Good morning!
The numbers involved in yesterday’s SpaceX IPO filing were staggering. But with OpenAI and Anthropic expected to follow suit, the broader impact of these new listings could be more complex than we’re used to.
The FT leads with a story this morning highlighting how new “fast entry” rules on the Nasdaq exchange will allow these tightly-held new listings (with small free floats) to gain index membership within weeks of listing. This could force passive funds to sell billions of dollars of Magnificent 7 stocks in order to buy shares in the new entrants, regardless of price - triggering a round of volatility…
In macro news, Iran and the US appear slightly closer to a deal after the US submitted new peace proposals, but demands for Iran to hand over its uranium stockpile appear to be a sticking point. The US is also understandably opposed to Iran’s ongoing efforts to levy tolls on Hormuz traffic.
Meanwhile, concern about the impact of disruption to energy and fertilizer supplies continues to grow, with International Energy Agency chief Faith Birol warning in a speech in London that oil markets could enter a “red zone” by July or August.
Bond investors – traditionally seen as the smart money – are also concerned about another major spike in inflation, less than five years after the Ukraine war triggered a previous bout. Long-term borrowing costs for major developed markets continue to rise:
However, the saying goes that bull markets climb a wall of worry. Animal spirits certainly seem to remain strong at the moment, with the big US indices continuing to trade at record highs:
Major markets are also expected to open higher this morning:
FTSE 100 expected to open up 0.4%
S&P 500 expected to open up 0.4%
Nasdaq 100 expected to open up 0.5%
Brent Crude is up 1.9% at $102 a barrel
Gold is up slightly at $4,537/oz
Today's agenda is now complete.
Spreadsheet accompanying this report: link.
Companies Reporting
| Name (Mkt Cap) | RNS | Summary | Our view (Author) |
|---|---|---|---|
Games Workshop (LON:GAW) (£6.3bn | SR67) | Core revenue for the year ending 31 May 2026 is expected to be not less than £625m, with licensing revenue of at least £30m and group pre-tax profit of not less than £265m (FY25: £262.8m). | GREEN = (Roland) Growth in the core business slowed somewhat during the second half, while full-year licensing revenue failed to match the very strong performance in the prior year. However, both of these trends appear to be in line with both expectations and historical trading patterns. I don’t see any serious concerns. This remains an exceptional business, with a differentiated business model, strong IP and continuing growth. I’m going to retain our positive view. | |
Inchcape (LON:INCH) (£2.9bn | SR84) | Inchape has acquired the official distributor of Mercedes-Benz cars and Daimler Trucks and Buses in Bulgaria. This will add to the group’s existing c.13% share in passenger vehicles and 6% share in LCVs in Bulgaria. Silver Star had revenue of c.£240m last year. | ||
Softcat (LON:SCT) (£2.8bn | SR77) | Good performance in Q3, with double-digit growth in gross profit and underlying operating profit. Corporate and AI-related demand remains strong. Now expect mid-teens growth in underlying operating profit, from high-single-digit previously. | AMBER/GREEN = (Roland) Today’s upgrade is the second this year and highlights continued strong momentum from demand for new AI infrastructure. The shares don’t look particularly cheap but I think the business should keep performing well while demand remains strong. At some point the music will stop, or at least change, but how soon that will be is impossible for me to gauge. For now, I think a moderately positive view is fair, reflecting the stock’s High Flyer styling. | |
Genuit (LON:GEN) (£659m | SR63) | Year-to-date revenue down 0.4% to £198.5m (-8.7% LFL). Middle East and UK market conditions have affected sales and resulted in cost inflation. Genuit has implemented double-digit price increases. 2026 underlying operating profit now expected to be at the lower end of market forecasts. | BLACK | |
