Share Talk Weekly Small Cap Movers & Shakers, Saturday 10th June 2023

Broadly, the AIM All-Share Index was mostly stable, experiencing a negligible 0.03% drop to 790.25 points during the first week of June. In contrast, the FTSE 100 and FTSE 250 declined by 0.2% and 0.4%, respectively.

Shareholders of Clean Power Hydrogen were not thrilled with the termination of its license agreement with GHFG over contract violation, which caused a 14% decline in shares. Likewise, shares of troubled retailer N Brown fell by 11% due to concerns about ongoing “weaker confidence” that may continue to impact its performance.

On a more optimistic note, Amigo Holdings‘ shares more than doubled after the company confirmed its plan for an orderly, solvent wind-down of operations in March. Likewise, diversified group Barkby saw a 27% increase in share prices after its subsidiary, Cambridge Sleep Sciences, received a five-year global license to manufacture a ‘Smart Pillow.’

Gama Aviation recorded strong profits and cash flow due to significant growth and improved profitability at its US maintenance and repair business, Jet East, leading to a 4% increase in its shares.

While the ongoing political unrest in Peru hasn’t made significant waves in UK news, it is causing a real and costly impact for PetroTal and its shareholders.

The company’s shares, influenced by its operations in northeastern Peru, experienced a 9% drop as a consequence of an unauthorized, violent river blockade, preventing vessels from providing essential services to their operations. The Indigenous Association for Development and Conservation of Bajo Puinahua is reported to have instigated the blockade last Saturday.

This disruption happened simultaneously with PetroTal’s scheduled production cuts meant to facilitate the integration of existing infrastructure and adjustments for future oil output. As an upshot, a five-day shutdown of the field was initiated on the 8th of June, potentially affecting the annual oil production forecasts.

Other noteworthy news in the oil sector includes IOG’s 45% plunge due to a potential mechanical blockage discovered during well cleanup and testing procedures at the Blythe H2 well in the Southern North Sea, which has resulted in below-average initial gas flow rates.

In a similarly disappointing turn of events for smaller oil firms, Barryroe Offshore Energy’s shares plummeted over 79% as it abandoned plans for a previously announced equity raise. Facing financial uncertainty, the company has decided to appeal to its major shareholders for essential working capital.

We’ve seen some substantial gains in the London market this week, notably from Amigo Holdings, whose shares more than doubled to 0.69p. The company announced in March its plan to wind down its operations in a solvent manner, which has seemingly been received well by investors.

Also observing positive movement was Barkby, a group with diverse interests in various high growth and quality businesses. Barkby’s shares rose by 27% to 4.2p following an announcement that its subsidiary, Cambridge Sleep Sciences, was granted a global licence valid for five years to manufacture a ‘Smart Pillow’.

In aviation, Gama Aviation‘s shares experienced a 4% increase to 53.9p. The boost comes after the company reported strong cash flow from profits, attributed to significant growth and improved profitability in its US maintenance and repair business, Jet East.

Meanwhile, the mining company Premier African Minerals saw its shares rise by 32% to 0.82p. The increase followed an announcement that the firm is in advanced talks with Canmax Technologies to expand their agreement. Canmax, a company engaged in the sale and manufacture of new energy materials, reaffirmed its commitment to the existing arrangement, fuelling the positive response in the market.

RWS Holdings, a language translation specialist, also saw an over 10% jump in share prices to 258p. The AIM-listed company, following an announcement of plans to return £50mln to shareholders through a buyback, surpassed a market cap of £1bn while also maintaining its full-year revenue guidance of £747mln and pre-tax profits of £126mln.

While these are positive signs, it’s still too early to call it a resurgence in capital markets. Recently, there have been a few large-cap IPOs, including the FTSE 100-bound WE Soda, and about 20 secondary fundraisers over the past month. However, the funds raised in these instances have been relatively small, averaging around £2mln.

Interestingly, we have observed a similar trend since the end of January, with the amounts raised gradually increasing along with growing confidence. This upward momentum was short-lived, halting in mid-March when the Silicon Valley Bank, a significant lender to many high-tech and high-growth companies, collapsed. This unfortunate event sent ripples through the market, with small-cap investors quickly seeking safety.

Despite the rocky terrain, some insiders in London’s corporate brokerage community believe that a brief revival in the secondary and primary markets may be on the horizon. This resurgence, however, is expected to be transient as we approach the traditionally slow summer months.

The landscape after the summer break will largely hinge on the decisions made by central banks, as well as the actions of international political figures, particularly Russia’s Vladimir Putin and Ukraine’s Volodymyr Zelensky. The future of the capital markets, for now, remains uncertain but cautiously optimistic.

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