Tuesday 22/11/22

1. In ENERGY NEWS, Sinopec signs a massive deal with Qatar, Eskom’s money troubles persist and nuclear fusion gets more funding
2. In EV-RELATED NEWS, Tesla supplier warns of graphite issues, Pod Point has a profit warning, Ikea pours money into car charging and Domino’s invests in EVs
3. In SOCIAL MEDIA/APP NEWS, Twitter sheds more jobs, the FCA warns of trading gamification, dating apps suffer and Grindr looks vulnerable
4. In INDIVIDUAL COMPANY NEWS, Disney looks forward, Beyond Meat has issues, Compass bounces back and Virgin Money pays out
5. AND FINALLY, I bring you Christmas-dinner-in-a-can and Pringles Mingles…

So Sinopec does a massive deal, Eskom problems persist and nuclear fusion gets a boost…

Did you know that there is a podcast to go with Watson’s Daily? In this podcast, I discuss two stories from the day’s edition in a bit more depth with a Watson’s Daily Ambassador, my mate Ralph (on the Weekly podcast) or a special guest. The idea of this is to help to give you more of an idea of what talking about this stuff could sound like 👍 You can find the podcasts on the buttons below:

China’s $60bn deal with Qatar will keep gas on for 27 years (Daily Telegraph, Oliver Gill) highlights the humungous deal that state-owned Sinopec has signed with Qatar Energy for the latter to provide the former with LNG for 27 years, starting in 2026. China was the world’s biggest importer of LNG last year, overtaking Japan in the process, as it attempts to wean itself off heavy use of coal. This is probably the biggest single LNG sales and purchase agreement in history.

Then in Eskom warns of lack of funds to fuel South Africa’s back-up power plants (Financial Times, Joseph Cotterill) we see that South Africa’s embattled state electricity monopoly says that it’s running out of money to buy diesel for back-up power plants. This means that the government will have to bail it out or the country will face even more severe rolling blackouts. * SO WHAT? * Eskom has been burning through diesel this year to take the edge off power cuts that have been happening because of a creaking network of coal plants, but it is now nearing the end of the line on finances. There have been over 100 days of outages this year (twice last year’s level) and many South Africans have been cut off for up to 10 hours a day. This situation will only get worse without more cash.

On a more positive note, Nuclear fusion research wins £100m in extra funds (Daily Telegraph, Howard Mustoe) shows that the UK government is going to allocate over £100m to nuclear fusion research as part of a wider effort to re-engage with various European scientific programmes. We have four nuclear fusion startups versus three in Japan, five in the EU and 20 in the US. Making nuclear fusion a viable energy source is the Holy Grail of renewables, so putting money into it makes a lot of sense!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Graphite supplies could be tricky, Pod Point has a profit warning, Ikea puts money into chargers and Domino’s buys into EVs…

In Tesla supplier warns of graphite supply risk in ‘opaque’ market (Financial Times, Harry Dempsey) we see that Australia’s Syrah Resources, the world’s biggest natural graphite producer outside China, is warning that Western supplies of graphite could get tighter over the next ten years as pricing for the battery material is difficult to predict. * SO WHAT? * As things stand currently, China mines 65% of the world’s graphite, processes 85% and has the world’s top six anode material producers (battery anodes mainly use graphite), according to the International Energy Agency. Although China is also massive in the refining of other battery materials including lithium, nickel and cobalt, mining for the materials is spread around the world. Given that natural graphite demand is expected to triple in the next four years due to rising sales of EVs, something needs to be done. Prices of graphite have already risen by a third over the last year so, given everything else, you would have thought graphite prices are only going to be going up from here!

Meanwhile, in the world of charging, Electric car charger Pod Point issues profit warning on delayed home installations (Financial Times, Peter Campbell) shows that the EDF-backed electric car charging group Pod Point has suffered because long waiting times for buying EVs has led to prospective owners delaying their purchase of home chargers. In some cases, global supply

problems have meant that customers are waiting for over a year for new models, meaning that there’s less urgency for owners to buy the chargers – a situation Pod Point doesn’t think will ease until 2024. * SO WHAT? * This is a big deal for Pod Point because it makes about 60% of its revenues from installing home chargers, with the remainder coming from workplace and commercial. Orders from businesses have also slowed down as they try to cut costs.

Meanwhile, Ikea family pours £177m into electric car charging sites (Daily Telegraph, Oliver Gill) shows that Interogo Holding, the Swiss-based foundation that runs the legacy of Ikea founder Ingvar Kamprad, has invested £177m into engineering giant ABB’s EV spin-off, ABB E-mobility. ABB E-mobility made a failed attempt at a stock market listing earlier this year, so I’m sure this money will come in handy before it tries again!

