Good morning. News from the Middle East continues to confuse, with Donald Trump claiming he called off a major attack on Iran to offer the republic a “last chance” in talks “before decapitation”. Iran, for its part, has denied that it is in talks with the US but says it’s continuing to work with Oman to set up new shipping routes through the Strait of Hormuz.
The oil market has digested the facts and nudged the price of crude oil a little higher overnight.
Elsewhere, the FT leads with an exclusive article (paywall) looking at a $200bn “finance machine” that Google has assembled to fund demand from Anthropic for AI chips and data centres.
It’s a complex story involving chip manufacturer Broadcom, various crypto data centre operators and a private-credit vehicle backed by names including Blackstone and Apollo.
Ultimately, though, this appears to be vendor financing on a large and concentrated scale. The FT concludes that for Google, “$200bn of contracts [are] tied to Anthropic’s ability to pay its chip and data centre leases.”
The FTSE is up 0.3% at 10,884
S&P 500 is up 0.2% at 7,620
Brent crude is up 1.6% at $84.15/bbl
Gold is up 0.1% at $4,059/oz
Bitcoin is up 0.5% at $63,752
Mark Simpson joins me (Roland) today.
Spreadsheet accompanying this report: link.
Today's report is now complete.Companies Reporting
| Name (Mkt Cap) | RNS | Summary | Our view (Author) |
|---|---|---|---|
HSBC Holdings (LON:HSBA) (£274bn | SR71) | Revenue +11% to $37.7bn with pre-tax profit +23% to $19.5bn. Intends to initiate a $1bn buyback. Outlook: net interest income now expected to be “at least $46bn” (previously “around $46bn”). Remains committed to targets set out in Feb 26. | ||
BP (LON:BP.) (£86.7bn | SR94) | H1 underlying RC profit (adj net profit) up 139% to $8.9bn. Net debt reduced to $22.3bn (H1 25: $26.0bn). New CEO lays out “five priorities to deliver a step change in performance”. | ||
Coca-Cola Europacific Partners (LON:CCEP) (£35.7bn | SR77) | H1 revenue +4.4% with operating profit +6.9% to €1,458m. Adj EPS +9.1% to €2.17. Outlook: reaffirming full-year guidance. | ||
Fresnillo (LON:FRES) (£18.4bn | SR72) | Adj revenue +72.1% to $3,413.2m, “mainly due to higher silver and gold prices”. Adj operating profit from continuing operations up 149% to $2,143.8m. Adj EPS up 227.9% to $1.751. 2026 outlook “remains in line with previous guidance”. | ||
Halma (LON:HLMA) (£13.5bn | SR74) | Sold NovaBone Products LLC to Isto Biologics for total consideration of $60m (£45m) following a strategic review that concluded it was no longer a good fit for Halma’s portfolio. | ||
SEGRO (LON:SGRO) (£13.1bn | SR55) | Prologis (NYQ:PLD) and Segro have reached agreement on a recommended share offer with partial cash alternative. Segro shareholders will be entitled to 0.0920 new Prologis shares for each Segro share. This values the offer at 1,031.7p per Segro share, a 39% premium to the undisturbed price of 742p on 23 June 2026. | TAKEOVER | |
Smith & Nephew (LON:SN.). (£10.1bn | SR69) | Revenue +4.6% to $3.1bn with adj operating profit +4.3% to $448m. Adj EPS +6.2% to 35.6c. Outlook: 2026 revenue now expected to be +4% (prev. +6%). Trading profit & FCF guidance unchanged. | ||
ConvaTec (LON:CTEC) (£4.41bn | SR34) | Revenue +4.4% with adj operating profit +3.9% to $262m. Adj EPS +6.3% to 8.5 cents. “New products are launching well and gaining share”. 2026 outlook: guidance confirmed for 5.5-6.5% organic revenue growth, double-digit EPS growth and margin expansion to >23%. Announcing a $200m buyback. | ||
Rotork (LON:ROR) (£3.98bn | SR48) | H1 revenue flat at £367m with pre-tax profit +9.7% to £71.4m. Adj EPS +4.2% to 7.4p. 2026 outlook unchanged. Expects takeover offer to complete in H1 2027. | TAKEOVER | |
Keller (LON:KLR) (£2.11bn | SR96) | H1 revenue +10.3% with adj operating profit +14.9% to £117.9m. Adj EPS +22.4% to 120.1p. Strong growth “driven by North America performance”. 2026 outlook: confident of delivering FY results in line with recently upgraded guidance. | AMBER/GREEN = (Roland - I hold) [no section below] After a spectacular surge when earnings forecasts were upgraded at the start of July, I’m not surprised to see the stock has retreated somewhat since then. The upwards chart trend still looks broadly intact to my (inexpert) eye, though, and today’s in line results sound confident about meeting upgraded full-year expectations. With a P/E of 12, a £1.9bn order book and minimal debt, Keller looks in good shape to me and could still be reasonably valued. Super Stock styling and a StockRank of 96 provide quantitative support for my view. I think it’s fair to leave our AMBER/GREEN view unchanged today. | |
