Frontier Tech Investor 2021 stock-take (part 1)
16th December 2021 |
As sleighbells are ringing, jing-jing-jingling, so too are the closing bells to financial markets across the world, as they wind up for the festive season.
We are too, and would like to pass on our sincere thanks for your continued time and attention in our work over the past year.
The fact you’ve made the big decision to join us at Frontier Tech Investor is humbling and we hope we’ve been able to deliver a service to you that meets and exceeds your expectations.
We look forward to continuing that into and through 2022… and beyond!
Now, over the next two weeks, we’re going to do a top to bottom rundown of the stocks in our buy list. This will help give some clarity over our position on the stocks, stocks you might hold in your own portfolio, or some that you’ve maybe not yet considered.
We’ve broken it up over two weeks as it’s a lot!
Furthermore, please note that our second part to this stocktake will be your last update for 2021. We won’t be sending an update on 30 January as we will also be taking some time off with family and friends over this period.
We will be back with you on 6 January 2022, with your first update for the New Year.
But back to this one first…
It’s been quite the year – good, bad, ugly and yes, even a little optimistic.
All things considered, there’s plenty of cheer and optimism for what we see coming in 2022.
This includes our Frontier Tech Investor buy list stocks too.
Much potential remains in the industries in which our stocks lie: the emergence of blockchain and digital assets into the mainstream; green energy; cyber security; the emergence of the legalised cannabis industry and more.
For many of our stocks, it’s only just the start – as our recommendations are typically long-term positions. This gives us great excitement heading into 2022.
We’ll keep an eye on the markets over the festive season: should there be any need to get a broadcast out to you while we are away, we shall do so.
NB: The yearly share price changes have been calculated from the first trading day of the year, 4 January 2021, through to 14 December, unless the stock was purchased after 4 January, in which case we took the price on the date of recommendation.
Aston Martin Lagonda Holdings (LSE: AML)
Yearly share price change: -34%
Aston Martin Lagonda Holdings is a manufacturer of luxury, performance cars.
After a torrid time during the pandemic, the company is recovering well.
For the nine months ended 30 September 2021, revenues stood at £736.4 million. This is a 173% increase on the previous corresponding period (pcp).
In part, the improvement in revenues was driven by strong demand from its first and very popular SUV model, the DBX.
During the first half of 2021, DBX sales accounted for more than half of the 2,901 cars sold. In comparison, only 895 vehicles were sold altogether in the first half of 2020.
In addition, Aston Martin has a strong pipeline of new car models waiting to be delivered.
Of note, deliveries of its Aston Martin Valkyrie and Valkyrie AMR Pro are due to commence in the fourth quarter of 2021.
Another point to mention is the publicity its car range has received thanks to the release of the new James Bond film, No Time To Die.
It featured four Aston Martin classics from the past, present and future, including the DBS, Valhalla, DB5 and V8 Saloon.
The film serves a reminder of the stylish and robust properties of Aston Martin’s expertly engineered cars. It also reinforces Aston as a global brand with strong British ties adding to its prestige.
There are signs that the company is turning a corner. Our view that entrepreneur Lawrence Stroll has all the tools to turn the company into a strong, valuable global luxury brand at a level akin to Ferrari remains very much intact.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
AMTE Power (LSE: AMTE)
Yearly share price change: -9%
AMTE Power is a developer of battery technology to the automotive, oil and gas, and energy storage industries.
Our main reason for taking a position in AMTE was its involvement in the electric vehicle (EV) industry, which is gaining traction as the world looks to tackle the urgent issue of climate change.
AMTE is at a nascent stage in commercialisation, which perhaps explains why its share price has yielded a -38.42% portfolio loss so far.
We are eagerly awaiting the announcement of its gigafactory plans, which are due to come in 2022.
In the meantime, it has up-scaled capacity at the UK Battery Industrialisation Centre (UKBIC), a government-funded battery production facility. It is transitioning away from its low-volume production facility in Thurso, Scotland.
