Small Talk: Pawnbroker thrives on credit crunch woe
Monday 18 August 2008
If more evidence was needed that the credit crunch is doing its worst to people’s lifestyles, the refuseniks should make a note of H&T’s interim results, which are due to be reported on Wednesday. The pawnbroker is set to report that everything is going swimmingly well, and even as the majority of high-street retailers struggle, the Alternative Investment Market (AIM) listed group is pressing ahead with its shop opening programme.
However, it is not just the credit crunch that is behind H&T’s apparent growth: yes, there is some truth in reports that hard up (mostly former) City financiers are flogging off the Rolex in order to meet Little Johnny’s public school fees, but the inflated price of gold, H&T’s particular favourite, is also helping the company.
Investors that back the group largely do so because they are comfortable in the knowledge that the group is asset-rich (for obvious reasons), and as the price of gold increases so the company becomes more attractive. Indeed, clever folk, no doubt having attended the same said public school, might decide thatH&Toffers an intriguing hedge against the prospect of losing their job.
Skywest airline on a high
Here is a piece of shocking news: Skywest is a profitable Aim-listed company. And here is piece of even more shocking news: it is an airline.
The group is 45 years old, but has had a shot in the arm since 2003, when the executive chairman, Jeff Chatfield, and his team decided to target clients in the mining sector, a boom market in Western Australia.
That decision turned out to be rather a shrewd one. As the likes of British Airways and Ryanair continually tell tales of woe, Skywest was able to announce a 94.9 per cent year-on-year increase in charter services for July. Even the most casual reader of this column will already have realised that miners are among one of the few sectors making any money during the downturn, and as they travel around, ancillary groups like Skywest are benefiting.
One of the biggest complaints among other airlines is that they are not able to readily pass on increases in oil costs to the passenger. Not a problem for Skywest, says Mr Chatfield, who points out that his contracts with the likes of Rio Tinto and BHP Billiton include provisions for the extra cost to be passed straight through.
Vitec is a winner at the Olympics
As the Beijing Olympics get into full swing, it seems that the television crews sent to cover the Games are spending as much time trying to film Free Tibet protests as they are actually covering some sporting endeavour or other. Either way, the event has attracted a record amount of television coverage, and that can only be good news for Vitec, which claims to be the biggest supplier of what they call broadcast accessory equipment to the Games.
For what is not a big company, the event is a serious operation, with 35 tonnes of Vitec's kit being used by the likes of America's NBC news. And while NBC is beaming back the pictures to the US, in high definition for the first time, one viewer who might be taking particular note of the picture quality is one Bill Gates. Through Harris Associates he is the biggest shareholder in the group, with nearly 13 per cent of the stock.
Peninsular Gold aims to shine with Malaysian mine
The Aim market is all about having a good idea and trying to persuade others to go along for the ride, more often than not by stumping up the cash for whatever adventure is in the offing.
By the end of September, Aim-listed Peninsular Gold hopes to start pouring gold from its mine in Malaysia, which it forecasts will be producing 25,000 ounces per annum. While there is always quite a bit of nervousness around mining groups that are not actually in production, the group has already secured $20m from investors by issuing three convertible loan notes to pay for the construction of its plant.
Everything appears to be on track for the group, especially as with a predicted cost per ounce of $250, Peninsular should be able to return a pretty healthy margin. However, any nervousness that investors did have before buying can only have been heightened in recent weeks as the price of gold continues to soften, falling below $800 a troy ounce for the first time this year last Friday.
Desire deal takes chill off Falklands drilling plans
The Falkland Islands are generally considered to be a rather inhospitable place to live, given the weather and their remoteness. If you work for an exploration company and live there, and you cannot get hold of a rig to get at the gas that you think lies below the seabed, life must be doubly frustrating.
For those at Aim-listed Desire Petroleum, the frustration may be about to be lifted after the group announced last week that it has signed a deal with the shipping and drilling firm Arcadia Petroleum. As part of the agreement, Arcadia, and a third party, Rockhopper, will cover the £10m or so it costs to drill a couple of wells, while Desire will retain 57.5 per cent of the site, which they reckon has the potential to provide as much as 7.8tr cubic feet of gas.
The farm-out deal is a rather nifty piece of business, which not only gives Desire the chance of getting at the gas for no cost, it also avoids the prospect of going cap-in-hand to investors to ask for more money. The shares were up 10 per cent on the news last Thursday.
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