Georgia Capital (LON:CGEO) (£1.39bn | SR80) | June 26 NAV +18% to £50.10 per share vs March 26. H1 net income -27.1% to GEL721m. Launching new GEL 1bn capital allocation programme. Outlook: “well positioned to continue delivering sustainable NAV per share growth over the medium to long term”. | ||
Volution (LON:FAN) (£1.26bn | SR52) | getAir is a leading provider of decentralised residential heat recovery ventilation systems to a range of European OEM customers. Consideration is €40m (c.£34m), funded from existing debt facilities. getAir generated adj EBITDA of c$4m for the year to 30 June 2026. | ||
Travis Perkins (LON:TPK) (£1.22bn | SR66) | SP +18% H1 revenue -1.8% with adj operating profit up 6.3% to £67m. Adj EPS +13.5% to 15.1p. Leverage reduced to 1.9x, within target range. Outlook: expects a similar trading performance in H2 (FY26 consensus EPS: 28p). | AMBER ↑ (Roland) These results appear to be in line, or perhaps even to suggest that full-year results could be slightly ahead of current consensus. My concern with today’s upbeat market reaction is that underlying trading trends remain fairly indifferent. Profit growth in H1 was largely driven by the proceeds from property sales. I’d also argue that with the stock on a 2027 P/E of 17.5x, a fair level of recovery is already priced in. Even so, I think Travis Perkins’ improved balance sheet position and in-line guidance justify a return to a neutral view today. | |
Metro Bank Holdings (LON:MTRO) (£1.21bn | SR70) | Adj pre-tax profit +34% to £60.6m (+14% vs H2 25). Growth of 43% in “core lending” with total loans and advances +4% to £9,074m. Net interest margin +0.3% to 3.18%. 2026 outlook: reaffirming all guidance for FY26 and beyond. | ||
Dominos Pizza (LON:DOM) (£786m | SR79) | H1 revenue +6.7% to £353.6m with adj pre-tax profit +0.9% to £44.1m. Adj EPS +4.8% to 8.8p. “Positive trading in July”. 2026 outlook: “confident in achieving full year expectations”, all major costs hedged for FY26 and into FY27. | ||
A G Barr (LON:BAG) (£723m | SR64) | H1 revenue expected to be up by c.8% to c.£246m. H1 operating margin expected to be “in the middle of the guidance range”. Revenue growth was impacted by “reduced stock availability” relating to internal supply chain issues and third-party manufacturing issues. This had an estimated impact of £10m on H1 revenue. Outlook: remains confident of delivering profit in line with expectations (consensus adj PBT £71.9m). | ||
ITM Power (LON:ITM) (£704m | SR27) | The GET H2 Nukleus hydrogen project has now produced and delivered “initial quantities” of green hydrogen through a 120km pipeline to an industrial customer. | ||
Filtronic (LON:FTC) (£552m | SR48) | Revenue -1.4% to £55.5m with pre-tax profit -72% to £3.8m. Dil EPS -71% to 1.78p. FY27 outlook: strong order book covering c.90% of FY27E revenue. FY27 is expected to be H2 weighted, but the Board remains “confident of delivering FY2027 in line with market expectations.” | AMBER = (Roland) Today’s results are technically a slight miss, but in reality are largely as expected. What really matters is what happens next. The company has made significant investments in headcount and in its facilities to support a step change in scale, diversification and complexity. While there are early signs of progress, it’s too soon to be sure if this will deliver returns. With the shares trading on 54x FY28 earnings I think a fair amount of growth is already priced in, so I’m staying neutral today. | |
XP Power (LON:XPP) (£486m | SR61) | H1 revenue -2% to £109.1m with book to bill of 1.53x (H1 25: 1.02x). Order book +43% to £173.9m. H1 adj pre-tax profit +538% to £5.1m with adj EPS of 14.2p. 2026 outlook: FY expectations unchanged. | ||
Sabre Insurance (LON:SBRE) (£450m | SR86) | Gross written premium +16% to £116m with pre-tax profit -6.3% to £23.9m. Combined Operating Ratio of 85.6% (H1 25: 82.6%) and Solvency Coverage Ratio of 161.4% (H1 25: 180.9%). 2026 outlook: “well on track to deliver on our existing guidance - a profit slightly higher than 2025”. Broker Panmure Liberum has made some slight changes to forecasts: - FY26E adj EPS: 16.1p (prev. 16.2p) - FY27E adj EPS: 17.5p (prev. 17.4p) - FY28E adj EPS: 19.2p (prev. 19.0p) | AMBER/GREEN = (Roland) [no section below] I recently covered Sabre in a Stock Pitch, so I’m keen to see whether the story is playing out. Today’s results appear to be largely in line with expectations to me, with guidance unchanged for a modest increase in profit this year. As a quick reminder, this motor insurer has historically focused on a number of profitable niche areas but is seeking to expand cautiously into the more general market. Early indications suggest this is developing as I’d expect – premiums are rising fast, but there’s a small reduction in underwriting profitability. In fairness, it’s probably too soon to draw many conclusions in this regard – full-year margins may well be higher as newer business makes a greater contribution. My view remains unchanged – with a c.7.5% forecast dividend yield, I think the stock is attractively valued and could deliver a gradual re-rating over time. In keeping with the StockRank of 86 and neutral styling, I’m leaving our AMBER/GREEN view unchanged. | |
