There’s something of a common misconception that the Aquis Exchange stock market is an index full of little tiddlers that don’t trade much, and they’ve only opted for an AQSE listing as they don’t pass the cut for a ‘proper’ stock exchange.
Nothing could be further from the truth. Yes, Aquis does have companies that have market capitalisations that can be counted in the tens and hundreds of thousands of pound – the smallest constituent of the index is Gowin New Energy Group Limited [AQSE:GWIN] a Taiwanese retailer of LED lights, tea, agarwood incense and essential oils which has a market cap of GBP21,750.
But Gowin – whose primary market is Asia not the UK – is an exception to the rule and investors should be viewing the market through the lens of what it does. Aquis is unabashedly a growth market – and as such it’s not going to dominated by multinational companies with hundreds of years of history. That’s not to say it doesn’t have its share of veritable old institutions, but Aquis was established to create a platform for smaller, younger companies at the start of their growth journey.
Moreover, although it has lower investment barriers than the FTSE, this doesn’t mean lower standards. Aquis just has a more streamlined process with potentially lower listing fees, and as such is more attractive to smaller, more agile innovative companies that are more focused on growing their businesses, than the nameplating that listing on another exchange can offer. These companies want to grow their businesses – which is a good thing for shareholders – and aren’t overly concerned with status, which some management teams seem to be more focused on and therefore dismiss Aquis. Those companies are more ones to look out for – it ain’t what you do, it’s the way that you do it.
That said although Gowin is a micro-business when compared to some listed entities, albeit dual-listed on Aquis and the Taipei Stock market, Aquis has some much more substantial companies.
1. Mears [AQSE:MER]
Mears, the property maintenance business with a market cap of over GBP330m is also listed on the FTSE’s main market under the ticker code LON:MER. The Armchair Trader recently wrote about the billion-pound business which reflects the concept of Aquis. Starting off from a man-and-van in Gloucester in 1988, the company is now one of the county’s most significant local authority contract maintenance businesses.
As reported, Mears enjoyed a strong year, and a few days ago (8th August) published its interim results for the half-year to end-June. The company reported revenues up 10% year-on-year to GBP580m, profit before tax up 44% to GBP30.5m and declared an interim dividend of 4.75p/share, up 28% on this time last year, putting many of its ‘senior market’ peers in the shade.
2. Arbuthnot Banking Group [AQSE:ARBB]
Arbuthnot, another dual-listed company LON:ARBB is Aquis’ second largest constituent by market cap, with a market capitalisation of GBP155.8m. The private banking group has also been featured by The Armchair Trader and has been around for two hundred years. With a history that traces back to the age of tea clippers, one would not think it has the same ‘growth’ profile as other companies on Aquis. However, the company, whilst retaining its private client core, has also diversified into the newer, more modern markets of asset finance, leasing, and commercial lending and its growth plan is encapsulated in its ‘Future State 2’ plan, focused on diversifying its loan books by increasing the proportion represented by the specialist lending divisions.
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It’s been a bit of a hard year for the financial services company as high interest rates unwind, but in its latest results for the six months to end-June, published last month, despite its reorganisation and interest rates coming off the boil, Arbuthnot still reported profits before tax of GBP20.8m, EPS of 94.6p and declared a dividend (paid in June) of 20p/share.
Arbuthnot also saw customer loans up 3% to GBP2.4bn and its Specialist Lending Divisions’ loan balances grew by 12% in the first half of the year, and 29% year-on-year to GBP861.1m.
3. Aquis Stock Exchange [AQSE:AQX]
Aquis, the company behind the stock exchange is the third-largest company by market cap valued at GBP134m. It’s doing quite well, testament to the unique selling point of the exchange with its last results from March showing revenue growth of 13% and profits up by 15%. Growth has been most notable in technology and data channels, with management noting that 16 new companies had joined the exchange in FY23. Whilst macroeconomic uncertainty continues to drag, the company notes that it has made a strong start to the new year and participants have been supportive of recent rule changes.
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The Armchair Trader did a much deeper dive into the business at the beginning of the year, speaking to the exchange’s CEO Alasdair Haynes as part of our popular podcast series. Haynes is quite chipper about the future, speaking of a tidal wave of new international investment following the Labour Party’s recent victory in the UK General Election.
4. Shepherd Neame [AQSE:SHEP]
Next, we raise a glass to GBP100m brewer, Shepherd Neame, a Kentish stalwart The Armchair Trader covered in January. With consumers returning to the pubs following a long lockdown, Shepherd Neame has been enjoying the last few years. Shepherd Neame is Britain’s oldest brewer – established in 1698, but with a history of continuous brewing on the same site that dates back over 100 years earlier – and primarily operates in Kent and the South East and has a stable of well-known ales and beers including Spitfire and Bishop’s Finger. However, the brewery also manufactures other beers under licence, including Thailand’s Singha beer and US craft beverage Boston Lager, and operates around 300 pubs and hotels. The company exports its brands to over 40 countries, including India, Brazil and Canada.
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Again, this is no startup, but has a growth bent opening up new premises and having a systematic programme of refurbishment of its existing estate, when many pubs across the country are shutting down or running down. In its last results to 23rd December 2023, published in March, the Faversham-based brewery saw its revenue for the half year up 4.3% to a record GBP89m with earnings up 5.2% and operating profit up 8% to GBP6.8m. The company announced a interim dividend of 4.2p/share – up 5% y-o-y.
Chief executive, Jonathan Neame said at the time: “[Although it’s been] a turbulent few years for the hospitality sector […] the fundamental strengths of Shepherd Neame, as a well-balanced, well-invested, cash generative business, with great people operating at the heart of our communities, are intact. We remain confident in [the] company’s long-term prospects.
5. Invinity Energy Systems [AQSE:IES]
Last on the list, with a market cap just shy of GBP100m is Invinity Energy Systems. Invinity manufactures flow batteries for large-scale, high-throughput energy storage requirements of business, industry, and electrical networks. Without doubt a key growth market.
Invinity’s factory-built flow batteries run continually with no degradation for over 25-years, making them suitable for the most demanding applications in renewable energy production. Energy storage systems based on Invinity’s batteries are safe, reliable, and economical, and range in size from less than 250 kilowatt-hours to tens of megawatt-hours.
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Invinity was founded in April 2020 through the merger of two flow battery industry leaders: redT energy plc and Avalon Battery Corporation. With over 65 MWh of systems already deployed or contracted for delivery across over 70 sites in 15 countries, Invinity is active in all major global energy storage markets and has operations in the UK, Canada, USA, China and Australia. Invinity is also listed in the UK on AIM LON:IES and trades in the USA on OTCQX [OTCQX:IESVF].
Last month Invinity opened a new manufacturing facility in Motherwell, Scotland, six-times the size of its existing factory, that will increase Invinity capacity to 500MWh a year. The country has been crying out for a battery factory of this scale for the last five years. This move is a bright spark that fuses with Britain’s new vision for growth.
The Aquis Exchange is proving to be a fertile ground for diverse investment opportunities. While it’s often stereotyped as a market for small-cap companies, the exchange is home to a variety of businesses, from established enterprises with significant market capitalization to dynamic growth stocks. As demonstrated by the companies highlighted, Aquis offers a unique blend of established value and high-growth potential, making it a compelling market for investors seeking exposure to a mix of company sizes and sectors.
