Daily Stock Market Report (Thur 21st August 2025) - SEE, RBN, SMW, DEBS, CGS, PFD, AMCO, HAS, RSW

Good morning! Today's Agenda is complete.

Wrapping it up there, cheers!

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Spreadsheet accompanying this report: link (last updated to: 1st August).

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Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
United Utilities (LON:UU.). (£7.91bn)	Haweswater Aqueduct Resilience Programme Update	£3bn estimated cost, project to be delivered by Cascade Infrastructure and begin in 2026.
Renishaw (LON:RSW) (£2.17bn)	Board Change and Trading Update	SP +8% After 46 years with the company, the Group Finance Director is to step down. Trading update: revenue to be around the middle of the £700-720m range, adjusted PBT to be towards the top of the £109-127m range.	AMBER (Graham) [no section below] A remarkable tenure that has lasted since 1980, well done to Mr. Allen Roberts. And it’s nice for him to match this announcement with an in-line trading update - better than in line, to be precise. Mark was AMBER/RED on this in February, saying that it was “significantly overvalued”. This stance strikes me as a little harsh: I prefer to be neutral on fundamentally good companies where the valuation has gotten ahead of itself, and reserve AMBER/RED for situations where there are concrete problems. So I’ll take our position up by one degree today.
Premier Foods (LON:PFD) (£1.62bn)	Acquisition of Merchant Gourmet	Convenient meals brand to be acquired for EV of £48m. MG is “highly complimentary” to PFD’s portfolio. Valuation implies “high single-digit EV/EBITDA multiple”, although a footnote clarifies that this is “post expected synergies”.	AMBER/GREEN (Graham) [no section below] The owner of Batchelors, Mr. Kipling, Bisto, Oxo, Saxa, Sharwoods, etc. is adding Merchant Gourmet to its stable. MG produces ready meals with a focus on lentils, wholegrains, chestnuts and mushrooms. It's a fairly small deal in the context of PFD’s overall size, with only 25 employees at MG (all them being transferred over), where all manufacturing is outsourced to third parties. Checking PFD’s most recent results, I see that its net debt was £144m and its leverage multiple was only 0.7x, significantly lower than its target of 1.5x. A subsequent Q1 update in July confirmed that trading was in line. With the company forecast to generate PBT of £172m this year, bolt-on acquisitions such as this are easily affordable, so I like this use of surplus cash. PFD shares are a little expensive by their own historic standards (PER 12.6x according to Stockopedia) but given the company’s current profitability and financial strength, that’s understandable.
WH Smith (LON:SMWH) (£1.4bn)	North America: Revised Guidance	Headline trading profit from North America to be approx £25m, not £55m. Accounting overstatement.	BLACK (AMBER/RED) (Graham) Downgrading our stance on this by one notch after it emerges that their growing North American division is not as profitable as they suggested it was, as supplier incentives were being recognised too early. This throws up many more questions and given the uncertainty I think it’s reasonable for investors to be cautious at this stage. My long-term positive impression of the stock has certainly taken a hit today, and its American operations might  currently be much less profitable than was suggested, but I'd still see a lot of long-term value in the core business.
Hays (LON:HAS) (£1.01bn)	Preliminary Report 2025	Net fees -11% LfL. Adj. PBT -65% LfL. Trading in July and August has been in line.	AMBER/RED (Mark) These weak results are not unexpected given the recent profits warning. Like many companies at the moment, Hays would like us to give them the benefit of their cost-savings but ignore the costs of making them. There is a dividend cut, but this was partly expected. With no end in sight to current weak trading, there is no reason to change our negative stance.
Smarter Web (OFEX:SWC) (£445m)	Head of Bitcoin Strategy Appointment	Hired Bitcoin Strategy Consultant in June, now appoints him to a full-time position.
Boohoo (LON:DEBS) (£195m)	Successful Refinancing	£175m facility replaces the £125m RCF. New rate: BoE base rate plus 7.3% (prev: SONIA + 4%.	RED (Mark) [no section below] It seems a stretch to call this refinancing “successful” when the interest rate is now 11.3% versus a previous c.8%. The interest on the fully drawn £175m facility has doubled to c.£20m pa, vs £10m on the previous £125m facility if fully drawn, putting them further away from profitability, and underlining our very negative stance here.
