Francesca Morgan
Market Report
15:32, 16th October 2020

AO World (LON:AO. FOLLOW) shares jumped 21.79% to 281p as it expects profits to rise 

The European online electrical retailer said that it expects half-year profit to rise by 57% for the six months ended 30 September 2020 due to strong demand in the UK and Germany. 

In a trading update released this morning, AO World said that UK revenue rose by around 54% during the period with German sales increasing by 83% on a constant currency basis. 

It said sales momentum continued in Q1 and Q2 despite the competitor physical stores reopening as customers turned to buying online goods due to concerns regarding COVID-19. 

“We believe we have seen a lasting step change in online penetration,” AO World said. Looking ahead, the group predicts that it is on track for its biggest ever peak trading period. 

Commenting on a positive trading performance, AO Founder and CEO, John Roberts, said: 

"The last six months of trading have been like no other during my two decades in the business. AO was in good shape coming into this financial year and the global, structural shift in customer behaviour to online, accelerated by Covid, emphasised our strengths. 

“Whilst we remain mindful of the uncertain economic climate caused by the pandemic and Brexit, we are on track with plans and well set for our biggest ever peak trading period in the UK and Germany,” he added. 

The Group expects to announce its interim results for the period in late November 2020.  

GCM Resources (AIM:GCM FOLLOW) shares soared 82.50% to 18.25p with framework agreement 

Shares in GCM Resources skyrocketed after the mining and energy company signed a framework agreement with NFC China Nonferrous Metal Industry's Foreign Engineering and Construction ("NFC") and Power Construction Corporation of China ("PowerChina"). 

GCM has agreed to establish a joint venture with the CNF to develop its 572 million tonnes high-grade coal resources at the Phulbari Coal and Power Project in North-West Bangladesh. 

Under the JV, the companies will discuss and arrange works related to the project, including a definitive feasibility study and financing.China Nonferrous Metal is expected to acquire a 5% stake in the JV and to arrange financing for the project since it will be appointed as the exclusive engineering, procurement, construction and commissioning contractor. 

Commenting on the JV, Datuk Michael Tang PJN, GCM’s Executive Chairman, stated:  

“Whilst the Covid-19 pandemic has delayed our progress with the Project, we believe that it has encouraged the Government of Bangladesh to review and enhance its energy security by utilising local fuel sources, following supply and importation disruptions.” 

The Phulbari Coal and Power Project in Bangladesh is expected to produce 572 million metric tonnes of high-grade coal while generating 6,000-megawatt of electricity. Currently, GCM Resources is awaiting approval from the Government of Bangladesh to develop the project. 

Alien Metals (AIM:UFO FOLLOW) shares rose 46.80% to 1.85p as investors back iron ore project 

Thegroup continues to rise today following the successful completion of a follow-up detailed geological mapping and sampling programme last week at its Hamersley Iron Ore Projects.  

The Company announced back in September 2020 that it had begun follow-up work at the site in order to validate its recently announced exploration targets across its two projects.  

Alien said detailed mapping was conducted over four of the project’s five priority projects during a site visit and consisted of four-to-five kilometres of grid-based sampling across priority prospects as well as detailed mapping over exposed iron ore formations.  

Assay results are expected later this month and final results from the sample assays and detailed mapping are to assist Alien with the preparation of its maiden drilling campaign.  

Financial news source The Armchair Trader said the recent share price action represents a massive gain for a company that was trading at 0.11 in July. It also highlighted that one of the big areas of focus for the miner is the Elizabeth Hill silver project in Western Australia. 

In recent weeks, Alien Metals said it has added more than 100 square kilometres of ground to the already highly prospective Elizabeth Hill silver project in Western Australia.  

The new ground at Elizabeth Hill, which was acquired by the company last month, is thought to contain as much as three million ounces of unmined silver relatively near to the surface.  

With both projects advancing, Alien ‘has a lot of activity ongoing across multiple sites on two continents, any of which could pay dividends relatively quickly’, the Armchair Trader wrote. 

Orosur Mining (AIM:OMI FOLLOW) shares increased 19.92% to 30.8p with plans to start drilling 

The mining group released its final year results for the year ended 31 May 2020, with CEO, Brad George describing the last fiscal year as being “one of transition” for the Company. 

Orosur said the Board has continued to apply its strategic plan to restructure its business while recapitalising and transforming the group by advancing its Anzá Project in Colombia. 

After the year end, the Company sold its mining and exploration permits in the San Gregorio Project area of Uruguay to Kiwanda Group for an aggregate cash consideration of $0.550m. 

“San Gregorio had been the backbone for the company for many years, producing some 1.5Moz of gold during its life.  2020 however marks a new chapter where we shift focus to Colombia and the Anzá project, with our partners Newmont and Agnico,” said George. 

He added “COVID-19 has clearly presented challenges, but with careful planning and operation, we hope to be active toward the end of calendar 2020, setting the foundation for an exciting 2021." 

Orosur, which has a market cap of £28.45m, said on Monday that it hopes to begin drilling its Anza project in Colombia next month, assuming there are no more Covid-19 restrictions. 

It’s 100% owned Colombian subsidiary, Minera Anzá S.A received around $650m as a first payment to fund exploration at the project for 12 months commencing 7 September 2020. 

Shares in Orosur Mining have increased by more than 300% since the end of September. 

Domino’s Pizza (AIM:DOM FOLLOW) shares fell 8.76% to 339.4p despite sales boost 

Shares in Dominos fell despite it expecting to meet market expectations for 2020 profit. 

In a trading statement for Q3 2020, or the 13 weeks to 27 September 2020, Dominos posted a strong performance with a 19% jump in sales after experiencing more online orders. 

The UK’s largest pizza delivery company told investors that it expects annual underlying pre tax profit to range between £93m and £98m compared with £98.8m in 2019.  

A reduction in the UK’s value-added tax rate to 5% from 20% in July which helped Domino to mitigate costs and enabled savings to be passed on to its customers, it said. Since the rate change, the group said VAT has benefited reported UK system sales and like-for-like growth. 

The company’s UK and Ireland system sales rose to £342.1m in Q3 2020 from £288.2m in 2019. UK system sales up 19.6%, with the UK accounting for 95.1% of total system sales.  

Dominos said online sales now account for around 95% of delivery sales in the UK. 

“At the heart of our future plans is realignment with our franchisee partners and we are having detailed discussions to agree a sustainable way forward, although we continue to expect that these discussions will take some time,” said Dominic Paul, CEO of Dominos. 

He added, “It is a privilege to stay open and serve our local communities, and we are confident that we have operational plans in place to adapt to different levels of lockdown that may arise in the coming months.” 

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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