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Sector reports

Below is a list of sector reports.

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Mining

15/08/2019
Gold: Doves in the ascendant
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‘Even today, the importance of gold in the international monetary system is reflected in the fact that it is today the only commodity held as reserve by the monetary authorities, and it constitutes the largest component after dollars in the total reserves of the international monetary system.’ Robert A Mundell, Nobel Laureate for Economics, 1999.

Companies mentioned

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Technology

11/07/2019
Diversification and scale for online success
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The global online gaming market generated c £40bn of gross gaming revenues (GGR) in 2018 and newly regulating markets (the US) are expected to contribute to 7% CAGR to 2023 (according to H2 Gambling Capital (H2GC)). However, while regulated markets have provided significant opportunities for operators to date, government intervention remains a constant threat and legislation is tightening. Some mature markets (notably the UK) have been raising taxes and implementing regulatory burdens, which increases the cost of business. In our view, success will depend on a combination of scale, diversification, proprietary technology and a strong balance sheet. Many of the 12 operators in this report should benefit from these dynamics and sector valuations remain attractive, at 12.6x P/E, 8.2x EV/EBITDA and 6.0% dividend yield for FY19.

Companies mentioned
Show companies...888 Holdings, bet-at-home, Betsson, Flutter Entertainment (Paddy Power Betfair), GVC Holdings, JPJ Group plc, Kindred, OPAP, Playtech, Rank Group, Stars Group, The William Hill

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Pharmaceuticals & healthcare

02/05/2019
Cannabis - Where are we and where are we going?
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The cannabis sector is relatively broad, spanning FDA-approved drugs to consumer products. Both markets are still at a fraction of their potential peak sizes due to laws forbidding the use of cannabis and also regulatory hesitance to approve drugs with related active ingredients. Worldwide sales for all regulator-approved cannabinoid therapeutics were only $53m in 2018 while the total legal cannabis market in the United States was only around $8bn in 2017 compared to $234bn in sales for the alcoholic beverage industry. However, things are changing, mainly due to two reasons: legalization is popular with voters and politicians recognize that the tax revenue that could be extracted through sales taxes/VAT could fill budgetary holes.

Companies mentioned
Show companies...GW Pharmaceuticals, Insys, Lilly, Tilray, Corbus, Zynerba, Arena, Therapix*, Intec, Cronos, Amyris, InMed, Intrexon, Johnson and Johnson, Novartis

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Oil & gas

29/01/2019
Exploration watch: 2019 exploration wells
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Worldwide exploration continued to be dominated by ExxonMobil’s ongoing success offshore Guyana, with five discovery wells and the opening up of two new plays. In 2019, this activity will continue, but will be joined by two separate efforts led by Tullow Oil and Repsol that will look to extend this success to the inboard Orinduik and Kanuku blocks. In Latin America attention will also be focused on Mexico, as drilling extends into deeper waters alongside further exploration of the shallower Sureste Basin. In the North Sea, potential high-impact wells in the Barents Sea and West of Shetland were deferred into 2019 and activity looks set to increase in these areas this year. Onshore, we look at high-impact wells in the Nanushuk trend of Alaska’s North Slope and the frontier region of Western Mongolia.

Companies mentioned
Otto Energy , 88 Energy , Hurricane Energy , Cairn Energy , See more..., 88Energy, Aker BP, Azinor Catalyst, BP, Cairn Energy, Chevron, Eco Atlantic, ENI, Equinor, ExxonMobil, Hurricane Energy, INEOS, Lundin Petroleum, Murphy Oil, Nexen, Otto Energy, Pemex, Pantheon Resources, Petro Matad, Red Emperor Resources, Repsol, Siccar Point Energy, Spirit Energy, Shell, Total, Tullow Oil

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*Multiple Sectors

09/11/2018
Deutsches Eigenkapitalforum - EKF conference book 2018
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A very warm welcome to the Edison conference book for the Deutsches Eigenkapitalforum 2018. Performance in the equity markets this October has been one of the weakest in recent history. While risk factors such as ongoing trade disputes, slow-moving BREXIT negotiations and concerns about the Italian budget, to name just a few, are numerous, they are also well known and not new. As this downturn did not have a clear trigger, there is arguably also no clear path to recovery. Our strategist, Alastair George, views these equity declines as a continuation of an ongoing derating of equities. Accordingly, he retains a cautious position on developed market equities.

Companies mentioned

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Oil & gas

21/08/2018
Exploration watch: Argentina
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Argentina has experienced major changes in its oil and gas industry over the last five years. The country holds world-class shale potential in the Vaca Muerta and is the second-largest shale region undergoing development in the world after the US. Discovered in 2010, the Vaca Muerta has attracted major companies to invest in the region including Chevron, Dow, ExxonMobil, Shell and Total. Production has historically been dominated by the state majority-owned company Yacimientos Petrolíferos Fiscales (YPF), but this is shifting as it partners with the majors to develop the Vaca Muerta and as the country moves to more market-friendly policies under President Mauricio Macri, elected in 2015. Unconventional development is not the preserve of the majors, however, and independent Phoenix Global Resources’ 2018 programme is designed to accelerate unconventional growth in the Vaca Muerta. Meanwhile, the shift of focus of the majors to unconventionals has created an opportunity for independents operating in the conventional space, where production has been declining. Both President Energy and Echo Energy are focused on growing conventional production in Argentina and have active programmes in 2018.

Companies mentioned
President Energy , See more..., Echo Energy, Phoenix Global Resources

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27/07/2018
July 2018 Edition of Australasia Monthly Book
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Welcome to the July edition of Edison’s Australasia Monthly Book. The Asia Pacific region has continued to attract investment attention, with international funds looking for quality companies in safe jurisdictions with strong cash flow and yield. Access to information on the Asia Pacific region continues to be affected by the recently implemented European GDPR and MiFID II reforms, which have significantly changed the way that the buy-side can receive its research information. Our approach continues to improve the visibility of our client companies to potential investors, enhances liquidity and provides the opportunity to attract the widest range of potential investors and stakeholders.

Companies mentioned

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Investment trusts

07/06/2018
Listed private capital - Defining the LPC arena
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According to Preqin/McKinsey, private capital (PC) AUM has grown from $0.7tn in 2000 to $5.2tn in 2017. Private equity (PE) remains the largest subsector, but a number of other asset classes have developed rapidly over recent years, including infrastructure and private debt. The listed private capital (LPC) sector provides public market investors with access to these diverse investment opportunities. In light of LPEQ’s strategic shift to represent the LPC arena, we examine the size and scope of LPC and the opportunities it presents to investors. We estimate that the European LPC arena is capitalised at £130bn and offers an attractive risk-reward profile compared to traditional listed investments.

Companies mentioned
LPeC