Seeing Machines (LON:SEE) (£152m)	FY2025 Trading Update	FY25 Revenue $62-63m, ahead of market expectations. Adjusted EBITDA loss US$29m - US$30m, improvement in 25H2 (US$12.5m) compared with 25H1 (US$17.7m). Cash $23.1m (FY24:$23.5m). Current trading is in line with expectations.	RED (Mark) What starts as a positive trading statement looks increasingly terrible the more you delve into the details. This company is coming up to its 20 year anniversary of being a listed company, but with no signs of the promised cash flow break even, despite cost-cutting. With ongoing losses and the need to refinance a looming large convertible loan they could need to raise over $100m in fresh equity over the next year, unless they can refinance the loan.
Castings (LON:CGS) (£119m)	AGM Statement	Demand remained at lower levels, with European heavy-truck demand 10-15% below normalised trend levels. “With a continued focus on productivity and cost control, management anticipate the result for the full year to 31 March 2026 to be in line with market expectations.”	AMBER (Mark) [no section below] This is a short in-line AGM statement. I struggle to get excited by this, which is essentially for slightly declining revenue and an improvement in EPS due to cost-cutting, but it trades at a high P/E by historical standards. They highlight the chance of a cyclical recovery, but weak near-term conditions. Given that the share price has gone nowhere over the last 20 years, what investors are most likely to get in the long-term is a 7% dividend growing slightly above inflation. This may appeal to some investors, but it’s not enough for me to be anything but neutral on this stock.
Amcomri (LON:AMCO) (£95.0m)	Trading Update	25H1 Revenue +17% to £31.8m+, u/l adj. EBITDA +15% to £4.3m. “We enter the second half of the year with positive momentum and strong continued confidence in the Group's prospects.”	AMBER/RED (Mark) The headline growth rates seem reasonable, but they have decelerated in 25H1, there is a lack of operational gearing and the rating is already higher than the growth rate indicating possible overvaluation. The shares have done incredibly well over the last few months but with no accompanying upgrades in EPS, this looks speculative in nature, and open to a rapid reversal. Given the lack of trading history here, and the aggressive acquisition strategy, I think investors need to be guided by the algorithm. Overall, the Stock Ranks are weak and I believe indicate taking a negative stance.
Savannah Resources (LON:SAV) (£81.3m)	Final Assays for Updated Resource Estimates	Final batch of assays for updated resource estimates received. Resource estimate for the Project expected in September. Expects the new resource will represent both an upgrade and expansion on the Project's current resource of 28Mt at 1.05% Lithium Oxide.
Robinson (LON:RBN) (£26.0m)	Interim Results	Revenue +2% to £27.6m, u/l Op Profit +25% to £2.0m. Net debt £8.5m (FY24: £5.9m). “The Group continues to expect underlying operating profit for the 2025 financial year to be ahead of 2024 and in line with current market expectations.”	AMBER (Mark) Good cost control has led to a decent improvement in EBIT, despite flat volumes in the period. However, net debt is up due to a normalisation of working capital, and increased capex. This will be offset by surplus property sales already agreed. Even in the most optimistic view of the future provided by the company, it's hard to argue that this is undervalued, given the pressure on retailers to reduce plastic packaging use. The strong Momentum Rank means holders may want to hang on for the chance of an EPS beat at the full year, but should probably be eying the exit if that Momentum Rank starts to wane.
Wishbone Gold (LON:WSBN) (£24.5m)	Drilling Expands Breccia Pipe Interval, Red Setter	Drilled the breccia down to a depth of 777m, found an interval of 152m, with Quartz-carbonate veining and sulphides of chalcopyrite and pyrite on either side from 520m-777m a total zone of 257m. No assays yet.
Prospex Energy (LON:PXEN) (£19.7m)	Signing Gas Sales Agreement	12-month contract commencing 1 October to supply c.27.963 million standard cubic metres of gas, price will be linked to the Italian Gas Index.

