Daily Stock Market Report (Tue 2nd December 2025) - MBH, MERC

Good morning!

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The Agenda is complete!

Spreadsheet accompanying this report: link (last updated to: 10th November).

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Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our View (Author)
Shaftesbury Capital (LON:SHC) (£2.78bn | SR59)	Trading Update	367 leasing transactions YTD, with £30.2 million of new contracted rent 9% ahead of December 2024 ERV and 14% ahead of previous passing rents.
Kier (LON:KIE) (£978m | SR94)	CFO succession	CFO stepping down after six years. Interim CEO of Wincanton will succeed him.
Discoverie (LON:DSCV) (£583m | SR45)	Interim Results	H1 revenue +3.5%, organic sales +1%. Adjusted opening profit +5% (£30.2m). On track to deliver full year adjusted earnings in line with the Board's expectations.
Victrex (LON:VCT) (£543m | SR64)	Preliminary results	Full-year revenue +3% CER. Underlying PBT -10% CER. H2 PBT in line with H1. Profit improvement plan underway. FY26 will be “a transitional year”.
Foresight group (LON:FSG) (£532m | SR86)	Half-year results	AUM +4%, FUM +1%. “Core EBITDA” +6%. On track to achieve five-year target to FY29.
Newriver Reit (LON:NRR) (£308m | SR52)	Half-year results	Like-for-like valuation grew by +0.5%. Occupancy 95.3% vs 96.1% in March. Further modest disposals needed to bring LTV within guidance <40%.
B.P. Marsh & Partners (LON:BPM) (£239m | SR89)	Change in Executive Directorship Roles	Brian Marsh OBE becomes Non-Executive Chairman. CIO becomes CEO. MD becomes COO.
CLS Holdings (LON:CLI) (£228m | SR46)	Trading Update	First three quarters of 2025: “letting activity in-line with 2024, albeit with lower activity than was initially targeted”. Total vacancy fell marginally to 15.0%.
On Beach group (LON:OTB) (£279m | SR30)	Final results	TTV +11%. Revenue +6%. Adjusted EPS +45% (19p). FY25 growth has continued into the new year with year-to-date TTV +16%. Board is confident in delivering FY26 adjusted PBT of £39-43m, in line with market expectations.
Gooch & Housego (LON:GHH) (£139m | SR68)	Full-year results	Revenue +10.7%, adjusted PBT +46.8% (£11.9m). Net debt £43.9m. “...the Board's expectations for FY2026 are unchanged…”.
Augmentum Fintech (LON:AUGM) (£137m | SR50)	Interim Results	NAV 159.5p. Cash reserves £22.4m. “The fundamental strength of the portfolio provides a stark contrast to this market valuation: our underlying private growth companies delivered solid trading performance, achieving 23% revenue growth and an 8.5% EBITDA margin.”
Mercia Asset Management (LON:MERC) (£127m | SR63)	Interim Results	Rev -3.9%, PBT +4.2% to £2.5m. AUM £2,000m (Mar ‘25: £1,988m). NAVps 43.4p. Confident outlook.	GREEN = (Graham) Not much has changed here since I reviewed it last, but the share price is lower and we are now just 15 months away from the March 2027 target date, with the company remaining confident that it can hit its medium-term targets. Even if it doesn’t quite manage to hit them, I still really like the risk:reward on offer.
Personal group (LON:PGH) (£105m | SR89)	CFO Succession	CFO Sarah Mace is stepping down after 11 years with PGH. She is replaced by Matthew Cohen who is currently CFO of a European insurance business.
Severfield (LON:SFR) (£88m | SR60)	Interim results	Rev -18%, adj PBT -96% to £0.6m. Order book down 3.4% to £429m since July. £324m for delivery over next 12 months. Steelwork market remains subdued. Mgt expectations for FY26 are unchanged.
Topps Tiles (LON:TPT) (£85m | SR50)	Annual Financial Results	Rev +17.5% to £295.8m, adj PBT +46% to £9.2m. Current trading ex-CTD +3.3%, with TPT LFL +2%. Slower sales in early FY26 but remain confident in outlook.
Michelmersh Brick Holdings (LON:MBH) (£79m | SR49)	Pre-Close Trading Update	PW: H2 trading has been ahead of H1, but seen “notable slowdown” in construction final quarter. FY25E rev now exp c.£69m, adj EBITDA c.£12.5m (prev. c.£70m, £14m).	BLACK (AMBER ↑) (Roland) After 18 months of profit downgrades and a 50% share price decline from its 2021 peak, I wonder if we’re near the bottom for this premium brick producer. The market seems to think so, as the shares have hardly moved today despite my estimate of a c.5% downgrade to FY25 consensus expectations. FY26 forecasts have been left unchanged today and if delivered would justify a more positive view, in my opinion. However, my feeling from today’s commentary is that it may be too soon to have much confidence in a rapid recovery. To reflect the mix of value/uncertainty and my broadly positive opinion of this business, I’ve upgraded my view by one notch to neutral today.
Celebrus Technologies (LON:CLBS) (£56m | SR41)	Half-year results	Rev -40% to $10.4m, ARR +21% to $15.6m. Adj pre-tax loss of $1.4m, net cash $27.3m. Outlook: focused on closing pipeline opportunities. Board remains comfortable that trading is in line with FY26 exps.
IG Design (LON:IGR) (£45m | SR49)	Interim Results	Rev -13% to $131.4m w/ softer UK demand. Adj op profit -56% to $5.7m. 96% orderbook visibility entering H2. FY26 guidance unchanged for $270-280m revenue, adj op margin 3-4%.
System1 (LON:SYS1) (£27m | SR75)	Interim Results	Revenue -7% to £17.1m, pre-tax profit -90% to £0.3m. “Lower, but ongoing, spend” from many major clients. Continues to trade in line with 23 Sept 2025 guidance.
Haydale Graphene Industries (LON:HAYD) (£23m | SR29)	Commercial Update	Signed distribution agreement with Interfloor and received first US orders for JustHeat Pillar. Confident outlook.
Vianet (LON:VNET) (£17m | SR70)	Interim Results	Revenue flat, adj op profit +10.4% to £1.6m. Net debt reduced. Good momentum in H2. Trading in line with FY expectations.
Tpximpact Holdings (LON:TPX) (£14m | SR61)	Unaudited Interim Results	Revenue -4.3%, adj EBITDA +39% to £3.2m w/ adj EPS of 1.7p. On track to achieve key objectives of 3yr plan. FY26 outlook unchanged, expect adj EBITDA £6-7m.

