SMALL CAP MOVERS: Fabric tech firm Heiq slumps 40% after profit warning; Genetics company Genincode jumps 70% on licence approval
London-listed Swiss ‘functional textile’ technology firm HeiQ gave its investors a big dose of New Year’s blues as it opened January with a profit warning.
The firm, which makes fabrics and textiles with anti-odour and anti-microbial qualities for the likes of Hugo Boss and Lycra, saw its shares tumble more than 40 per cent this week as it warned shareholders of a ‘significant deterioration’ in consumer demand during its fourth quarter.
Certainly, amidst the cost-of-living crisis and emerging recession there’s more than a little whiff of fear and uncertainty that’s causing HeiQ’s customers to cut their cloth accordingly, figuratively and literally.
Heiq makes fabrics and textiles with anti-odour and anti-microbial qualities
HeiQ said brands are becoming hesitant to invest in new innovative product development and that’s leading to delays to key milestones with its partner brands.
It told investors that the expected volumes were ‘pushed’ into the next financial year, nevertheless, now trading at around 30p the share is down 60 per cent in the past six months and is a long way away from its December 2020 float price of 112p.
Short of respite, the company downgraded its outlook for 2023 snuffing out expectations for growth – with sales and margins now seen at similarly levels to its last year, and, cutting-cutting necessary.
Across the broader market small caps were nudging higher with the AIM 100 index up by 2 per cent to 4,034.09 by the end of 2023’s first week of trading, which was broadly in line with the FTSE 100 blue-chips and the mid-cap FTSE 250 benchmark.
On the rise was genetics company Genincode which saw its shares rocket 70 per cent to trade at 15p after its Irvine, California, laboratory landed state licensing approval and CLIA certification.
Significantly, it opens new commercial opportunities as it will allow the health-tech junior to provide products used for risk assessments in cardiovascular disease to patients, across 49 of the 50 states in the US.
‘There has been a tremendous work effort to deliver these approvals representing a major advance in the company’s commercial programme,’ the company said in a statement.
Another UK tech stock on the up was radio frequency mesh network provider CyanConnode which climbed some 31 per cent higher to 17p with the news on Wednesday that that its Indian subsidiary received an order to supply its Omnimesh Modules to a smart meter deployer in Jabalpur, India.
The order comes from Gujarat civil engineering firm Montecarlo Limited and, according to executive chair John Cronin, it was ‘won against a very competitive field’.
Meanwhile, in the junior oil and gas sector, there was a frustrating though likely not-too-unforeseen challenges for Enwell Energy which noted that it could lose its rights to operate in Ukraine due to its ties to Vadym Novynskyi, described as the owner of major indirect shareholding interest in the company.
Novynskyi is presently under sanctions from the Ukraine government, and, new laws coming into force at the end of March will allow the government to suspend or revoke mineral or hydrocarbon licences ultimately owned by those under sanction.
Sticking to hydrocarbons it was for entirely operational reasons that United Oil and Gas was among the fallers, as news of a dud well in Egypt sent its shares down 28 per cent.