Daily Stock Market Report (Fri 13 June 2025) - PAY, MPE, LTI, AGR/PHP, OXIG, GRIO, MFX, NXR, MOTR

Good morning!

First up, I'm sorry that we didn't cover more in yesterday's report - it was entirely my fault, and I'll try to make up for it today! There is hardly any news today, so my main focus will be the backlog.

First up, we have a section from Roland on PayPoint.

Wrapping up the report there, thanks everyone.

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Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Assura (LON:AGR) (£1.62bn)	Statement regarding offer by PHP for Assura	Primary Health Properties (LON:PHP) has not given up in its bid to acquire Assura, despite KKR/Stonepeak having their cash bid recommended by the Assura board two days ago. That cash bid is 50.4p plus scheduled dividends bringing the total value to 52.1p. Today PHP argues the case for its own bid, saying that its LTV leverage will only “temporarily” exceed the target range (40-50%) and will return to that range in the short-term and that it expects to obtain an investment-grade credit rating. From a risk point of view, it notes that the combined group’s portfolio would be principally let to government tenants. Based on yesterday’s PHP share price (103p), their proposal is worth 53p, a small premium to the proposal from KKR/Stonepeak.	PINK (Graham) [no section below] It’s a wonderful position for Assura shareholders to have two competing proposals, but KKR/Stonepeak have made their “final” cash offer. Perhaps PHP should offer a little more? The premium they offer over the KKR/Stonepeak deal is less than 2% which is not much considering that one is cash and the other is a riskier mix of cash and shares. To win over Assura shareholders may require a higher premium, and the Assura board are satisfied that KKR/Stonepeak is the right choice. So for now, it looks like KKR/Stonepeak are more likely to get it through. Personally I agree with the strategic merit of what PHP are proposing, even if it is rather ambitious. The two companies are roughly equal in size, so it would always be somewhat tricky for PHP to acquire AGR.
Oxford Instruments (LON:OXIG) (£1.09bn)	Preliminary Results	Revenue +6.5% (£500.6m), adj. operating profit is up 10.8% when measured at organic constant currencies, but is only up 2% without those additional adjustments (£82m). Very large FX headwind (£8.5m) due to USD weakening. Statutory operating profit falls to £39.2m. Net cash stable at £84m. £60m disposal to boost cash further and a £50m share buyback will commence shortly. Outlook: vague. “Our differentiated higher margin business will continue to deliver attractive profitable growth.”	AMBER/GREEN (Graham) [no section below] This is a highly reputable FTSE-250 stock with a good track record, but I’m reluctant to be fully GREEN on it. For a start (and as noted by Megan in April), growth is underwhelming with orders rising just 0.9% for the year, using the company’s own adjusted figures. Multiple factors are at work here including “general market weakness”, the company’s own acknowledged mistakes, and cyclicality. Secondly, I dislike when a company needs to use multiple layers of adjustments to present its figures, as is the case here. Thirdly, OXIG’s earnings forecasts have been unstable and have been marked down repeatedly. I do suspect that it is in value territory at current levels (a takeover bid would not surprise me at all), but in light of the above factors I don’t think I can justify a fully GREEN perspective. The StockRank is only 40 and it is categorised as a Falling Star.
