a "debt free cash free" basis from Cribbin Family Butchers. Gabbotts Farm operates 11 retail butchers units, which includes a factory meat mart attached to a small distribution centre, in the North West of England.  Their retail format is almost identical to that of the company, selling quality fresh meats and food-to-go at value prices. Gabbotts Farm generated a turnover of c. £10.8m and an EBITDA of £0.8m (before group management fees and one off costs) for the financial year ended 31st December, 2014. The acquisition will increase earnings immediately and provide the company with access to customers in a completely new geographical region, as well as presenting the potential for operational synergies to further enhance profitability.

Everyman Media Group (LON:EMAN)

Everyman Media Group, a leading independent cinema group in the UK that currently owns and operates eleven cinemas based in London, the South East of England, Birmingham and Leeds, announces that it has raised £20m via a placing at the placing price of 85 pence per share. The net proceeds of the placing are to be used by the company to buy four cinemas from Odeon Cinemas Limited and ABC Cinemas Ltd located in Gerrards Cross, Esher, Muswell Hill and Barnet and to fund an acceleration of the company's organic rollout plan. Geographically, the target sites complement the existing Everyman estate. The cash consideration for the target sites is £7.1m and the directors expect to spend approximately £6.1m to refurbish the sites to existing Everyman standards. In aggregate, the target sites have a total of 14 screens, compared to 21 screens currently in operation within Everyman sites. The target sites reported unaudited revenue of £3.6m and an EBITDA of approximately £0.5m for the 12 months ended December 2014. Following refurbishment, the directors expect the target sites to achieve a significantly improved level of financial performance. The directors believe that, within 12 months, all of the new target sites will be fully operational as Everyman cinemas.

Galasys Holdings (LON:GLS)

Galasys, a market leading provider of integrated amusement park solutions and services to the fast growing amusement parks industry in Asia, announces its full year unaudited results for the year ended 31 December 2014. The company's revenue for 2014 were up by 45 per cent at RM38.62m (2013: RM26.67m), which allowed gross profit to increase by 83 per cent to RM19.52m (2013: RM10.64m). EBITDA was up by 48 per cent at RM12.58m (2013: RM8.5m) and profit before tax was up 35 per cent at RM11.34m (2013: RM8.38m). Profit after tax was up 30 per cent at RM9.40m (2013: RM7.21m) and cash at RM12.22m (2013: RM2.16m). Repeat and recurring revenue increased to 66 per cent of sales (2013: 60 per cent) and the board recommended final dividend of 1.084 sen, c. 0.2 pence per share. Galasys also announces a proposed placing at 30 pence per new ordinary share by way of a subscription agreement by Beijing Shiji Information Technology. Galasys and Shiji Information have also signed a collaboration agreement under the terms of which the two groups will cooperate in the tourism and leisure industry in Asia.

Gfinity (LON:GFIN)

Gfinity, a leading eSports business and News UK, part of the global media group News Corp, announces they have signed a major sponsorship agreement for The Sun to become Gfinity's official newspaper and on-line news partner in the UK and Ireland. The two-year commercial partnership is the first such major agreement signed by Gfinity and will contribute significantly towards the company achieving its revenue targets this year and in 2016. The deal is exclusive to the publishing and on-line media industry in the UK and Ireland; however, it does not block Gfinity from negotiating a separate deal for the rights to broadcast its content and tournaments on television. The partnership contract enables The Sun to become: the official partner for 2015 and 2016 Gfinity Championship Series, the title sponsors of 2015 and 2016 Gfinity UK Championship Series and the lead sponsor of Gfinity's High Performance Programme. The agreement signals the growing popularity of eSports in the UK and Gfinity hopes it will lead to an increase in audience figures, create new revenue streams and provide an opportunity to uncover the next generation of eSport stars.

Horizonte Minerals (LON:HZM)

Horizonte, the nickel development company focused in Brazil, announces the completion of its infill resource drilling programme at its Araguaia nickel project in Para State, north central Brazil where initial results have demonstrated significant new high grade drill intersections (>2 per cent Ni). New high grade nickel intersections from completed infill resource drilling on the Pequizeiro deposit include: 9.66 meters grading 2.28 per cent Ni, 2.29 meters grading 2.17 per cent Ni, 10.80 meters grading 2.13 per cent Ni, and 20.17 meters grading 2.09 per cent Ni; the company are now in the final phase of the geotechnical and hydrogeological drilling programme across the proposed process plant site which will provide detailed information on ground conditions to assist in the design of the process plant structures.  This will be completed in Q2 2015, with final infill drill results also due then.


ITM Power, the energy storage and clean fuel company, announces that it has won a competitive tender to supply an integrated hydrogen system for use at the European Marine Energy Centre (EMEC) tidal test site on Eday, Orkney, Scotland.  The system's principal component is a 0.5MW polymer electrolyte membrane electrolyser with integrated compression and up to 500 kg of storage. The company has also been offered an additional maintenance contract alongside the integrated system as well as a fuel cell for local back up power. The total contracted value of the project is £1.79m. Including this project, the company currently has £9.97m of projects under contract and a further £5.79m of contracts in final stages of negotiation. The 0.5MW electrolyser will be used to absorb excess power generated by the tidal turbines testing at EMEC. The hydrogen gas generated will be compressed and stored, with some of the gas being used in (an optional) hydrogen fuel cell to provide backup power to critical EMEC systems. The remainder of the hydrogen gas will be used off-site by a further project being developed separately which plans to absorb output of a local community wind turbine operated by Eday Renewable Energy Ltd.

Keywords Studios (LON:KWS)

Keywords Studios, the international technical services provider to the global video games industry, provides its full year results for the year to 31 December 2014. The group's revenue increased by 130 per cent to £37.3m (2013: £16.2m), allowing for adjusted profit before tax to increase by 104 per cent to £5.1m (2013: £2.5m).The adjusted basic earnings per share was up by 48 per cent to 8.54c (2013: 5.76c) and there was net cash of £11.0m (2013: £15.3m), after £8.9m net cash consideration for acquisitions, £3.0m repayment in Babel Media borrowings upon acquisition, £1.5m costs of acquisitions and integration expenses, and £7.3m (net of expenses) raised in a placing. The company had strong organic growth, and continued to gain market share adding clients like Ankama, Bioware, Carbine, Frontier Developments, Nexon and Tencent. The group also significantly extended service capabilities and geographical reach through four acquisitions: Liquid Violet, Babel Media, Binari Sonori and Lakshya Digital.

Mariana Resources (LON:MARL)*

Mariana Resources, the exploration and development company with projects in South America and Turkey, announces that it has received notification from Teck Madencilik Sanayi Ticaret that it has terminated its one-time back-in right at the Ergama gold-copper prospect, Balikesir province, Western Turkey. As a direct result of this notification, Mariana will regain 100 per cent ownership of the 2,168 Ha Ergama property, with Teck retaining a 2 per cent NSR with respect to any future production from the property.  Aegean Metals Group is of the opinion that the Ergama prospect contains both high and intermediate sulphidation epithermal gold mineralisation assemblages and a quartz(+/-clay) lithocap, both of which are interpreted to overlie porphyry style gold-copper mineralisation at depth. Drill testing of the highest priority geophysical and geochemical targets at Ergama has yet to be undertaken.  

Market Tech Holdings (LON:MKT)

Market Tech Holdings, the holding company that combines iconic real estate assets with an e-commerce business and owns and manages the main Camden Markets in Central London, announces that it has exchanged contracts to acquire a 0.84 acre property, hosting small businesses, for a total consideration of £44m, comprised of a £42m purchase price and £2m stamp duty. The property, known as Utopia Village in Chalcot Road, is located close to the group's principal Camden Markets site and currently comprises 29 individual units totalling a net internal area of approximately 44,500 square feet. The property has development potential however the group plans to operate the complex primarily as a fully serviced co-working office environment where businesses can rent flexible accommodation with access to Market Tech's e-commerce and business infrastructure, enabling the group to accelerate its growth plans while benefiting Camden and the surrounding area.

Midatech Pharma (LON:MTPH)

Midatech Pharma, the international specialty pharmaceutical with a diversified portfolio of high-value assets, announces the signature of a new research collaboration with Dana-Farber Cancer Institute, a principal teaching affiliate of Harvard Medical School, Boston, Massachusetts, one of the US's premier cancer centres. Under the terms of the collaboration, Midatech Pharma and Dana-Farber will test the preclinical effectiveness of Midatech's targeted nanomedicines against Glioblastoma (a type of brain cancer). The collaboration aims to find the most effective treatments to take into Glioblastoma patients as rapidly as possible, given the current unmet medical need.  Glioblastoma represents approximately 17 per cent of all primary brain tumours (about 60-75 per cent of all astrocytomas) and is difficult to treat due to the involvement of different cell types. No financial terms were disclosed.

OptiBiotix Health (LON:OPTI)*

OptiBiotix Health, a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes, provides a research update on its research and development programmes. OptiBiotix announced in December 2014 to undertake human studies on 50 subjects who have high cholesterol and its associated increased risk of cardiovascular disease.  The aim of the study is to establish the extent of the cholesterol lowering potential of its product. The study commenced at the start of January; groups one, two and more than half of group three will have passed the halfway point (six weeks) of treatment and testing by the end of April. The study is expected to complete on schedule in July allowing data analysis and reporting in September as planned. The company also announced in March 2015 to screen 360 strains of bacteria for the presence of enzymes which produce novel oligosaccharides. The aim of this work is to identify non-digestible sugars with the potential to act as calorie free sweeteners, and/or selectively enhance the growth rate of specific microbial strains, species, and genera, to modulate the human microbiome. The first phase of that work is now complete and has shown: high enzyme activity in a number of Lactobacilli species tested, supporting earlier data; very high enzyme activity in a number of strains of a second species tested, suggesting the potential to produce high volume of sugars; and medium activity in a number of strains of a third species tested.  

Petards Group (LON:PEG)*

Petards, the developer of advanced security and surveillance systems, announces that it has been awarded a £0.6m contract by a major UK defence systems contractor to provide test equipment for use on a UK Ministry of Defence programme. The contract is for the design, manufacture and supply of equipment that will form part of a Defensive Aids Suite system integration test rig that will enable the customer to carry out verification of electronic countermeasure configurations prior to their installation on aircraft.  Most of the equipment is expected to be delivered in the second half of 2015 and the project is expected to be completed early in 2016.

Plant Health Care (LON:PHC)

Plant Health Care, a leading provider of novel patent-protected biological products to the global agriculture markets, announces that it has signed an agreement with a major industry player in the agricultural space regarding the evaluation of its Innatus™ 3G peptide platform. This technology platform enables the design, production and screening of a large pipeline of peptides with diverse biostimulant properties. The peptides can be used for both seed treatment and foliar applications.  They can also be combined with conventional crop protection chemicals, making them highly complementary to existing production practices. Plant Health Care has also continued to expand its research and development effort under the leadership of its Chief Scientific Officer, Dr. Zhongmin Wei. Over the past 18 months, the company added 4 research staff and, in 2015, plans to double its current research personnel.  In addition, by mid-year, the company will relocate to a larger research facility in Seattle with over three times the square footage of its existing lab. The expanded workspace, staff increase, and planned addition of new growth chambers are expected to significantly accelerate the company's ability to develop new peptide families.

]]> Northland Capital Partners View on the City Mariana Resources, Ferrex Plc, Gaming Realms and Frontier Developments Wed, 22 Apr 2015 08:20:00 +0100 Ferrex (LON:FRX) – CORP: Appointment of Nomad

Market Cap: £6.6m; Current Price: 0.6p

  • Ferrex appoints Northland Capital as its Nominated Advisor

NORTHLAND CAPITAL PARTNERS VIEW: Ferrex is an AIM listed manganese development and iron ore exploration company with assets located in Africa. It is currently finalising a Bankable Feasibility Study at its Nayega Manganese Project, located in Togo and expects to receive a mining permit in mid-2015. Alongside this the Company is defining resources at its Mebaga iron oxide project, located in Gabon.


Mariana Resources (LON:MARL) – CORP: Hot Maden update

Market Cap: £20.6m; Current Price: 2.7p

  • Phase II drilling has commenced
  • Mariana Resources joint venture partner Lidya has commenced the 10,000m phase II drill programme at the Hot Maden project, located in Turkey.
  • Drill hole HTD-08 has been collared c. 50m north of previous drill holes HTD-04 (103m at 9.0 g/t Au & 2.2 % Cu from 25m) and will test the high grade extension of the Gold-Copper zone and Zinc-Lead zone discovered in the last drill programme.
  • Assay results are expected in May and will continue to be released throughout the drill programme.

NORTHLAND CAPITAL PARTNERS VIEW: The follow up drill programme at Mariana’s Hot Maden project has been eagerly anticipated following the success of phase I that defined high grade gold-copper mineralisation and zinc-lead mineralisation over large intercepts. The two scissored discovery holes indicate that there is a wide body of gold-copper mineralisation (103m at 9.0 g/t Au and 2.2 % Cu from 25m - HTD-04 and 82m at 20.4g/t Au & 1.9% Cu from 147m - HTD-05) as well as an adjacent area of high grade stratabound zinc-lead mineralisation located to the east (31.5m at 1.8% Zn and 0.6% Pb - HTD-05 and 28m at 1.28% Zn and 0.08% Pb from 41.7m and 27m at 2.3% Zn and 0.2% Pb from 75.5m - HTD-06). Results are expected to start flowing next month and we look forward to further updates.