Nichols (LON:NICL) (£386m | SR71) | Laura Padfield appointed as independent NED from 1 Sept 26, replacing Helen Keays who will step down after nine years. | ||
Capita (LON:CPI) (£321m | SR20) | H1 Total Contract Value +15% to £998m. Adj. revenue +1.6% to £906.4m, Adj. Op Profit -31.6% to £32.2m due to additional costs incurred on the Civil Service Pension Scheme contract. Net Debt excl leases £200m (25H1: £87m net debt). | ||
Winvia Entertainment (LON:WVIA) (£267m | SR33) | Delivered an H1 performance in line with its plans. Expects to report adj. EBITDA +7.5% to £17.2m. On track to deliver full year results in line with market expectations. | ||
CLS Holdings (LON:CLI) (£210m | SR36) | Leasing transactions during the first half of the year have been steady, but slower than expected, with vacancy anticipated to be broadly unchanged at 14.5%.Expects a 4.6% fall in valuations in local currency. Now expects 2026 full year EPS to be in the range of 4.6 to 5.5 pence per share (vs. 6.8p consensus). | BLACK | |
Gulf Marine Services (LON:GMS) (£201m | SR65) | Has converted its January 2026 bridge loan used to acquire a new vessel into a long-term term loan and secured an additional AED-equivalent US$7.5 million working capital facility. | ||
Afentra (LON:AET) (£171m | SR45) | CFO Anastasia Deulina tendered her resignation for personal reasons. Will leave on 3 Feb 2027. | ||
KEFI Gold and Copper (LON:KEFI) (£147m | SR9) | Phase 1 Resettlement Action Plan at Tulu Kapi, clearing the mining licence area for the installation of initial infrastructure, is well advanced, with 100% of compensation agreements now completed. Preparations for the Phase 2 RAP, covering the open pit mining and plant areas are now underway. | ||
Synthomer (LON:SYNT) (£146m | SR71) | H1 Volumes +2.3%. Revenue cont. Ops +6.7% to £954.3m, EBITDA +16.4% to £96.7m. Net debt £671.3m (25H1: £638.3m net debt). FY 2026 slightly ahead of market expectations (EBITDA consensus £162m). | AMBER/RED = (Mark) | |
Focusrite (LON:TUNE) (£140m | SR93) | …has continued to trade in line with the Board's expectations. (revenue of £170.1-173.7m and adj. EBITDA of £25.2-27.4m.) | ||
Genel Energy (LON:GENL) (£140m | SR30) | H1 Revenue -63% to $13.4m. Operating loss $15.3m (25H1: $2.5m op. loss). Net cash $108.1m (25H1: $134.4m net cash). | ||
Tribal (LON:TRB) (£135m | SR93) | H1 trading in line with expectations. Core ARR +10.7% to £64.6m. Net cash £0.6m (25H1: £3.9m net debt). FY26 revenue and adj. EBITDA comfortably in line with current market expectations. (Revenue: £93.6m, Adj. EBITDA: £17.0m, Net Cash (ex-leases): £9.4m) | AMBER/GREEN ↓ (Mark) | |
GreenX Metals (LON:GRX) (£135m | SR9) | Multiple intrusion-related gold targets identified in two new licences. | ||
Mincon (LON:MCON) (£120m | SR89) | Revenue +19% to €87.8m, Op Profit +127% to €9.3m. Confident in delivering continued growth in profitability over the remainder of 2026. | ||
SIG (LON:SHI) (£104m | SR72) | LFL sales -1.5% to £1.293bn, u/l Op profit -32% to £10.5m, u/l LBT £16.3m (25H1: £10.3m loss). Net debt £531.6m (25H1: £523.5m). | BLACK (EBIT lower end of range) | |
Xaar (LON:XAR) (£96.2m | SR70) | H1 Revenue +9.2% CCY to £29.7m. Adj. PBT £0.2m (25H1 net loss £0.7m). Net debt £0.1m (25H1: £5.1m net cash). Full-year outlook remains unchanged. | RED ↓ (Mark) | |
Vulcan Two (LON:VUL) (£69.6m | SR33) | Since completing the acquisitions of CloudRx, Hyperdrug and Webmed on 19 March 2026, the Company has been encouraged by the potential of the acquired businesses and the progress made in integrating operations across the Group. Has rationalised a small number of lower-margin, higher credit-risk customers in the period. These clinics primarily operated in the weight-loss sector. Cash £6.0m. | ||
Strix (LON:KETL) (£67.8m | SR72) | 12 month Controls revenue -23.8% to £52.9m at CER. Consumer Goods revenue +12% to £34.4m CER. Adj. PBT AER 15mo -78% to £2.1m. Year end net cash £38.7m after Billi disposal. £10.0m tender offer post period and £3.7m of buybacks. “Entering FY27 with positive momentum, with Controls volumes stabilising against 2025.”. | RED = (Mark) | |
PROCOOK (LON:PROC) (£57.7m | SR82) | CFO Dan Walden to step down in Summer 2027. | ||
CT Automotive (LON:CTA) (£39m | SR92) | Revenue +15% to $62.1m, slightly ahead of management expectations. 26H1 PBT expected to be materially below the prior-year due to lags in cost recovery into H2. | AMBER/GREEN = (Mark - I hold) | |