M P Evans (LON:MPE) (£537m)	AGM Statement	Fresh fruit bunches harvested +11%. Palm oil production down slightly (less 3rd party product brought in than last year), but sale prices are up by 14%. There’s an increased final dividend of 37.5p for 2024, making total dividends 52.5p per share. Board’s intention over the long-term is to increase or at least maintain the dividend.	GREEN (Graham) [no section below] Roland was GREEN on this in March and I’m happy to leave that unchanged seeing as this is a Super Stock (StockRank 99) and not much has changed for the company in recent months besides a $34m (£25m) acquisition in April, which brought in additional Indonesian planted hectares near their existing operations. The company had net funds of $46m as of Dec 2024, with which to pay for that acquisition. Palm oil prices have cooled off since the highs they reached at the end of 2024 and are now back around the levels at which they traded in 2023 and H1 2024.
Lindsell Train Investment Trust (LON:LTI) (£170m)	Annual Financial Report	This niche investment trust owns a stake in Lindsell Train Limited (its own investment manager, accounting for 26% of its assets) and also in a portfolio of quoted investments. The NAV return is minus 2.2% for FY March 2025 after gaining 2.1% in FY March 2024, both years underperforming the MSCI World by a wide margin. However the share price return for FY25 was better at +9%, as the trust’s discount to NAV narrowed. The main detractor to performance for FY25 was the holding in Lindsell Train Limited, which generated a return of minus 29% due to fund outflows into passives. Funds under management at LTL declined from £15.2bn to £11.4bn.	AMBER/GREEN (Graham) [no section below] It’s a quirky setup to find a trust that owns a stake in its own fund manager: it would be much cleaner to have the fund manager listed separately. But I am a fan of Nick Train’s methods and I follow many of the same stocks, e.g. Unilever, Diageo, A.G. Barr. However, the methods haven’t worked over the past five years and the fund manager is another casualty of the success of passive S&P 500 investing. LTI's net asset value per share (as of 6th June) is £968.63, with the shares currently trading at a 14.5% discount to this level. As I’m AMBER/GREEN on most fund managers and I believe their methods are fundamentally, sound, I’m content with a moderately positive view here. I’d like to think that they can outperform the indexes again, perhaps when the Magnificent 7 are no longer providing such easy returns.
Ground Rents Income Fund (LON:GRIO) (£25m)	Half-year Report	This tiny REIT is gradually selling its assets. NAV decreased to £50.4m as of March 2052, with a like-for-like reduction of 10%. They made disposals of £9.2m during the period and since the period end, at a 1.8% discount to the official independent valuation of these assets. LTV falls to 6%.	AMBER (Graham) [no section below] These special situations can be tricky, as I’ve found to my cost. I’m still holding some shares in a fund that delisted all the way back in 2021, as the fund is still in liquidation and my stockbroker can’t remove it from my account - which means that I can’t crystallise the loss for CGT purposes. This experience has taken the fun out of investing in wind-down situations for me, and I’m unlikely to do it again. For those who can’t resist a discount to NAV, GRIO does offer that, subject to uncertainty around building safety liabilities and the potential impact of leasehold reform for freeholders. Personally, I’ll be staying away in the light of my ongoing experience with a delisted fund.