Frontier Developments (LON:FDEV) – Trading update

Market Cap: £71.4m; Current Price: 212p

  • Positive metrics in unit sales and average unit price
  • Total unit sales of Elite:Dangerous now exceed 500,000 – ahead of the Bull case in the scenarios that were prepared in late 2013. The retail price remains £40. This is substantially higher than the £10 average unit price that was modelled. 
  • Net cash of £11.4m that provides sufficient funding for continuing investment plans and management has decided to lower its revolving credit facility to £1m from £3m. This facility expires in May 2016.
  • Elite:Dangerous recently made available on the Stream digital distribution service and will be available on Apple Macs next month and Microsoft’s Xbox One console later in the year.
  • Management is now guiding to revenue >£22m for the current financial year, compared with guidance of c. £19m as at the January trading update.

NORTHLAND CAPITAL PARTNERS VIEW: Positive metrics in the launch year for Elite:Dangerous with both units sold and average price per unit tracking above the company’s Bull case scenario and hence management has upgraded its FY15 revenue guidance. This represents an encouraging start but the Bull case does assume substantial growth in FY16 (£40m in revenue) and FY17 (£300m) and maintaining momentum will remain a challenge in a congested market.


Gaming Realms (LON:GMR): Finals

Market Cap: £66m; Current Price: 34p

  • 12x revenue increase in 15 months to December 2014
  • Results are as expected for the year ended December 2014. The business produced c. £11m of revenue in 15 months, a 12 fold increase on FY13, on the back of acquiring 138,852 new depositing players (2013: 18,881) in the period.  The acquisitions of QuickThink Media and Blueburra Holdings have added significantly to the business enabling rapid growth of the customer base. Loss at the EBITDA level 5% better than expected at £7.8m, consensus at £8.2m for the 15 months. 
  • The group invests heavily in player acquisition as evidenced in the £10.2m of marketing spend in the period and 138,852 new acquired players. The investment very encouragingly implies the business is acquiring new players at £73.50 (CPA) which in our view looks lower than any other listed peer in the industry. Furthermore, the marketing investment is a significant percentage of revenue for the period and at normal levels of marketing investment we estimate the business would be profitable at EBITDA level.  
  • The management team is focused on delivering real money gambling to the casual gaming market across multiple platforms. Though the mobile channel is a key area of focus and produced 68% of the revenue in the period. Recently launched proprietary platform SpinGenie has started well and is already delivering strong results. 
  • 1Q15 trading looks healthy where revenue was +23% QoQ to £3.8m and in particular real money gambling revenue was +80% QoQ, though from a lower base to £1.8m on the back of a 51% increase in new depositors and 20% increase in daily depositors. 
  • The Board remains confident the group is well positioned to maintain strong growth trajectory and continue its player acquisition through focussing on acquiring new players in the mobile channel and further reducing an already impressive cost per acquisition. 

NORTHLAND CAPITAL PARTNERS VIEW: The results are highly encouraging and the acquisitions of Blueburra and QuickThink position the business well to continue to acquire new players at a lower CPA’s. The current market capitalisation implies the business is trading on c. 6x revenue, which isn’t particularly undemanding. However the business is clearly growing rapidly and in our view FY14 and FY15 should be viewed as periods of high investment in marketing to grow the player base. Returning to normal levels of marketing investment in FY16 after another year of high growth, would imply a significant drop through to the profit line in our view. With £4m of cash on the balance sheet and a management team with a very strong track record the business is well positioned for further growth.      

]]> Short-Selling Herds Finding April Is the Cruelest Month Since 2009 Wed, 22 Apr 2015 08:06:00 +0100 Short-Selling Herds Finding April Is the Cruelest Month Since 2009 

Here is the opening of this informative story from Bloomberg: Absent a huge rally to end the month, the relatively modest advance in the U.S. stock market in April is unlikely to go into the history books with much fanfare. It is, however, shaping up to be one of the roughest months of the bull market for those who have borrowed shares and piled into some of the most in-demand short positions, according to data and research firm Markit Ltd.

The top 10 percent most-expensive U.S. stocks to borrow have beaten the market by more than 3.5 percent so far this month (which is obviously not what you want to see happen when you're short a stock). That's the biggest outperformance since April 2009, when the bull market was still just a wee calf, according to Markit analyst Simon Colvin.

Months like this tend to be an anomaly, as Markit's data shows that the stocks which are most expensive to borrow tend to underperform the market in more than three out of four months on average. Over the last five years, they've trailed the market by a cumulative 70 percent.

Expensive small-cap shorts have underperformed even worse, to the tune of more than 90 percent over the last five years.

Still, as you've probably heard or can imagine, short-focused hedge funds have been struggling in this bull run. Despite relative underperformance, the most-expensive large-cap shorts are still up by more than 60 percent in the past five years, according to Colvin, who said it "shows that the runaway market is largely to blame for the lackluster performance from short-biased funds."

David Fuller's view 

Hedge funds of the long/short variety understandably do best in choppy markets which produce some significant moves in both directions.  However, you have to think about your environment.  If the world remains mostly awash with liquidity, as is still the case today, downside moves may be sharp for a few days before markets mostly bounce back even more strongly.  Moreover, markets such as the S&P 500 Index can stay in persistent uptrends for lengthy periods.

Two of the oldest rules in the business are apt:

1) Don’t fight the Fed (or any other central bank).

2) Run with the trend.  


Email of the day 

On a complete break-up of the Euro:

“Hi David, even though it is quite a low probability event, I would be interested to hear your opinion of how a complete break-up of the Euro currency would play out. For example, being based in Ireland, would Irish bank balances be converted into a new Punt? Similarly, would bank balances in Germany be converted into a new Mark? Given that a new Punt would likely be a weak currency, would it be prudent at this point to hold cash in other currencies e.g. Singapore Dollar, Canadian Dollar, Australian Dollar? Many thanks.”

David Fuller's view 

No one knows but I think a complete break-up of the Euro would be most unlikely anytime soon.  Mario Draghi has significantly lowered that risk, although GDP growth is still alarmingly low.  However, I have long said that I expected some countries to exit the single currency, eventually, just as others are still entering it. 

This item continues in the Subscribers’ Area.  


Giants Suddenly Look Like Dinosaurs as India Retail Evolution Leaps Over A Step 

My thanks to a subscriber for this article from The Times.  Here is the opening: There was a time a few years back when telecoms chiefs rubbed their hands at India’s ability to leapfrog fixed landline connections with a jump straight to mobile phones. Now online retailers are doing the same, with India set to bypass the western bricks-and-mortar retail model altogether.

This is not a surprise. India is perfect e-commerce territory. Think of its expertise in IT, which has prompted a flood of online retailers. Then there is that oh-so-cheap Indian labour, making the cost of delivering products door-to-door lucratively low. Then there are India’s consumers, well used to taking delivery of goods at home for a nominal fee — a service offered by many local grocery stores.

In contrast, the cost and complexity of acquiring large plots of land and associated permits makes western-style superstore retail a la Walmart or Ikea excruciatingly slow and expensive. Three years after Delhi threw open the doors to foreign retailers such as Tesco, none has seriously taken the plunge into the nation’s $500 billion retail market, 90 per cent of which is still controlled by roadside shacks and shops.

Even the dismal state of India’s roads and transport infrastructure offer a big edge for e-commerce. Why spend hours dodging cows, rubbish and potholes on India’s congested roads trying to reach an out-of-town superstore when you can shop in air-conditioned comfort from your own home or office?

As well as lower prices, adding to the attraction of online retail is the fact that many Indian e-retailers provide same-day delivery, while customers can opt for paying cash on their doorstep.

So, while Tesco and Walmart grind their teeth in frustration as they puzzle over how to tackle India, the country’s e-commerce market is exploding, propelled by rapid growth in internet access. India reported a 53 per cent growth in online transactions last year. The country’s e-commerce market is expected to hit $16 billion this year, up from $4.4 billion in 2010.

Such figures are attracting huge investments from Amazon and homegrown rivals such as Flipkart and Snapdeal. Between January and March, investors poured more than $1 billion into e-commerce and technology investments. And that growth is being driven by smartphones, with more than 235 million of India’s 300 million web users accessing the net via their phones.

David Fuller's view 

Once again, technology makes the difference, enabling India to have first world e-commerce, despite third world infrastructure.  Of course India also needs to redevelop its infrastructure, which this fast growing economy led by capable Narendra Modi intends to do, but it takes time and money. 

This item continues in the Subscribers’ Area.


My personal portfolio 

A trading profit taken

David Fuller's view 

Details and charts are in the Subscribers’ Area.


The Markets Now 

We had a good audience for three presentations yesterday.

David Fuller's view 

Here is the text of my opening slide, the first of 5.  The full PowerPoint presentation is in the Subscribers' Area.


The Markets Now

Stock markets are edgy and commencing temporary consolidations, but cushioned by QE in Japan, EU, & China’s stimulus.

However, valuations have risen.

David Fuller – 20th April 2015

East India Club – 16 St. James Square

London SW1Y 4LH, UK


China Trip Report 

Eoin Treacy's view 

The first time I visited China was in 2005 and I didn’t stop coughing until we got back on the plane to leave. The pollution was such that you couldn’t see more than 100 metres in any direction for the entire time we were there and I didn’t think to wear a face mask. It was November. 

Utilities burn large quantities of coal in North China between October and March for heating which results in heavy smog across a wide swathe of the country. From April the weather heats up so heating demand goes down and the air improves. I’ve been to Beijing in the summer and autumn but this was the first time in the spring and the air was cleaner than I’ve ever seen it before. Visibility was up to about a mile and there was a powdery blue sky overhead. 

Mrs. Treacy has often talked about the dust storms that hit Beijing in the spring as well as the willow catkins that fill the air. We experienced both on this occasion. The catkins in particular looked like snow on the freeway and delighted my daughters. 


Musings From the Oil Patch April 20th 2015 

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. This edition has more of interest than usual and I commend it to subscribers. Here is a section on the surge in private equity interest in the oil sector:  

We came away with several impressions from the two presentations and our discussions with fellow attendees. First, as we mentioned earlier, the vultures who circle over every disastrous industry are circling over energy with high expectations that road-kill victims will soon be available. Second, there are a lot of smart investors looking for the right opportunity to “buy into the energy industry at the bottom.” To us, that means there is too much money chasing a limited number of quality investments. That also likely means pricing on deals initially will be too high. The private equity investors believe these early investors may have to wait longer for the returns they are traditionally expecting. Fortunately, or unfortunately, the availability of public money is delaying the typical industry cycle pattern for private equity returns.

The uniformity of thinking among private equity players is a bit scary. Group-thought is usually not a successful strategy. The volume of public capital is not only surprising, but discouraging if one believes the industry needs to experience pain before a true recovery can begin. Lastly, in looking at the presenters and the audience, there were very few present that experienced the 1980’s forced re-structuring of the energy business following the bullish experience of the 1970’s. In our discussions that day, we encountered another old-timer who referenced the 1980’s downturn starting in 1982, three years before when most who look at the industry’s history think it began. We were there then, and this guy had it exactly right. This industry is headed for significant change.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

One of the problems faced by fundamental or value investors at a time when interest rates are low, liquidity abundant and valuations elevated is that there is a dearth of opportunities. When a decline such as we have seen in the energy sector occurs, they have little choice but to deploy capital because there are so few other low prices opportunities. This at least partially explains the ease with which private equity firms have been able to raise capital. The problem is that with so much money chasing opportunities prices will rise for troubled assets and the eventual rationalisation of the sector will be delayed. 


Buttered Coffee Could Make You Invincible. And This Man Very Rich 

This article by Gordy Megroz for Bloomberg may be of interest to subscribers. Here is a section: 

He calls the mixture Bulletproof coffee. Drink it, the name implies, and you’ll feel invincible. “Fats and caffeine help stimulate the brain,” Asprey says in his office, taking another sip. The coffee, along with the drug cocktail he’s just downed, which includes vitamins K and C as well as aniracetam, a pharmaceutical designed to improve brain function, is intended to provide hours of enlightenment. “There’s a sense of cognitive ease, where everything you want to say is at the tip of your tongue,” he says. “It’s like getting a new computer—you never want to go back to the old one.”

Eoin Treacy's view 

In the videos on Mr.Asprey’s website he is sporting the near ubiquitous beard of the hipster generation and his fad is likely to be popular among those searching for the next new health craze. The evolution of demand for grass fed dairy and beef products could not be more welcome news for Irish and New Zealand dairies and beef exporters.

]]> Broker spotlight: Centrica, Rio Tinto, Anglo American, United Utilities, Oilex... Tue, 21 Apr 2015 12:42:00 +0100 Election day getting near has not stopped Berenberg upgrading its view on British Gas owner Centrica (LON:CNA).

The current share price is overly pessimistic about the balance of risks it faces, especially as the broker sees common sense prevailing in the Competition and Markets Authority’s review.

Furthermore, decisive management action on the dividend and capex supports the balance sheet and gives it breathing space to conduct a thorough strategic review of the business (due in July). Buy with a target price of 295p (from 300p).