Workspace (LON:WKP) (£648m | SR43) | Saba Capital (21% holder) has submitted a revised requisition notice that now calls for the removal of all six of the company’s non-execs and the appointment of six new directors in their place. | ||
Metals Exploration (LON:MTL) (£426m | SR77) | Gold production down 22.2% to 65,287oz, with sales up 9.1% to $208m and operating profit up 15% to $61.6m. La India development 33% complete at year end, slightly ahead of schedule and within budget. | ||
Enquest (LON:ENQ) (£360m | SR95) | Year-to-date production has averaged 41.5 kboe/d, within 41-45 kboe/d guidance range. Six-well drilling programme at Magnus is now underway. | ||
Altyngold (LON:ALTN) (£286m | SR94) | Gold sales rose by 29% to 11,532oz, resulting in a 122% increase in revenue to $56.3m. Remains confident in the outlook for the remainder of 2026. | ||
Helical (LON:HLCL) (£233m | SR42) | EPRA earnings per share up 105% to 4.5p, reflecting greater development profits. Net rental income down 21% to £15.4m. EPRA NTAV of 351p (FY25: 348p), with LTV of 36.5% (FY25: 20.9%). Confident outlook citing constrained supply of good quality office space in London. | ||
Fonix (LON:FNX) (£157m | SR65) | Company will undertake buyback of 1.25m shares today at 159p, in coordination with the sale of the same number of shares by Richard Thompson, a member of the Concert Party controlling 33% of Fonix shares. | ||
Mobico (LON:MCG) (£130m | SR55) | On 12 May 2026, WMATA issued a notification of termination to Mobico’s US subsidiary to cease operating paratransit services. This follows a lawsuit for breach of contract discussed in Mobico’s 2025 results. | ||
Gemfields (LON:GEM) (£70m | SR28) | Auction revenue of $26.8m, 36/37 lots were sold, totalling 183,385 carats. Average realised price of USD 146.08 per carat. | ||
Creo Medical (LON:CREO) (£47m | SR49) | FY25 Final Results, Proposed Sale of 49% Interest in Creo Medical SL & Placing to raise approximately £5.5m | Revenue +50% to £6m, with underlying operating loss reduced by 38.5% to £13.7m. Now expects revenue growth of 50-60% in 2026 (previously 40-60%). Announces a placing to raise £5.5m at 15p per share. Also intends to sell remaining 49% share of Creo Medical Europe, following a 51% sale last year. Sale said to be priced in line with year-end carrying value. | |
Zenith Energy (LON:ZEN) (£32m | SR44) | Agreed terms for the sale of the ZEN-260 for total gross consideration of approximately US$4.3 million to a company operating in the oil and gas sector in the Philippines. | ||
Headlam (LON:HEAD) (£30m | SR31) | Completed three previously announced disposals, generating net proceeds of c.£15.3m. Continues to evaluate the potential sale and leaseback of the Coleshill property. | RED = (Roland) [no section below] I’m not sure why the share price has reacted so strongly to today’s update, as it doesn’t contain any new information. Details of these property sales were confirmed in an update on 20 May, which today’s update repeats almost verbatim. These disposals were also flagged in March’s full-year results. The main point I would take from today’s update is that the cash from these sales is being used to “invest in working capital” and improve liquidity. To me, this sounds like cash from the sale of long-term assets is being used to keep the lights on and fund day-to-day operations. I might be more positive if the proceeds were explicitly being used to repay long-term debt. My concern is that if the business remains loss-making at an operating level, its runway for survival could be limited. I note forecasts show an adjusted net loss in 2026 and 2027 – not ideal given material debt levels. I’m going to retain our negative view today. As I discussed in more detail recently, I think the equity looks risky here. | |
FIH (LON:FIH) (£28m | SR62) | Sale and leaseback of Momart warehouse in Leyton completed in Sept 25, generating a pre-tax return of £11.8m. Sale of Portsmouth Harbour Ferry Company completed on 28 Feb 26 delivering net proceeds of £10.7m. Costs included a £478k bonus to the CEO for completing these divestments. Shareholders will receive a 40p special dividend on 14 July 2026 (ex-divi 4 June 2026). | ||
