Daily Stock Market Report (Thur 3 April 2025) - "Liberation Day", DFCH Interview, MWE, CURY, MOTR, BIG, AGR/PHP, MOON, APTD, XLM, COG

Good morning! Today's Agenda is ready.

"Liberation Day": President Trump has announced a 10% universal duty on all goods brought into the US, plus further tariffs on 60 countries designed to equalise trade imbalances between the US and those nations.

Tariffs go into effect at 1 minute past midnight on April 5th.

Some of the special tariffs on particular countries/groups:

• China 34% - the total tariff here is now 54%.
• EU 20%
• India 27%
• Japan 24%
• Pakistan 30%
• Sri Lanka 44%
• Switzerland 32%
• Taiwan 32%
• Vietnam 46%

The blue chip Eurozone index, the STOXX 50, is down 2%. The FTSE is down 1.2%. No special tariff has been applied to the UK.

1pm: wrapping this up here, another clean sweep. However, the markets remain in the red with the STOXX 50 now down nearly 3% and the FTSE down 1.6%. Let's see if it calms down tomorrow! Cheers.

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Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Assura (LON:AGR) (£1.5bn)	Possible offer from Primary Health Properties (LON:PHP). Mix of shares and cash.	Implied offer value 46.2p (including a normal dividend). Premium of 23.5% to the undisturbed price. AGR’s last-reported NAV was 49.4p per share on 30 Sep 24.	PINK (Roland) [no section below] Assura is now in receipt of two possible offers but no firm offers. The KKR-led proposal of 10 March was for 49.4p per share in cash, matching NAV, so appears the fairest offer for shareholders. Note that the AGR Board has not yet granted an extension to the deadline for a firm offer from PHP. The current deadlines are 11 Apr (KKR) and 7 Apr (PHP). It may be that AGR will reject the PHP offer as inferior to KKR, but with due diligence by KKR presumably ongoing, AGR’s board may want to hedge their bets to try and ensure they secure an offer.
Currys (LON:CURY) (£1.0bn)	Profits expected to be above previous guidance	“Continued positive” LFL sales growth in the UK&I and Nordics. With <5 weeks until y/e adj PBT is now expected to be c.£160m (prev. £145-155m). A “strong net cash position” is expected at year end. FY update due 21 May 25.	AMBER/GREEN (Roland) [no section below] A very brief but positive update from Currys today ahead of the company’s FY update in May – when we will take a closer look. For now, we know that the momentum reported in January has continued through to (almost) the year end. House broker PanLib translates this to a 5% increase in FY25 EPS, giving a figure of 10.6p. Repeated earnings upgrades and a modest valuation suggest Currys may deserve its Super Stock styling, but I share Graham’s caution about this low-margin, cyclically sensitive business so I’m leaving our view unchanged today.
Moonpig (LON:MOON) (£741m)	TU	Rev £350-353m (slight miss?). EBITDA margin ahead of exps, double digit EPS growth.	AMBER/GREEN (Graham) A new £60m buyback. Personally, I'd prefer to see the company using its cash flow to reduce leverage further, as its balance sheet doesn't look particularly healthy. I do think this is a great brand and an impressive business, and I'd give the shares another look.
Big Technologies (LON:BIG) (£211m)	Update re: CEO Dismissal	Has notified the Takeover Panel as former CEO’s actions may “engage” the takeover rules.	AMBER/RED (Graham) These shares are potentially cheap if the fallout from the recent controversy is mild, but it’s difficult to have trust in these circumstances. Accounts for 2024 remain delayed.
Aptitude Software (LON:APTD) (£161m)	New Contract Win	$1.0m/5yr contract for Fynapse product w/ mobile parking payment customer.	AMBER (Graham) [no section below] The company is keen to highlight momentum in its sales pipeline and the potential for its product to achieve shortened sales cycles, which is reasonable. That said, I'm not sure that a contract win for $1m over five years deserves its own RNS. Annual revenues at APTD are c. £70m. Overall, I'm not seeing enough growth here to justify a fairly high valuation (ValueRank only 17).
Motorpoint (LON:MOTR) (£110m)	FY TU & further buyback	FY retail vol +14% YoY, gaining share. Exp adj PBT of £4-4.3m. New buyback for up to 3m shares.	BLACK (AMBER) (Roland) Today’s RNS takes a positive tone, reporting higher volumes, market share gains and improved PBT vs H1. However, it looks to me like a possible profit warning, with the associated earnings downgrade revealed through the company’s house broker today. Shore Capital has cut earnings forecasts for FY25 and FY26 due to finance costs staying high for longer than previously expected. Motorpoint appears to be trading well, but the shares look fully priced to me and I’m disappointed that management chose to release a downgrade in this way.
MTI Wireless Edge (LON:MWE) (£44m)	Significant Mottech contract extension	The water mgt division has won a $1.5m/3yr contract extension with an Israeli municipality. All new service agreements such as this are said to include price increases, presumably supporting margins.	AMBER/GREEN (Roland) [no section below] This update is positive and represents c.+3% annualised addition to FY24 revenue for the water business. This division had a useful 13% margin last year. However, MTI faces difficult operating conditions in Israel at the moment. Shore Capital has left forecasts unchanged today, suggesting eps growth of 2% this year. I believe there’s scope for upgrades to forecasts, especially given MTI’s significant defence exposure. On a P/E of 12, the shares could offer some value. But this is a small, family-controlled overseas business, so I think a measure of caution is also sensible. Given the stock’s recent de-rating, I’m happy to take a mildly positive view.
Cambridge Cognition Holdings (LON:COG) (£15m)	Contract Win	Selected by major pharma for 2 Phase 3 MDD trials. Contract wins with total value £1.2m that will run until 2027-2029. Forecasts unchanged.	AMBER/RED (Graham) [no section below] Taking a moderately negative stance on this as it has been around for years but remains  very small and close to the levels where a public listing is unsustainable. Today's announcement of contract wins worth £1.2m doesn't change anything. Both top-line growth and bottom-line profitability have serious room for improvement.
XLMedia (LON:XLM) (£14m)	Full Year Results	XLM is now a cash shell. Y/E cash was $35m, $12m rec’d YTD. Cash is being returned to shareholders.	PINK (Graham) [no section below] I'm putting this PINK as it has made various business disposals and now expects that its shares will be suspended around 12th May, as it returns cash to shareholders. Cash at 31st March was $13.7m, then $11.2m was received on 1st April. I make that $24.9m, equivalent to £18.9m which is >30% higher than the current market cap. Perhaps buyers at the current level will enjoy an uplift but this isn't the type of trade I go for these days - taxes and costs always seem  to come in higher than expected.