UBS, meanwhile, has upgraded its target price on water utility United Utilities (LON:UU.) to 980p from 775p.

Earnings forecasts have been raised by 5-11% on the more favourable final determination by regulator OFWAT published in December. 

“The updated dividend policy of annual growth at least in line with RPI inflation from the 37.7p paid for FY2014/15 remains attractive and offers visibility through FY2019/20.”

Oil and gas facilities contractor Petrofac (LON:PFC) has been downgraded to 'neutral' after another cost overrun (£130mln) at Laggan Tormore in the Shetlands.

Market confidence in management assurances has been shaken, said UBS,  and with just 2% upside to a revised price target and a cautious investor community, ‘neutral’ is now the recommendation (from 'overweight'). 

Barclays sent out a big note on the miners this morning with commodity downgrades virtually across the board.

Anglo American (LON:AAL) had its target price cut from 1080p to 959p and an ‘underweight’ rating added for good measure.  “Every division of the business is under increasing pressure right now,” said Barclays.

“Platinum restructuring remains an uphill battle given current market  conditions. “South Africa continues to grab headlines for the wrong reasons (blackouts and riots).”

The broker  also scrapped ‘overweight’ rating on Rio Tinto (LON:RIO) and knocked its price target for the miner’s shares down from 3350p to 2850p. 

“We find it hard to see where further positive catalysts can come from given the extraordinary efforts of the last 18-24 months,” Barclays said. 

It favours Glencore (LON:GLEN), with no iron ore, downgrades are the lowest and Barclays reckons the stock is starting to screen the cheapest on most valuation metrics. The broker upped its share price  target on the firm by 10p to 350p. 

BHP Billiton (LON:BLT), meanwhile, should fare well over the next six months, it reckons, partly on the view that the oil price should perform reasonably well.

Barclays has changed all its commodity price assumptions for 2015 and 2016 almost universally down, yet again.

The iron ore supply/demand outlook is among the worst of any commodity it looked at. Copper remains more volatile but with strong underlying fundamentals.

Away from the miners, Citi analysts tucked into Tesco (LON:TSCO) ahead of the supermarkets full-year numbers tomorrow raising its target price on the grocer by 45p to 235p.

The broker also had an appetite for online food order website Just East (LON:JE.) and raised its price target for shares in the firm by 20p to 515p. 

Aussie oil explorer Oilex (LON;OEX) has received a ‘buy’ rating and a 7.4p target price in an initiation note from Westhouse.

After the recent success of the ‘Proof of Concept’ Cambay-77H well, Oilex can apply what it has learnt to unlock the substantial reserves and resources contained within its tight gas assets in India.

Demand for gas is expected to exceed supply in India for the foreseeable future, and Oilex should start to deliver substantial volume and cashflow growth over the next five to six years.

Medtech ANGLE’s (LON:ANGL) work with Sidney Kimmel Cancer Center and the Medical University of Vienna, is to be postered at the prestigious AACR (American Association for Cancer Research) annual meeting in Philadelphia, notes Cenkos. This is highly encouraging, said the broker, which has a ‘buy’ recommendation.

]]> Northland Capital Partners View on the City CDialogues, Rockwell Diamonds and Tiziana Life Sciences Tue, 21 Apr 2015 08:19:00 +0100 Rockwell Diamonds (TSE:RDI) – CORP: Q415 sales and production figures

Market Cap: CAD$11.7m; Current Price: 21.5c

  • From yesterday: Saxendrift performs well while Niewejaarskraal is put on care and maintenance
  • Revenue from owner operated Middle Orange River projects increased to $35.7m in FY15 from $28.9m from FY14.
  • Saxendrift continues to generate significant revenues despite lower grades.
  • Niewejaarskraal Mine placed on care and maintenance.
  • Closure of the Bondeo 140 cc acquisition now expected in H115.
  • Forecasts, rating and price target remain under review.

NORTHLAND CAPITAL PARTNERS VIEW: Q415 (financial year) was a challenging quarter for Rockwell Diamonds with diamond production down at all operations compared to the previous quarter. Despite this, Rockwell continued to grow its revenue from its owner operator projects in the Middle Orange River for the year by 24% compared to the previous year, largely as a result of higher diamond values at its flagship Saxendrift Mine. During Q415 at the Saxendrift operation the grades were lower than expected but gravel volumes remained strong. Diamond values were also strong with five stones greater than 50cts in size recovered, with the largest weighing 135.7cts and 121.6cts. At the Saxendrift Hill operation, gravels volumes during Q415 were low following the closure of the plant in December. The remaining gravels at Saxendrift Hill are being processed in the Saxendrift plant. At the Niewejaarskraal Mine, both grades and volumes were lower than expected during Q415. As the mine is sub-economic at current plant throughput rates, Rockwell has opted to put the mine on care and maintenance while it undertakes further planning to refine its understanding of the orebody and looks to increase the plant capacity. Closure of the Bondeo 140 cc acquisition now expected in H115 (calendar year) and will be an important event for the Company.


Tiziana Life Sciences plc (LON:TILS) Fundraise of over £6m 

Market Cap: £106m; Current Price: 115p

  • Issue of convertible loan notes to raise £6.14m
  • Tiziana Life Sciences announced that is has raised £6.14 million (US$9.15 million) through the issue of 8,780,905 unsecured convertible loan notes (CLNs) to new investors. 
  • The CLNs are redeemable by the note-holders at any time after 25 June 2016 and will be redeemed, at the election of the company, in cash or by conversion into new ordinary shares in the company at a conversion price of £0.70 per share. 
  • Interest shall accrue quarterly on the CLNs at a rate of four per cent. per annum.
  • The funds raised will be used: to subsidise the development of the group’s clinical stage assets; to meet the company's ongoing liabilities in respect of licence agreements; and for general working capital purposes.

NORTHLAND CAPITAL PARTNERS VIEW: This raise brings Tiziana’s total fundraising over the past month to £8.7m. This funding will allow the group to move its projects through to their next inflection points, including the company’s flagship phase II clinical trials of lead asset milciclib for thymic carcinoma.

CDialogues (LON:CDOG) – Prelims

Market Cap: £16.4m; Current Price: 262p

  • Geographic and customer diversification
  • Maiden FY revenue +117% to €9.9m with subscriptions accounting for 76% (FY13: 79%), EBITDA +87% to €2.9m and PBT +89% to €2.6m. EPS +77% to €0.43. Adj. FCF +108% to €1.2m resulting in net cash of €2.4m (June IPO raised €0.6m (net)). Maiden dividend of 2p, subject to AGM.
  • Diversification of business in terms of customers and geographies with eight mobile marketing projects in five countries across the Middle East. These projects were delivered to a total subscriber base of 35m customers that attracted more than 5.5m unique subscribers and gross billings >€50m. Revenue growth in spite of the cessation of operations in Iraq in early December.
  • Gross margin fell 910bps to 35.5% reflecting increased cost of sales as new projects came on stream – these should recover somewhat. Operating costs +45% to €0.9m but fell to 9.3% of revenue (FY13: 14%). €0.5m of capitalised development spend, up 10% on FY13. Year end accrued income of €3.8m and related accrued expenses of €2.3m – the vast majority has been since collected/settled.
  • Good start to the current year with reasonable revenue visibility based on current contracts. Ongoing investment in core Platform capacity on mobile data analytics and marketing language engineering in order to expand its Services portfolio.

NORTHLAND CAPITAL PARTNERS VIEW: Good set of maiden prelims, flagged in January’s pre-close. Mobile network operators (MNOs) continue to battle with subscriber acquisition, retention and increasing ARPU. CDialogues is not alone in offering mobile marketing services but its opt-in subscription-based model differentiates it from the competition and provides the company with better revenue visibility. Targeting high growth geographies is not without its risks (as evidenced by the loss of business in Iraq) but the company is making good progress. Shares are trading at an undemanding 8.7x FY14 and 6.1x FY15.

]]> Report from The Chart Seminar in Singapore Tue, 21 Apr 2015 08:14:00 +0100 Report from The Chart Seminar in Singapore 

Eoin Treacy's view 

Last week’s event was another enjoyable visit to Singapore and was an apt time to ruminate on Lee Kwan Yew’s legacy of turning a tropical backwater into a first world private banking and high end manufacturing centre. Delegates came in from Argentina, Australia, Japan and of course Singapore which led to some interesting and varied discussions.

Singapore’s stock market is being led higher by the banking sector and shares a high degree of commonality with Taiwan and South Korea. The Index is somewhat overbought in the short-term and some consolidation of recent gains in looking likely. However a sustained move below the 200-day MA, currently near 3400, would be required to question medium-term scope for additional upside.

As one might imagine the main topic of conversation was on the outlook for the Asian region not least following China’s explosive breakout over the preceding three weeks.  Delegates were also interested in the outlook for the European region and we also looked at the S&P 500. We looked at the oil price and a number of related instruments. We also looked at gold prices and a number of miners, select Singapore shares as well as a wide range of international bank shares. We also had a wide ranging discussion on currencies. 


Mapping World Prices 2015 

Thanks to a subscriber for this interesting report from Deutsche Bank. Here is a section:

A key finding of this year’s survey is the extent to which exchange rate movements impact relative prices across countries. In previous years, Australia had consistently been the world’s most expensive country while the United States had been the cheapest developed country. This year, however, the strength of the USD has significantly narrowed the gap between the two. Similarly, shopping in Europe and Japan now feels a lot cheaper than before.

When we began this series, Brazil was the most expensive emerging market in the world and was more expensive than the US for several categories. Currency depreciation has brought Brazilian prices more in line with what one would expect for a country at its level of development. Meanwhile, India remains the cheapest major economy in the world across a range of products.

Despite USD appreciation, the United States remains the cheapest place to buy an i-Phone6. Barring India and Canada, it is also the cheapest place to buy a pair of Levi’s 501. For some reason, the brand costs around twice the US level in Singapore, Hong Kong and China. Singapore also remains, by far, the most expensive place to buy a car. For watching a movie, we recommend readers try Mumbai, Delhi and Kuala Lumpur but avoid Zurich. Also avoid Zurich if you want a hair-cut. We found that Germany is the best place for doing an MBA – the fees are a third of US universities but salaries offered to graduates are 80-85% of US levels.

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

Mrs.Treacy and I share a love of seafood so we sampled all three major methods of cooking Singapore’s local delicacy, pepper, chilli and butter crab, while in the city. Despite the fact that the Singapore Dollar is trading below its highs of recent years, prices are higher than I remember from past visits. 


Email of the day on the reality of bond market investing 

This is David Einkorn’s presentation at the Grants Conference. I found it a very interesting analysis of the impact of low/negative interest rates on consumers and on banks. Especially in relation to new banking regulations. 

P.S. Yours and David’s timely recommendation of HSI and HSCEI really paid off. Apart from that, many thanks for your continuously interesting and valuable analyses, which provide daily distance from turbulent markets.

Eoin Treacy's view 

Thank you for your kind words and this insightful presentation which is well worth taking the time to peruse. Here is a section:

I think the more interesting question is why do long‐term investors who bought sovereign bonds for the income continue to hold them at negative yields? Why not sell and capture all the future income and then some today? Why continue to take duration risk, liquidity risk and even credit risk without any compensation?

We think the answer lies in the new regulatory regimes that are shaping the behavior of large financial institutions today.

Post crisis, Basel III regulations for banks and Solvency II regulations for insurers were designed to improve their financial stability. However, it’s not clear that the designers contemplated negative bond yields.

Requiring financial institutions to hold bonds that are guaranteed to lose money destroys value and adds significant and underappreciated systemic risk.


Email of the day on small arms manufacturers 

Big upward dynamics on high volume. SWHC said good things about sales, but not great things. Boy are these 2 a classic example of lousy sentiment turning into strong sentiment.

Will be interesting to see if the big 4 funds that hold 1/3 of the float are increasing their positions (won't know until about August, when the funds have to file holdings reports for 2nd quarter).

Hope your trip to China has gone well.

Eoin Treacy's view 

The commonality in the small firearms manufacturing sector is noteworthy. I wonder if it is influenced by the recent almost constant news flow on civilians being shot by police officers and whether that is increasing speculation that about gun control and possibly prompting accelerated buying as was the case in 2014. 

]]> Broker spotlight - Tesco,. Lloyds, Aldermore, HSBC, Horizon Discovery ... Mon, 20 Apr 2015 12:20:00 +0100 Tesco (LON:TSCO) dominated the broker headlines today as former house broker JP Morgan suggested it had a £5bn pensions black hole that it would need new funds to fill.

The troubled supermarket’s results are out Wednesday, but after signs of a revival this is not what new chief executive Dave Lewis needs.

The announcement by David Cameron that a new Tory government would hand back the 22% rump of its stake Lloyds Banking (LON:LLOY) is seen by Investec as a repeat of a promise already made by the chancellor.

The plan suggests a £4bn offer within the next 12 months at a c.5% discount to the prevailing market price, with additional 1-for-10 retention sweeteners. Hold says the broker.

UK retail banks are a bit of theme today with Deutsche Bank recommending challenger bank Aldermore (LON:ALD), where it sees 31% earnings growth over the next three years. 