In terms of commercial success, AMTE has been chosen a lead supplier in a UK Government-funded project known as ULTRA, which is seeking to develop lithium-ion batteries to “automotive readiness”.
AMTE has received £2.3 million in grants from the project.
For now, we believe government grants will continue to be a strong source of revenue for AMTE, especially as the UK government seeks to achieve its net zero target for carbon emissions by 2050.
The commercialisation of its four-pronged battery range isn’t too far away, with the potential move to the gigafactory on the horizon.
As such, it’s still early days for AMTE, with undoubted upside potential thanks to the accelerating transition towards greener energy alternatives following COP26.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here.
Argo Blockchain (LSE: ARB)
Yearly share price change: -29%
Argo Blockchain is a miner of cryptocurrencies, mainly bitcoin at this stage.
Being a cryptocurrency miner, its mining capacity is essential to its profitability. After all, the greater the mining capacity, the greater the probability of mining more bitcoin.
It’s encouraging to see that Argo has made great strides in increasing its mining capacity this year.
In September 2021, it agreed to buy 20,000 new mining machines for its West Texas mining facility.
In this, it has more than doubled its hash rate. This is defined as the rapidity at which a computer can convert any set of data into letters and numbers of a specified length. More hash rate equates with a greater likelihood of mining bitcoin.
Of course, being a bitcoin miner, Argo’s share price is partly tied to the swings in the crypto market.
And with bitcoin’s price in a strong upward trajectory, which shows little sign of waning as it continues its move into the mainstream, Argo’s valuation will likely increase.
For the half-year ended 30 June 2021, revenues were £31.1 million, a 180% rise on the pcp.
What’s also impressive with Argo is that it is committed to being “green” in its mining practices – which is something not typically associated with energy-guzzling crypto mining.
For example, Argo currently uses 100% hydro and wind power at its Quebec facility and is part of the “Crypto Climate Accord” which seeks to power mining rigs using 100% renewable energy sources by 2025.
At a time when the world is desperate to reduce carbon emissions, this makes Argo a standout in the crypto mining field.
We reiterate our BUY recommendation. You can find the original recommendation here.
Blancco Tech Group (LSE: BLTG)
Yearly share price change: 9.55%
Blancco is a provider of data erasure software.
Increases in data protection laws are meaning that more firms are using data erasure to stay compliant. At the same time, the data erasure software allows companies to bolster their cybersecurity.
This year, the company has sought to expand its international presence.
Of note, Blancco opened a new branch office in Hanoi, Vietnam – a country that is experiencing increased demand for data erasure software services.
Crucially, Blancco’s solution has now been tested, certified and approved by more than 15 government bodies around the world, which is an industry first in terms of compliance.
In addition, Blancco won a bulk tender to supply its solution to 100,000 laptops in the Government Technology Agency of Singapore, in October 2021.
For the year ended 30 June 2021, revenues were £36.5 million. This a 9% increase on the pcp.
We believe that Blancco is primed for further commercial success in the face of more frequent, potent cyber-attacks and stringent data protection laws.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
Corero Network Security (LSE: CNS)
Yearly share price change: 14%
Corero is a provider of cybersecurity software.
With cyber-attacks across the world being more ubiquitous than ever before, its services are proving to be invaluable.
For example, as of 24 October 2021, data breaches (a form of cyber-attack) totaled 1,111 and were 238 away from breaking the record for a single year. With 68 days of the year left to go, the likelihood of this record being broken were reasonably high.
Corero has built on its success from last year, upgrading its flagship SmartWall solution with improved cyber-defence capabilities.
Also, Corero has had great success in commercialsing its SmartWall solution, which defends against cyber-attacks without affecting business operations.
Of note, it has found a route into the burgeoning 5G network market, after securing a deal with Australia-based telecommunications company 5G Networks.
The financial outlook for Corero also looks promising.