Backlog: PAY, MFX, NXR, MOTR.

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Backlog

PayPoint (LON:PAY)

Up % to p (£85m) - Results for the year ended 31 March 2025 - Roland - AMBER/GREEN

At the time of publication, Roland has a long position in PAY.

This has been another year of progress for PayPoint where we have delivered a resilient financial performance and made further significant steps towards delivering £100m EBITDA by the end of FY26.

This UK payments group is focused on providing a range of commercial and payment services to the private sector (mainly convenience stores) and to the public sector (e.g. some benefit payments).

Graham and I have both written positively about this business in recent months and I also hold the shares personally and in the SIF portfolio. However, the complexity of PayPoint’s results always makes my head spin; there are a lot of moving parts here!

2024/25 results summary: I’ll try and keep this as simple as possible. These group-level numbers show flattish revenue and some improvement in underlying profitability – but with the caveat that PayPoint’s profit figures have been much more heavily adjusted than usual.

In fact, the company provides no fewer than three measures of pre-tax profit, something I dislike:

• Revenue up 1.4% to £310.7m

• Net revenue up 3.7% to £187.7m

• Underlying pre-tax profit up 10.2% to £68.0m

• Pre-tax profit excluding exceptional items down 7% to £49.7m

• Statutory pre-tax profit -45% to £26.3m

• Net corporate debt up 44% to £97.4m

• Dividend up 2% to 19.6p per share

I’ll return to the profit adjustments in a moment, but I think it’s useful first to take a look at the trading performance of PayPoint’s different divisions last year. Reassuringly, net revenue improved across the board:

Broker Panmure Liberum has published a detailed and informative note this morning. It includes this chart, which provides a much more useful visual representation of quarterly revenue performance across the business over the last four years. I hope they won’t mind me reproducing this here:

This seems to reflect the mix of mature and growing operations within PayPoint’s operations. It’s now clear to see that the Love2Shop acquisition has helped to support otherwise anemic revenue growth in recent years.

Profit adjustments: these totalled almost £42m last year, accounting for more than 60% of the group’s preferred measure of underlying pre-tax profit. Digging down into the footnotes reveals a mix of one-off and repeat items. Here are the main culprits:

• £12.8m loss on a 2024 £15m convertible loan to Judge Logistics (parent of Yodel), recorded when Judge was acquired by InPost last year and the loan was converted to equity - with hindsight, this “strategic investment” now looks a little more like a bailout to me.

• £14.2m settlement with customer Utilita (a pre-pay utility provider) relating to a legal dispute, the two companies have now signed a new agreement

• £6.4m in legal fees – presumably relating to the Utilita settlement and a second legal dispute with Global 365 that is ongoing and currently in front of the Competition Appeal Tribunal. From what I understand, Global 365 provides pre-pay energy payment systems.

• £8.7m amortisation of acquired intangible assets

Personally, I am not inclined to simply accept all of these as exceptional items. As far as I can see, they all represent cash outflows (past, present or future) and are – in my opinion – a reflection of PayPoint’s business model and risk appetite. Similar items could occur again, in my view.

Turning to the cash flow statement for some kind of reality check, my sums suggest an underlying free cash flow figure of £37.8m, before acquisitions and investments.

For comparison, reported profit after tax was £19.3m. Adding back the amortisation of acquired intangibles gives me £28m. So my feeling is that the underlying business here remains highly cash generative.

Unfortunately, there were many additional calls on PayPoint’s cash last year, including almost £25m of investments and acquisitions (of which £12m has already been written off, plus the £6m in legal costs mentioned above.

The £14m settlement with Utlita will be paid during the current financial year, representing a further outflow.

As a result of these factors, plus £28m of dividends and £15m of buybacks, PayPoint’s net debt rose by £30m to £97.5m last year. This probably isn’t a problem in itself, but I’m concerned to see that the company intends to escalate its buybacks going forward, potentially using more borrowed cash to do so.

Outlook & Updated Guidance: the company has reiterated its goal of reaching £100m EBITDA by the end of FY26.

PayPoint’s CEO Nick Wiles has also announced some new targets covering the period until FY28:

• Net revenue growth of 5%-8%

• Reduce share capital by at least 20% through buybacks of at least £30m per year until the end of FY28

• Maintain leverage at 1.2x to 1.5x EBITDA

With thanks to Panmure Liberum, we also have updated earnings forecasts:

• FY26E EPS increased by 0.7% to 75.7p

• FY27E EPS increased by 4.7% to 90.2p

• FY28E EPS introduced at 103.1p

These numbers put PayPoint on a FY26E P/E of 10.4 and suggest solid growth (boosted by buybacks) from the FY25 adjusted EPS figure of 69.1p.

However, PanLib’s forecasts also mirror my own view that net debt will need to rise further to support these buybacks, something I dislike.

Roland’s view

I have mixed feelings about these results. While the numbers show some organic growth and good underlying profitability and cash conversion, this progress has been overshadowed by a high level of adjusting items. I would argue that these reflect some of the underlying risks in this complex business and that ignoring them all could give a false sense of security.

More broadly, I am a little uncomfortable about the increase in debt and the apparent use of borrowed cash to fund buybacks.