Eden Research (LON:EDEN) (£20.5m | SR18) | Slovakia: Botrytis fungicide authorised for use on grapes and pome fruits from July 2026 Egypt: approved for use on grapes with no pre-harvest interval. | ||
Symphony Environmental Technologies (LON:SYM) (£19.5m | SR17) | H1 Revenue +23% to £3.60m, Net Profit £50k (25H1: £503k loss) | ||
Genedrive (LON:GDR) (£16.1m | SR11) | Rapid pharmacogenetic test to prevent antibiotic-induced hearing loss in newborns, has been implemented at Erasmus MC University Medical Center in Rotterdam, the Netherlands. | ||
Medpal AI (LON:MPAL) (£14.1m | SR0) | 47,223 NHS prescription items dispensed in July 2026. Private prescriptions: GLP-1 weight management clinic generated private prescription revenue annualised at over £2.2 million. | ||
Great Western Mining (LON:GWMO) (£13.7m | SR25) | Drilling at Defender is expected to commence in the next two weeks, with all preparatory fieldwork now complete and drill pads constructed. | ||
FIH (LON:FIH) (£13.5m | SR48) | Momart, including its subsidiaries, sold for £7.6m. Net proceeds from the sale are likely to be split between shareholder returns and retained by the company. |
Roland's Section
Filtronic (LON:FTC)
Down 9.4% at 227p (£m) - Full year results - Roland - AMBER =
Today’s results from this electronics group cover the year ended 31 May 2026 and follow an earnings upgrade on 23 June. These numbers were always going to seem poor relative to last year, as the last 12 months have seen Filtronic invest heavily in expanding and diversifying its capabilities following an exceptional surge of single product sales to SpaceX.
While this may have laid the foundations for a more robust and diversified growth pipeline, the near-term impact is that the company’s cost base has risen sharply, while its sales have not.
FY26 summary
Here are the main headline figures for the last year. As we often see when a company’s numbers are declining, Filtronic appears to have forgotten how to calculate percentages (!) so I’ve done this myself:
Revenue down 1.4% to £55.5m
Adjusted EBITDA down 33.5% to £11.3m (vs 23 June broker estimate of £11.7m)
Pre-tax profit down 71.6% to £3.8m
Diluted earnings per share down 70.6% to 1.78p
Net cash excluding leases down 12.2% to £10.8m
Slightly confusingly, Filtronic doesn’t report adjusted EPS, but brokers covering the stock still use this measure.
According to house broker Cavendish, today’s results equate to adjusted EPS of 3.2p, below the broker’s own forecast of 3.3p and also below the StockReport’s consensus estimate of 3.4p.
Cavendish says the EBITDA miss was due to an error in its calculations rather than any underperformance, but in any case I don’t think today’s apparent miss is really all that important – the shape of today’s results is largely as expected.
Trading commentary: what matters to me as a potential investor is whether the company’s progress to date shows tangible progress towards its aims of expanding its product range and diversifying its customer base. On balance, I think it probably does.
Here are some of the highlights flagged up by the company today:
SpaceX revenue reduced to 68% of total last year, from 83% in FY25. This was achieved on broadly flat total revenue, implying a 24% increase in non-SpaceX revenue last year.
A second large customer accounted for 10% of revenue last year, up from 6% in FY25.
Secured a $8.0m contract with a US customer for high-performance amplifier systems.
Multi-year contract wins, including a €7m agreement with a European space customer and a £13.4m contract with a “leading European defence prime”.
Successful deployment of next-generation GaN E-band products and continued expansion into high-frequency spectrum brands, “increasing Filtronic’s addressable market”.
Completed move into new Sedgefield headquarters and factory, increasing production capacity to be able to support annual revenue of >£200m.
Geographic diversification improved, too. Much of the increase in non-SpaceX revenue appears to have been in the group’s home market of the UK:
Source: Filtronic FY26 results
Profitability & Cash Flow: today’s results show us that Filtronic’s profitability declined sharply last year:
FY26 operating margin: 7.2% (FY25: 23.9%)
FY26 return on capital employed: 8.8% (FY25: 35.2%)
There are some good reasons for this. Capital expenditure rose to £10.3m (FY25: £3.8m) to reflect the investment in Sedgefield. Operating costs also rose sharply to reflect a 40% increase in R&D spending to £9.3m and a 27% rise in headcount to 236:
Source: Filtronic FY26 results
If revenue and capacity utilisation in the company’s new factor gradually increases, I’d expect a corresponding recovery in margins and return on capital employed. If this doesn’t happen of course, then Filtronic may have overinvested and be destined for a period of sub-par returns.