Buy with a target price of 290p suggests the broker, though Credit Suisse is much more cautious with a 235p target and neutral stance.

Challenger bank Virgin Money (LON:VM) received an upgrade from Investec which moved its rating from ‘sell’ to ‘hold’.

HSBC (LON:HSBA) and Standard Chartered (LON:STAN) are both reportedly looking at switching from London to a new home in Asia due to a higher tax on UK banks .

Unfortunately, unlike Standard Chartered, there is little likelihood of re-domiciling HSBC despite the levy costing 9% of profits, reckons JP Morgan.

The broker upped its target price on HSBC to 640p with a ‘neutral’ rating, factoring in US$6bn of cost saves outlined by management, but added that the latest rise in UK bank  levy keeps costs above guidance at US$38bn.

JP Morgan also topped up its target price on wealth  manager St James’s Place (LON:STJ) from 924p to 1022p. 

Citi analysts took a look at Diageo (LON:DGE) after the drinks maker came up short with a sales slide last week.

“The third quarter was disappointing, but we not overly concerned however, because the miss was within a reasonable margin of error in our view, on what was a difficult quarter to forecast for some regions.”

Citi added that some factors that affected Q3 should reverse or improve in Q4 and that emerging markets are on an improving trajectory.

BNP Paribas turned bullish on speciality plastics group Victrex (LON:VCT) with an ‘outperform’ rating while Barclays lowered its target price to 2300p on the FTSE 250 firm. 

Panmure Gordon has repeated its buy recommendation on bio group Horizon Discovery (LON:HZD) after today’s collaboration with Thermo Fisher.

Thermo will market and distribute Horizon's X-MAN human haploid and diploid isogenic cell line collection and offer Horizon's X-MAN haploid cell line generation service to Thermo's worldwide customer base. 

The long term follow-up data announced by ReNeuron (LON:RENE) on Friday from its Phase I trial of its stem cell therapy targeting chronic stroke was positive, confirming safety and tolerability plus sustained improvement out to at least 2 years.

Buy with a 6.2p price target said N+1 Singer in what in what promises to be a year of significant news flow for the group.

]]> Northland Capital Partners View on the City Sunrise Resources and Audioboom Mon, 20 Apr 2015 08:08:00 +0100 Sunrise Resources (LON:SRES) – CORP: Placing

Market Cap: £1.45m; Current Price: 0.25p

  • Additional exploration funds
  • Placing to raise £210k at 0.2p/share. The additional funds will be applied to the exploration of the Company’s projects in Australia and Nevada and general working capital purposes. 
  • Northland Capital Partners acts as Nomad and Broker to Sunrise Resources.

NORTHLAND CAPITAL PARTNERS VIEW: A positive development from Sunrise Resources with the additional funds raised from this placing to be used to continue exploration at its Nevada and Australian based projects, as well as for working capital.


Audioboom (LON:BOOM) – Update

Market Cap: £40m; Current Price: 7.5p

March KPIs

  • More than 2,400 active content partners (posted content in the previous week) by the end of March – c. 4,000 in total. 
  • More than 3.6m registered users with 200,000 signing up in March, a monthly record. 244,000 mobile app installs (113,000 iOS and 131,000 Android) – a record with the March number equivalent to c. 50% of all installs to date. Monthly active uniques (MAUs), people accessing Audioboom content via the web site, apps and content players, of 22.8m.
  • Advertisers include McDonalds, Burger King, Holden Australia (part of GM), Walmart and Progressive Insurance.

NORTHLAND CAPITAL PARTNERS VIEW: The KPIs at Audioboom are heading in the right direction and there has been high profile newsflow with the content partnership with Russell Brand and the appointment of Nick Candy to the board as well as the launch of the Android app. The next step is to translate this into meaningful revenue. Revenue in FY14 (11months) amounted to £51k including £25k from advertising. For the current year this is expected to increase to £3m though losses are also expected to increase to reflect the heavy investment in sales and marketing. The business is reasonably funded following October’s £8m placing. The shares have settled after last year’s euphoria but still assume very strong execution. 

]]> Broker spotlight: Diageo, Whitbread, Debenhams, GKN, OPG, Clinigen ... Fri, 17 Apr 2015 11:57:00 +0100 Spirits giant Diageo's (LON:DGE) update yesterday wasn't as bad as the market reaction suggested according to Deutsche Bank, though it adds what comes next is crucial.

Adjusting the 0.7% decline in organic sales, Deutsche has managed to come up with a total of 0.6% growth, while US depletions are also improving it said. 

All in all, Diageo is changing for the better, says the broker and it is closer to the end of the change than the beginning. Buy.

Credit Suisse likes Whitbread (LON:WTB) sufficiently to have raised its target price to 6200p, though its ‘outperform’ rating remains the same.

Whitbread shares have risen 120% in 2 years, but looking at opportunities for Premier Inn in Germany the broker can see earnings growing by 11% annually for ten years, which justifies the current rating.

Investec has put a hold rating on drugs distributor Clinigen (LON:CLIN).

A review of its competitive situation and key products suggests it can continue to grow  its portfolio, but services is not growing as fast as expected so the broker downgrading earnings estimates down the road. Target price is 550p. Hold is the view.

India-based power generator OPG (LON:OPG) is about to be transformed, says cantor Fitzgerald, with execution risk about to fall away on the completion of 480MW of projects to take total capacity to 750MW. 

Cantor believes this means most of the real risk is out of the way but the shares do not yet reflect this. 

Positive changes in the wider Indian economy are also being overlooked.  Buy with a target price of 130p, say the broker.

Debenhams (LON:DEBS) has received a bullish update from Citigroup following yesterday’s better than expected interims. ‘Buy’ from ‘neutral’ is the new recommendation.

Engineering  heavyweight GKN (LON:GKN) has been upgraded to ‘neutral’ from ‘sell’ by Goldman Sachs, which also now has a conviction buy stance of oilfield services group Hunting (LON:HTG) sending it shares scooting higher this morning.

Barclays Capital, meanwhile, has upgraded defence specialist QinetiQ (LON:QQ) to overweight, while there price upgrades for Wier (LON:WEIR) to 1,925p from Exane, Chariot Oil (LON:CHAR)  to 20p from 12p from Cantor and BAE (LON:BA.) to 611p from Goldman.

Valve specialist Rotork (LON:RTRK) was a notable downgradeas Barclays Capital cut its stance to ‘equal weight’. 

]]> A Century-Old Technique for Analyzing the Market Is Raising a Warning for Investors Fri, 17 Apr 2015 08:23:00 +0100 A Century-Old Technique for Analyzing the Market Is Raising a Warning for Investors 

My thanks to a subscriber who asked what I thought about this article when supplying the link from Bloomberg Business.  Here is the opening:

Transportation stocks are trailing the Dow Jones Industrial Average by the most in more than two years, raising concern among investors who follow a market-analysis technique that’s more than a century old.

The Dow Jones Transportation Average has fallen 4.8 percent this year as the industrial average climbed 1.2 percent, the biggest divergence over comparable spans of time since October 2012. The transportation gauge has lost almost 5 percent in less than a month and on Tuesday dipped below its average from the past 200 days for the eighth time since March 26.

The moves could be alarming to investors who subscribe to what’s known as Dow Theory, which holds that transportation and industrial stocks must advance together for market gains to last, said Richard Moroney, chief investment officer at Horizon Investment Services and a follower of Dow Theory, named after Wall Street Journal founder Charles Dow who came up with the concept in the 1880s. A drop in the Dow industrials to 17,164.95, the lowest closing level this year, would confirm a bearish trend, he said.

“Transports have gone below a key low and if the industrials were to confirm that by moving below that Jan. 30 close, that would be your classic bear-market Dow Theory signal,” said Moroney, who also edits the Dow Theory Forecasts and Upside newsletter. “It’s a yellow flag when there’s a divergence like this.” 

David Fuller's view 

With no offence to Dow Theory Forecasts, I am glad that I am not running a service that is primarily dependent on one indicator.  I recall at least one Dow Theory sell signal during this 6-year bull market to date.  I am never dismissive of them because the next big selloff will contain a Dow Theory sell signal.  However, we do not have one right now, because the DJIA is testing its upper boundary.

This item continues in the Subscribers’ Area. 


China Starts Campaign to Counter Outflow of Corruption Cash 

Here is the opening of this informative report from Bloomberg: China started a campaign to stop the use of offshore companies to transfer the ill-gotten gains from corruption and bribery overseas.

The People’s Bank of China, the central bank, will join with four ministries including the State Administration of Foreign Exchange, to crack down on underground banks, offshore company accounts and other illegal means of transferring cash gained from corruption, according to a central bank statement today.

The campaign, which will last until the end of the year, dovetails with the “Sky Net” operation whose focus is on capturing fugitive officials, the bank said in the statement. Tracking down economic fugitives and bringing them, and their ill-gotten assets back, has become a key component of President Xi Jinping’s anti-corruption campaign.

“China’s anti-corruption drive faces severe challenges with officials fleeing the country with huge amounts of money, and no way to stop it,” said Zhuang Deshui, a governance professor at the Peking University who specializes in anti-corruption. “By promoting this operation, China could build a mechanism to stop the transfer channels.”

The Sky Net campaign, which incorporates the so-called “Operation Fox Hunt” that the official Xinhua News Agency said had led to the repatriation of 680 fugitives suspected of economic crimes, is making waves overseas. 

David Fuller's view 

Corruption is a problem in every economy but it is epidemic in undemocratic regimes, not least because people see it as the quickest way to gain sudden wealth, and also keep it if they can transfer funds and leave the country.

Xi Jinping will surely know that he can reduce the problem if he encourages additional private wealth creation and gives companies the protection of ethical rule of law.     


Artificial Intelligence and the Fridge 

Here is the opening from an amusing, edgy article by Maija Palmer for the FT Connected Business section:

Could an internet-connected thing — a smart fridge, a thermostat or a home-help robot — become a millionaire? This is not as ridiculous a question as it may seem.

If we do indeed move toward a world in which devices are connected to the internet and performing mundane chores, it is likely that many of them will be connected to some kind of bank account.

For maximum efficiency, the smart fridge that orders your milk should also be able to also handle the payments to the supermarket. You may not hook the fridge directly to a current account — worried perhaps a software glitch might cause the fridge to accidentally put you in debt by ordering £20,000 worth of dairy products in a single day. But you might set up a pre-paid account with a set amount of milk money that the fridge can access. 

David Fuller's view 

The article is an imaginative journey towards the trouble we can get into if we devolve too much responsibility to machines.  The simple solution – go out and buy your own milk. 

There are excellent links in the article and also in the ‘More’ column to its left. 


Email of the day 1 

On battery storage, as discussed in Tuesday’s lead article:

“All very well, but is there currently a viable storage product available in the near future? If so, who is co-developing the product and what's it called?” 

David Fuller's view 

Fair point but consider a decade or more ago, when there seemed to be minimal research and development on batteries.  Today, on a ‘needs must’ basis, an enormous and varied effort is underway to produce reliable batteries of all sizes.  My guess is that they will be readily available within a few years. 


Email of the day 2 

On valuations, as shown in Wednesday’s lead article:

“Thanks for the above comments which give the valuations for the various China/Hong Kong markets. I have been searching for a good source for such valuations and was wondering if you could tell us your source of these p/e multiples as one would like to monitor them regularly, for the Chinese and other global markets. Thank you, in advance.” 

David Fuller's view 

Yes, it is important to compare valuations.  I have a Bloomberg terminal, which is not cheap.  Before the terminals I had to rely on financial newspapers, which was a tedious process.  Subscribers may have some suggestions on this topic, as there must be other related services or publications in various countries.   


The Markets Now 

On Monday 20th April at the East India Club, 16 St. James’s Square, London, SW1Y 4LH 

David Fuller's view 

Here is the current brochure.  Guest speaker David Pinniger’s subject could not be more topical.  Iain Little suggested David Pinniger as a guest speaker and contributed this comment:

“I met David Pinniger at a recent investment forum here in Zurich.  I found that, despite David’s impressive academic and professional credentials, he was also able to communicate a complex subject –biotechnology - in a way that non-scientists like me could understand.  So he would be a logical “next step” after David Brown’s bravura presentation on The Third Industrial Revolution at the last Markets Now.”

Iain Little and I are looking forward to a lively evening with subscribers and their friends, including at the Club’s spacious American Bar following presentations.  

We have five seats left for anyone else tempted to join this timely and lively seminar on Monday evening.

]]> Northland Capital Partners View on the City Hummingbird Resources, CDialogues, Royal Dutch Shell, Kromek and others Fri, 17 Apr 2015 08:15:00 +0100 Hummingbird Resources (LON:HUM) – BUY: Q115 update

Market Cap: £29m; Current Price: 32p; Target Price: 82.4p

Initial drill results and mine development update

Drill programme:


  • 5,100m completed of 10,000m drill programme.
  • Initial results include; 38m at 2.54g/t Au from 72m (KMWRC1051), 21m at 5.37g/t Au from 73m (KMWRC1054), 12m at 10.68g/t Au from 73m (KMWRC1058), 11m at 8.22g/t Au from 18m (KEGRC0006) and 2m at 3.31g/t Au from 9m (GKARC1062).