While this may prove to be affordable and should boost earnings per share, extra leverage also adds risk to a business where organic growth has been inconsistent and not especially strong. I’d prefer to see PayPoint deleverage and focus on returning genuine surplus cash to shareholders.

However, I need to maintain a balanced view. As far as I can tell, PayPoint’s operating businesses are continuing to perform largely as expected. Underlying profitability and cash generation still seem good and my sums suggest the stock could be valued with a free cash flow yield of c.7% at current levels. That’s potentially attractive, in my view.

I’m still broadly positive about the outlook for PayPoint shares, but my view is that the equity now looks slightly riskier than previously. I’d also like to see stronger evidence of organic growth – last year’s 3.7% net revenue growth is well below the 5%-8% rate now being targeted.

To reflect this view, I’m going to downgrade our view by one notch from GREEN to AMBER/GREEN.

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Manx Financial (LON:MFX)

Up 20% yesterday to 26.5p (£31m) - 2024 Results Advance Guidance - Graham - AMBER

I tend not to comment on Jim Mellon stocks very often, but there’s been a request that I look at this one. Manx Financial is the owner of Conister Bank.

Yesterday’s RNS does not motivate me to look at Mellon stocks more often:

Manx Financial Group PLC (AIM:MFX), the holding company providing a range of diversified financial services to the Isle of Man and the United Kingdom, is pleased to announce that it is anticipating a 41% increase in its consolidated Profit Before Taxation for the year ended 31 December 2024 to a result in the region of £9.9 million (2023: £7.0 million), subject to final auditor sign-off. The Group expects to release its full, audited financial statements no later than 25 June 2025.

A 41% increase in PBT is not to be sniffed at, and for a market cap of £31m, PBT of £9.9m screams extraordinary cheapness.

But how on earth can it take six months to publish results?

There is a reason for the 25th June deadline:

This date has allowed the Group to successfully implement the controls and systems at its wholly owned subsidiary, Payment Assist Limited, to meet the enhanced governance requirements of being part of a listed entity following the completion of its acquisition on 13 September 2024.

Payment Assist is a business that allows people to spread the cost of unexpected bills - with no fees or interest. It would be really helpful to know what “controls and systems” were lacking that have prevented Manx from issuing its results.

Graham’s view

I have found Jim Mellon stocks to be rather hit-and-miss, and I don’t think I’ll be able to judge the risks associated with this one.

Historically, I missed out by not holding onto my shares in Charlemagne Capital, his fund management business that was bought out in 2016. But there have been others, like Webis, where I’m glad that I stayed away.

Manx is probably too cheap in terms of its P/E multiple, and so perhaps I should be at least AMBER/GREEN. However, the lateness of these results is a red flag, and the reason for it strikes me as odd. So I’d prefer to stay neutral.

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Norcros (LON:NXR)

Unch. yesterday at 268p (£237m) - Results for the year ended March 2025 - Graham - AMBER/GREEN

Norcros, the number one bathroom products business in the UK and Ireland, today announces its results for the year ended 31 March 2025.

The company’s expectations for FY26 are unchanged and so the market didn’t react much to these results, which I think were only a slight miss in terms of revenue:

It’s a remarkably similar result vs. the prior year.

However, I note that actual operating profit came in at only £8.3m.

After finance costs including £5m of bank interest and £1.7m of lease-related interest expense, PBT comes out at a measly £2m.

(And that’s not even the last word - the company also suffered £9m of losses on pension calculations, which aren’t on the income statement.)

It’s a much messier set of accounts than we saw last year from Norcros. The main source of the mess is “acquisition and disposal related costs” (£25.4m), which largely consists of the loss incurred when Norcros sold its Johnson Tiles UK division last year.

The explanation for the loss is simple enough: “The sale completed at a consideration lower than the carrying value of the assets of the business.”

Checking the balance sheet, I see that the company’s tangible net assets have reduced £54m.

