AUS
NZ
UK
CA
USA
IND
_07_03_2026_05_47_55_513416.jpg)
Summary
- The UK's PMI index increased from 50.1 in June 2020 to 53.3 in July 2020.
- The PMI index for the Euro Zone increased from 47.4 in June 2020 to 51.8 in July 2020.
- Versarien PLC launched a face protection mask that has graphene-enhanced polymer.
- Versarien PLC secured a loan facility of £5 million from Innovate UK Loans Limited.
- 7digital Group renewed the contract with Universal Music Group France.
- 7digital Group is hopeful to report operating profitability in H2 FY2020.
Given the above-market conditions, we would discuss two stocks - Versarien PLC (LON:VRS) & 7digital Group PLC (LON:7DIG). VRS is a basic materials stock, whereas 7DIG is a consumer discretionary stock. Based on the 1-year performance, VRS was down by 61.22 percent and 7 DIG was up by 89.62 percent (as on 3 August 2020 before the market close at 3:20 PM GMT+1). Let's skim the financial and operational updates of the companies to understand the stock better.
Versarien PLC (LON:VRS): 2-DTech received a grant from Advanced Propulsion Centre (APC)
Versarien PLC is a UK based chemicals company that manufactures engineering materials. The Company categorizes the business under Graphene & Plastics and Hard Wear & Metallic Products. The Company has seven subsidiaries, and the Company is included in the FTSE AIM All-Share index.
Recent Events
- On 3 August 2020, the announced the launch of graphene enabled protective face mask. The mask uses the Company's graphene-enhanced polymer PolygreneTM. The Company had delivered 100,000 masks to a British university and 20,000 masks to businesses engaged in mechanical and electrical services in the UK. The developed mask provides defence against airborne bacteria and viruses. Versarien has developed the mask in collaboration with a Chinese partner.
- The loan facility is at an interest rate of 7.4 percent per annum that would be repaid over 36 months, starting after 45 months from the drawdown. The funds from the loan would be used to enhance the manufacturing capacity of the graphene to a commercial supply level. The loans received from the Innovate is under the fund scheme of £75 million that was formed to provide credit to small and medium enterprises to innovate, develop and manufacture products.
- On 28 April 2020, 2-DTech, the subsidiary of the Company, received a grant of £104,000 from Advanced Propulsion Centre (APC). The award was given under the scheme that is formed to fund the development of low-carbon technologies.
Corporate Update as reported on 1 July 2020
The Company announced formed a JV, Beijing Versarien Technology Co. Ltd (BVT), in March 2020, in China with Young-Graphene Technology Company Limited. The agreement had a backstop arrangement following which the Company could purchase the equity interest of Young-Graphene Technology Company Limited in the JV for the nominal value of £1. Versarien exercised the backstop arrangement and acquired the 100 percent of BVT. On completion of the backstop arrangement, the JV would be terminated.
Varserian's Business Model
(Source: Company Website)
Share Price Performance Analysis
1-Year Chart as on August-3-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Versarien PLC's shares were trading at GBX 45.00 up by about 9.76 percent from the last closing price (as on 3 August 2020 before the market close at 3:20 PM GMT+1). Stock 52-week High and Low were GBX 124.00 and GBX 21.20, respectively. The Company had a market capitalization of £69.57 million.
Business Outlook
The Company wants to expand the commercial footprint of the face protection mask, and the Company had received encouraging initial interest, and it is talking with few potential customers. The Company would use the loan raised from Innovate UK to advance the production capacity of graphene. The Company would also develop graphene-enhanced lightweight materials and powertrain structures. The Company remains focused on China and the expansion of commercialization of the graphene products.
7digital Group PLC (LON:7DIG) – Renewed contract with GrandPad
7digital Group PLC is a UK based music service provider that provides a Music platform and a Branded music solution. The Music platform provides content, data and services and manages and monetizes the music, whereas Branded music solution manages branding and engagement with the users. 7digital Group is listed on the FTSE AIM All-Share index.
Contract renewal with Universal Music Group France as reported on 17 June 2020
The Company renewed the contract with Universal Music Group France (UMF) to support the music streaming services of La Poste Mobile and support Digster. The Company had an existing partnership with UMF, and this agreement was an extension of the association. La Poste Mobile is a wireless communications services provider in France and used 7digital's technology to engage in back end-user reporting as it stream's music that is sourced from UMF. Digster is a subsidiary of the UMF and 7digital's music platform would provide music services coupled with mobile services in Europe, a few markets in Africa and the Middle East. 7digital's technology would also enable Digster to service customers as per their regional preferring. The agreement is for an initial 12-months, and the Company would receive set-up and monthly fees, in addition to the usage-based content fee.
Business Update as reported on 27 April 2020
The Company highlighted that it anticipates the renewal of the few contracts and start of new agreements would move from Q2 FY2020 to the second half of the financial year due to the pandemic. The Company took some cost mitigating measures that would translate to an annualized cost savings of close to £750,000. The Company is positive about reporting operational profitability in H2 FY20. In April 2020, the Company renewed the contract with GrandPad, where the Company would provide access to over 30 million songs and feature to curate the playlist to GrandPad's customers. GrandPad provides music services to adults and offers purpose-built tabs for people aged 75 and above for mental well being.
Client Portfolio of 7digital Group
(Source: Company Website)
Share Price Performance Analysis
1-Year Chart as on August-3-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
7digital Group PLC's shares were trading at GBX 0.45, up by about 16.88 percent from the last closing price (as on 3 August 2020 before the market close at 3:20 PM GMT). Stock 52 week High and Low were GBX 0.75 and GBX 0.15, respectively. The Company had a market capitalization of £9.45 million.
Business Outlook
The Company plans to vision the niche market by providing services that would cater to regional preferences and curated playlist. The increasing penetration of mobile phones would support the business model of the Company, and it would lead to more music streaming. The Company is reliant on the renewal of the existing contracts and winning new contracts.
