26/07/2023

hVIVO plc (HVO), the company focused on testing infectious and respiratory disease products using human challenge clinical trials, announced a trading update for the six-month period ended 30 June 2023. First half revenue growth of 52% to £27.3 million (H1 2022: £18.0 million). EBITDA margin c.19% (H1 2022: 12.7%). Net cash of £31.3 million as at 30 June 2023 (H1 2022: £15.9 million). Weighted contracted orderbook of £78 million as at 30 June 2023 (30 June 2022: c.£70 million) underpins venue visibility. The company said it was pleased to announce another period of excellent growth for hVIVO, delivering strong revenues, healthy EBITDA and continued cash generation. Since the end of June its weighted contracted orderbook has increased even further following the recent announcement of its new Influenza B human challenge model. This record visibility of revenue well into the second half of 2024 provides a strong basis for future trading, as well as additional flexibility and adaptability to efficiently manage its pipeline.

Comment: The second RNS of the week from HVO, and one of the best small cap updates of the recent past. The company has hit all the bases since it came to market, and not only continues to flourish, but has if anything exceeded expectations. If we not in a bear market for small caps, HVO would be valued at multiple of its current rating.

Graft Polymer, (GPL) a special multi-sector chemicals company, announced the signing of a distribution agreement with leading US veterinary products company Inter-Technologies Inc. The agreement is a major step forward in expanding the penetration of the Company’s GraftBio products into the Veterinary Food Supplements market in the USA, through Inter-Technologies’ five operating subsidiaries in that market. The company said this is an important opportunity for the company and is evidence of it ability to forge strong partnerships with leading operators in new markets, opening up additional growth channels. It was excited by the potential for development within the US veterinary sector and is fully aligned with Inter-Technologies Inc. in playing a vital role in contributing to pet welfare thanks to its market leading technology and unique products.

Comment: While the stock market seems content to be behind the curve in terms of both awareness of GPL, and appreciation of the business model, the company forges ahead, in this case in the key U.S. market.

Actual Experience (ACT), the analytics-as-a-service company, announced that it has signed a Letter of Intent with Logicalis International Limited to secure the first customer for a new joint product offering based on Actual’s Digital Workplace Management Platform and delivered through Logicalis’ Digital Fabric Platform which provides their managed services customers with a real-time view of digital infrastructure across cloud, security, workplace, and connectivity. The company said this is an incredibly exciting time for the Company as it sees increasing market interest for its new DWMP product. This important technology relationship with Logicalis has the potential to deliver multiple fast-moving sales opportunities in their global international customer base.

Comment: Shares of ACT have been attempting a recovery off the lows over the past couple of weeks, and its should be the case that today’s news is enough to allow this recovery to continue in a meaningful way.

Synergia Energy (SYN) updated concerning the current workover of the Cambay C-77H well. The company said C-77H will be flowed for a period to satisfy the request of the Directorate of Hydrocarbons to establish a baseline of production without artificial lift. Over the coming weeks, the well performance will be observed after flow rates have stabilised. Following the establishment of the baseline of production, the workover rig will be re-deployed over the C-77H well for the installation of the jet pump artificial lift system. The jet pump installation is scheduled for mid-August 2023.

Comment: SYN’s Cambay well is certainly the flagship for the company, and it is evident that it is progressing on this in an accelerated fashion. One would expect the share price to respond in kind as production draws near.

CyanCannode (CYAN): After the trading update ahead of these finals to March 2023, the shares slid back. So, the 23% revenue increase to £11.7m and the increased EBITDA loss to £2.9m are expected.  Q1 revenue, however, is reported at £2.8m which twice last year’s H1 and there is a stronger than expected forward order book.  As there is a backlog of 2.3m units and a strategic framework agreement in place to deliver 3m units.  Add to this the scheme in Indian that mandates compulsory installation of smart meters across the country with an ambitious target of 250m smart meters by 2025. CYAN is a leader in Narrowband Radio Frequency (RF) Smart Mesh Networks, and is the primary vendor of smart meter connectivity technologies in several states across India while also targeting other countries. It raised £4.3m in January at 17p and net cash is estimated at £3m.

Comment: Investor patience may start being rewarded as these orders flow. At least the company has a cushion of cash to address the backlog.

Bens Creek Group (BEN), the owner of a metallurgical coal mine in North America supplying the steel industry, has, on 25 July 2023, entered into a non-exclusive marketing and sales services agreement with Avani Resources Pte Ltd, the Company’s largest shareholder. The company said it has been examining the possibility of expanding our sales channels which to date has been driven exclusively through its offtake partner Integrity. It has been very pleased with the service provided by Integrity and will continue to utilise their services. The addition of Avani will provide us with both competition for its product and greatly increase exposure of Bens Creek coal within its target market.

Comment: BEN keeps it in the family with the deal with Avani, something which actually looks as it could be significant enough to end the malaise we have seen for so long in the share price.

Zephyr Energy (ZPHR), the Rocky Mountain oil and gas company focused on responsible resource development from carbon-neutral operations, issued an AGM statement. The company said looking ahead, with a diverse portfolio of cash-flowing assets, potential for substantial future organic growth, a solid financial footing, and a talented and growing team, it continues to be extremely optimistic about Zephyr’s future. Its key goals for the remainder of 2023 are to move the Paradox project towards commercial production while continuing to grow the non-operated asset portfolio.

Comment: Judging by the share price it would appear that the key here for ZPHR is to get Paradox over the line. This would suggest that at current levels those entering the fray have decent risk/reward given the way that most of the heavy lifting regarding the project has already been done.

Velocity Composites (VEL), the supplier of composite material kits to aerospace and other high-performance manufacturers, provided a trading update. The company said the last year has been one of transition and investment. The investments it has made will be repaid many times through the new contracted business we have already won and the new business it can now target.  In the next financial year, it will see a transformational upturn in annual revenue at Velocity. It has built a significant asset in the US in terms of production capability and engineering resource, which with organic growth in the UK, will make the Company profitable.

Comment: VEL mentions the P word, profitable, and the run up to this has clearly been a factor in terms of a significant rally in the stock since the autumn. A return to the highs in the mid 60p’s looks to be on the cards over the next couple of months.

Saietta Group (SED), the multi-national business which designs, engineers and manufactures complete electric drivetrain (eDrive) systems for electric vehicles, announced a new Letter of Assignment for a third vehicle line with its existing Indian client, one of the largest OEMs in the Indian light-duty mobility market. Subject to entering into formal production orders, the parties initially expect a volume of 60,000 units over a 5-year period. The company said this is an exciting time for Saietta. It is the culmination of many years of hard work to develop deep insight into the Indian lightweight mobility sector and to then engineer a range of complete, modular eDrive solutions specifically for it – designed in the UK to ‘Make in India’ with a largely Indian supply chain. This new agreement from it major Indian OEM customer for a third product line is further validation that its product and service offering is highly valued.

Comment: SED finesses its recent share price recovery, by consolidating the fundamentals in terms of its existing Indian client. One would expect the rally we saw in March to have a second wind.