Today's edition features:
• Thor Mining (LON:THR)
• Speedy Hire (LON:SDY)
Markets
Europe
The FTSE-100 finished yesterday's session 0.30% higher at 7,275.25 whilst the FTSE AIM All-Share index was unchanged at 994.33. In continental Europe, the CAC-40 finished 0.16% higher at 5,237.44 whilst the DAX was up 0.02% at 12,561.79.
Wall Street
In New York last night, the Dow Jones rose 0.18% to stand at 22,370.80, the S&P-500 added 0.11% to finish at 2,506.65 and the tech-focussed Nasdaq was 0.1% higher at 6,461.32.
Asia
In Asian markets this morning, the Hang Seng was recently up 0.22% at 28,114.46, while the Nikkei 225 was broadly unchanged at 20,302.40.
Oil
In early trade today, WTI crude oil was 0.63% higher at $49.79 per barrel and Brent was up 0.38% at $55.35 per barrel.
Headlines
Tata and ThyssenKrupp seal steel deal
Indian conglomerate Tata's European steel business has agreed the first stage of a joint venture with German steel manufacturer ThyssenKrupp. The tie-up will lead to job losses, to be shared between the two companies. The deal would create Europe's second-largest steel group, after ArcelorMittal. The two companies have been in negotiations since last year, when Tata scrapped plans to sell off its UK operations. The two partners expect the move will require a reduction in workforce of about 4,000 jobs, with half coming from administration and half from production. The job losses will be shared evenly between the two companies. In a statement, the chief executive of ThyssenKrupp, Heinrich Hiesinger, said the two companies needed to consolidate and become more efficient because of increasing pressure from imports and an overcapacity within the industry. "We will not be putting any measures into effect in the joint venture that we would not have had to adopt on our own," he said. Roy Rickhuss, chair of the National Trade Union Steel Co-ordinating Committee, said: "The steel trade unions cautiously welcome this news and recognise the industrial logic of such a partnership.
Source: BBC News
Company news
Concepta (LON:CPT, 10.75p) – Speculative Buy
Concepta, the pioneering UK healthcare company and developer of a proprietary platform and suite of products targeted at the personalised mobile health market with a primary focus on women's fertility and specifically unexplained infertility, yesterday announced its interim results for the 6 months ended 30 June 2017 ('H1 FY2017'). During the period, the Group continue to progress its myLotus fertility product towards market launch in China and Europe. Operational highlights included; 1) signing of first distributor agreement in China with Beijing ThinkBrio Medical Technology Consulting Co Ltd ('ThinkBrio'), 2) first myLotus sales order from HuanZhong Biotech Co Ltd ('HZ Biotech') worth £225,000 and subsequent first shipment of myLotus products from UK to China, 3) obtained ISO13485 accreditation for myLotus for commercial launch in UK and Europe, and 4) signing of technology transfer agreement with Selective Antibodies to develop stress test for myLotus fertility product. The Group has also appointed Mr Neil Mesher as Non Executive Director and Ms Zhang Zhi Gang as Head of China Operations. Mr Mesher is CEO of Philips UK and Ireland, while Ms Zhang was one of the founders of Concepta Diagnostics Limited who led the way in developing key contacts in China for manufacturing and distribution. The Group recorded a loss for the period of £1,083,905 (H1 FY2016 £414,589), leading to basic and diluted loss per share of 1.0p (H1 FY2016: 1.0p). Cash balance at the period-end stood at £1,234,974 (H1 FY2016: £341,249).