Mine development:


  • Long lead items ordered including ball mill, mineral sizer, tower crane and carbon-in-leach tanks.
  • LoI signed with Société de Forage et de Travaux Publics to commence plant earthworks before the end of April 2015 and expected to be completed by mid-June 2015.
  • Johann du Preez appointed Project Construction Manager.
  • No change to forecasts, rating or price target.


NORTHLAND CAPITAL PARTNERS VIEW: Positive drill results from the infill and grade control drill programme at Hummingbird Resources’ Yanfolila Gold Project, located in Mali, with numerous high grades over large intercepts from the Komana East and Komana West ore bodies. Drilling at Gonka, where Hummingbird is looking to define additional gold mineralisation that can be added to the mining schedule, defined high grades over narrower intercepts. The Company has wasted no time since the completion of its financing in ordering the long lead items and appointing a contractor to commence the earthworks. Johann du Preez has been appointed the Project Construction Manager. He has over 30 years’ experience and was the construction manager for MDM Ferroman in Mali for the construction of Randgold Resources’ Loulo Gold Mine and Nevsun Resources Tabakoto Gold Mine. Hummingbird continues to look undervalued compared to its peers.


Kromek (LON:KMK) – Pre-close

Market Cap: £38.4m; Current Price: 35.5p


  • FY revenue light but EBITDA expected to be in line
  • FY revenue expected to be £8.1m (+38%) with growth from H1 to H2 of 53%. This is lower than the 100% sequential growth anticipated in the interims and reflects the slippage in contract timing with a number of government agencies and OEMs. Recently delivery, and hence invoicing, for orders worth £0.6m have been postponed by the customer. A further £0.4m in orders has been secured with delivery scheduled for FY16. Advanced negotiations on contracts worth ≥£0.5m that will be delivered in FY16.
  • EBITDA expected to be in line with expectations, including a H2 profit, given a richer product mix and good cost control. £3m revolving credit facility secured in March to be used to fund working capital. As a result, management is comfortable with current funding levels. 
  • Separately, Kromek announced a modification to its existing contract with the Defense Advanced Research Projects Agency (DARPA), an agency of the US Department of Defense, for the volume supply of radiation network detectors worth up to $2.0m over 16 months. To date, Kromek has been awarded $4.35m in contract revenues with DARPA. The latest modification is for the production of 1,000 D3S detectors at $1,000 per device. Management is pursuing an ultimate price of $400 per detector.


NORTHLAND CAPITAL PARTNERS VIEW: Mixed update with the extension of the DARPA contract and the move into EBITDA profit (although no indication on the level of capitalised R&D) in H2 as positives but the slippage of contracts a negative. At the interims, management had guided to revenue growth in excess of 100% in H2, suggesting >£6.3m. The reality of c. £4.9m (+53%) is commendable but contract slippage is likely to remain a feature until management starts to secure volume contracts in its target markets of medical, security and nuclear.


Week Ahead (20/04/15)

View from the trading desk

Greece returned to the top of the agenda and the potential for a ‘Grexit’. Two payments totalling nearly €1bn are due to the IMF in May but the government is struggling to raise sufficient funds to pay wages and pensions and meet debt obligations. Reports circulated that the government was rebuffed by the IMF about potentially asking for a delay. Yields on Greek bonds returned to levels last seen before the debt restructuring with 3-year paper increasing above 27% and 10-year to 12.9%. Meanwhile Germany’s finance minister, Wofgang Schäuble, appeared to rule out the release of bailout funds to Athens at next week’s meeting in Riga and Standard & Poor’s downgraded Greece’s junk status further to CCC+. 

The main UK index seems to have settled above the 7,000 level even though the outcome of May’s election appears no clearer although Labour has enjoyed a small lead in the most recent polls. The next government will inherit massive deficits in both public sector finances and external balances that could put sterling under considerable medium term pressure. Meanwhile Chinese stock hit multi-year peaks with the expectation of further fiscal stimulus in the face of weak economic data. Exports fell 15% in March reversing January and February’s growth, imports also fell (12%). For Q1 as a whole, the economy grew at its slowest rate in six years at 7%. Whether reduced interest rates will be sufficient to kickstart investment in the face of reduced demand remains uncertain. 

Sales & Research thoughts

TMT: CDialogues (LON:CDOG, the provider of mobile marketing services to Mobile Network Operators (MNO) is scheduled to announce maiden prelims on Tuesday. In January’s pre-close, management reported that results would be in line with expectation with revenue more than doubling to >€9.5m and EBITDA +70% to c. €2.7m. This was achieved in spite of reduced revenue from Iraq where operations ceased in early December (it accounted for c. 15% of group revenue in November). Cash increased €1.1m to €2.4m with the benefit of the small fund raising at IPO (£1.2m). MNOs are constantly looking to win and maintain subscribers and CDialogues is able to help through mobile marketing campaigns (content, prizes etc).

IT hardware distributor and services company, Computacenter (CCC.L), is due a Q1 IMS on Thursday. Key areas for focus will be the success of onboarding a number of 2014 customer wins in the UK, whether the improved momentum in Germany in Q4 has carried over and an update on the troubled French division. The distribution division remains a reasonable bellwether for the health of UK IT spending. 

Mining; Following last week’s proposed mega-merger in the oil and gas space between Royal Dutch Shell (LON:RDSA) & BG Group (LON:BG.), it was the mining world’s turn to announce a proposed corporate transaction this week. Alamos Gold Inc (TSE:AGI). & Au Rico Gold Inc. , two TSX listed miners, have agreed to a friendly US$1.5bn deal that would see the two companies merge. The all paper transaction will value the business equally but see the post-merger entity retain the name Alamos Gold and its CEO, John McCluskey. On paper the deal makes sense for both companies as Alamos has cash that it needs to deploy on quality assets and Au Rico needs cash to advance its quality assets. The combined business will produce around 425,000oz Au in 2015 increasing to 700,000oz Au in 2018, making it an important mid-tier producer. 

Could now be the time that we have all long waited for, where we start to see an uptick in corporate activity in the mining space? So far this year we have seen a steady trickle of junior miners blowing up and delisting or becoming shells. What we haven’t seen is the combination of some obvious assets that would result in a bigger company with a reduced GA burn that is, as a result, sufficiently more attractive to investors. However, the reduction in GA could well prove a sticking point for any potential deal with some management teams.

]]> Broker spotlight - Goldman downgrades Rio, BHP, Anglo; stays positive on Glencore Thu, 16 Apr 2015 09:36:00 +0100 It was Goldman Sachs’ turn to knock the miners this morning as the heavyweight broker cut its rating on three FTSE 100 majors.

Anglo American (LON:AAL) was lowered from ‘neutral’ to ‘sell’ and was given a lower share price target of 800p.

BHP Billiton’s (LON:BLT) ‘buy’ rating disappeared with Goldman going ‘neutral’ on the diversified commodity company.

There was also a downgrade for Rio Tinto (LON:RIO) with the broker slashing 500p from its original 2500p share price target.

On the flip side, Goldman stayed positive on Glencore (LON:GLEN) and placed the firm on its Conviction Buy list, upping its target price to 340p. 

That’s in complete contrast to JP Morgan’s view on the business. Analysts at the firm cut Glencore's target price to just 61p this morning.

Elsewhere, Jefferies topped up its target for Tesco (LON:TSCO) shares from 210p to 220p and kept its ‘hold’ rating on the supermarket giant.

Nomura kept its ‘buy’ rating on Morrisons (LON:MRW) despite shaving 10p from its 270p price target.

It also stayed ‘neutral’ on Sainsbury’s although, like Morrisons, it knocked down its target price on the company’s shares. 

Investec kept its ‘buy’ stance on WHSmith (LON:SMWH) after the retailer upped its dividend this morning.

“An in line set of interims does not reflect the underlying momentum building,” said the broker on the magazine and books retailer.

Among the small caps, Madagasar Oil’s (LON:MOIL) government approval to develop its Tsimiroro Field on the island was hailed by broker VSA.

This approval will also make the company much more attractive to potential farm-in partners or outright acquirers, some of whom already have an interest on the island, given the strategic importance of the Tsimiroro asset. 

The broker has a ‘buy’ and a 35p price target on the company. 


]]> Northland Capital Partners View on the City - Alexander Mining, Hummingbird Resources, Cyan Holdings,Altona Energy Thu, 16 Apr 2015 08:13:00 +0100 Alton Energy (LON:ANR) – CORP: Directorate change and JV update

Market Cap: £3m; Current Price: 0.39p


CEO Michael Zang steps down 

Michael Zang the CEO of Altona Energy has stepped down and Zhang Qinfu the Executive Chairman will assume the role of CEO.

Philip Surtherland a Non-Executive Director of Altona met with representatives of Sino-Aus Energy Group Limited and Wintask Group Limited last week to discuss amendments to the joint venture.

The joint venture will be amended to reflect the commencement of a bankable feasibility study into the potential for underground coal gasification (UCG) to be used to produce natural gas from the Arckaringa coal deposit, located in Australia.

Parson Brinckerhoff has been engaged by the joint venture to assess the most effective way to advance the Arckaringa coal deposit using UCG.

Further details on the joint venture agreement will be published in the coming weeks.

NORTHLAND CAPITAL PARTNERS VIEW: While the loss of Altona Energy’s CEO Michael Zang is a negative development for the Company it would appear that talks with joint venture partners for the development of the Arckaringa coal deposit have been positive. With all parties agreeing to investigate the potential to use underground coal gasification to advance the project. We look forward to further developments on the joint venture agreement.


Dr Ryan D. Long +44 (0)20 7382 1131


Alexander Mining (LON:AXM) – BUY*: Definitive Ebullio agreement

Market Cap: £1.8m; Current Price: 0.7p; Target Price: 2.6p


Definitive licence agreement with Ebullio for the Sivas copper project

Alexander Mining has signed a definitive licence agreement with Ebullio Resources Fund and RCR Quantum Madencilik. Ebullio holds 3.91% of Alexander Mining and 75% of RCR Quantum. RCR Quantum owns 75% of the Sivas copper project located in Turkey.

Ebullio intends to sell a stake of at least 20% in RCR Quantum to a third party consortium and the definitive licence agreement with Alexander Mining is conditional on this sale. Alexander Mining will receive 25% of the net proceeds received by Ebullio from the sale. As part of this agreement, Ebullio has disposed of 7.8% of its former 11.7% stake in Alexander Mining to the consortium.

RCR Quantum will pay Alexander Mining US$100,000 on completion, plus US$100,000 for technical services. Alexander Mining will receive a 3% royalty of gross saleable metal products produced using the Leaching Technologies from Sivas. Alexander Mining will also receive US$10,000 per month until the Sivas mine plant is commissioned or RCR Quantum terminates the project.

No change to forecasts, rating and price target.

SOURCE: Northland Capital Partners Limited. * Northland Capital acts as NOMAD & Broker


NORTHLAND CAPITAL PARTNERS VIEW: An unexpected but positive announcement from Alexander Mining this morning with a definitive agreement for Alexander Mining’s patented technology to be used on the Sivas copper project located in Turkey. The deal is still subject to Ebullio Resources Fund concluding the deal with the third party consortium to take at least a 20% stake in RCR Quantum, but it’s a major step forward for a deal that looked dead last year. Alexander Mining and Ebullio first looked at using the AmmLeach® technology on the assets of Red Crescent Resources Limited, which Ebullio planned to purchase, in October 2013 but Ebullio pulled out of the acquisition in April 2014 and as a result, could not execute its agreement with Alexander Mining. Ebullio has since acquired a 75% interest in RCR Quantum and is now looking to move the Sivas copper project forward using the AmmLeach® technology. Besides the potential for commercialisation the deal is positive as it would also result in Alexander Mining receiving cash payments of US$200,000 plus 25% of the net proceeds from Ebullio’s sale of 20% interest in RCR Quantum and monthly income of US$10,000 helping to cover its corporate overheads. Alexander Mining is also advancing its HoA agreement with Compass Resources Ltd., towards a definitive agreement that would see the AmmLeach® technology used at the Browns Oxide Copper-Cobalt-Nickel mine, located in Australia. With two potential avenues for maiden commercialisation the Company looks good value in our view.



Dr Ryan D. Long +44 (0)20 7382 1131


Hummingbird Resources (LON:HUM) – BUY: Result of open offer

Market Cap: £26.5m; Current Price: 31p; Target Price: 82.4p (from 82.2p)


From yesterday: Open offer raises an additional c. US$650,000

As a result of the open offer undertaken in conjunction with its recent (20/03/15) placing for US$8.9m, Hummingbird Resources has raised an additional US$0.65m.

The open offer was conducted at the same price as the placing 30p per share with half a warrant.

1,332,416 additional shares will be issued, and as a result the Company will have a total share capital of 94,777,473.

Forecasts upgraded with the additional cash and a minor upgrade to our price target to 82.4p per share from 82.2p per share. BUY rating maintained.

SOURCE: Northland Capital Partners Limited. 


NORTHLAND CAPITAL PARTNERS VIEW: It is positive to see existing shareholders supporting Hummingbird Resources’ recent fund raise and the additional cash raised has a positive impact on our forecasts and price target. Hummingbird is currently completing an extensive drill programme ahead of development work at its 1.8moz Au Yanfolila Gold Project, located in Mali. The project is fully funded to production that is expected to commence in H116. We continue to believe the Company’s rating looks significantly undemanding compared to its peers.