The end result of last year’s increase to capex and opex was a net cash outflow of c.£1.6m for the year, reducing net cash modestly to £10.8m.
However, overall cash performance would have been far worse without c.£8m in deferred income receipts. These reflect cash received upfront from customers before products/services are delivered.
I’m not sure, but I think this increase in deferred income relates to the company’s policy of seeking a “Non-Recurring Engineering” charge from customers when “when product development is customer specific”. This is done in order to “maintain a healthy cash flow”.
Outlook
Filtronic says it has approximately 90% coverage of current market forecasts for FY27 revenue and remains confident of delivering FY27 results in line with expectations.
Broker Cavendish has left FY27 forecasts unchanged today but has introduced new estimates for FY28, suggesting performance could strengthen next year:
FY26 actual adj EPS: 3.2p
FY27E adj EPS: 3.4p
FY28E adj EPS: 4.2p
Roland’s view
Filtronic’s share price has fallen by more than 50% from the the peak reached (which coincided with excitement over the SpaceX IPO):
Despite this, today’s forecasts still leave Filtronic shares trading on a fairly demanding valuation of 67x FY27E forecast earnings and on a FY28E P/E of 54.
This is reflected in the StockRank, with a very low value score:
While I think Filtronic is making progress and investing sensibly for the long term, we don’t yet know if this will translate into a suitable increase in revenue at attractive margins.
In the meantime, there’s already a fair amount of growth priced into the stock.
We’ve been neutral on Filtronic for some time now. I’m going to leave that view unchanged today.
Travis Perkins (LON:TPK)
Up 18% at 677p (£1.42bn) - Half-Year Results - Roland - AMBER ↑
When I took a first look at Travis Perkins’ results at 7am, I saw the comment about “a similar trading performance” in H2 and suspected another profit warning. However, when I checked the consensus forecasts, I realised that this wasn’t the case. Instead, a similar performance in H2 would be in line with or even slightly ahead of consensus.
It looks like the market has come to a similar conclusion this morning, as this builders merchant is the biggest riser in the FTSE 250 today, up by 18% at pixel time:
H1 results summary
Here are the key numbers from today’s half-year figures:
Revenue down 1.8% to £2,258m
Operating profit up 10.2% to £65m
Operating margin: 2.9% (H1 25: 2.6%)
Adjusted earnings per share up 13.5% to 15.1p
Interim dividend down by 11.5% to 4.0p, “reflecting the Group’s dividend policy”
Net debt/EBITDA down to 1.9x (2025: 2.3x)
Net cash excluding leases of £55m
At first glance, these numbers show a welcome improvement in profitability despite a small decline in sales.
However, a closer look at the numbers shows that while gross margin improved and administrative costs were cut, these benefits were offset by a 7% increase in selling and distribution expenses (fuel/energy?) to £428m.
The £5.8m increase in reported operating profit matched exactly the £5.8m of proceeds from property disposals in H1:
Source: Travis Perkins H1 2026 results
Without this benefit, operating profit would have been flat and earnings would have been lower than the adjusted figure of 15.1p reported today
Of course, there’s nothing wrong with a company selling surplus property to strengthen its balance sheet. But it’s a one-time benefit and is only a second-best substitute for an actual improvement in trading.
Additionally, any of these sales that are sale-and-leaseback deals will result in an increase in future lease liabilities, rather than the benefit of freehold ownership. Total lease liabilities fell in H1, so I’m not sure if the property sales reflect branch closures or surplus assets in this case.
Trading commentary: this is a challenging sector at the moment, due to the slowdown in housebuilding and related activity. A quick look at Travis Perkins’ divisional results suggests trading does remain difficult:
General Merchanting: like-for-like sales -1.2%. 8 branches were closed, taking the total to 717. Adjusted operating profit for the period fell by 5% to £60m as “gross margin expansion and cost control were unable to fully offset inflationary pressures”.
Toolstation: like-for-like sales rose by 1.4%, with adjusted operating profit flat at £15m as a £7m loss in Europe (Benelux) was offset by an improved £22m profit in the UK. Branch numbers were flat at 590 in the UK, with an increase of 1 to 110 in Europe. The company is in discussions with “multiple interested parties regarding the possible divestment” of the Benelux business.
Outlook
The Group is seeing encouraging early progress in its operational turnaround. However, the UK construction sector remains subdued with activity levels remaining depressed during the first half. In addition, given wider geopolitical and macroeconomic events, building materials price inflation remains hard to forecast.
The Group expects market conditions in the second half to be comparable to the first and as such expects a similar trading performance.
I don’t have access to any updated broker forecasts today, but annualising today’s adjusted EPS of 15.1p would give a full-year earnings estimate of 30.2p per share.