Net debt of £36.8m gives rise to a leverage multiple of 0.8x, which would generally be considered very safe.

Current trading:

Group revenue in the two months to the end of May 2025 was 1.8% below the prior year on a constant currency like for like basis, adjusting for Johnson Tiles UK and the number of trading days in the period (UK and Ireland -1.1%, SA -3.2%). Market conditions are likely to remain uncertain, with the pace of recovery in the new build sector still unclear, however, the RMI sector remains resilient and the Board's expectations for FY26 remain unchanged.

Their medium-term targets include organic growth of 2-3% above market, and ROCE >20% (underlying ROCE was 17.3% in FY25 according to the company). I’d be impressed if they managed this! Historic ROCE (without adjustments) has been 7%-15%.

Graham’s view

I’m happy to leave this at AMBER/GREEN (see Mark’s coverage in April). I like companies that are willing to rationally simplify their operations, and my sense is that Norcros is doing this. The strategic review of Johnson Tiles South Africa is said to be “nearing completion”.

In valuation terms it continues to trade cheaply, although this is another stock where top-line growth is limited (or non-existent). So do bear that in mind.

Pension repair contributions (i.e. repairing the deficit) are set to end after June 2027 and are modest at £4.5m per annum.

To my eyes, therefore, this is another cheap stock. There are some reasons for it to be cheap, but there are also some reasons for optimism - low leverage, disposals/simplification, and stretching medium-term targets that management are working towards.

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Motorpoint (LON:MOTR)

Down 1% yesterday to 161p (£135m) - Final Results - Graham - AMBER

This is “the UK’s leading independent omnichannel vehicle retailer”.

The results released yesterday showed very nice improvement vs. FY March 2024:

One nice feature is zero exceptional items. A reminder that we don’t have to accept a barrage of exceptional items as the norm!

The company is back in profit and proposes a 1p dividend, which will hardly see any shareholders quitting the day job but is a nice gesture nonetheless. It’s an £850k payment.

Of greater significance is the share buyback. A first buyback of 3.6 million shares was already completed, and another 3 million share buyback is underway. The latest share count is 85.6 million.

The company’s £20m bank facilities were undrawn at year-end, as it had a positive cash balance of £6.6m.

Current trading/outlook: positive momentum in FY26 including retail volume growth in the first two months of the financial year. Economically, they “expect ongoing macroeconomic pressures to generally ease, with further, moderate reductions in interest rates; although mindful consumer confidence in near term remains uncertain.”

CEO comment:

"I am extremely pleased with our performance in FY25. Motorpoint has experienced several years of considerable economic headwinds that have hampered our industry. We responded in FY24 with our Brilliant Basics programme which rightsized the business and improved margin performance. This successfully laid the foundations for growth and in FY25 resulted in double digit year on year volume growth, significant gains in market share, faster stock turn, and a welcome return to profitability. I am also delighted that our customer NPS improved through the year, reaching record levels in the final quarter, and that we have been recognised as one of the Sunday Times' best big places to work.

Estimates: there is no change to next year's forecasts at Zeus. In FY26, revenue is seen rising to £1,209 million, with adjusted PBT (hopefully the same thing as unadjusted PBT!) increasing from £4.1m to £7.2m.

Graham’s view

With such slim profits margins, small differences in performance - particularly in the cost base - have an outsized impact on the bottom line. Motorpoint says that it will “continue to prudently manage cost base despite labour inflation headwinds”.

I’m inclined to leave Roland’s AMBER stance (see here) unchanged. While I do rate it as an above-average motor dealer in terms of its brand value and recognition, this is a sector that should trade cheaply given its economic exposure, low margins, and general lack of pricing power.

If Motorpoint hits its FY March 2027 estimates from Zeus, that implies a forward earnings multiple of 14x, then falling to 13x based on FY March 2028 estimates. But these estimates are highly uncertain - we had a profit warning from Motorpoint only two months ago. I think the stock is fully valued.