5th Apr 2023. 9.00am

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Regency View:


Qinetiq wins night vision contract with US Army

Defence tech giant, Qinetiq (QQ.) announced last week that it has won a contract with the US army to develop night vision goggles.

The deal, worth $92.6m over four years will help the US Army develop is Digital Night Vision Technology (DNVT).

DNVT is used to support soldiers with situational awareness making use of enhancements such as fused imagers, processing hardware and algorithms.

QinetiQ US CEO, Shawn Purvis said the technology “will better enable soldiers to view and understand information in tactical environments allowing them to react and respond to real-time data”.

The deal is small in relation to Qinetiq’s £1.5bn estimated 2023 revenue, but underlines the company’s position as a global defence tech leader.

On the price chart, the shares are bouncing from a key level of support at 320p and we are targeting a retest of trend highs by year end.

QQ. Daily Candle Chart

QQ. Daily Candle Chart

Halma Buys FirePro for €150m

Halma (HLMA) has added to its portfolio of fire detection and suppression solutions with the purchase of FirePro.

FirePro is a designer and manufacturer of aerosol-based fire suppression systems. Its systems use non-pressurised condensed aerosol technology to extinguish fires without causing damage to the environment.

Halma have paid €150m for FirePro on a cash and debt-free basis. FirePro’s unaudited revenue for the 12 months to 31 December 2022 was €23.3m, with Return on Sales more than double Halma’s target range of 18-22%.

Commenting on the deal, Halma CEO, Andrew Williams said:

“There are strong opportunities for growth in its existing market niches, driven by higher regulatory standards, and the adoption of new technologies for renewable energy are creating new opportunities for growth”.

It’s early days for our position in Halma, but so far so good with the stock showing decent levels of relative strength in recent weeks.

HLMA Daily Candle Chart

HLMA Daily Candle Chart

Teck Resources reject hostile approach by Glencore

Glencore’s (GLEN) “opportunistic” bid to buy Canada’s Teck Resources has been rejected.

Glencore offered to buy Teck in an all-share transaction, for a 20% premium to its share price on March 26 when Teck’s closing market cap stood at C$25bn ($19bn).

The proposed deal would have seen Glencore spin out the combined company’s coal and energy transition businesses to create “two global standalone giants” according to Glencore CEO Gary Nagle.

Under the proposal, Glencore and Teck’s combined coal business would be called ‘CoalCo’, and its combined new metals operation would be the world’s third largest copper producer, provisionally called ‘Glenteck’.

Mr Nagle said that synergies of $4.25bn-$5.25bn across marketing and operations would allow the two new companies to gain about $15bn in additional market cap as a result of the transaction.

Whilst the deal has been rejected it offers some insight into how Glencore plan to manage their transition towards non-coal assets.

GLEN Daily Candle Chart

GLEN Daily Candle Chart

HSBC defend SVB UK deal to fractious Hong Kong shareholders

HSBC (HSBA) Chair Mark Tucker has been forced to defend the purchase of Silicon Valley Bank’s (SVB) UK business at an annual meeting with shareholders in Hong Kong.

“We paid one pound, one pound for this company” said Mr Tucker, “this was too good an opportunity to turn down” he added.

The comments followed concerns that HSBC were once again acting in a UK-centric way and that the deal was rushed.  

Mr Tucker said HSBC’s due diligence had found “there were no fundamental issues” with SVB’s UK business.

HSBC is under pressure from Hong Kong shareholders to spin out its Asian business and increase shareholder distributions.

The shares were hit hard in a sector-wide sell-off last month, but recent price action has seen prices stabilise and rally from a key area of support (see chart below).

HSBA Daily Candle Chart

HSBA Daily Candle Chart


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