Hercules (LON:HERC) (£28m | SR n/a) | Final Results and H1 Trading Update & Restoration to Trading | FY25 revenue +19% to £121, ahead of expectations. Underlying EPS +36.6% to 4.74p (y/e 30 Sept 25). H1 FY26 revenue +8.4% to £59.2m. Shares restored to trading today. | |
Checkit (LON:CKT) (£27m | SR40) | “Since the commencement of the Formal Sale Process, the Company has received credible interest from potential acquirers. Discussions with these parties are ongoing and further announcements will be made as and when appropriate.” | ||
Tekcapital (LON:TEK) (£16m | SR56) | Exec Chairman Clifford Gross has launched a new company to commercialise IP in the field of geothermal-powered data centres. Tekcapital will gain a 51% equity interest for no cash consideration, with Gross retaining the remaining 49% interest. | ||
Zinc Media (LON:ZIN) (£14m | SR16) | Agreed to acquire William Martin Qatar LLC, an event production business, for an initial net consideration of £0.4m, to be funded with shares. In 2025, WMP Qatar generated a pre-tax profit of £0.3m and had net assets of £0.5m. | ||
Rua Life Sciences (LON:RUA) (£13m | SR42) | Expects revenue +6% to £2.8m, with gross margin of 75%. H1 EBITDA expected to be at break even. | ||
Sound Energy (LON:SOU) (£11m | SR15) | “Significant progress has been made in advancing the sustainability of the Company through the transformational transaction with Managem in 2024. Revenue generation from mLNG is expected in the near future.” |
Roland's Section
Games Workshop (LON:GAW)
Up 4% at 19,830p (£6.5bn) - Full Year Trading Update - Roland - GREEN =
This morning’s update from Games Workshop is fabulously concise. My summary comment in the table above is almost the entire RNS!
Here is the fully copy:
Games Workshop, the maker of Warhammer, is pleased to announce that for the 52 weeks ending 31 May 2026, we estimate the Group's core revenue to be not less than £625 million (2024/25: £565.0 million) and licensing revenue of not less than £30 million (2024/25: £52.5 million). The Group's profit before taxation ("PBT") is estimated to be not less than £265 million (2024/25: £262.8 million).
We intend to publish our 2026 Annual Report for the 52 weeks ended 31 May 2026 on the 28 July 2026.
What should investors take from this update?
Today’s update covers the year to 31 May 2026 and looks to be in line with expectations:
Total revenue up 6% to at least £655m (FY25: £618m)
Total pre-tax profit up 0.8% to at least £265m (FY25: £262.8m)
These figures tell us the group’s pre-tax profit margin fell from 42.5% to 40.5% last year. My sums suggest this reflects the lower contribution from licensing revenue rather than any weakness in core margins (licensing revenue carries a margin of nearly 100%):
Core revenue (figures and game products) up 10.6% to £625m
Licensing revenue (video games and TV/film) down 43% to £30m
However, comparing today’s figures with the half-year results suggests growth in the core business slowed during the second half of the year, with core revenue falling below H1 levels:
H1 core revenue: £316.1m (+17.3% vs H1 FY25)
H2 core revenue: £309.9m (+4.5% vs H2 FY25)
This isn’t unprecedented for this business and is perhaps not that surprising, given the macro backdrop during the second half (Nov-May).
The company’s decision to provide no commentary on trading in today’s update means we’re left guessing, but given that consensus forecasts suggested full-year revenue of £643m, today’s figures do not seem to suggest any surprises.
Outlook: Games Workshop doesn’t provide any forward guidance and we don’t have access to any broker notes for the business. However, the limited market reaction to today’s update suggests to me that market forecasts for FY27 are likely to remain largely unchanged, as they have been since November:
Roland’s view
As usual, Games Workshop shares do not look obviously cheap:
But the quality of this business is exceptional, as is its long-term growth record. This justifies a premium valuation, in my view.