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Graham's Section

Mercia Asset Management (LON:MERC)

Unch. at 29.56p (£127m) - Interim Results - Graham - GREEN =

Mercia Asset Management PLC (AIM: MERC), the regionally focused, private capital asset manager with £2.0billion of assets under management ("AuM"), is pleased to announce its interim results for the six months ended 30 September 2025.

I’ve been a fan of this growing fund manager for some time, although the share price hasn’t cooperated with me yet:

Let’s see how these interim results are shaping up:

• H1 revenue fell slightly to £17.2m (H1 last year: £17.9m).

• Operating profit £1.8m (H1 last year: £1.3m).

• PBT £2.5m (H1 last year: £2.4m).

So far, so good.

Fund management: AUM has risen 1% over six months to £1.81 billion, with no redemptions. Venture Capital funds such as VCT/EIS don’t work like open-end funds with daily redemptions - it’s much stickier AUM.

The company’s fundraising progress seem to have ramped up in H2: Mercia’s Northern Venture Capital Trust is raising an additional £50m, and a new £35m “North East Accelerate Fund” was launched in October.

Direct investment portfolio: Mericia’s own direct investment portfolio receives a fair value of £131.1m, up by £5m over six months. They have always had their own direct portfolio, and it’s an important part of their history, but it’s no longer necessary. There will be a “pragmatic divestiture”.

I note in passing that the fair value of their direct portfolio is higher than their market cap.

Medium-term targets are on track:

At this mid-point in Mercia '27, we remain confident of achieving our three-year goals of growing AuM to £3.0billion, EBITDA to £10.0million, and EBITDA margin to 26% by 31 March 2027.

£bn of AUM will be an enormous achievement - as of Sep 2025, it was only £2 billion (made up of £1.81bn of 3rd-party funds, and £187m of "proprietary capital”).

H1 EBITDA was £4.2m, and the EBITDA margin was 24.6%, so it’s less of a stretch to imagine that they could generate £10m of annual EBITDA and an EBITDA margin of 26%.

Market conditions are mixed:

Fundraising conditions remained challenging during the period for EIS, while our VCTs are on track to deliver strong capital raisings supported by wealth manager relationships and an increasingly strong investment performance track record.

The Autumn Budget is only mentioned twice in this report, and they do not mention the cutting of VCT tax relief for individuals, from 30% to 20%. Here’s what the CEO has to say as far as the outlook is concerned:

The second half of FY26 is set to build on the strong operational and financial momentum of the first. Fundraising activities remain robust, with a growing pipeline across all capital pools that we manage…

We expect a strengthening domestic market through to the conclusion of our Mercia '27 strategic plan, with recent successful IPOs signalling renewed confidence. Historically, venture activity accelerates six to nine months after public markets reopen and we're already seeing those early signs. We are optimistic for continued progress in 2026 and beyond.

Graham’s view

I don’t see how I can do anything except maintain my positive stance on this.

I would have liked to read more of a reaction from the company on the Budget, but it’s worth pointing out that retail investors are only responsible for a fraction of AUM. Local authorities and the British Business Bank are more important, with over £1 billion of the AUM in the “public sector” category:

The table above also shows £880m of AUM that’s currently targeted or in the pipeline for March 2027. This is an organic figure so it could be bolstered by acquisitions. This helps us to see how the company plans to stretch for that £3 billion AUM target.

Balance sheet tangible equity is £155m, including £34.5m of cash - fuel for an acquisition perhaps?

