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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June 27, 2023

Mega-cap tech reversal

Macro & Overnight

US mega-cap tech that led the market upwards in recent months sold off sharply overnight, with 3-4% falls in Nvidia, Tesla, and Meta.

Russia’s newly formed coalition government is already fraying at the edges. President Putin is now threatening to shoot Wagner coalition partner mutineers in a show of force. At the same time, their leader is assumed to be exiled in Minsk.

Nick Clegg got off lightly.

UK Company News

Growth company investor Chrysalis Investments reported an H1 NAV of 130p vs 147p, -12% since September. It said this resulted from lower values of the tech-enabled companies used as comparables to the portfolio. It sees the continuing challenging market conditions prevalent since early 2022, driven by rising inflation and interest rate expectations. It will shift the focus from pure growth to more portfolio balance towards profitability. It said that 84% (by NAV) of the portfolio is now either profitable or funded to anticipated profitability, up from 67% in September 2022, and it has liquidity of c£43m. 

CML, the mixed-signal, RF and microwave semiconductors supplier, produced strong results. (Click here for note).  

Eleco, the software provider for the built environment, announced that it had acquired BestOutcome Limited for up to £5m. It said that it would enhance both annualised recurring revenue and earnings. The target has 60 active customers and is particularly strong in winning public sector business. 

JD Sports said in its update that businesses in North America are experiencing some softening in trade. It noted that inventories are at normal levels and will be only as promotional as it needs to be to remain competitive.

Telecom Plus, the supplier of bundled household utility services, reported profits up 55% to £96.2 million, EPS up 57% to 99.2p and a dividend of 80p (2022: 57p). It saw a 22% increase in customers, taking the total to 886,579, a 24% increase in the number of services supplied, and its insurance business more than doubled to over 100,000 policies. This was driven by a 25% increase in partner numbers to almost 60,000. In future, it sees double-digit annual percentage customer growth, leading to a broadly corresponding rise in adjusted pre-tax profits. TEP is investing in services, people and technology with new specialist customer support hubs in Burnley and Selkirk. It intends to scale its insurance business by establishing an in-house broker and insurer. 

Shoe supplier Unbound has terminated its strategic review and plans to sell the company. It is now considering a restructuring proposal and equity fundraising. 

Wise, the money transfer business, continues to drive its strategy of money without borders and building the necessary products. In the last year, 10 million people and businesses chose Wise to move and manage their money internationally, an increase of 34% YoY. And in total, it helped these customers move c.£105bn across borders, up 37% YoY. This growth drove a 51% increase in revenue and a 73% increase in income. It intends to use interest income to offer further incentives, including interest payments, to drive growth. It expects income to grow by 28-33% in FY2024 and by more than 20% CAGR over the medium term. EBITDA margin will be at or above 20% over the medium term, but remain higher in FY2024 due to a higher proportion of interest income. 



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