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Graham's Section

WH Smith (LON:SMWH)

Down 37% to 694p (£876m) - Update - North America: Revised Guidance - Graham - AMBER/RED

A mere 129 words have served to wipe nearly 40% off the value of this FTSE-350 stock.

And the way it’s phrased makes it sound like it’s just an accounting issue:

In preparation for the Group's year end results for the financial year ending 31 August 2025, a current financial review has identified an overstatement of around £30m of expected Headline trading profit in North America. This overstatement is largely due to the accelerated recognition of supplier income in the North America division.

The word “largely” is important to flag - it means there are multiple issues, not just one issue.

In a footnote, the definition of “supplier income” in this context is provided:

The Group receives supplier income in the form of supplier incentives and discounts. These incomes are recognised as a deduction from cost of sales on an accrual basis as they are earned for each supplier contract.

So WH Smith receives various payments from its suppliers - special incentives and discounts, presumably in recognition of WH Smith’s importance as a major retailer.

As time passes and as WH Smith moves through these contracts, the payments are supposed to be recorded on the income statement as lower cost of sales.

However, the benefits of these contracts might have in fact been received on day one of each contract. So in cash flow terms, the entire benefit might be received instantly.

But that’s not relevant for the income statement. The income statement is supposed to show when revenues are earned and when costs are incurred. Cash movements aren’t relevant.

It sounds to me as if WH Smith treated a cash benefit as if it had already been earned, or at least planned to do so, and baked this error into its forecasts.

Which makes me wonder: has something like this occurred in any previous years? There is no mention in today’s announcement regarding previous financial years.

Financial impact is proportionately huge, taking out more than half of profits in the North American division:

WHSmith now expects Headline trading profit from the North America division for the financial year ending 31 August 2025 to be approximately £25m, down from previous market expectations of approximately £55m.

As a result, the Group expects full year Headline profit before tax and non-underlying items to be in the region of £110m.

Assuming that £30m of trading profit would have converted cleanly into £30m of PBT, this cut represents about 22% of prior expectations.

The market has been much harsher than that, taking the share price down by nearly 40% this morning.

Graham’s view

Markets hate this sort of thing, for good reasons:

• Incompetence or something worse? Either management really thought they were twice as profitable in North America as they really were (implying some degree of incompetence in their analysis), or they didn’t really think that (worse).

• More cockroaches in the kitchen? Supplier income is “largely” responsible for this error - what else is responsible? Has the overstatement been properly measured yet, given that multiple issues could be involved?

• It’s not just an accounting problem - recognising the benefit of long-term contracts too soon means that profits are recognised too early, which can mislead investors as to the real underlying profitability of the company.

Historically, SMWH has been a stock with good cash flow backing up its profit figures, and so I’d be reluctant to write off its overall quality just on the back of today’s announcement.

But I can accept that it’s fair for the market to write down its valuation by something considerably more than the 22% cut to the profit forecast.

We were AMBER/GREEN on this stock until Megan reduced to neutral in June, noting that like-for-like sales growth in North America was only 2%. Roland maintained our neutral stance later that month.

I had previously been AMBER/GREEN on it: I do like this company, but it hasn’t been trading very cheaply against earnings, and there is “headline net debt” of £454m to be considered (Feb 2025 figure).

If I could make a suggestion: perhaps they could stop using the phrases “headline trading profit” and “headline net debt”. In my experience, only somewhat untrustworthy companies use that terminology. Although in this case, I could have used that as a signal!

And to those who are more sceptical of buybacks than I am - this is a win for you, as SMWH’s £50m buyback has been carried out at prices that are expensive in hindsight:

Assuming around 65p of adjusted EPS this year (I don't know how accurate this is), the stock is trading at a PER in the region of 10.5x.

I’ll downgrade our stance by another notch to AMBER/RED, bearing in mind the three negative bullet points mentioned earlier.