Dr Ryan D. Long +44 (0)20 7382 1131



Game Account Network (LON:GAME): Finals

Market Cap: £24m; Current Price: 43p


Looks in-line as expected 

GAME produced net revenue of £7.5m for FY14 almost £5m lower compared to the prior year as the prior year results included a significant systems sale. Underlying revenue, mainly game development fees for conversion of existing offline slots titles to the online market, increased by 20% YoY to £6.5m. As expected the business produced a loss at the EBITDA level of c. £1.4m compared to profit of £4.1m in the previous year.  

The business achieved many things operationally in FY14 and the launch of its simulated gaming is proving popular with many land based casino groups particularly in the US market. However real money internet gaming in regulated states like New Jersey has been slower than expected which has also had an impact. Whilst GAME is well placed in the State of Pennsylvania for simulated and real money gaming with Parx Casino group, a number of legislative bills are under active consideration by the state legislature, though this could take some time to complete. 

Finally, the business is actively engaging with multiple potential system buyers and management remains confident in delivering on sales in gaming systems.


NORTHLAND CAPITAL PARTNERS VIEW: The slower than expected pace of growth of real money gaming in the US, mainly as a result of regulation taking longer than expected, is having an effect on the performance of the business. Without a systems sale in the near term it remains difficult to see a positive catalyst for the share price. 


Michael Campbell +44 (0)20 7382 1133


Cyan Holdings (LON:CYAN) – Project live

Market Cap: £13.6m; Current Price: 0.305p


First Advanced Metering Infrastructure volume project in India live

Successfully deployed the first 865MHz Advanced Metering Infrastructure (AMI) volume project in India with Tata Power Mumbai in a district of Mumbai through smart meters from Larsen & Toubro. Cyan provided CyLec RF modules for the meters, Data Concentrator Units, Head End Server software licences and installation and maintenance services. 

Of the 5,000 initially ordered (July 2014), 4,000 are now live with the balance expected this quarter. The smart meters are now providing data to generate customer bills, real-time information on outages and other factors related to the quality of power. On the last billing cycle, Tata Power achieved 100% success in communicating meter readings from the CyLec-enabled meters to its billing systems.

NORTHLAND CAPITAL PARTNERS VIEW: An important proof point for the commercialisation of Cyan’s wireless mesh networking platform. There is considerable scope to expand the work with Tata in Mumbai and beyond as well as Larsen & Toubro and other smart meter manufacturers. The successful deployment should encourage other utilities to look at the Cyan approach to cost effective smart metering. That said commercial progress remains gradual. 


]]> Broker spotlight - Greggs, Tullow Oil, Burberry, Next ... Wed, 15 Apr 2015 12:27:00 +0100 Big name broker Goldman Sachs sent out a 'buy' rating on Tullow Oil. Meanwhile, Liberum sent out six upgrades and four downgrades this morning on stocks in multiple sectors, including one on fashion favourite Burberry.

]]> The $5 Billion Race to Build a Better Battery Wed, 15 Apr 2015 08:27:00 +0100 The $5 Billion Race to Build a Better Battery 

My thanks to a subscriber for this informative article from Bloomberg Business.  Here is the opening:

Professor Donald Sadoway remembers chuckling at an e-mail in August 2009 from a woman claiming to representBill Gates. The world’s richest man had taken Sadoway’s Introduction to Solid State Chemistry online, the message explained. Gates wondered if he could meet the guy teaching the popular MIT course the next time the billionaire was in the Boston area, Bloomberg Markets magazine will report in its May issue.  “I thought it was a student prank,” says Sadoway, who’s spent more than a decade melting metals in search of a cheap, long-life battery that might wean the world off dirty energy. He’d almost forgotten the note when Gates’s assistant wrote again to plead for a response.

A month later, Gates and Sadoway were swapping ideas on curbing climate change in the chemist’s second-story office on the Massachusetts Institute of Technology campus. They discussed progress on batteries to help solar and wind compete with fossil fuels. Gates said to call when Sadoway was ready to start a company. “He agreed to be an angel investor,” Sadoway says. “It would have been tough without that support.”

Sadoway is ready. He and a handful of scientists with young companies and big backers say they have a shot at solving a vexing problem: how to store and deliver power around the clock so sustainable energies can become viable alternatives to fossil fuels.  How these storage projects are allowing utility power customers to defect from the grid is one of the topics for debate this week at the Bloomberg New Energy Finance conference in New York. Today’s nickel-cadmium and lithium-ion offerings aren’t up to the task. They can’t run a home for more than a few hours or most cars for more than 100 miles (160 kilometers). At about $400 per kilowatt-hour, they’re double the price analysts say will unleash widespread green power. “Developing a storage system beyond lithium-ion is critical to unlocking the value of electric vehicles and renewable energy,” says Andrew Chung, a partner at Menlo Park, California–based venture capital firm Khosla Ventures.

The timing for inventors—and investors—may finally be right. Wind turbines accounted for 45 percent of new U.S. power production last year, while solar made up 34 percent of fresh capacity worldwide. Storing this energy when the sun isn’t shining or a breeze isn’t blowing has remained an expensive hurdle. Battery believers say that’s changing. They’ve invested more than $5 billion in the past decade, racing to get technologies to market. They’re betting new batteries can hold enough clean energy to run a car, home, or campus; store power from wind or solar farms; and make dirty electricity grids greener by replacing generators and reducing the need for more fossil fuel plants. This market for storage capacity will increase almost 10-fold in three years to 2,400 megawatts, equal to six natural gas turbines, Navigant Consulting says.

David Fuller's view 

Energy storage is the missing link for renewables such as solar, so these developments are encouraging and will be a welcome boost for the sector.

Just think – up until about a decade ago numerous gloomy forecasters told us that we faced a frightening, dark and interminable period of economic decline because of energy shortages.  Today, energy prices are lower due to an abundance of supply from not only fossil fuels but more importantly, increasingly viable renewables led by solar.  We can thank technology for this favourable situation.  


The Weekly View: Just a Temporary Soft Patch 

My thanks to Rod Smyth for his excellent market letter, published by RiverFront Investment Group.  Here is the opening:

The first quarter began with strong reports from the labor market and upward revisions for the last three months of 2014; it ended with the opposite.  The payroll data for March came in at just 126,000, and with revisions the quarter created 591,000 jobs compared to more than a million in the previous quarter.  To be fair, the average pace throughout this recovery has been similar to the first quarter’s pace at around 600,000, but there has clearly been a deceleration from the strength of late 2014.  We should also remember that 2014 started in a similar fashion.

As with last year, weather played a role, along with the labor dispute in West Coast ports, which saw Los Angeles (the nation’s busiest port) handle 29% less cargo in January than it did in January 2014.  The dispute was resolved in mid-February.

Beyond these more temporary effects, the US economy spent the first quarter adjusting to two longer term economic headwinds – lower oil prices and a stronger dollar.  As one of he world’s top 3 oil producers, US companies are slashing oil exploration budgets and hiring plans in light of continued weakness in oil prices.  Similarly, the dollar’s sharp rise in recent months has pressured exports and made imports more price competitive.  The combination of these factors led to flat manufacturing employment numbers in March.  

David Fuller's view 

I find little to disagree with in this summary.  However, there are two important variables which subscribers should keep an eye on over the next few months.

This item continues in the Subscribers’ Area, where The Weekly View is also posted. 


Email of the day 

On the Euro and possible ‘Grexit’:

“Something that concerns all of us with exposure to other countries other than our own is: does the euro go up or down if Greece leaves the eurozone. Eoin mentioned some while back that it might rise. Yet one reads many other places that it might drop sharply.

"Could you or Eoin please explain the possibilities and likelihoods?”

David Fuller's view 

The Euro obviously does not trade on its own, as it is priced against other currencies which will variously be in or out of favour.  Nevertheless, while ‘Grexit’ would create some temporary uncertainty, we do not think that it would drop sharply.  In fact, it would most likely rise.

This is most easily explained by considering what would happen if all the Southern European economies left the Euro?  The single currency would be stronger without its weaker components.    

Meanwhile, QE will keep the Euro soft but we would not have to worry about another sharp drop unless Germany decided to leave, which is highly unlikely.


Army of Robots to Invade Amazon Warehouses 

My thanks to a subscriber for this article from CNN Money.  Here is the opening: CEO Jeff Bezos told investors at a shareholder meeting Wednesday that he expects to increase significantly the number of robots used to fulfil customer orders.

There are currently about 1,000 robot workers on Amazon floors. The increase won't change the number of actual people employed, an Amazon spokeswoman said.

The robots are made by Kiva Systems, a company Amazon bought for $775 million two years ago.

They are tied into a complex grid that requires months of planning and testing. But once the system is in place, it can save time and cut down on fulfilment costs.

David Fuller's view 

You have probably heard the quip: Future warehouses and factories will only have two living inhabitants – a man and a dog.  The man will feed the dog and the dog will ensure that the man does not touch any of the machinery.  

The Markets Now 

On Monday 20th April at the East India Club, 16 St. James’s Square, London, SW1Y 4LH

David Fuller's view 

Here is the current brochure.  Guest speaker David Pinniger’s subject could not be more topical.  Iain Little suggested David Pinniger as a guest speaker and contributed this comment:

“I met David Pinniger at a recent investment forum here in Zurich.  I found that, despite David’s impressive academic and professional credentials, he was also able to communicate a complex subject –biotechnology - in a way that non-scientists like me could understand.  So he would be a logical “next step” after David Brown’s bravura presentation on The Third Industrial Revolution at the last Markets Now.”

Iain Little and I are looking forward to a lively evening with subscribers and their friends, including at the Club’s spacious American Bar following presentations.  

]]> Northland Capital Partners View on the City MotifBio, DJI Holdings and Botswana Diamonds Wed, 15 Apr 2015 08:20:00 +0100 Motif Bio plc (LON:MTFB) – CORP: FDA agreement to enter phase 3 trials

Market Cap: £19m; Current Price: 30p 

  • FDA agrees to proposed Phase 3 clinical development programme
  • Motif Bio announced today that the U.S. Food and Drug Administration (FDA) has agreed to the proposed Phase 3 clinical development programme for the Company's lead product candidate, iclaprim. 
  • The Phase 3 programme is designed to obtain marketing approval for an intravenous formulation of iclaprim in the treatment of acute bacterial skin and skin structure infections (ABSSSI) and hospital acquired bacterial pneumonia (HABP) caused by Gram positive pathogens, including resistant strains such as MRSA (methicillin-resistant Staphylococcus aureus) and MDRSP (multi-drug resistant Streptococcus pneumoniae). 
  • The FDA confirmed that two ABSSSI trials or one ABSSSI trial plus one HABP trial meeting their pre-specified primary endpoints are required for approval of iclaprim.  
  • Motif is working to determine the costs and timeline of these options. Assuming that funds can be raised or a partnership can be entered into, the first Phase 3 trial for ABSSSI is expected to commence in the second half of 2015.


DJI Holdings (LON:DJI): Trading statement

Market Cap: £76m; Current Price: 58p 

  • 4Q14 EBITDA materially lower 
  • Despite strong YoY revenue growth DJI expects EBITDA for the 4Q14 to be materially lower than anticipated on the back of delays in fee and bonus revenues in turn a result of the Chinese government’s temporary suspension of online lottery sales. Higher than anticipated commissions paid also had an impact on results and the result of all of this is that the company expects results for FY14 will be materially below market expectations.     
  • Subject to final audit but based on internal financial information, gross sales for FY14 were £642m compared to £22m in the prior year, revenue was £13.6m compared to £1.1m in the prior year and gross margin £7.2m compared to £1m in FY13 which shows significant improvement. Although the company expects to show a loss at EBITDA level for FY14, an improvement in the loss of between £5m and £5.5m is expected as a result of a profitable second half. 
  • Final results are due during early part of May 2015.  

NORTHLAND CAPITAL PARTNERS VIEW: The company has demonstrated significant improvement in sales and trading during FY14 unfortunately the temporary suspension has had a negative impact on progress. The share price has halved in the last 3 months mainly as a result of the news regarding the suspension. A lifting of the suspension in our view would be a significant positive catalyst for the share price especially given the progress the company showed in growing sales during FY14, despite an implied multiple of c. 5x FY14 revenue at the current price.   


Botswana Diamonds (LON:BOD): New licences

Market Cap: £2.2m; Current Price: 1.1p 

  • New licences in Central Botswana
  • Botswana Diamonds and joint venture partner Alrosa have been awarded thee licences (PL135/2015, PL136/2015, PL137/2015) through the subsidiary company Sunland Minerals.
  • The licences PL135/2015 and PL136/2015 were selected to verify magnetic and gravity anomalies and follow up if justified.
  • PL137/2015 contains Kimberlitic Indicator Minerals (KIMs) that suggest they have not travelled far from their source, justifying follow up exploration on this small licence area.
  • The partners plan to immediately undertake detailed geophysics and acquire mineral chemistry data with the aim of making rapid decisions regarding potential drilling.

NORTHLAND CAPITAL PARTNERS VIEW: Positive news for Botswana Diamonds as it and its joint venture partner, mining major Alrosa, increase their exploration footprint in Botswana. These licences appear to contain promising targets that the partners will rapidly investigate.