For the six months ended 30 June 2021, revenues were $8.3 million, a 34% rise in revenues on the pcp.
We believe that Corero is well positioned to generate further growth, in a world where demand for cybersecurity remains at an all-time high.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
City Pub Group (LSE: CPC)
Yearly share price change: 8.52%
City Pub Group is an operator of 50 pubs across the UK.
Like all of the hospitality sector, it endured a difficult lockdown period in which footfall to its pubs was restricted.
However, its recovery has been reflected in its share price, going from a low of 53.4GBp, achieved in March 2020, to 96GBp at the time of writing.
The company has completed two acquisitions this year.
Firstly, it bought a 49% stake in Kensington Park Hotel, London, for £750,000 in April 2021.
Secondly, it acquired the Cliftonville Hotel in Norfolk, for a consideration of £1.7 million in September 2021.
It shows that City Pub Group is back in growth.
We believe 2022 will give a better indication on City Pub Group’s progress, as it will not be affected by Covid in the way that it was in the last two years.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
Equals Group (LSE: EQLS)
Yearly share price change: 54.37%
Equals Group is a financial ecosystem that provides international and domestic payment services, travel cash and crypto liquidity.
It has been a successful year for the company, which has seen it pivot away from its business to customer (B2C), travel money roots to a business to business (B2B) payments services provider.
In October 2021, the company announced that it had completed its largest transaction to date.
According to Equals, it will contribute around £1.5 million in revenues to the current financial year.
It will add to what is an already impressive balance sheet.
For the six months ended 30 June 2021, revenues were £16.9 million. This is a 22.5% increase on the pcp.
Its share price has also been a strong upward trajectory, rising 54% from 4 January 2021 to 14 December 2021.
Clearly, there is huge interest in the company – in a commercial sense, and from stock market investors.
We believe that Equals is primed for further growth as it continues to deploy its innovative payments solution, one that makes cross-border payments more seamless than ever before. And we foresee a greater shift into the digital assets space long term.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
EQTEC (LSE: EQT)
Yearly share price change: 8.33%
The newest addition to the Frontier Tech Investor portfolio has come at an opportune time.
The COP26 climate summit talks have meant that the eyes of the world, and indeed investors, are focused on green energy alternatives that address climate change.
EQTEC is a resourceful, innovative company that converts waste into syngas, which is then used to power green energy appliances.
The company has enjoyed an excellent year, which has seen it further commercialise its gasification technology.
Notably, EQTEC signed an agreement for the acquisition of a 5MWe project in northern Greece.
In addition, EQTEC announced the acquisition of a 1.2MW power plant in Croatia, which will convert up to 8,000 tonnes of biomass per year.
Planning permission was also given for the development of the UK’s first sustainable waste-to-energy plant, providing capacity of 25MWe.
It’s also worth noting that the company’s current pipeline of contracts, which includes non-contracted tender opportunities, is worth €657 million.
For the year ended 31 December 2020, revenues were €2.23 million – a 33% increase compared to 2019.
We remain excited by EQTEC’s potential, as it expands production across a world which is rapidly transitioning towards green energy alternatives.
We reiterate our BUY recommendation. You can find the original recommendation here.
Gfinity (LSE: GFIN)
Yearly share price change: -11%
Gfinity is a producer and developer of software that hosts major gaming tournaments.
The company is emerging as an industry leader in one of the hottest global gaming trends: esports.
This year, Gfinity has hosted two of the most popular esports tournaments – the ePremier League tournament in March 2021 and the F1 Virtual British Grand Prix in February 2021.
Away from its commercial exploits, Gfinity has undergone two acquisitions, which could drive strong business growth.
The first of these was the purchase of Stock Informer for £5 million. Stock Informer is a website that tracks down “hard to find” products in the gaming world, such as PlayStation 5 consoles.
The second was the acquisition of SiegeGG, an operator of the Rainbow Six Siege gaming website that provides statistics and analysis on the game. As part of the acquisition, SiegeGG received nine million ordinary Gfinity shares.
