Update: Bentley funding key

The next few months are critical to the future of Xcite. $135m of bonds mature at the end of June 2016 and there is no visibility yet that they can be refinanced, or at what cost. At the same time, Xcite has done an excellent job of driving down costs for its Bentley development, both through cost deflation and optimisation of the project. With improving fiscal terms, the Bentley project is potentially more robust than ever before and is resilient across a wide range of commodity prices. However, with depressed equity and debt markets and cautious industry sentiment, securing development fundi...

Outlook: Critical year ahead

2015 is a critical year for Xcite and its shareholders. Having seen its Bentley development delayed, the company is taking an innovative approach, engaging early with major service contractors to put in place a development group that would get it through FID as well as reduce execution risk to both cost and schedule. With the consortium complete, we examine how potential terms could affect returns, concluding there is strong upside potential for all parties, Xcite and contractors alike, with an aligned development strategy. However, we caution that investors need to be patient, as a sequential...

Institutional Comment: Daily comment

Norcros - Sale of Johnson Tiles UK agreed

Norcros’s disposal of Johnson Tiles is the latest strategic activity taken by management to better allocate capital to fit with priorities. Last year it closed its UK adhesives operation. Norcros has a compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. Its rating is low at 6.0x FY24e P/E, which is attractive, especially when compared to its yield of 5.4% on its well-covered dividend. We retain our estimates and value the shares at 246p, implying c 30% upside.

Henderson Far East Income - Repositioning to raise total returns

Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness to use reserves when necessary to support dividend payments, which it did in FY23. This reduces the r...

Freelancer - AI to drive return to growth

Freelancer’s Q124 results were mixed. Operationally, the company is seeing rising demand for AI specialists as customers seek affordable ways to develop proprietary AI. Notably, in Enterprise, the company delivered a large-scale AI pilot for a tech giant, sourcing 20,000 freelancers in 24 hours across 52 languages. This impressive achievement could lead to a substantial multi-year contract. Major initiatives across Loadshift and Escrow with leading organisations are set to be deployed over the coming months, potentially catalysing performance and diversifying revenue streams. We revise our for...