]]> Broker spotlight - BP, Tullow Oil, TUI, HSBC, JD Wetherspoon Tue, 14 Apr 2015 12:12:00 +0100

After crushing the mining sector on Monday, it was the turn of the oilers to get the wrath of Citi analysts today.

"In the pursuit of growth in recent years we think many companies have not left enough headroom to deal with a lower oil price environment,"  said analyst Michael Alsford.

He reckons the price of crude will not see a return to the triple-digit environment seen between 2010 and 2014 and most challenged in this position are the heavy oil players and big caps and those focused on liquefied natural gas (LNG).

In a note called “Survivors’ Party”, the US broker says investors should retool portfolios and strategies with prices under US$60 barrel, but adds prices should recover in 2016 and 2017.

US shale, Brazil, Kurdistan and Russia brownfield are areas, which show defensive growth characteristics and where investors should position themselves, reckons Alsford.

It downgrades oil giant BP (LON:BP.) to 'neutral' from 'buy' due to what it said were lower growth prospects and risks around its ongoing Gulf oil spill trial. 

It stayed 'neutral' on Shell (LON:RDSB) and reckons any value in its deal to by BG Group (LON:BG.) will come down to the success of a US$30 disposal programme earmarked from 2016.

Tullow (LON:TLW) got the top marks with an upgrade to 'buy' from 'neutral' and a higher share price target of 433p - lifted  from 406p.

Citi highlighted the quality and defensiveness of Tullow's portfolio.

"We believe the concerns around TLW’s balance sheet and timing of the TEN developments are more than discounted in current valuation with the shares trading below our core NAV of 354p," it noted.

Overall, despite the industry hoping for a quick rebound in prices, Citi said previous cycles show year one of an oil downturn ends with prices still 40% below their peak. 

Indeed, Citi’s base case expectation is for further oil price deterioration in Q2.

Away from oil, Japanese house Nomura topped up its price target for travel company TUI Group (LON:TUI)  to 1,386p from 1,344p and repeated a 'buy' call.

The broker is looking forward to capital markets day on May 13, which it will hold alongside posting first half numbers, as the firm has already announced EUR100mln of cost savings at the time of the merger.

"We now expect management will use this opportunity to outline longer-term strategic initiatives and a more detailed review of operating costs that may deliver a further EUR 131m synergies."

Elsewhere, bank HSBC (LON:HSBA) received a double downgrade from heavyweights Investec and Credit Suisse. Investec went to sell from hold, while Credit Suisse repeated an 'underperform' rating and moved the target to 580p from 610p.

Numis, meanwhile, turned sober on JD Wetherspoon (LON:JDW).

The broker dropped its 'neutral' stance on the pub group to a 'reduce' and cut its target price  to 680p from 800p.

Turning to the minnows, Mariana Resources (LON:MARL) has regained full control of the Ergama gold-copper prospect in Balikesir, western Turkey after Teck swapped its stake for a royalty interest, it emerged today.

Broker SP Angel said the firm was building its exploration portfolio in Turkey, and while Hot Maden currently takes priority, it seems likely that Ergama will eventually receive attention either as a company operated project or a joint-venture.

]]> Northland Capital Partners View on the City W Resources, Cyprotex, Colliers CRE, Mariana Resources and others Tue, 14 Apr 2015 08:17:00 +0100 Mariana Resources (LON:MAR) – CORP: Ergama update

Market Cap: £21m; Current Price: 2.8p 

Mariana gains 100% ownership of the Ergama project


  • Teck Resources has terminated its back-in right at the Ergama gold-copper project, located in western Turkey. As a result, Mariana will regain 100% of the project with Teck retaining a 2% NSR.


NORTHLAND CAPITAL PARTNERS VIEW: The termination of Teck Resources back-in right for the Ergama gold-copper project is a positive development for Mariana Resources giving it 100% ownership of a project that contains epithermal gold mineralisation and has the potential for porphyry copper mineralisation. Teck is focused on Tier 1 projects but a non-Tier 1 discovery for Mariana would be commercially significant. In our view, the project remains prospective with defined epithermal gold mineralisation along with large geochemical and geophysical anomalies that could potentially be buried porphyritic intrusions that have not been drill tested to date. Mariana now has some flexibility on how it advances the project and could look to joint venture the project or advance it by itself.


W Resources (LON:WRES) – BUY*: Corporate update

Market Cap: £9.7m; Current Price: 0.3p 


  • From yesterday: Bergen fully rapid
  • W Resources has fully repaid the US$800,000 Bergen convertible note.
  • Company is now in a stronger financial position with its BBVA €225,000 finance facility, recently received €200,000 VAT refund and a pending VAT refund of €500,000.
  • W Resources is now focused on securing US$15-20m required for the development of the La Parrilla Fast Track Mine, targeting first production in 2016. These funds could take the form of debt or equity at the asset level.
  • Forecasts and price target under review. BUY rating maintained.
  • NORTHLAND CAPITAL PARTNERS VIEW: The removal of the Bergen facility is an important step forward for W Resources eliminating what was a significant overhang in the Company’s shares. The Company is now looking to secure US$15-20m at the asset level to put the La Parrilla Fast Track Mine into production in 2016 which would see a major increase in production from current operations.
  • Alternative Networks (LON:AN.) – H1 update
  • Market Cap: £224m; Current Price: 462p 
  • H1 trading robust; FY expected to be in line
  •  2.3m and dividend of £4.6m. Reiterates commitment ≥10% DPS growth progressing towards 15% target.
  • Strong performance in Advanced Solutions with growth in reported revenues (≥10%) and orders signed (+15%); cross selling remains a focus and 43 such contracts signed with a further 250 opportunities being evaluated. Order backlog increased substantially reflecting new order growth and larger customer wins. As a result, higher H2 revenue and profit weighting. Good wins in the Service Provider vertical. 
  • ontrolCircle performance satisfactory with trading impacted by two clients putting new business on hold pending internal strategic reviews. New business (excluding these clients) +4% and pipeline worth £30m in GM. Intercept IT performed well with double digit revenue growth and improved margins. Integration should be completed by the end of the year with five London offices reduced to two.
  •  Mobile Network Services - further gains in market share in Mobile with 11% increase in subscriber base – ahead of expectations. Division is expected to contribute c. 30% of group revenue with c. 4,000 net additional connections (to 95k). Increased data usage has largely offset declining voice and tariff erosion. Reported revenue expected to be flat and up c. 9% on an underlying basis. Gross profit ≥10%.
  • Fixed Line Network Services – continues to shrink and will represent <20% group revenue. Line rental continues to decrease with the shift to SIP (part of Advanced Solutions) – 2,800 channels added in H1 (+30%).


NORTHLAND CAPITAL PARTNERS VIEW: Solid trading update with good performances in the Advanced Solutions and Mobile divisions and managed decline in Fixed Line. The growth in the order backlog in Advanced Solutions is encouraging as the company secures larger contracts but this does introduce some potential revenue timing risk. Company continues to throw off cash and management is targeting at least a £10m reduction in net debt in H2 whilst reiterating its commitment to a progressive dividend policy. Shares have been a little weak in 2015 (down 11%) and are now trading on 14.4x FY15 and 13.1x FY16 consensus EPS.


Cyprotex plc (LON:CRX) Launch of new service

Market Cap: £12.7m; Current Price: 56.5p 


  • Launch of new in-vitro cardiotoxicity assay service
  • Cyprotex announced the launch of a new in vitro service to identify potential cardiotoxic liabilities of pharmaceuticals. 
  • The service combines 3D cell culture methods and confocal high content imaging technology. The 3D microtissues are formed from a co-culture of 3 different types of cardiac cells present in the heart. Using this method, the cells are able to beat spontaneously in a similar manner to a human heart.
  • The new 3D microtissue model is able to accurately identify drugs in early development which cause structural damage to the heart. 


The service is complementary to the group’s other cardiotoxicity assays such as eCiphrCardio which evaluates changes in electrical activity in the heart—which may lead to cardiac arrhythmia. 

NORTHLAND CAPITAL PARTNERS VIEW: Drug induced cardiovascular toxicity is the leading cause of attrition during drug development. By combining various state of the art techniques, Cyprotex is able to capture a wide range of cardiotoxic liabilities. As such, the group continues to expand its service offering into high value specialist areas. 


Connemara Mining Company (LON:COL): New licences
Market Cap: £0.3m; Current Price: 0.6p 


  • Acquires five new prospecting licences in County Donegal
  • Connemara Mining Corporation has acquired five new prospecting licences covering 187sq km of the Innisowen peninsula in County Donegal, Ireland. This area contains the historic Glentougher Lead-Silver Mine.


NORTHLAND CAPITAL PARTNERS VIEW: Connemara Mining Corporation believes the five prospecting licences recently acquired could contain high grade gold and base metal mineralisation. The previous licence holder defined grades up to 104g/t Au in 2011, and the results of a Tellus Survey confirm the presence of anomalous gold in the area highlighting additional target areas for further work. To date the Company has defined sixteen targets for further work and an initial prospecting programme is due to commence shortly with first results in July.

]]> Iran Deal Can Open the Way to Trade and Peace Tue, 14 Apr 2015 08:04:00 +0100 Iran Deal Can Open the Way to Trade and Peace 

Here is a section from this informative article by Liam Halligan for The Telegraph: The notion of a Western rapprochement with Tehran has been in play since mid-2013, when Hassan Rouhani replaced Mahmoud Ahmedinejad as president. At a stroke, instead of a firebrand religious hardliner, Iran was represented by a seemingly moderate cleric, English-speaking and with a doctorate in law from a British university.

Within months of taking office, Rouhani was at Davos, Alpine hob-nobbing with the best of them, doing his bit to charm the Western and West-leaning global elite.

“Our country has never sought, nor seeks, anything other than peaceful technology,” he opined in early 2014, securing not only the start of this latest thaw in Iranian-US relations, but also an interim agreement to access much-needed foreign exchange reserves. “Iran is open for business,” Rouhani has said, at a string of international summits since, using a near identical text each time.

“Come and visit us and see the investment opportunities for yourselves.” Over the last 18 months, the Iranian president has consistently argued that his country, “within the next three decades, could become a top-10 global economy”. Funnily enough, he is right.

In 2012, the year before Rouhani took office, Iranian GDP shrank by over 5pc, the economy gripped by sanctions and enduring its worst financial crisis for at least two decades. Since then, growth has returned, in part because sanctions have slightly eased. Independent Western analysts now estimate 2014 GDP at around $450bn (£304bn), placing Iran comfortably among the world’s 30 largest economies – ahead of both Austria and Taiwan.

But this country is still massively under-achieving. Along with its natural commodities, Iran also boasts a highly-skilled, near-universally literate population, with a vigorous median age of just 28. Its numerous universities, while far from gender-friendly, have long-produced a steady stream of well-qualified scientists and engineers.

In the mid-1950s, real per capita GDP was just four-fifths that of Turkey, Iran’s ancient rival. Over the 20 years that followed, free trade and economic dynamism meant growth was strong, with GDP per head soaring to more than two-and-a-half times that of Turkey.

Then came Ayatollah Khomeini’s 1979 revolution, with its theocratic clampdown on enterprise, which sent the economy spiralling downward.

As such, Iran missed the emerging markets revolution that, from the 1980s onwards, ignited the rapid expansion of economies like China, India and Turkey.

Iranians are now, once again, much poorer than their Turkish neighbours. Rouhani has pledged to reverse that, stating repeatedly that he wants to “join the rest of the global economy”, positioning Iran as, potentially “the most exciting emerging market on earth”.

David Fuller's view 

Using history as our guide, we know that it can take just one key leader to either make or break a country’s fortunes for many years.  This is especially true in non-democratic societies where there is no orderly mechanism for removing the unreliable.

President Hassan Rouhani of Iran is an interesting case in point, who replaced the deeply unpopular and aggressively hostile Mahmoud Ahmedinejad in mid-2013.  A smiling, English speaking and apparently mild mannered cleric with a law degree from a British University, he has been a likely candidate for negotiations, although he is not the Supreme Leader.  That is 75 year old Ali Khamenei, who succeeded Ruhollah Khomeini in 1989. 

This item continues in the Subscribers’ Area.

7 Robots too Expansive (or Lethal) to Own 

My thanks to a subscriber for the link to this fascinating site. 

David Fuller's view 

Businesses and government agencies will be using most of these increasingly sophisticated robots, which are now being developed at an exponential rate.  Yesterday’s science fiction is becoming today’s reality.


GE Pivot From Finance Sets Up Immelt for Industrial Deals 

Here is the opening of this informative report from Bloomberg: Jeffrey Immelt, poised for the biggest restructuring push on his watch at General Electric Co., is plotting acquisitions to complement an industrial portfolio spanning jet engines to locomotives to oilfield equipment.

With GE planning to sell the bulk of the GE Capital unit, Immelt said he will spend as much as $5 billion a year to expand the manufacturing units. GE’s chief executive officer is getting a start on building up cash for purchases and stock buybacks with a $26.5 billion plan to dispose of real estate assets.

“We’re always looking for ways to grow our industrial businesses,” Immelt said Friday in a telephone interview. “We’ve got so many investment opportunities in the businesses we’re in today -- oil and gas and healthcare and aviation.”