Another nice use of the cash is buybacks and dividends: a £3m buyback is ongoing, and the dividend is increasing:

The P/E multiple is currently very high but this is clearly a balance sheet story as much as an earnings growth story.

So what's my conclusion? Not much has changed at Mercia since I reviewed it last, but the share price is lower - offering better value, as far as I'm concerned - and we are now just 15 months away from the March 2027 target date, with the company remaining confident that it can hit its medium-term targets. Even if it doesn’t quite manage to hit them, I still really like the risk:reward on offer.

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Roland's Section

Michelmersh Brick Holdings (LON:MBH)

Down 1% to 85p (£78m) - Pre-Close Trading Update - Roland - BLACK (AMBER ↑)

We were AMBER/RED on Michelmersh in September after the premium brick maker warned on profits. Unfortunately today’s update is another profit warning, albeit slightly less severe.

In my view, the wording of this announcement was not as clear as it could be – management seems to switch between positive and negative comments, before restating expectations without any reference to previous guidance.

Here’s a summary of the main points – this update covers the year to date, ahead of Michelmersh’s year end on 31 December:

• H2 trading and profitability has been ahead of H1, but there has been “a notable slowdown” in construction activity levels during the final quarter – blamed on the economy and Budget uncertainty;

• Michelmersh has continued to see “positive order intake levels”, underpinning the forward order book. However, the company mentions “a collaborative approach to pricing” (price cuts?) and admits to “more uncertain timing of brick despatches”;

• The company has bought back £1.8m of shares so far this year and expects to complete the £2m buyback announced in April by the end of the year;

• Following investment in its facilities, “a more normal production operating rhythm” has continued during H2. This is expected to deliver improved profits going forward.

Outlook

The company provides revised guidance:

With the change in market conditions in the fourth quarter, the Board expects revenue for the year to be c.£69.0 million with adjusted EBITDA of approximately £12.5 million

Checking back to the interims, previous guidance was for the FY25 result to be “broadly reflective” of FY24, when Michelmersh reported revenue of £70.1m and adjusted EBITDA of £14.0m.

So today’s new guidance equates to a 11% cut in EBITDA expectations.

However, crunching the numbers does suggest Michelmersh’s EBITDA margin may be recovering:

• FY24: 20.0%

• H1 2025: 16.5%

• H2 2025 (implied): 19.9%

This recovery seems encouraging to me, supporting the company’s claim that operations are returning to normal after a period of investment and disruption.

Net cash: due to weaker trading in Q4, cash guidance has also been cut. The company now expects to end the year with “a broadly cash neutral balance sheet”. Previous broker forecasts had been for a net cash position of c.£5m.

This will mean that net cash has fallen from £11.0m (FY23) to £6.0m (FY24) to approximately zero (FY25E).

Updated estimates

In the absence of clear guidance from the company, we do have access to updated forecasts from brokers Cavendish and Canaccord Genuity – many thanks.

These firms’ analysts appear to have interpreted today’s revised guidance slightly differently:

• Canaccord FY25E adj EPS: 6.7p (-13% vs 7.6p previously)

• Cavendish FY25E adj EPS: 8.1p (-4.2% vs 8.5p previously)

Averaging the two gives me a figure of 7.4p, which is 5% below the current Stockopedia consensus of 7.8p.

Both brokers have left FY26 forecasts largely unchanged, apparently following management guidance.

Roland’s view

Earnings forecasts for Michelmersh have tumbled over the last year and are now more than 30% below summer 2024 levels:

However, this is another UK small cap whose share price peaked in 2021 and has been drifting lower ever since. The Michelmersh share price is now down by almost 50% from its April 2021 peak of 160p:

Based on June’s half-year accounts, the stock is now trading 13% below its net asset value of 97.7p and only slightly above its tangible net asset value of 78p.

Profit downgrades have now continued for c.18 months and the share price decline has been spread over several years – this combination arguably fits the profile for a long-term reversal Ed discussed recently. What’s missing, of course, is any concrete evidence of improving momentum.

Ultimately, this is a cyclical construction-related stock. Early signs of a recovery in margins seem to support the company’s claims operations are getting back to normal and my feeling is that the business has well-invested facilities and some decent products.

The operating leverage inherent in this high fixed-cost business model should mean that a return to sales growth could feed through to a nice recovery at the bottom line.

What’s missing is any sign of improving trading – today’s commentary on the order book and despatch volumes did not seem entirely reassuring to me.

The market has hardly reacted to today’s profit warning and I am inclined to take a similar view. On the assumption we are at a low point in the construction cycle, I think Michelmersh could be approaching the point where it’s a convincing cyclical/value play. The StockRanks support this view too, with higher Quality and Value ranks and Contrarian styling:

Current forecasts suggest a forward P/E of 11 and covered 5.4% dividend yield – that doesn’t seem too demanding to me for what’s (hopefully) a low point for profits.

There’s no certainty of a recovery next year, of course. And there’s always the risk the business will be less well managed than in the past. But on balance I think it’s fair to assume volumes will improve at some point. On balance, I am going to take a chance and upgrade our view to neutral today.