Our View: Concepta has made good operational progress during the period, moving from lab prepared product into ISO13485 accredited new production facilities in Doncaster, UK, which is expected to be fully operational by the end of 2017. Meanwhile, the receipt of first sales order worth £225,000 was encouraging and production of this has been facilitated in Colworth site where the first test strips for myLotus has already been shipped to China. Looking ahead, the primary focus of the Group is the launch of myLotus in China by the end of this year and Europe by the first half of FY2018. In preparation to this, with the progress being made in the H1 FY2017, the Group expect to complete both the fit out of new Doncaster facility and achieving CE marking accreditation by the end of FY2017. To put Concepta's opportunities into perspective, the Chinese market potential has been estimates to be worth around £250m, while the larger European opportunity is around £350m. Indeed, the total global opportunity addressed by Concepta's current product offering is estimated to be worth as much as US$2 billion. Beside this, the Group also runs a trial to extend the use of the myLotus products into early pregnancy monitoring in China, and the development of new products including stress test (utilising the resources of Selective Antibodies) to complement myLotus range. With respect to the previously announced delays in new Doncaster facility and slower than expected changes to the Chinese regulatory framework on health apps which necessitated additional development work, the Group has confirmed that the issues have been dealt with post the period and have seen a "significant increase" in enquiries from various new potential distributors in China. Recognising the value already created and the scale of the opportunity, Beaufort retains its Speculative Buy rating on the shares with a target price of 22p.
Beaufort Securities acts as corporate broker to Concepta Plc
MySQUAR Limited (LON:MYSQ, 3.38p) – Speculative Buy
The Myanmar-language social media, entertainment and payments platform whose principal activity is to design, develop and commercialise Myanmar-focused internet-based mobile applications, yesterday announced it has successfully integrated and utilised the carrier billing service (purchases are made by deducting from the phone balance) of Ooredoo Myanmar, the leading Qatari telecommunications provider operating in Myanmar since 2014, for MySQUAR's mobile applications and games. Ooredoo will earn a share of revenues as part of the integration. MySQUAR's COO & CFO, Pham Dang Hung, commented "We are delighted to work with Ooredoo whereby the Company's applications and games will be directly available to Ooredoo's users. As a result we expect that the revenue generating capability of the Company will also be enhanced which we intend to exploit through a planned program of new title releases".
Our View: MySQUAR has made another important and positive step! The move was in line with the Group's strategies to seek new partnerships to diversify and build its user base and monetisation channels. Ooredoo is one of the world's largest telecommunications provider connecting 133 million people across 12 markets. In Myanmar, Ooredoo is the first operator to launch 4G services while also expanding its 3G network, building its subscription base to over 9 million mobile customers since 2014. It's 4G service is now available across 52 townships which cover 5 major cities and leads the 4G market with 5 million 4G subscribers. This news follows integration of Telenor Myanmar's carrier billing services for the same purpose completed back in March 2017. Given a population of about 55 million (of which, 47% is under the age of 24) with 93% mobile phone penetration recorded in January 2017, Myanmar today has over 51 million people with mobile connections. Combining strong subscription base of Ooredoo (9 million as at end 2016) and Telenor (18.2m as at end 2016) which amounts to more than 53% of the Myanmar's market share, MySQUAR has now greater access to distribution and marketing while making in-app purchases significantly easier for mutual customers (as oppose to purchases, for example, using mobile top-up phone cards), altogether enhancing its revenue generating capability. Having raised £1.2m (before expenses) through a placing and subscription at the end of July, together with cash position, various receivables and the undrawn Rising Dragon loan facility, MySQUAR's balance sheet has been strengthened for ongoing expansion of its online offerings, while also evaluating potential acquisitions and strategic investments with a view to further accelerating the growth of MySQUAR's product lines. Based on expected progress, Beaufort considers MySQUAR has the potential to produce its first net earnings for shareholders as early as its financial year-ended June 2019, by which time its branded social media and entertainments platform will indeed have secured deep foundations in Myanmar. This all suggests the shares still have a long way to go from currently depressed levels notwithstanding, of course, the opportunity for a predatory approach from one of the acquisitive online hubs which remain hungry to add new virgin territories to their international portfolios. Beaufort retains its Speculative Buy recommendation on MySQUAR with target price of 21p.