It will be very interesting to see what comes next:

The Board has instructed Deloitte to undertake an independent and comprehensive review.

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Mark's Section

Seeing Machines (LON:SEE)

Up 4% to 3.24p - FY2025 Trading Update - Mark - RED

Things start well here with an ahead statement:

Reported Revenue for FY2025 is expected to be in the range of US$62m - $63m, ahead of market expectations.

This is around 8% ahead of the $58m consensus they footnote. However, things start to go wrong from there. The second footnote reveals that:

Reported revenue includes US$10.2m of Automotive royalty license revenue as per AASB15: Revenue from Contracts with Customers for guaranteed minimum volume royalty payments from a program that commenced production during FY2025.

So a significant chunk of that revenue is due to how the accounting standards treat contracts with guaranteed minimum royalty payments, recognising these on day one. Followers of Sanderson Design will be familiar with this dynamic.

Even if it is ahead of expectations, revenue here is below the FY24 figure of $67.6m. If Seeing Machines hadn’t signed this deal in Q4, revenue would have been some 25% below FY24.

At least they only include the “cash” revenue in their adjusted EBITDA figure:

Adjusted EBITDA excludes the revenue recognised at the start of production, but the guaranteed payment and any excess volume is included, to more closely align with operational performance.

But even here things look terrible:

Adjusted EBITDA loss expected to be in the range of US$29m - US$30m, with a significant sequential improvement in H2 FY2025 of (US$12.5m) compared with H1 FY2025 of (US$17.7m)

How on earth is a company that will mark its 20th Anniversary of being a listed company this year, managing to lose $30m on around $60m revenue? The half year accounts show they have accumulated losses of $235m during that period, with a share price that has gone nowhere.

With previous results highlighting cost reductions to reach cash flow break even in 2025, the cash flow is a key metric. In H1, the adjusted EBITDA loss of $17.7m became a $15.9m cash out flow despite reduced capitalisation of development costs. They have a long way to go to that cash flow break even. However, the headline here looks promising:

Cash at 30 June 2025 of US$23.1m (FY2024: US$23.5m)

Until you realise that they raised $32.8m net of costs from issuing more shares in H1, and the cash balance at the half year was $39.6m. They have effectively burnt through this raise over the last year.

They also don’t mention the $48.5m of convertible loan notes that they owe. These have an 11p conversion price so have almost zero chance of conversion. This makes the accounting treatment of the conversion rights look unrealistic to me:

More worrying is that the note matures in October 2026, so they will need to fund this as well. This should be the $47.5m lent, plus around $15m of interest by this time. Given the current cash burn, will anyone be willing to provide debt funding again? It seems unlikely, or not without a mid-teens interest rate. This means that company probably needs to raise a further $100m of equity over the next year to keep the show on the road.

Mark’s View

The algorithms rate this as a Sucker Stock, and I agree:

What starts as a positive trading statement looks increasingly terrible the more you delve into the details. This company is coming up to its 20 year anniversary of being a listed company, but with no signs of profitability in sight despite huge cost-cutting. There probably should be some kind of advanced computer vision technology delivering AI-powered operator monitoring systems to prevent investors buying into stocks like this and improve investor safety ;-)

They have been masters at raising equity in the past and they look like they are going to be needing all of that skill over the next year to be able to fund ongoing losses and refinance a looming large convertible loan (which at 11p conversion price, looks like it has almost no chance of being converted to equity). At the end of last year, Graham had this as an AMBER due to the quality of the customer base. However, given what now looks like the upcoming need for an equity raise and/or a very difficult refinancing of a convertible loan, I think this now has to be RED, at least until the raise and/or refinancing is completed.

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Robinson (LON:RBN)

Flat at 155p (£26m) - Interim Results - Mark - AMBER

There is modest revenue growth here, driven by pricing, with volumes flat:

Revenue up 2% to £27.6m (2024: £27.1m), sales volumes in line with H1 2024

However, a slight improvement in gross margin, together with good cost control means that the underlying PBT is up 37%:

For the full year they say:

The Group continues to expect underlying operating profit for the 2025 financial year to be ahead of 2024 and in line with current market expectations.