The decision to unload most of GE Capital breaks with Immelt’s incremental pace of dispositions to wean GE from the unit that destabilized the parent company during the 2008-09 financial crisis. Shrinking GE Capital may let it escape designation as a systemically important financial institution, and GE said it’s working with federal regulators.

“The timing was very good to be a seller of financial service assets,” said Immelt, 59, who has been CEO since 2001. “You’ve got slow growth, you’ve got low interest rates, you’ve got lots of liquidity, you’ve got search for yield. We said, ‘This is a great environment.’”

David Fuller's view 

Selling off GE’s financial sector will reduce earnings revenue but this can be at least partially offset by share buybacks. 

This item continues in the Subscribers’ Area.  


My personal portfolio 

Increasing a position

David Fuller's view 

Details and a chart are in the Subscribers’ Area.  


Saudi Arabia Plan to Extend the Age of Oil 

This is an interesting article on Saudi efforts to slow the switch away from oil. 

David Fuller's view 

It is reasonable to assume that the world will still be consuming plenty of crude oil in 20 to 30 years’ time, despite renewables and climate change concerns.  However, the Saudi gamble is that low prices can curb both global oil and renewables production sufficiently to keep prices reasonably high. 

It may work for a few years but cannot reverse technological progress which ensures cheaper production costs for all forms of energy, whether fossil fuels or renewables over the longer term. 

This item continues in the Subscribers’ Area.


The Markets Now 

On Monday 20th April at the East India Club, 16 St. James’s Square, London, SW1Y 4LH

David Fuller's view 

Here is the current brochure.  Guest speaker David Pinniger’s subject could not be more topical.  Iain Little suggested David Pinniger as a guest speaker and contributed this comment:

“I met David Pinniger at a recent investment forum here in Zurich.  I found that, despite David’s impressive academic and professional credentials, he was also able to communicate a complex subject –biotechnology - in a way that non-scientists like me could understand.  So he would be a logical “next step” after David Brown’s bravura presentation on The Third Industrial Revolution at the last Markets Now.”

Iain Little and I are looking forward to a lively evening with subscribers and their friends, including at the Club’s spacious American Bar following presentations.  


]]> Broker spotlight - BHP Billiton, Vedanta, Rio Tinto, Pearson, Virgin Money Mon, 13 Apr 2015 08:07:00 +0100 Citi got the red pen out and scrapped its 'buy' rating on iron ore heavy major BHP Billiton (LON:BLT) this morning in a bearish note on the miners.

The research entitled ‘End of the Iron Age’, predicts iron ore prices to now average US$45/t in 2015 and sinking further to US$40/t in 2016.

As a result, analysts at the US bank moved their sector stance down to 'neutral' from 'bullish.

"We think the self-help, cost cutting and improving capital structure catalysts have played out and the sector is increasingly more vulnerable to lower commodity prices and macro conditions, in particular a strengthening US$, slowing Chinese economy and Citi’s view of continued oversupply in the bulk commodities."

It sees a  tough one- two years ahead for the sector.

On BHP, Citi is now 'neutral' and has a target price of £15.50 per share, down from its previous £18.

“The reduction in our target price and the change to our recommendation are largely driven by the iron ore price downgrade,” it said, adding that other commodity prices have also been lowered, including coking coal.

Citi has also moved to 'neutral' on  BHP, Glencore and Rio Tinto, and downgraded to 'sell' recommendation on Anglo American and Vedanta. 

"We also downgrade Gem Diamonds and Lonmin to Neutral," it told the note to clients.

Elsewhere, Jefferies took a look at publishers Pearson and Reed Elsevier (LON:REL) but takes a considerably different view of both. 

On the latter, the broker upped its target price to 1060p per share from 884p, keeping its 'hold' rating.

Analyst David Reynolds said Reed appeared to "have constructed something of a 'dull but reliable' reputation in recent years, something of a turnaround for the REL of the noughties... And while we remain holders, in many ways REL seems to be navigating the digital challenge more ably than PSON."

Pearson (LON:PSON), meanwhile, the owner of the Financial Times, was cut to 'underperform' from 'buy' and had its share price cut by 50p to 1184p. 

It says the share price has risen to a "lofty multiple" and the broker believes that the major restructuring may prove to be simpler than the firm delivering in what is now a "digital world".

"We see real digital advances beginning to emerge as tablet, iTunes U and Google Apps for Education deliver real utility. Top educators now seek to publish 'text books' for free; execution risks are rising," it said.

Meanwhile there’s much to like about Virgin Money (LON:VM) , according to analysts at German bank Berenberg who have initiated a 'hold' rating on the challenger bank with a 400p price target. The currrent price is 418.30p.

It reckons the stock should prove a "relative winner" in the sector, on which the broker generally is negative.

“While UK mortgage growth remains subdued, intermediaries are gaining market share, a result of regulation that incentivises third-party distribution. 

“An established intermediary offering means Virgin Money is well placed to take advantage of this structural trend.”

In small caps, Richland Resources (LON:RLD) has started pre-production work at its Capricorn sapphire project in Queensland.

Samples run through a pilot plant have recovered sapphires and work is underway to finalise the pit design, layout and mining plan.

Charlie Long, analyst at broker Sanlam, said the Capricorn mine was potentially the largest sapphire mine in the world. 

“Previous owners did not brand the mine’s product, so Richland will be the first company to promote Australian sapphires in a significant way,” he said.

“Given the potential volumes of the mine, Richland is entering a transformational period.”

]]> Northland Capital Partners View on the City Galasys, Stratmin Global Resources, ReNeuron and Alexander Mining Mon, 13 Apr 2015 08:02:00 +0100 TechFinancials Inc. (LON:TECH) – CORP

Market Cap: £26m; Current Price: 37.5p


  • Entry into US market through Cantor Exchange
  • TechFinancials Inc. (TECH.L) this morning announced that it has established itself in the regulated US binary options market as an independent software vendor (ISV) for liquidity providers on the Cantor Exchange (owned by Cantor Fitzgerald). We believe Cantor Exchange is one of only three regulated retail-focused binary options exchanges in the US market licensed by the Commodities Futures Trading Commission (CFTC) that can offer binary options to citizens in the US. 
  • TECH went live on the exchange on 23 March 2015 following a six month software testing and integration period with Cantor Exchange. As a result of TECH’s efficient pricing engine, it led to a successful first day of trading where significant volumes were traded on the exchange. 
  • TECH has also entered into discussions with Introducing Brokers (IB’s) to use the TECH software on a B2B basis as an integrated solution with Cantor Exchange. This will enable retail traders in the US to access binary options products through a preferred broker on the Cantor Exchange using TECH software and ensuring maximal utilisation of the TECH software platform in the US.
  • In addition to trading binary options on FX pairs, Cantor Exchange has also started offering gold binary contracts (as at 30 March 2015) at which point TECH started offering prices on gold on the Cantor exchange. The new product development should help drive additional volume into the exchange. 
  • As outlined by the Directors in the company’s admission document at time of listing in mid-March, entry into the US market represents one of the key strategic objectives of penetrating new regulated markets with high growth potential. Exposure to the regulated US market represents a new growth market for the business and its licensees which is an important phase in the company’s development. 



Thor Mining (LON:THR) – CORP Appointment of Broker

Market Cap: £2.1m; Current Price: 0.07p


  • Thor appoints Northland Capital Partners as Broker.


NORTHLAND CAPITAL PARTNERS VIEW: Thor Mining is a tungsten focused development company with projects in Australia and Nevada. Its principal asset is the Molyhil tungsten-molybdenum project that has JORC compliant mineral resource estimate of 4.7mt at a grade of 0.28% WO3 and 0.13% Mo. In January, Thor completed at definitive feasibility study of the project that had a post-tax IRR of 44% and a capex of A$70m with a mine life of six years. The project would produce around 130,000mtu of tungsten within a concentrate at a C1 cash cost of US$112/mtu. The Company’s other tungsten project is the Pilot Mountain project that has a JORC compliant mineral resource estimate of 6.8mt at a grade of 0.31% WO3 and 0.17% Cu.

Alexander Mining (LON:AXM) – BUY*: FY14 results

Market Cap: £1.8m; Current Price: 0.6p; Target Price: 2.6p

  • From Friday: Results in line with forecast
  • Revenue for FY14 was up to £0.51m compared to £0.03m in FY13, but just under our forecasts of £0.56m.
  • LBT for FY14 was down to £0.78m from £1.37m in FY13, just above our forecasts of £0.74m 
  • Net debt of £0.32m in FY14 compared with net cash of £0.11m, in line with our forecasts of £0.31m.

NORTHLAND CAPITAL PARTNERS VIEW: The 2014 final results for Alexander Mining were largely in line with our expectations. 2014 was a challenging year for the Company with a number of potential commercial realisation routes not progressing as hoped. Significantly the Company’s HoA agreement with Compass Resources Ltd. is progressing towards a definitive agreement that would see the AmmLeach® technology used at the Browns Oxide Copper-Cobalt-Nickel mine, located in Australia. 


StratMin Global Resources (LON:STGR) – BUY*: March update

Market Cap: £6.8m; Current Price: 4.5p; Target Price: 13.1p

  • Production lower than expected due to reduced drying capacity
  • Commissioning issues resulted in reduced drying capacity and as a result production for March was lower than expected at 130t.
  • 215t were sold in March.
  • StratMin will move to reporting production on a quarterly basis.
  • The new mill has been installed and limited tests have been completed. Development of the mill is ongoing with the plant flow sheet near to reaching increased grades.
  • The new screen has been installed and drying and screening are now a continuous cycle.
  • Forecasts downgraded. No change to rating and price target.

NORTHLAND CAPITAL PARTNERS VIEW: Issues with the commissioning of the drying plant has meant that production in March is behind our expectations. As a result, we have downgraded our production forecasts to 2,713t in 2015 from 2,883t previously. This has no material effect on our price target.


ReNeuron Group plc (LON:RENE) Application to commence third clinical trial

Market Cap: £63m; Current Price: 3.5p

  • Application to commence Phase I/II clinical trial for a blindness-causing disease
  • ReNeuron announced that it has filed an Investigational New Drug (IND) application with the US FDA to commence a Phase I/II clinical trial with its human Retinal Progenitor Cell (hRPC) therapy candidate for retinitis pigmentosa (RP).  RP is a group of hereditary diseases of the eye that lead to progressive loss of sight due to cells in the retina becoming damaged and eventually dying.
  • Pre-clinical studies carried out in disease models by ReNeuron’s academic collaborators have demonstrated that, when transplanted into the retina, the progenitor cells have the potential to preserve existing photoreceptors, potentially reducing or halting further deterioration of vision. In addition, the progenitor cells have been shown to mature into functional photoreceptors that engraft into the photoreceptor layer, bringing the possibility of restored vision. 
  • Subject to regulatory and local ethics approvals, ReNeuron expects to be able to commence the clinical trial in the second half of this year.  

NORTHLAND CAPITAL PARTNERS VIEW: Once approved and commenced, the proposed Phase I/II clinical trial in RP patients will be ReNeuron's third clinical study ongoing with cell therapy candidates. Moreover, this proposed study would bring a second cell line into the clinic for ReNeuron. Currently, ReNeuron is conducting a Phase II clinical trial in stroke and a Phase I clinical trial in critical limb ischaemia using the group’s flagship CTX cell line. Like CTX, the hRPC cell line could provide a platform for the treatment of several new indications, over and above RP.


Galasys (LON:GLS) – Prelims

Market Cap: £15.0m; Current Price: 22.5p

  • Strong set of results; maiden dividend and progressive policy
  • Pro forma revenue +45% to RM38.6m; gross profit +83%to RM19.5m; EBITDA +48% to RM12.6m; PBT +35% to RM11.3m and EPS of RM0.16 (2.9p). Cash (including net IPO proceeds of RM12.2m) +RM110m to RM12.2m. Recommended maiden final dividend of 0.2p and committed to a progressive dividend policy.
  • 46 new installed sites since IPO roadshow in April with new clients including Dahlian Wanda in China and Enchanted Kingdom in the Philippines. Extended sales network and channels into the Philippines, Indonesia, Vietnam and the UK. Launched Cloud Online Travel Agency (CLOTA) platform for theme park ticketing and Galasys GLT (formerly Green Laser Technology) integrated into group and performing ahead of expectations – will look at further M&A. 
  • Successful introduction of Ticketing IT Outsourcing (TiTo) model has enabled the company to secure more clients of different sizes. A number of TiTo engagements have delivered significantly higher gross margins. Will use this model to penetrate further into different segments of the ticketing industry. Looking to shift revenue model from project based to one that correlates more directly with the number of visitors.

NORTHLAND CAPITAL PARTNERS VIEW: Strong set of maiden prelims with a good number of new contract wins including two theme park projects with the Dahlian Wanda Group. The company is also having success in diversifying its customer base across the wider leisure and entertainment industry and moving its product set into online and mobile market segments. This investment is reflected in a more than doubling of capitalised R&D to RM4.1m (£0.8m). Shares have performed better over the last quarter and have returned to last May’s IPO price but on a FY15 consensus PER of 7.0x, Galasys trades at a considerable discount to accesso Technology (ACSO.L), the most obvious listed peer.