Gfinity’s latest financial figures are healthy.
For the year ended 30 June 2021, revenues were £5.7 million, which reflects a 27% increase on the corresponding period in the previous year. Losses also reduced 61% across the two periods.
So, things are looking pretty rosy for Gfinity heading into next year. We believe that, at its current share price of 3.85GBp, it is being hugely undervalued by the market.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
HYVE Group (LSE: HYVE)
Yearly share price change: -21%
HYVE Group connects business stakeholders via in-person and virtual exhibitions/events.
The company has had to adapt to the pandemic and to provide its stakeholder events virtually, as footfall to its locations was restricted.
However, there are signs of recovery.
In the fourth quarter of 2021, its flagship Groceryshop event, which linked grocery and retail ecosystems for trading opportunities, was hosted for the first time.
In the fourth quarter of 2021, 11 events were hosted in total, across the UK, United States, Turkey, Russia and Ukraine.
In truth, its most recent figures aren’t very encouraging.
In the six months to 31 March 2021, revenues were £10.4 million. This is well down from the £90.6 million in revenues generated over the pcp.
Of course, the pandemic has had an impact. And ongoing uncertainty around the events industry as a result means that we shall remain cautious with Hyve but also move the position to HOLD. This gives us a chance to wait and see how the next few months play out and what the governments actions will be in the new year around potential restrictions.
For now, we move Hyve Group to a HOLD recommendation. You can find the original recommendation here.
Ilika (LSE: IKA)
Yearly share price change: 13%
Ilika is a producer of solid-state battery technology, and a company which targets the industrial internet of things (IoT), medical, consumer electronics and EV industries.
We have identified Ilika as a key driver in the transition towards green energy alternatives.
Its batteries are setting the industry standard, providing charging rates up to six times faster than conventional lithium-ion batteries.
The company is pre-commercialisation, but is quickly advancing towards commercial production.
For example, this year, development of its Stereax battery manufacturing facility has made good progress, and is on track to deliver product sales from the second quarter of 2022.
In addition, Ilika is up-scaling its manufacturing line at the UK Battery Industrialisation Centre (UKBIC) to deliver its Goliath batteries, increasing capacity from 1kWh per week to 10kWh per week.
It’s still very early days with Ilika. But the transition towards green energy alternatives gives Ilika good opportunities, ahead of the rollout of its batteries starting next year.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here.
Immotion Group (LSE: IMMO)
Yearly share price change: 17%
Immotion Group is a provider of virtual reality (VR) and simulations to tourist attractions.
Immotion is making great progress after the pandemic. Its installations, which are so dependent on footfall, have captured pent-up demand after a quiet period of trading.
This year, Immotion opened its third, “larger style” installation in the United States. It opened a 16-seat installation at SEA LIFE Orlando, following successful installations at Shark Reef Aquarium, Las Vegas; and Clearwater marine aquarium, Florida.
Immotion’s latest development is hugely exciting.
It announced the launch of “Gorilla Trek” at the IAAPA trade show in Florida. It’s a virtual reality (VR) experience that allows users to engage with endangered mountain gorillas in the Rwandan rainforest.
Its Immotion’s involvement in the VR space that really excites us.
It forms part of a growing trend, known as the metaverse, an engaging virtual world(s) that allows users to interact within it.
Metaverses are being deployed across digital platforms, with Facebook the latest to venture into its realms. Facebook has changed its name to Meta Platforms and is also investing $50 million into the technology.
As such, we believe Immotion’s VR technology could provide a strong revenue stream in the coming months.
For the six months ended 30 June 2021, Immotion’s revenues were £2.8 million. This is a whopping 250% rise on the pcp.
The signs are looking positive for Immotion, and provides an astute way into the burgeoning metaverse market.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here.
That concludes our stock-take for this week. Next week, we will cover the remaining stocks in the Frontier Tech Investor buy list.
Until next week,
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