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Distribution Finance Capital Holdings (LON:DFCH)

• Share price: 34p
• Market cap: £60m

I was very pleased to have an initial chat yesterday with the management at this specialist lender: CEO Carl D'Ammassa and CFO Gavin Morris.

This is a financial stock that IPO'd in 2019 at 90p. I'm wondering if it might have found a floor around current levels:

I went GREEN on it in yesterday's report after reading their full-year results.

Please note that these questions and answers have been paraphrased - they are NOT direct quotes.

Q1. One of the unusual things I've noticed about your company is the emphasis on motorhomes and caravans. What is different about this market compared to typical lending markets?

Answer: it's a market that enjoys huge demand. This really took off in the aftermath of Covid when people started to spend more on staycations. In some ways it's surprising that people are willing to spend £30k-£100k on these leisure assets. So if you look at the demographics of the end-buyers, these are people who are resilient to inflation in the cost of living. As DCFH branches out from lending to manufacturers/dealers and moves into asset finance to consumers, it will benefit from the quality of these obligors who are financially very strong.

Q2. What sort of competition will you face in this sector?

Answer: The sector is well established but not well served. Black Horse (Lloyds Bank) are one of the main players and there are a number of French banks who are active in the area.

As we move into this area, we'll benefit from very high-quality data on prospective individual borrowers - the quality of data on individual borrowers is actually better than the quality of data on dealers and manufacturers.

Q3. It's an interesting time to move into asset finance (hire purchase and leasing) given the legal issues in the sector, isn't it?

Answer: DFCH has been through a long and gruelling regulatory process with its lawyers and with the FCA to enter this market and will be able to do business without the distraction of any legacy issues.

Q4. Your cost of risk (<1%) is currently very low. Is that all down to the security you have over the assets you lend against?

