MOVERS OF FRIDAY 23 OCTOBER 2020

Francesca Morgan
Market Report
15:13, 23rd October 2020

AO World (LON:AO.) FOLLOW shares rise a further 10.13% to 374p 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 last week, 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, further acknowledging that lockdowns have triggered a huge shift in consumer habits. Looking ahead, the group predicts that it is on track for its biggest ever peak trading period.  

Russ Mould, investment director at AJ Bell, said, “Anyone working or furloughed at home only has to look out of their window to see delivery vans going up and down the road all day long.” 

“Years ago, buying a new cooker would have involved a visit to a showroom and lots of chit chat. Now it's a simple check of the reviews and an order online in minutes,” he added. 

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.  Shares in the Company have skyrocketed over 250% since the beginning of the year. 

AO. price chart

Remote Monitored Systems (AIM:RMS) FOLLOW shares rose 33.58% to 0.915p after a company it is in the process of acquiring is set to launch a new range of COVI-19 masks this year 

The surveying services company shares rose as much as 37.96% this morning after noting an announcement published by Braveheart Investment Group in respect of Pharm 2 Farm. 

This morning, Braveheart Investment Group said its investee company, Pharm2Farm ("P2F"), will launch the sale of a new antiviral face mask that can kill COVID-19 by the end of 2020.  

The investment company conditionally agreed to sell its 51.72% holding in P2F back in August 2020 to Remote Monitored Systems (LON:RMS) for 310.4m shares in the latter. On completion of the sale, Braveheart’s stake in RMS will be taken to around 37.12%.  

The surgical mask project commenced in June and follows P2F’s development of a textile coating incorporating proprietary nanoparticles to grant long lasting virucidal properties.  

The first application of this technology has been to coat a fabric layer in surgical masks and produce a certified antiviral mask for both healthcare professionals and the public.  

P2F received test results from two independent laboratories confirming that the mask has a ‘kill rate’ of over 90% for up to 7 hours, meeting requirements for ISO 18184 certification which is awarded to antiviral fabrics proven to deactivate over 99% of enveloped viruses.  

P2F has purchased an automated mask production line which is on track to be delivered in November 2020. Manufactured in Europe, it has the capacity to produce up to five million standard or antiviral face masks per month and will be in production by the end of the year.  

RMS price chart

Sareum Holdings (AIM:SAR) FOLLOW shares jumped 23.78% to 1.77p as it awaits US patent for cancer immunotherapy and sees progress across several programmes 

The small molecule therapeutics specialist saw a recent breakthrough with autoimmune treatment SDC-1801 through a new formulation that will enable a higher exposure level. 

An application to commence first human trials is expected to be made during Q1 2021 following successful toxicology studies in rodents which showed ‘excellent tolerability.’ 

Meanwhile, the group recently unveiled that it expects to hear sometime this month if the group will receive grant funding from the UK Research and Innovation (UKRI) for preliminary studies of Sareum's TYK2/JAK1 inhibitors, a potential COVID-19 anti-inflammatory.  

In its results for the year ended 30 June 2020, Sareum said a response is expected by the end of the month which, if successful, will enable initial studies to begin shortly thereafter. 

Sareum has also completed formulation work for oral dosing of cancer immunotherapy candidate SDC-1802. Further manufacturing work is planned over the coming months. 

Sareum presented new findings back in October 2019 showing that SDC-1802, dosed orally as a monotherapy and in combination with chemotherapy, significantly reduces tumour growth in models of solid tumours and blood cancers.  

Earlier this month, the group received an allowance for its US patent covering SDC-1802, the grant of which will complete the patent protection of this compound in all major territories. 

In addition, it advanced its licensed programmes during the year including a deal for its FLT3+Aurora inhibitor programme targeting blood cancers with a Chinese pharma group. 

"Sareum has continued to make good progress with the preclinical development of our proprietary dual TYK2/JAK1 inhibitor programmes,” said CEO, Dr Tim Mitchell. 

Sareum posted a loss for the year of £0.99m (FY19: £1.45m) and reported cash in the bank of £1.80m at the end of the period (£1m at 31 December 2019; £0.92m at 30 June 2019). 

SAR price chart

4D Pharma (AIM:DDDD) FOLLOW shares increased 23.01% to 140.75p with proposed merger 

The pharmaceutical company announced yesterday its intention to merge with Longevity Acquisition Corporation where it will receive a cash injection of US$14.6 million as a result.  

The enlarged group expects to launch a new American Depositary Receipt programme and will apply to admit its American Depositary Shares for trading on NASDAQ under 'LBPS'. Meanwhile, 4D will also maintain its current listing on AIM, under the ticker symbol 'DDDD'.  

Longevity shareholders will own c.13.1% of the merged company’s equity while 4D will own the rest. The enlarged listing on NASDAQ is expected to become effective in early 2021.  

“Despite the tremendous operational and economic challenges in 2020 created by the global pandemic, 4D has made significant strides on a number of fronts,” said CEO, Duncan Peyton.  

He highlighted that the Company believes that a NASDAQ Listing will allow 4D to capitalise on increased interest from US healthcare investors in recent years and provide access to a much larger pool of specialist capital, thereby increasing our global profile and exposure.   

“The Merger will accelerate and de-risk 4D's admission to NASDAQ, while providing immediate access to additional funds to support our pipeline,” said Peyton, acknowledging that NASDAQ is “an attractive market for growing, innovative biotech companies.”  

DDDD price chart

Airtel Africa (LON:AAF) FOLLOW shares fell 4.10% to 62.1p as H120 profits took a hit  

The telecommunications and mobile money services provider with a presence in 14 countries in Africa, primarily in East Africa and Central and West Africa, reported a 36.6% loss in post-tax profit to $145m (FY19: $228m) for the six months to 30 September 2020. 

However, the customer base grew by 12.0% to 116.4 million while revenue on a reported basis increased by 10.7% to $1.815m (FY2019: $1,640m) with Q2 revenue growing 14.3%. 

Airtel Africa’s Chief Executive Raghunath Mandava said the first half of the current financial year included the peak impact of the COVID-19 pandemic in the countries within its figures. 

“Importantly, the fundamentals of our business remain strong and revenue growth further benefited from the execution of our strategy with a specific focus on expanding distribution in the rural areas, investing in our network and increasing 4G coverage, as well as benefiting from the fact we provide an essential service to consumers,” he highlighted to investors. 

Mandava said that the company remains alert for further disruptions from a second wave of COVID-19 across Africa, and the associated actions of governments to minimise contagion. 

He added, “Nevertheless, we are in a strong financial position to capture the opportunities in a fast-growing region that is vastly underpenetrated in terms of mobile and banking services. We remain confident of delivering long term sustained growth for our shareholders." 

AAF price chart

Disclaimer & Declaration of Interest

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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