That’s slightly ahead of current consensus of 28p:
Roland’s view
Current forecasts put Travis Perkins on a 2026 P/E of 24 after this morning’s gains, falling to a P/E of 17.5x in 2027. That seems high enough to me given the indifferent trend in underlying trading.
While I acknowledge the potential for an operationally-geared recovery, today’s further dividend cut suggests to me that management is not yet that confident about a turnaround.
Even during stronger periods of trading, profitability was fairly average at this business.
Perhaps the main positive from today’s result was the improvement in the group’s balance sheet, with a reduction in leverage and net cash achieved before lease liabilities.
We’ve taken an AMBER/RED view on this business over the last year or so, which I think has been the right one in the circumstances (see the EPS trend above). However, given the in-line nature of today’s update I think it’s fair to move back to a neutral view.
Mark's Section
CT Automotive (LON:CTA)
Down 25% at 40p (£39m) - Trading Statement - Mark - AMBER/GREEN
(At the time of writing, Mark has a long position in CTA.)
This is ultimately an in-line statement for the full year:
Taken together, the Board is confident that these drivers will address the first half shortfall and that the Group will meet market expectations for FY26.
These are said to be revenue of $123.5m and adj. PBT $10.2m, which appear to come from a single broker, Singers.
However, it is quite some roller coaster ride to get there. First, they say that revenue in H1 was slightly ahead of where they expected to be and with production revenue up 14% this is a decent growth rate for a company operating in a mature industry.
H1 profit impact:
However, when it comes to profitability, they are hit by three issues:
Cost rises as a result of higher energy prices. These can be passed on to customers, but have a lag involved.
Higher inventory and freight costs as the company protected themselves against possible supply disruption.
A few ramp-up challenges in the new production lines in Mexico
Take together these lead to:
…underlying profit before tax for H1 26 is expected to be materially below the prior-year comparative period.
Last year, this figure came in at $4.2 m, so this could be as low as, say, $2m?
What they don’t mention is that some of these issues can also have a knock-on impact on working capital. Net debt at 30 June last year was $12.1m, but was down to $7.7m at the year's end. I wouldn’t be surprised if this was higher than the year-end when the results are released in September.
The recovery:
However, all of these factors are temporary. Minor production inefficiencies are said to be resolved, cost recovery from customers underway, and inventory declining, aided by a new paint facility, which presumably means they can perform in-house what they used to have to outsource (and therefore hold inventory and pay freight costs).
So there are genuine reasons to think that these issues are behind them, and H2 will be materially stronger. The big question is, will it be strong enough to cover the H1 shortfall? The company seems to think so. The market is less sure. I can’t see any broker update this morning that would give a third opinion.
The rollercoaster:
The share price has been on a very similar roller coaster ride recently. The market liked the final results released in May, and the accompanying jump in Stock Rank and improving prospects made the company a Super Stock:
Despite the share price rising strongly, the company traded on a 2027 P/E of less than 5, giving strong justification that it remains materially undervalued. We see this with companies such as The Works. When the rating is very low, and the earnings grow, the share price can rise significantly while still looking good value.
Today’s almost 30% drop in the share price, on what is (at least in the company’s opinion) an in-line trading statement, also seems excessive. However, it only takes the price back to the level seen around a month ago.
Adding to this mix, we have the fact that many investors buy into rising stock prices and add trailing stop losses. The early trades this morning had all the hallmarks of a series of cascading stop losses being hit. Perhaps there will be investors out there who bought stock at 30p or so and are happy to have been stopped out at 40p. However, my feeling is that there will be a lot more out there that bought at 50p and have now been stopped out at a loss. Stop losses certainly have their place, I’m just not sure they do what they are meant to when applied to illiquid stocks, such as this.
Mark’s view
I hold CT, so I have a front-row seat on this roller coaster. While it has certainly been a thrilling ride so far, I tend to be more focused on valuation, general direction, and position sizing than on the short-term ups and downs. This means that I was top-slicing to maintain position-sizing when the share price was above 50p, and I have been slowly buying some of these back below 40p today to maintain my desired portfolio weight.
While today’s update certainly could have been better, I’m not sure it fundamentally changes the investment case here. I’m also not sure if they will generate sufficient recoveries from customers in H2 to fully overcome the H1 shortfall, but I don’t think it will be far off either way. The impact of geopolitical events is a genuine reason for H1 to be temporarily behind, but it also highlights that they will always be exposed to these risk factors beyond their control.
Those who buy into short-term share price momentum will certainly be more circumspect today following the share price fall. However, revenue will no doubt continue to grow as recent contract wins are brought into production. If that can be turned into increased profitability, then the shares remain exceptional value. But if today’s update is a sign that revenue is vanity and lacks the sanity of converting into profits, then the company will muddle along, at best. That still makes this an interesting play from a risk-reward perspective, in my opinion, which is why I maintain my AMBER/GREEN view, but I must admit I have no clue where the share price rollercoaster will take us next!