Answer: Yes, the main risk for us is when assets are sold out of trust, i.e. when the borrower sells the assets but does not use the funds to repay the loan they are secured against. Where a borrower defaults but the asset is available, the exposure is very low. Loans are made at a discount not just to the retail value of the asset but even the wholesale value, which is significantly lower. Assets will be redistributed through a manufacturer's distribution network or bought back by the manufacturer, so there is no need for DFCH to hold onto them.

Out of 1300 current customers, only 30 are classified as in arrears and classify them as in arrears even if they are only 1 day overdue (other lenders might not do so until they are 30 days overdue).

Q5. In your current business model do you find that you are always pitching to dealers and manufacturers, or do you find that you are turning prospective borrowers away?

Answer: It's a bit of both. 60% of lending is to manufacturers and when we start dealing with a manufacturer, it opens up their entire distribution network to us. However, we are not obliged to do business with all of the dealers in a network. They have to meet the criteria we set and we can turn them down if we don’t like the look of them. Also, some dealers may not need to use us, e.g. if they fund their inventory with their own cash.

Q6. With a high net interest margin of 7.9%, you must be charging a high APR to your customers. What sort of rates do you charge?

Answer: Our customers don’t think about it in terms of rates. They might know that they make a £2000 margin on a vehicle. We will lend to them for 150 days and the dealer will know that they are being charged a fee of £100/month, so if they do not sell the asset for 4-5 months then it may cost them £400-500.

Putting it in terms of rates, we earn somewhere in the range of 9% – 15% with an average of 12.2%.

Q7. I noticed that in addition to your core product, you currently provide a range of different bespoke loan types. This includes things like wholesale finance and receivables financing. How do you have the expertise to do this considering you are a small company? And from the perspective of an external shareholder, how does the risk of these activities outweigh the reward?

Answer: We have masses of experience in our Senior Team. I (Carl) was Group Managing Director of Business Finance at Aldermore Bank covering all types of different loans. We have 4-5 people covering this area and at any given time there will not be too many different bespoke loans to monitor, perhaps 15-20. This activity cements our place in the market and strengthens our very deep relationships in the niche sectors in which we operate.

One message we would like to emphasise is that we are not a challenger bank. We are a specialist lender operating in niche markets.

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Graham's Section

Big Technologies (LON:BIG)

Down 4% to 68.6p (£204m) - Update re: CEO Dismissal - Graham - AMBER/RED

This provider of remote monitoring technologies - smart tags - has been suffering some complications relating to its shareholder register.

They recently concluded that their former CEO “has or had a previously undisclosed interest in, or relationship with” various entities that hold 17% of their shares.

I see that BIG was yet another questionable 2021 IPO:

My rule of thumb is to wait at least 2 years after an IPO, by which time the stock price might more closely reflect reality, rather than the optimism that normally surrounds an IPO.

It gives time for any fundamental issues or problems to emerge, problems that might initially be overlooked.

In the case of BIG, it took four years for this story about the CEO’s alleged shareholdings to emerge. That’s a long time for an IPO-related issue to come to light.

Sara Murray was suspended as CEO on 18th March.

BIG has concluded that she “failed to disclose her interests in, and relationship with, the Relevant Entities in the context of Admission”.

They think she personally holds 26.8% of BIG, having acquired further shares since IPO, in addition to any interest she might have in the other entities (which hold 17.3%). Her aggregate stake could therefore be as high as 44% (her exact stake isn’t clear).

The problem isn’t hard to see - City rules require a takeover bid if an entity owning more than 30% of a listed company acquires more shares in that company. Therefore, BIG has been in touch with the Panel on Takeovers and Mergers, informing them of these matters.

Claims: “Improperly diverted or extracted significant sums of money”

Sara Murray is the founder of Buddi, the smart tag provider that was acquired by BIG prior to IPO. She is BIG’s largest shareholder, and until recently was the CEO. Therefore, unless I can trust this individual, I’m going to have a very difficult time taking a positive view on this share.

The RNS put out by the company on 31st March was a shocker. Among other things, it said that Big Technologies had concluded that Sara Murray “improperly diverted or extracted significant sums of money from the Company and/or members of its Group (principally Buddi Limited prior to 2019) to herself or persons connected with her, including the Relevant Entities”.