Beaufort Securities acts as corporate broker to MySQUAR Limited
Thor Mining (LON:THR, 0.88p) – Speculative Buy
Thor Mining, the exploration and development company with assets in Australia and USA, announced yesterday that it has completed the latest round of drilling on its wholly owned Pilot Mountain tungsten project in Nevada. Whilst assay results are pending, visual mineralisation was identified in drill hole 17DSDD-02 which intersected two mineralised zones within the Desert Scheelite deposit. The first represented a potential second new lode located approximately 20m to the North of known mineralisation. The second, intersected mineralisation 60m down-dip from the existing Desert Scheelite lode. Similarly, drilling at the Good Hope deposit has confirmed mineralisation from historical drill holes. Drilling at Good Hope has delineated a 28m wide zone of copper and zinc mineralisation beneath shallow alluvial cover. Assay results are still pending, however, preliminary XRF results indicate 27m grading 1.1Cu, 1.3% Zn and 0.19% WO3 from surface.
Our View: Whilst assay results are pending the above initial results are encouraging as Thor continues to development Pilot Mountain project. The additional lode as well as the down dip extension of known mineralisation at Desert Scheelite could potentially add to the existing resource base once confirmed from assay data. Pilot Mountain comprises four deposits: Desert Scheelite, Gunmetal, Garnet and Good Hope all within three kilometres to each other. We note that there is considerable exploration upside on both Desert Scheelite and Good Hope deposits. Desert Scheelite has an existing resource of 9.9Mt grading 0.26% WO3 plus 19.39g/t Ag and 0.14% Cu. On aggregate, Pilot Mountain has a compliant resource of 11.73Mt grading 0.28% WO3. We look forward to the assay results in the coming weeks as well as continued support of the recent rise in tungsten prices. In the meantime, we maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as a corporate broker to Thor Mining PLC
Speedy Hire (LON:SDY, 51.75p) – Hold
Speedy Hire, the UK's leading tools, equipment and plant hire services company, operating across the construction, infrastructure and industrial markets, yesterday provided its pre-close trading update for the 6 months ended 30 September 2017 ('H1 FY2018'). The Group said revenue (excluding disposals), are c.7.5% higher than last year (H1 FY2017) primarily due to growth in services revenues. The year-to-date utilisation rates have averaged at 54.5%, an improvement of c.6% over the corresponding period in the prior year. Overheads are expected to be broadly in line with last year. The Group has reduced number of operating divisions and distribution centres in accordance with its ongoing efficiency programme, which will result in overhead savings of at least £3m per annum. Net exceptional costs of c.£4.5m are expected to be recorded in the H1, while net debt at the period-end is expected to be below £70m (H1 2016: £85.4m). Overall, the Group said it expect adjusted pre-tax profit for the full year to be "well ahead" of the prior year and "slightly ahead" of the Board's previous expectations. The Group is scheduled to release its interim results on 14 November 2017.
Our View: Speedy Hire's management continue to successfully delivering on their goals to transform Group operations. Trading update for the first 6 months demonstrates the Group's strong financial performance with further growth in adjusted pre-tax profit. The movement on Shares on the other hand, has been relatively muted over the last 9 or so months, justified Beaufort's 'Hold' recommendation, where it now remains. Although huge (and widening) share price performance gap with Speedy's most obvious quoted peer, HSS Hire still highlights some possibilities for takeovers (by Speedy) steer by its major shareholders, Toscafund, which holds 20.0% of Speedy and 26.2% of HSS. Having said this, the ongoing operational disruption by HSS impacting both rental revenue growth and the overall cost base which has been both longer and more severe than originally anticipated, would likely to continue make Speedy's management reluctant to any such proposals to go ahead in the short-term. In view of this, Beaufort retains its Hold rating on Speedy Hire whilst await Speedy's interim results and outcome of HSS's strategic review, both due to be release in November.