Rush to fix ‘serious’ computer chip flaws

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Today’s edition features:

  • Fox Marble (FOX.L)
  • Green & Smart Holdings (GSH.L)
  • MySQUAR (MYSQ.L)
  • Watkin Jones (WJG.L)

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Markets

Europe
The FTSE-100 finished yesterday’s session 0.30% higher at 7,671.11, whilst the FTSE AIM All-Share index was up 1.23% at 1,063.44. In continental Europe, the CAC-40 finished 0.81% higher at 5,331.28 whilst the DAX was up 0.83% at 12,978.21.

Wall Street
Last night in New York, the Dow Jones closed 98.67 points (0.40%) higher at 24,922.68.
The broader-based S&P 500 added 17.25 points (0.64%) to end at 2,713.06 and the tech-focussed NASDAQ gained 58.63 points (0.84%) to 7,065.53..

Asia
In Asian markets this morning, the Hang Seng was 218.49 points (0.71%) higher at 30,779.44 and the Nikkei 225 resumed trading with a bang following an extended break, rising 688.67 points (3.03%) to 23,453.61.

Oil
In early trade today, WTI was up 0.81% at $62.13 per barrel and Brent was 0.44% higher at $68.14 per barrel.


Headlines

Rush to fix ‘serious’ computer chip flaws
Tech firms are working to fix bugs that could allow hackers to steal personal data from computer systems. Google researchers said there were “serious security flaws” in chips made by Intel, AMD and ARM, affecting devices which use them. The industry has been aware of the problem for months and hoped to solve it before details were made public. The UK’s National Cyber Security Centre (NCSC) said there was no evidence that the vulnerability had been exploited. Some fixes, in the form of things like software updates, have been introduced or will be available in the next few days, said Intel, which provides chips to about 80% of desktop computers and 90% of laptops worldwide.

Source: BBC News


Company news

Fox Marble (FOX.L, 11.75p) – Speculative Buy
Fox Marble yesterday announced that it has signed a 3 year exclusive sales agreement for distribution of its marble into GCC nations with Mr Shailesh Patil (Founder and CEO of Kesari Tours Pvt Ltd). Under the terms of the agreement, there is a minimum commitment of 3,000 tonnes per annum (worth c.€600k-€800k) and Mr Patel will make advance payments in total of £500,000 within 90 days of the agreement. On a separate announcement, the company said it is proposing to raise c.£3m before expenses through placing and subscription (issue of 26,283,331 new ordinary shares) at a price of 10.5p per share. The company also plans to issue £235,000 of convertible loan notes, and a further 7,457,140 new ordinary shares to repay £783,000 of its outstanding loans and other liabilities. Such capital raise/issue of equity is subject to shareholder approval at the General Meeting. The proceeds will be used to repay debt and ramp up the production at its quarries and expand processing capabilities at its factory. The company also provided sales guidance of €1.3m for the FY17 (FY16: €0.8m) and cash balance of €656,137 at 15 December 2017.

Our view: A new sales agreement demonstrates strong demand and recognition of its marble, while proposed capital raise (at c.2% discount), debt repayment and conversion would strengthen its balance sheet. The subscriber of £2m subscription is Kesari Tours PvT Ltd who’s CEO signed aforementioned sales agreement. It is also worth highlighting that the non-executive director, Roy Harrison OBE, has agreed to convert his £500,000 unsecured loan note (announced 7 December 2017) into equity in full. Overall, it shows continuing support from new and existing shareholders and the management’s confidence over its prospects. We retain our Speculative Buy rating on the share with a target price of 24p.

Beaufort Securities acts as corporate broker to Fox Marble Holdings plc

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Green & Smart Holdings (GSH.L, 6.12p) – Update
Green & Smart this morning announced progress on its second fully-owned biogas power plant and provides an update on trading for the year to 30 September 2017 (‘FY17’). The company said its Malpom biogas power plant located in Nibong Tebal, Penang, has obtained certificate of initial operation date (‘IOD’) from the authorities and expects to receive the formal certificate of commercial operation date (‘COD’) later this month. COD will permit the sale of power to Tenaga Nasional Berhad, the national utility company, at the full tariff rate. Malpom is the company’s second fully-owned biogas power plant successfully generating c.2.3MW (initially expected: 2.0MW) of gas. It has been developed for mills with space constraints that prevent them from setting up a conventional biogas power plant. The excess power produced from the extra gas will be channelled towards reducing the plant’s operating and maintenance expenditure. In terms of funding, the company said it is in advanced negotiations to secure long-term financing facilities from local finance providers. This would accelerate the development of some of the other secured projects. The company noted that it expects to report FY17 revenues of c.RM45m. Green & Smart’s CEO, Saravanan Rasaratnam, commented “we remain confident of delivering on our goal of becoming the largest provider of biogas-based renewable energy in Malaysia”.

Beaufort Securities acts as corporate broker to Green & Smart Holdings Plc

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MySQUAR (MYSQ.L, 3.60p) – Speculative Buy
MySQUAR yesterday announced that it has received an approach from another organisation. There can be no certainty that this will lead to a takeover offer. The company noted “whilst appreciating any interest shown by potential investors or acquirers, the Company is not actively seeking a purchaser and believes that the continued growth and monetisation of its products will make it an even more attractive prospect over time”.

Our view: Interesting news from MySQUAR! With its ongoing operational progress and expansion in its user base to over 20 million at 31 October 2017, MySQUAR continues to solidify its position as Myanmar’s leading local language social media platform. Its momentum along with our forecast for potential first net profit in financial year-ended June 2019 means the appetite from one of the acquisitive online hubs is realistic. We retain our Speculative Buy rating on the share with target price of 21p.

Beaufort Securities acts as corporate broker to MySQUAR Limited

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Watkin Jones (WJG.L, 219.50p) – Speculative Buy
Watkin Jones yesterday announced that it has secured planning consent for 3 student accommodations and 3 build to rent (plus one contract exchange) developments during December 2017. The company said its student accommodation division has “excellent” general momentum, while build to rent division is “progressing well”. The company is schedules to release its full year results on 15 January 2018.

Our view: The company continue to strengthen its pipeline and national presence. With respect to the FY17 performance, the company announced on 31 October 2017 that it expects to deliver underlying earnings in line with its expectations, while operational objectives were “successfully achieved”. We look forward to its full year results. The shares are valued at FY17E and FY18E P/E multiples of 16.6x and 14.9x, along with dividend yield of 3.0% and 3.3%, respectively. We reiterate our Speculative Buy rating with a target price to 225p.

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To read Beaufort’s full research archive click here

Compiled by:
Charles Long, Ben Maitland, Sheldon Modeland & Kazunaga Senga
(t) +44 (0) 207 382 8384
(e) info@beaufortsecurities.com


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