The Times has been covering the pending lawsuit between BIG and former shareholders of Buddi:

The investors allege that the offshore group of companies have undisclosed connections to Murray and were used to unlawfully push minority shareholders out of Buddi at a much lower price than Big achieved when it floated at a £577 million valuation.

Forecasts

Results to Dec 2024 have not yet been published and have been delayed by these matters. The company did say that they expected underlying performance to be in line with expectations. A note published by Zeus in January suggested that revenues for 2024 would be £50.3m (previous year: £55.2m) with an adjusted PBT of £25.1m (previous year: £30.8m).

The company is also forecast to have cash of over £100m, with very few liabilities against that.

So the enterprise value here might be only half of the £200m market cap.

But can we trust the numbers? I’m having a hard time trusting them in these circumstances.

Graham’s view

I’m going to take an AMBER/RED stance as while the company does have the characteristics of a value share such as a healthy balance sheet (on paper) and a cheap earnings multiple, I don’t feel confident that we have a properly functioning business here. And if there was a properly functioning business, I’m not sure how it will be able to proceed with all of these legal distractions and with the loss of its founder-CEO.

I’d like to hear Sara Murray’s side of the story.

One positive aspect of the controversy is that she has not been accused of secretly dumping shares in the stock. It’s the opposite - she is accused of owning more shares than she publicly acknowledged!

If the accusations were that Sara Murray had secretly sold her stake, this would be an automatic RED from me. As that’s not the case, I’m happy enough with AMBER/RED. High risk, but also potentially a high reward if it turns out that the company is fine and can continue on without her.

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Moonpig (LON:MOON)

Up 3% to 228p (£763m) - Trading Statement - Graham - AMBER/GREEN

This is a more reputable 2021 IPO, but it’s still quite a bit lower than its IPO price:

Today’s trading update has been greeted positively. Key points:

• Full year revenue £350 - 353m (for FY April 2025) - this seems to be very slightly below estimates.

• Stronger than expected adj. EBITDA margin, at top end of 25% to 27% guidance range.

• Double digit percentage growth in adjusted EPS - I think that EPS growth of over 10% was already pencilled in.

Leverage is anticipated at 1x adj. EBITDA at the end of the financial year, despite a £25m share buyback. So it makes sense that the company can afford a new £60m buyback to begin in FY26.

Although one might question if a buyback is the right use of funds, given the valuation here (ValueRank 37). The stock isn’t obviously cheap to me:

CEO comment:

"We are pleased that Moonpig Group continues to deliver strong profitability and high free cash flow generation, driven by the power of the Moonpig brand. Our strong performance reflects our unique customer proposition and sustained investments in technology and data.

By using technology, data and AI, we help our customers express themselves and connect with their loved ones, deepening engagement and strengthening loyalty…

As we look ahead, we remain well positioned to benefit from the long-term structural shift to online and to deliver mid-teens percentage growth in Adjusted earnings per share over the medium-term.

Graham’s view

This is a “High Flyer” and I’m happy to keep our positive stance on it as the valuation, while high in the context of today’s market, doesn’t strike me as excessive.

One green light for me is always when I find a company with high market share - Moonpig UK is thought to have a market share of 70% (for online cards) while subsidiary Greetz has 65% market share in the Netherlands.

It’s not every day that I get to cover a listed company that has its niche sewn up like this. Moonpig has an exciting combination of a high market share in a segment that can be expected to grow long-term. So I’m going to take a positive stance on this.

One issue that I should mention is that the balance sheet doesn’t look good: net assets of minus £32m, and it’s minus £175m if you exclude intangibles. Although it isn’t a problem if it continues to generate decent cash flow and keeps its leverage multiple low. The company clearly isn’t worried, given the buyback announcement today. But investors may wish to satisfy themselves on this topic.

Personally, I would prefer to see a cleaner and stronger balance sheet, but I’m still ok with taking a positive stance on the shares. AMBER/GREEN might be the fairest conclusion.

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Roland's Section

Motorpoint (LON:MOTR)

Up 1% to 128p (£111m) - FY Update & Share Buyback - Roland - BLACK (AMBER)

Motorpoint Group PLC, the UK's leading independent omnichannel vehicle retailer, provides an update on its trading performance for the fourth quarter and year ended 31 March 2025 ahead of announcing its Final Results in June 2025.