Then in Domino’s Pizza invests in electric vehicle fleet to help stores recruit drivers (Wall Street Journal, Heather Haddon) we see that Domino’s Pizza is buying in 800 branded Chevrolet Bolts and supplying them to some of its US outlets in an attempt to attract more drivers who don’t own their own cars. * SO WHAT? * This feeds in to the overall movement of some larger companies – including FedEx, PepsiCo and Uber – electrifying their fleets. Domino’s has struggled this year, like rivals Pizza Hut and Papa John’s, to attract enough delivery drivers, so this seems like a reasonable move whilst also burnishing the company’s eco-credentials.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Twitter sheds more jobs and trading apps face criticism while dating apps suffer…

Twitter lays off some sales employees after they committed to Twitter 2.0 (Wall Street Journal, Alexa Corse and Jessica Toonkel) shows that Twitter just went and cut staff anyway after they opted to stay on and adopt the “hard core” working ethic. Despite all the upheaval, Twitter added 1.6m active users over the last week! The drama continues…

Apps ‘turn investors into problem gamblers’ (Daily Telegraph, Simon Foy) is an interesting article that cites the FCA as condemning the gamification of trading apps that can encourage users to become problem gamblers. It reckons that having features like having in-app points, badges and celebratory messages on the completion of trades encourages users to spend more than they should on such platforms. Apps including eToro, Revolut and Trading 212 send push notifications on stock prices, which sails a bit close to the wind if you are being ultra-sensitive about gambling. * SO WHAT? * It sounds to me like this is an early warning but TBH I’m not really sure what the regulators can do here. I wonder whether they’ll go down the same road as cigarettes where you will just keep seeing a massive warning about the dangers of over-reaching yourself financially.

Squeezed singles dump dating apps to save cash (Daily Telegraph, Daniel Woolfson) shows that singles are spending less

these days on dating apps as everyone reins in extraneous expenditure! The latest figures from a Nationwide Building Society survey show that subscriptions to dating services and in-app purchases fell by 12% last month versus October 2021 while the total number of transactions fell by 35%. Staying on the same theme, Grindr: low free float disguises an unpopular Spac matchup (Financial Times, Lex) takes a rather unflattering stance on last week’s SPAC-backed flotation of the LGBTQ dating app, which shot up by a tumescent 200% on its first day of trading! It points out that the number of shares available to trade (called a “free float”) was actually very thin, which means that the share price can be very volatile. Also, companies that have floated via the SPAC-backed route have seen their share prices fall by 49% in the first nine months on average while rivals Match Group and Bumble have dropped by 66% and 37% so far this year. Grindr now has a massive valuation versus its rivals and will need to meet lofty revenue growth targets to justify it. * SO WHAT? * This is a bit of tricky one. Are dating apps a necessity for one’s overall well-being or a luxury that you can cut back on when budgets are tight? I would have thought that even if people abandon them in the short term, they will come back. After all, if you have to cut down on the number of times you socialise, the chances of meeting Mr/Mrs/Ms Right/Right-Now are lessened and swiping on your phone seems to be a way of narrowing the field (although I’m clearly not an expert in this regard!).

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

We look at the Disney aftermath, Beyond Meat’s problems, Compass’s rebound and Virgin Money’s triumph…

In a quick scoot around other interesting stories today, Walt Disney executives staged revolt against ousted chief Bob Chapek (Financial Times, Anna Nicolaou, James Fontanella-Khan and Alex Barker) gives us a bit more juice to yesterday’s story about Bob Iger suddenly returning to the company to replace Bob Chapek as CEO, saying that it was all put in motion over the summer against the backdrop of the company’s share price dropping by 40% this year. Disney: return of the Jedi brings a new hope – temporarily (Financial Times, Lex) reckons that although Iger’s return will soothe some investor worries, his honeymoon period won’t last forever and a fairlytale ending is not a given. It’ll be interesting to see what sort of strategic plan he comes up with.

Then in Beyond Meat’s very real problems: slumping sausages, mounting losses (Wall Street Journal, Jesse Newman) we see a really interesting article about the rise and fall of the company that floated in May 2019 to great success. Sadly, the company has been shedding money and increasing debt while other players have been taking market share. The company’s share price has fallen by a painful 83% in the last 12 month. * SO WHAT? * This is a really interesting article that I would recommend you read in full if you can. However, the problems remain that Beyond operates in a more competitive market selling a premium-priced product while trying to keep the financials under control. At the moment, it’s not working

and it seems that the vegan wave is losing momentum. I think this is a shame as I like the concept, but if things get much worse you would have thought the company could find itself a takeover target.

Elsewhere, Sales at world’s biggest catering group pass pre-pandemic levels (Financial Times, Oliver Barnes) highlights a strong performance by Compass, as a growing number of companies are choosing to outsource their food services. Compass provides food for hospitals, care homes and work canteens (and more besides) in 40 countries and said that it expected operating margins to breach 6.5% next year. * SO WHAT? * This was a better-than-expected performance but I have to say I wonder how much more momentum we’ll see here as inflation continues to push prices up and more companies start to go out of business. I would also imagine that company catering would be a cost that could easily be cut the longer a recession continues.

Then in Virgin Money adds £50m to buybacks after profits leap (The Times, Tom Howard) we see that challenger bank Virgin Money said it would splash out on share buybacks after posting better-than-expected results. Like other lenders, Virgin Money (which is the UK’s sixth biggest lender) has been boosted by the current trend of rising interest rates and Virgin Money: challenger bank has mature allure (Financial Times, Lex) suggests that the lender has done a good job and that its valuation looks quite attractive currently versus its rivals.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

…in other news…

We’ve now reached that time of year where I start talking about creative food innovations with a festive theme. This sounds kind of weird initially, but actually I think it should work: Heinz is selling ‘Christmas dinner in a tin’ with turkey, pigs in blankets and sprouts (The Mirror, Sara Odeen-Isbister). What do you think? Clearly this is more of a solo thing rather than a communal thing. When you think about it, it’s just posh veg soup with a bit of token meat in there.

Then in Pringles fans beg for ultimate multi-flavour can after brand teases ‘Pringles Mingle’ (The Mirror, Amber O’Connor) we see that Pringles fans are crying out for this new product to be made. Let’s not forget, though, that Pringles’ potato content is only 42%…