Their broker Cavendish have £3.6m of EBIT pencilled in for this year, so with £2m delivered in H1, they look on track to deliver at least this, even if we assume that costs will rise in line with inflation.

The movement in net debt looks a little worrying, and requires further investigation:

Net debt of £8.5m (31/12/2024: £5.9m)

Looking at the detail, this is due to capex running ahead of depreciation and working capital movements:

Looking at the Cavendish note, this appears to be a normalisation of a particularly low working capital point in FY24, rather than an unusually large working capital position:

Further small working capital outflows are forecast for FY26, although capex for this year is assumed to be closer to the depreciation charge.

Offsetting this is a number of post-period end or upcoming property sales mentioned in the results:

Walton Mill - £700k

Walton Works - Net £600k

Three Chesterfield properties - £1,195k

This makes the pro-forma net debt a more reasonable £6m. On top of this there is almost £3m to come if the Boythorpe Works surplus property receives planning permission, with them recently giving a developer an option on this.

Valuation

With the shares rising recently on the property sale news, they no longer look particularly cheap:

The dividend is held with these results, and they commit to the usual 6p per year payout. However, a 4% yield doesn’t stand out for UK small caps.

Longer term they say:

We remain committed in the medium-term to delivering above-market profitable growth and our target of 6-8% underlying operating margin.

However, with no volume growth in H1, and pressure on retailers to reduce single-use plastics, above-market growth may mean zero volume growth. So even if we are optimistic and assume 8% EBIT margins, say £65m revenue and they get the full property payout, reducing net debt to £3m, then we have £5.2m EBIT and a 5.6x EV/EBIT. It seems hard to pay more for a business making plastic packaging.

This view is backed up by the Stock Ranks, where any value seems to have been largely outed:

Mark’s View

Things seem to be going as well as they can for this sort of business. However, even if we take the most optimistic company targets, this is probably now fully valued for a business facing long-term environmental headwinds. Given the strong Momentum Rank, holders may want to hang on. Especially since if the H1 figures were repeated in H2, they would beat EBIT forecasts. However, they will probably want to make a swift exit if that Momentum Rank starts to turn downwards. Overall, I don’t see enough in these results to change my previous AMBER view.

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Amcomri (LON:AMCO)

Up 3% to 136p - Trading Update - Mark - AMBER/RED

This recent float has been on a bit of a tear since April:

Growth rates here are impressive. This is the FY results:

· Revenue increased by 23.4% to £58.1m (2023: £47.0m)

· Adjusted EBITDA increased by 33.3% to £7.7m (2023: £5.8m)

And this is today’s trading statement:

· Revenue for the Period is expected to be not less than £31.8m (17% increase on H1 24 £27.3m).

· Underlying Adjusted EBITDA is expected to be approximately £4.3m (15% increase on H1 24 £3.8m).

However, I see a couple of challenges here. The first is that revenue growth is decelerating, the second is a lack of operational gearing. This is fairly normal for a company where the main source of growth is acquisitions. Here they describe themselves as a:

"Buy, Improve, Build" UK focused, specialist engineering services and industrial manufacturing group

In this case, it seems remiss of them to not give us any indication of organic growth rates. They say they are trading in line, however with this sort of forward P/E for a company growing largely through acquisition the valuation is quite stretched:

The algorithms rate this as a High Flyer. However, despite the relative strength being phenomenal…

…I was expecting a higher Momentum Rank:

The issue is that the large rise in share price isn’t backed up by any broker upgrades:

Brokers tend to be pretty aggressive with price targets on this sort of company, especially when they have recently floated the business. Cavendish say:

Our target price of 143p is based on a peer-group average multiple of 13.1x EV/EBIT applied to our FY26 forecasts and we maintain this target price.

Given that the share price is approaching their target price and they can’t find an argument to increase it, this backs up my assertion that this rise has largely been speculative in nature.