Today’s update reads positively:

Full year retail volumes up c.14.0% on FY24

Strong outperformance of the used car market. In the 0-6 year category, for the 12 months to 31 December 2024, Motorpoint's retail sales volumes grew 14.8% year on year, against 2.8% market growth [i.e. MOTR has gained market share]

Management says adjusted pre-tax profit for the year is now expected to be £4.0m-£4.3m, but frustratingly does not comment on whether this is in line with expectations or not. This is the key information we need to interpret these figures. All we know is that H1 pre-tax profit was £2.0m, so H2 appears to have been stronger.

The RNS system is meant to provide equal access to information for all investors, but this isn’t always the case. Investors with access to broker notes are often at an advantage when it comes to interpreting management commentary.

Unfortunately, that appears to be the case here – in my view, it looks like Motorpoint has chosen to release a downgrade through its house broker, while not mentioning it directly in the RNS.

Earnings estimates: house broker Shore Capital has downgraded its earnings forecasts quite significantly today for both FY25 and FY26 (y/e 31 March).

Shore’s latest forecasts are given as:

• FY25E: -8% to 3.5p (previously 3.8p)

• FY26E: -20% to 6.2p (previously 7.8p)

For context, consensus figures shown on Stockopedia prior to today were 3.3p and 7.7p per share respectively. So Shore’s numbers are ahead of consensus for FY25 but significantly below for FY26:

Motorpoint provides a clue as to the possible reason for this downgrade in today’s commentary:

High interest rates continue to hamper finance commission performance and stock funding costs.

To add some nuance to this, Shore’s operating profit forecasts are unchanged today. Expectations for sales have actually increased slightly relative to the broker’s Shore’s November forecasts.

What’s prompted today’s downgrade (at least, from Shore) is that a reduction in finance costs was previously baked into FY26 forecasts. It looks like the broker (and presumably MOTR’s management) are now acknowledging that interest rates seem likely to stay higher for longer than previously expected.

This situation highlights a fundamental feature of Motorpoint’s used-car supermarket business model – it sells cars on very low margins and makes most of its profit from earning commission on finance and warranties.

At the same time, Motorpoint relies on a stock funding facility (secured debt) to finance its inventory. Higher interest rates have increased stocking costs and decreased margins on customer finance, due to affordability issues (and possibly the regulatory environment).

Today’s FY update hasn’t provided any updated figures, but the company’s half-year results showed an average retail gross margin per vehicle of £1,317 (+4% YoY) and an average finance commission of £639 (-14% YoY).

The H1 accounts show how gross profit flows down to the bottom line:

• Gross profit: £44.7m

• Operating expenses: £38.6m

• Finance costs: £4.1m

• Pre-tax profit: £2.0m

Using these H1 figures as a guide, a 5% increase in finance costs would result in a 10% decrease in pre-tax profit. So it’s easy to see how exposed Motorpoint is to interest rates.

Share buyback: the company expects to end the year with net cash (excluding leases and its stocking facility). This will be used to fund a further buyback of up to 3m shares – around £3.8m at current prices.

This is equivalent to around 3% of share capital so could provide a c.3.5% boost to future earnings. I’m not convinced this represents a great return on investment at this time, although if earnings continue to recover then it could prove good value in the future.

Outlook: today’s updated forecasts leave Motorpoint trading on a FY25E P/E of 36, falling to a FY26E P/E of 21. That’s significantly higher than the FY26 P/E rating implied before today:

Roland’s view

The title of today’s note from Shore Capital is “Executing well - finance headwinds”. I’d agree with this. Motorpoint appears to be taking market share in the used car market and my impression of the company since its listing has always been that it’s a good operator.

This view was reinforced by my on-the-ground experience recently when I recently visited a Motorpoint branch for the first time while shopping for a car.

Although we didn’t end up buying a car from them, I would have been happy to do so. Staff were friendly and on the ball, the stock seemed fine and the whole operation felt professional and well organised. They were also visibly selling cars, unlike some dealerships we visited.

On balance I’m going to take a neutral view today, ahead of Motorpoint’s full-year results. I think the company is executing well and will probably continue to do so. But I’m disappointed by how today’s downgrade has been handled and I don’t see much attraction at the current valuation, given the risk that finance costs will remain elevated.