11th Jul 2024. 8.59am
Regency View:
Update
Regency View:
Update
Argentex reports in-line trading update
Argentex (AGFX) released an in-line trading update on Tuesday, indicating that their performance for the first half of 2024 has met market expectations.
The currency exchange company reported expected revenues of approximately £23.9 million for H1 2024, a slight decrease from the £25 million reported in the same period last year. Despite challenging market conditions in their core FX business during the early part of 2024, trading showed positive momentum in the second quarter.
Key developments include the appointment of Guy Rudolph as the permanent Chief Financial Officer, who had been serving in an interim capacity since January 2024. This solidifies the leadership team as the company focuses on turning around its recent fortunes.
Argentex said significant progress was made in the development of their Alternative Banking (ATB) division. International expansion efforts have also seen success, with the company obtaining an Australian Financial Services Licence (AFSL) to serve wholesale clients in Australia. Additionally, progress is being made towards securing a regulatory licence in Dubai, which will further support Argentex’s global growth strategy.
The CEO, Jim Ormonde, emphasised the Group’s transformation towards becoming a leading provider of Alternative Banking solutions, complementing their currency risk management expertise.
AGFX Daily Candle Chart
CML Microsystems drop following profit decline
CML Microsystems’ (CML) share price dropped last week after the company released its full-year results for the year ended 31st March 2024.
Despite reporting an 11% increase in revenues to £22.89 million, the market reacted negatively due to a decline in profitability. Profit from operations fell to £1.94 million from £2.93 million (pre-exceptional profit from the sale of excess land) in the previous year. This decrease was attributed to several factors, including ongoing macroeconomic headwinds and overstocked inventory levels among some customers, which subdued profitability.
The company also reported a reduction in cash balances to £18.21 million, down from £22.26 million the previous year, following a share buyback, dividend payments, and capital expenditure investments. Additionally, profit before taxation decreased to £2.52 million from £3.16 million (excluding exceptional items) in FY23.
Operational highlights included the acquisition of Microwave Technology, which expanded CML’s portfolio and positively contributed to revenue. However, the overall impact of market conditions and customer inventory levels created a mixed demand environment, influencing investor sentiment and leading to a decline in the share price.
CML Daily Candle Chart
Next 15 hit by client spending delays
Next 15’s (NFG) share price took a tumble last week following their AGM trading update…
The update indicated resilient trading conditions for the four-month period ended 31 May 2024. However, the market reacted negatively due to small declines in certain segments of the business. These declines were partly attributed to delayed client spending, particularly concerning government contracts in a period of political uncertainty.
In addition to client spending delays, soft spending across the Group’s technology clients also contributed to investor concerns. Despite these challenges, management remains optimistic about the second half of the year, historically stronger for revenues. They anticipate that full-year profits will meet expectations, reflecting the Group’s resilient performance in a tough macroeconomic environment.
Despite the share price drop, Next 15 maintains a strong balance sheet and expects to be broadly cash neutral by year-end. Next 15 said it continues to prioritise organic investment while also considering selective mergers and acquisitions. Strategic options for returning excess cash to shareholders, including the current share buyback program, are under evaluation by the Board.
NFG Daily Candle Chart
Labour’s oil policies send Serica shares lower amid regulatory uncertainty
The announcement of Sir Keir Starmer as the new Prime Minister and his Labour Party’s proposed policies regarding the oil and gas sector have had a negative impact on Serica Energy’s (SQZ) share price.
Since the UK general election was called, Serica’s shares have dropped by more than 20%. This sharp decline reflects investor concerns over the potential ramifications of Labour’s plans, which include increasing taxes on the oil industry and halting new exploration licenses in the North Sea.
Serica, along with partners Jersey Oil & Gas and Neo Energy, recently decided to delay the planned commencement of oil production at the Buchan oilfield. This decision was explicitly linked to the unexpectedly early election timing, indicating the companies’ apprehension about regulatory uncertainties under a new government.
Despite these challenges, Serica Energy maintains fundamental strengths such as consistent production levels, a history of delivering earnings growth, and a debt-free balance sheet. These factors underscore the company’s operational resilience and potential attractiveness to value-oriented investors looking for stable long-term investments.
SQZ Daily Candle Chart
Supreme surge on strong results and strategic expansion
Supreme’s (SUP) share price has rallied higher in recent weeks, driven by the market’s enthusiastic response to the company’s robust Final Results for the year ended 31 March 2024.
The vape company’s financial performance exceeded expectations across several key metrics, propelling investor confidence. Revenue surged by 42% to £221.2 million, demonstrating strong top-line growth across all business divisions. This substantial increase was complemented by a 96% rise in adjusted earnings (EBITDA) to £38.1 million, underscoring Supreme’s enhanced profitability and operational efficiency.
Investors were particularly encouraged by the expansion of Supreme’s gross profit margin to 29%, up from 26% in the previous year. This improvement reflects effective cost management strategies and operational enhancements within the company, reinforcing its competitive position in the market.
Furthermore, Supreme demonstrated robust cash generation capabilities, generating £27.1 million in cash from operations during the fiscal year. The company ended the period with an adjusted net cash position of £11.6 million, marking a significant increase from previous levels and highlighting its strengthened financial flexibility.
SUP Daily Candle Chart
Water Intelligence expands EU presence with acquisition of Feakle Gas and Plumbing
Water Intelligence (WATR) recently announced the acquisition of Feakle Gas and Plumbing Limited (FG&P). This strategic move aims to bolster Water Intelligence’s presence in Ireland and expand its capabilities across municipal, commercial, and residential water and wastewater solutions in the EU market.
The acquisition, valued at €2.32 million in cash, includes an initial payment of €500,000 with additional annual payments over four years contingent on FG&P achieving minimum operating profit targets and additional sales milestones. FG&P reported €3.7 million in sales and €550,000 in adjusted operating profits for 2023, forming the basis for the earnout structure.
Water Intelligence sees substantial growth opportunities in Ireland, driven by EU directives requiring significant investment in water and sanitation infrastructure. Water Intelligence said the acquisition aligns with the Group’s strategy to capitalise on the €476 billion forecasted expenditure in water and wastewater infrastructure from 2024 to 2030 across Europe.
Dr. Patrick DeSouza, Executive Chairman of Water Intelligence, emphasised the strategic fit of FG&P with the Group’s expansion plans in Europe. He highlighted the proximity of FG&P to existing operations in the UK, facilitating seamless support and collaboration.
WATR Daily Candle Chart
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