Synthomer (LON:SYNT)
Up 13% at 100p (£146m) - Interim results - Mark - AMBER/RED =
The market has liked these results, mainly because they are said to be ahead of expectations, and are followed up by an upgrade to the full-year prospects:
FY 2026 outlook upgraded to slightly ahead of market expectations, reflecting strong H1 led by strategic growth and self help, supporting further progress in H2 despite ongoing geopolitical uncertainties.
The recovery seems broad-based across all divisions:
Coatings & Construction Solutions: Volumes +2.5%. Good revenue and volume growth, but excellent EBITDA margin improvement in the period, up 220bps.
Adhesive Solutions: Volumes +0.9%. Grew revenue and profitability,
Health & Protection: Volumes +2.9%. Volumes and pricing in April and May significantly higher due to disruption to the global sourcing and distribution networks of competitors.
Adjustments:
We have to be wary when companies mention “self-help”. This usually means cost-cutting, and many want shareholders to give them credit for the cuts made without counting the costs of making the cuts against them!
Restructuring charges remain ongoing, as do the costs of selling off non-core assets.
Pension past service costs are at least non-cash.
Cash Flow:
One has to question if EBITDA is a good measure for such a capital-intensive business. The cash flow statement reveals that even in their current tricky situation, they cannot cut capex by a huge amount:
Working capital outflows are normal for H1, but are also impacted by the need to repay the receivables financing they entered into toward the end of last year in order to meet banking covenants:
The net working capital outflow of £105.0m (H1 2025: £44.1m outflow) comprised higher raw material costs and the typical seasonal movements in inventories, payables and receivables totalling £(90.4)m (H1 2025: £(70.9)m), repayment in full of the £50.0m receivables purchasing arrangement at year end (see below), offset by an increase in net committed receivables financing facility utilisation in the period of £35.4m (H1 2025: £26.8m increase).
These were receivables that didn’t qualify for their normal €200m non-recourse receivables financing facility, which remains in place. While this may be off-balance sheet financing, it remains a finance cost to the company, which is why Free Cash Flow for H1 ends up at -£80.8m, and net debt keeps going up, and now stands at £671.3m.
Earnings:
The company reports Underlying EPS of 21.5p for the half, which looks really strong, assuming you accept their adjustments. However, a look at the income statement shows the bulk of this was due to an income tax credit of £22.3m, far more than their adjusted PBT of £13.2m. Given this and the debt, earnings multiples are not a useful way to value this business.
Mark’s view
While it is nice that the company is trading ahead of market expectations, the reality is that adj. EBITDA is not a particularly good metric to use for a capital-intensive business. The small beat doesn’t reverse an otherwise pretty negative trend for EPS:
Cash flow continues to be negative and net debt is increasing, which has to be worrying at this stage. Until it is clear they can significantly reduce their debt, then the equity will always be a very risky prospect and I think we need to maintain our broadly negative view of AMBER/RED.
Tribal (LON:TRB)
Flat at 63p (£135m) - Trading Update - Mark - AMBER/GREEN ↓
I recently wrote up a stock pitch on this company as a “Stock Rank Jumper” so was keen to see how they are getting on. The background is that they are a company in transition, where legacy contracts are rolling off and masking an otherwise reasonable growth in ARR. This is confirmed in today’s update:
Closing Annual Recurring Revenue (ARR) of the Core business increased by 10.7% to £64.6m.
The key is they say this is more than offsetting the decline in non-core ARR, so that ARR grows by 9.7% overall.
The result is:
Tribal expects to deliver a solid trading performance in FY26 with revenue and adjusted EBITDA comfortably in line with current market expectations.
This may set them up for a small beat. However, overall, this statement is a little uninspiring. They helpfully give us the consensus of “ Revenue: £93.6m, Adjusted EBITDA: £17.0m, Net Cash (excluding leases): £9.4m.” But last year they did revenue of £92.5m, adjusted EBITDA of £17.5m, and had net cash of £11.4m. So even if they come out slightly ahead of consensus, these figures are at best flat on the year before.
Mark’s view
Graham updated this to GREEN at the end of last year when they beat expectations. The share price is at a very similar level to then, but I struggle to get excited about a company where results are likely to be flat at best over the next couple of years. However, I do buy the argument that revenue in this space is sticky, and as legacy contracts roll off, the company will start to grow again, which may lead to a re-rating.
However, our views tend to be set by the shorter-term prospects, and waiting a couple of years for a possible re-rating as the overall results are at best flat, seems beyond the horizon for all but the most patient of investors, So I think we should be a little more circumspect until it is clear that they are either going to consistently beat expectations by a reasonable margin, or it is clear that underlying growth overcomes the decline in legacy contracts rolling off. It’s more like an AMBER/GREEN for me.
Strix (LON:KETL)
Flat at 34p (£67.8m) - Final Results - Mark - RED =
The company presents a huge number of figures in two tables at the start of the results, constant currency and actual currency, adjusted and GAAP, continuing and discontinued. However, given that they changed the year-end to create a 15-month period, they don’t give us what we actually need to work out how they are trading, namely 12-month comparatives for continuing operations, at constant currency.