While licensing revenue was weaker this year, a more “challenging” environment was flagged up in the H1 results and appears to have been expected. The group’s live action venture with Amazon MGM Studios continues to progress, as do various video game partnerships.
It is the nature of these things to take several years, and while we wish we could tie down a release the way we can with our core business, the reality is that, as with any licensing deal, delivery is not in our control. We leave it to our partners to manage their own businesses.
The StockRanks rightly flag Games Workshop as a High Flyer…
The low ValueRank is unsurprising, but perhaps it's worth noting that momentum has weakened recently:
Despite this, the medium-term uptrend on the chart still looks fairly healthy to me:
We were positive on Games Workshop in January and I don’t think the story has changed since then, so I’m going to keep our view at GREEN today.
Softcat (LON:SCT)
Up 11% at 1,600p (£3.1bn) - Q3 Trading Update - Roland - AMBER/GREEN =
Softcat shares remain below historic highs, but today’s upgrade to full-year expectations suggests the business is continuing to perform well and benefit from AI-related data centre demand.
The AI boom has led to massive growth in hardware revenue for value-added resellers such as Softcat, as they supply the high value, high volume kit required to build out new computing infrastructure.
Softcat’s half-year results showed gross invoiced income up 33%, with hardware sales up 79%.
Today’s third-quarter update covers the three months to 30 April 2026. It’s brief and lacks any specific numbers, but suggests to me that the underlying trends haven’t changed.
Q3 Trading: key points
“... strong double-digit year-on-year growth in gross profit and underlying operating profit”
“Growth remains broad-based with particular strength in corporate, supported by customer demand for AI-enabled infrastructure and continued pull forward of some orders due to memory shortages.”
Outlook
Looking further ahead, the Board is encouraged by the momentum in the business and prospects for continued market share gains, while recognising the uncertainty caused by the ongoing memory shortages and macroeconomic environment.
As a result of the strong performance so far this year, guidance for profit growth has been upgraded:
New FY26 guidance: “mid-teens operating profit growth” up from “high single digit previously”
I don’t have access to broker forecasts today, but a c.15% increase in underlying operating profit is likely to drop through to at least a c.10% increase in adjusted earnings per share.
This morning’s share price gain seems to support that view. Applying a 10% increase to previous consensus of 75p per share suggests a new FY26E EPS estimate of perhaps 83p. That would leave the stock’s forward P/E of 19 largely unchanged.
Today’s upgrade is the second this year from Softcat, highlighting the strong momentum in this market at the moment. However, limited visibility means forecasts for next year’s earnings have remained somewhat flatter:
Roland’s view
I have both an interest in and a bias towards this sector, as Softcat’s larger peer Computacenter (disc: I hold) is one of my largest personal holdings.
While these value-added resellers are low-margin businesses and can be seen as middlemen, they have evolved over the last 20 years to be an essential conduit between suppliers and end users. Even the largest hyperscalers source at least some of their IT requirements through resellers, who are able to coordinate, supply and implement large and complex solutions:
Our uniquely broad offering brings together specialisms from the datacentre to the edge, through the network, security, data and automation layers, and across hardware, software and services, spanning the design, implementation, management, support and optimisation of new solutions.
From a financial perspective, companies such as Softcat are able to generate attractive returns on capital by benefiting from favourable supplier credit terms on high volumes of product. Cash generation is also generally very strong.
Softcat and its peers are undoubtedly benefiting from the boom in AI infrastructure. But there’s obviously a potential flipside to this – at some point, spending will probably moderate. Predicting when that happens is beyond my paygrade, but personally I may choose to top slice my exposure to this sector at some point in the future in order to lock in profits and hedge against any slowdown risk.
I think this situation is nicely reflected in Softcat’s High Flyer status and high-VM StockRank:
For this mix of reasons, I am leaving my previous AMBER/GREEN view unchanged today.
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