Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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September 28, 2023

Investors grab a slice of yellow cake

Macro & Overnight

After two years of teetering on the brink, the China Evergrande end is in sight. The shares have been suspended, and it now looks like the CCP is prepared for its corporate demise.

Meanwhile, Country Garden, another major Chinese property developer, failed to meet a coupon payment that was due yesterday.

While Chinese and broader Asian equities fell, there are no signs that this is their Lehman moment, at least for now.

Oil prices remained firm, with Brent crude trading above $97.

Some UK Company News

Microlise, a provider of transport management software to fleet operators, reported H1 revenue +10% PBT +5.7% lower cash conversion and net cash position £14.1m churn of just 0.5%. It successfully navigated its supply chain issues and delays in new vehicle availability. Its performance for FY23 will be in line with market expectations.

Microlise is a vertical software, systems and services provider to an attractive global niche sector. The shares have not done anything much since its IPO in 2021. Intriguingly, the founder, CEO and largest shareholder, Nadeem Raza, used the IPO to increase his already substantial shareholding in the business. Having overcome the component and new truck shortages that slowed its growth over the last couple of years, this business should start to show better growth prospects. Listen here for background.  

RBG  H1 results and strategy to restore value and reduce risk profile. Note here

Yellow Cake undertook a placing overnight to raise $125m to fund its option to buy $100m of product from Kazatomprom under its long-term supply agreement. 

Yellow Cake is an investment fund with a simple strategy to buy and hold physical Uranium 308 (AKA yellow cake). Uranium is a relatively obscure and opaque market, unlike other markets for traded energy sources such as oil, gas or coal. Over the last few years, the long-term global oversupply of U308 has ended as demand has significantly increased as many countries increase investment in nuclear reactors. Unlike oil, gas or coal, U308 is a tiny fraction of the cost of supplying nuclear-generated energy to end customers. It is, therefore, subject to more volatile price action. The market is very tight, and the price has increased more than threefold since March 2020. Yellow Cake is one of a handful of ways investors can play this off-piste but increasingly strategic sector. A further signal of how keen investors are to get exposure to this commodity is that Yellow Cake raised its targeted $125m in a couple of hours last night. The UK stock market may serve some value after all.   

Zoo Digital updated with its AGM. Note here.  


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