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Monday 6th October OMG ! REPORT
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…Last Week….
..market’s did not improve; unpredictable world events drove them lower. The FTSE 100 dropped 1.82% to 6,527, the FTSE 250 was 0.94% lower and the AIM All Share fell 1.28%. Improved US employment numbers, however cheered markets-up on Friday. For 2014 so far; FTSE 100 has gained 4.3%, FTSE 250 is up 5.2% while the Aim All Share is disappointing off 4.4%. Prospects for lower UK inflation, mixed PMIs (Purchasing Managers Index) and various world troubles firmly indicate there is no rush for the BOE to increase interest rates from 0.5%.
……..This Week………..
The UK economic outlook is benign, if not even good- which will start supporting the performance of Small Caps. On Tuesday there is UK Industrial Production figures and on Wednesday Inflation which could fall to as low as 1%. The key international influence remain the prospects of QE ‘further’ tapering and increasing US Interest rates; on Friday there is a US Treasury Statement….. be weary
Pause for Thought
The ‘multiplier’ effect of the QE money flowing around all asset classes has supported equities in US with corporate equity buy backs which may have created a ‘mild’ bubble that is set to deflate.
Financial Times
REPORTS
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RAME ENERGY (LSE:RAME)*
The interims from this recently floated multi-disciplinary engineering business and project developer shows that it is transforming into an independent Power Producer that should be capable of producing strong earnings from quality power projects. The near term project pipeline is being accelerated with their partner Santander and should crystalise value and milestone payment. An off grid PPA project for a mine in southern Chile is subject to final contracts and financing construction should start on four projects with a total of 118MW in Q1 of 2015.
Once construction starts Rame receive stage payments and will become a power producer which is value enhancing. The commissioning of the first two on-grid wind farms at the end of the year will also be a key milestone for Rame as will the progress of the smaller off grid project in Patagonia. The focus is on project delivery and revenue and earnings growth.
There are three distinct and complementary business divisions; on-grid power generation, off-grid power generation and engineering services. All three divisions providing a strong platform from which they will be able to generate further significant growth in 2015. The earnings profile from these long terms projects make this an attractive institutional investments.
Financials
Due to increased investment the loss increased £1.2m with net cash of around £2m as £9.75m was raised at 15.5p a share after the period end. Sufficient for key milestones tyo be achieved.
Trading Strategy
There is a widow of opportunity as high return assets are being built alongside Santander, which reduces the financial risk and improves the operational leverage. It is a tuck away and certainly a buy on weakness.
· Although not the broker to Rame Jon Levinson has traded in these shares
Price 18p Mkt Cap £17.94m Next Results Finals to December 2014