Mark’s View

Given the lack of trading history here, and the aggressive acquisition strategy, I think investors need to be guided by the algorithms here. The recent huge rise in share price simply doesn’t seem to be backed by fundamental improvements in the business. This leaves it prone to a large reversal if that Momentum fades. That the Momentum Rank is just 72 worries me enough to take a negative stance of AMBER/RED.

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Hays (LON:HAS)

Down 2% to 62p - Preliminary Report 2025 - Mark - AMBER/RED

We know things are tough with recruiters, and Hays NFI is in line with most peers, down mid-teens:

The company remains profitable, at least on an adjusted basis. However, the broker trend gives little confidence that it will remain so:

Like most companies at the moment, Hays would like to claim the credit for the cost-savings they have implemented, without us counting the cost of making those cost-savings against them:

Exceptional items for the year ended 30 June 2025 of £30.7 million consists of a restructuring charge of £17.7 million and £13.0 million relating to Technology transformation and Finance transformation programmes; the prior year charge of £80.0 million consists of a restructuring charge of £42.2 million and goodwill and intangible impairment of £37.8 million.

Cash generation remains good, though, and leads them to maintain net cash:

Our net cash position at 30 June 2025 was £37.0 million. We had a strong cash performance across the Group and converted 281% of operating profit(2) into operating cash flow(4), up YoY (FY24: 107%(4)) due to a working capital inflow of £58.1 million in FY25 (FY24: £16.5 million outflow) as Temp & Contracting fees and placements reduced and cash collection remained strong. Debtor days increased slightly to 37 days (FY24: 36 days), largely due to growth in our Enterprise Solutions business which has longer payment terms than the Group average. Debtor days remain below pre-pandemic levels and our aged debt profile remains strong. Group bad debt write-offs remain in line with FY24 and are at historically low levels. Our strong cash performance drove FY25 cash from operations of £128.3 million, up 14% YoY.

I’m not convinced this net cash position is a normal state of affairs during the year, as they say:

The net finance charge for FY25 was £13.4 million (FY24: £10.4 million). The increase YoY was primarily due to a £3.3 million increase in net bank interest payable (including amortisation of arrangement fees) to £7.3 million (FY24: £4.0 million) due to higher average drawings on the Group's revolving credit facility.

Their definition of operating cash flow also excludes lease principle, and of course, interest charges. I make the free cash flow around £28m for the year, which has not been enough to fund their dividend payout. It is perhaps unsurprising then, that they now say:

Faced with a second consecutive year where our core dividend cover would be below our 2-3x target range, together with an uncertain trading outlook, the Board has proposed a reduction in the final dividend payment that more appropriately aligns to the Group's current level of profitability and affordability.

The final dividend proposed of 0.29 pence per share is calculated on 3x FY25 pre-exceptional earnings cover, and applying our historic one-third/two-thirds interim/final split. This brings the full year dividend to 1.24 pence per share.

A cut was forecast, but this level is still below consensus expectations:

This has never been a prolific dividend payer, so presumably no one held this for the yield. Similar-sized Page Group chose to maintain their dividend and yield over 6%, despite reporting a very similar drop in profitability recently. However, you have to wonder how long they will be able to maintain that.

Balance sheet:

Excluding lease liabilities and provisions, there is still net cash:

However, there is little in the way of downside protection, as most of the net assets are intangible.

Outlook:

They say:

July and August to date have been in line with our expectations, with no significant change to trading momentum from Q4. September is the key trading month of the quarter, and it is currently too early to assess trends.

Basically, market conditions look to remain weak for the foreseeable future.

Mark’s view

All the recruiters have recovery potential, but we have been becoming increasingly worried that the current weakness represents a shift away from the typical recruitment consultant model, rather than simply economic conditions. Hence, it seems that a better recovery play would be to own one of the smaller niche recruiters that have better downside protection from tangible assets, rather than the larger but more highly rated generalist recruiters such as Hays. Graham downgraded this to AMBER/RED following the last profits warning in June, and I see little reason in these results to change that view.