Market Prognosis

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

September 20, 2023

UK inflation lower than expected

Macro & Overnight

UK inflation rate fell last month, with headline CPI up 6.7%, less than the 6.8% gain the month before and below the 7% expected.

UK core inflation fell further to 6.2% from 6.9%. The chart below illustrates that the UK continues to follow the US inflation cycle with a 3-4 month lag.

In the past few weeks, the UK has had a larger GDP and lower underlying inflation rate than expected.

Unsurprisingly, the £ is weaker on lowered expectations for rate hikes, and the UK market is opening up strongly.

Screenshot 2023-09-20 083420

UK Company News

Capital, the mining services company, has announced a three-year comprehensive drilling services contract with Nevada Gold Mines, which will generate annualised run rate revenues of ~$35 million once all the rigs are fully operational. Capex of ~$20 million is required, predominantly falling in 2024. Capital has focused on large-scale mine sites and Tier-1 projects with significant growth potential.

IQGeo has announced a significant new contract with an existing customer, a top five global wholesale fibre network provider with operations in the US and Europe with a software ACV value of $400,000 pa and a total contract value over three years of $1.9 million. 

Judges Scientific reported that H1 revenue increased by 16.5%, and order intake was up 14%. It should meet FY market expectations.

Warpaint sales increased by 46% to £36.7m in H1 with EBITDA of £7.9m (H1 2022: £4.4m). It sees significant opportunities for continued growth, both already secured with our existing retailers and in discussion with addition other retailers globally.

Wincanton’s pension scheme showed an actuarial surplus of £3.9m, compared to an actuarial deficit of £154m this year. No further contributions are currently payable into the scheme, significantly improving the Group’s free cash flow.  

Finsbury Foods has agreed to a PE offer of £134m, a 24% premium.  

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.