The best we get is 12-month comparators for revenue, which shows consumer goods doing ok, but sales in the core controls business struggling:
o Controls revenue declined by (23.8)% to £52.9m at CER (Mar25: £69.4m), due to the challenging macro environment and increased competition.
o Consumer Goods growth accelerated, up 12.0% to £34.4m at CER (Mar25: £30.7m), driven by higher bespoke filters and appliance volumes.
They say:
Group adjusted PBT for PE26 of £10.1m at CER, firmly within forecast range.
But this includes the Billi business, now sold. Even on a 12-month-to-15-month comparative, the CER PBT on continuing operations dropped from £9.5m to £2.0m. Presumably, this would be even worse on a true like-for-like basis.
Outlook:
Things don’t look that much better going forward. Although they say they are “Entering FY27 with positive momentum, with Controls volumes stabilising against 2025.” This doesn’t mean they aren’t facing problems, here: “Heightened competition and pricing pressures in the Controls market expected to continue.”
I doubt the world has suddenly been buying 24% fewer kettles, so the issue is most likely that they continue to lose market share and have to cut prices.
Then there is the double-whammy of increased costs needing to be passed on to customers, and, as today’s CT Automotive update shows, this often comes with a time lag.
Balance sheet:
Perhaps the only saving grace is that they have moved from a significant net debt position to a net cash one, following the sale of Billi:
· Net cash of £38.7m provides financial flexibility to invest and the ability to return funds to shareholders.
· Returned £13.7m of capital to shareholders to date.
The £10m tender offer and around £1.8m of the buyback are post period end (by my estimates), meaning proforma cash is perhaps around £26.9m. This is around 40% of the current market cap. They say they have a “Comprehensive capital allocation framework under development, balancing investment for growth, capital discipline and shareholder returns.” Which sounds to me like they are going to spend a fair amount of the cash trying to turn around the controls business.
Broker forecasts:
Zeus update us today. They see the net cash declining further to £20m at the year end (partially due to the buyback) and adjusted EPS coming in at 2.5p, for a P/E of 13.7x. Although they point out that the EV/EBITDA is just 3.2x, I’m not convinced that this is a business where we should be using EBITDA as a valuation metric.
I’m also not convinced this is particularly cheap for a business facing so many long-term headwinds in its core. The company’s insistence on returning cash to shareholders via tender offers and buybacks at historically elevated multiples looks to me that they are destroying shareholder value rather than adding it with the current buyback. It would take a further recovery, far beyond the 2.7p of EPS currently forecast for FY28, to make this look good value.
There is a new management team in place, and Zeus say:
Andy Rainforth joined as CEO on 13 July (appointed to the Board 5 August 2026), and will be appointed to the Board on 5th August, succeeding Mark Bartlett. A Capital Markets Day later this financial year will set out a strategic update and capital allocation framework.
However, I am reminded of the old Buffett quote about whose reputation remains intact after a great manager meets a poor business.
Mark’s view
I am surprised the market has not reacted more negatively to the outlook here. The key controls part of the business looks structurally challenged to me, facing increased competition and pricing pressure amid rising costs. This is a horrible place to be stuck in the middle of.
As such, the current rating looks too high, unless there is a strong recovery beyond the current forecast horizon. Given the recent history, that possibility is looking increasingly unlikely. The only saving grace is that they continue to have significant net cash, giving them time to attempt the turnaround. Perhaps a new CEO will be able to make things happen, but I’m not willing to invest on that basis at anywhere near the current valuation, so I maintain our previously negative view. RED
Xaar (LON:XAR)
Flat at 121p (£96m) - Half-year Financial Report - Mark - RED ↓
The company scrapes into an Adj PBT:
Adjusted profit before tax from continuing operations of £0.2 million (2025 H1: loss of £0.7 million)
Something they’ve struggled with in recent years:
The word “adjusted” is doing the heavy lifting, though, as there is a big restructuring charge amongst other adjustments:
Perhaps most worryingly, the pursuit of break-even profitability continues to require large cash outflows, and they find themselves in a net debt position:
Net debt of £0.1 million (2025 H1 net cash of: £5.1 million)
In 2021, they had £25m of cash and they’ve spent it all pursuing a growth strategy that is yet to appear in the bottom line.
The full-year outlook is said to remain unchanged. With no broker updates this morning that I can see, this means they would do 2p EPS for the full year, putting them on 60x earnings.
FY27 is forecast to be much better, with 6.37p of EPS putting them on a more reasonable 19x earnings. However, the EPS consensus direction over the last few years gives pretty much no confidence that this will really be the outcome:
Mark’s view
Shareholders appear to have given this company the benefit of the doubt over the last few years, that growth and profitability are just around the corner. However, the broker consensus trend gives almost no confidence that this is really the case. For a long time, their net cash position gave them the time to pursue this strategy. However, with these results, the move into net debt starts the clock ticking for them to actually deliver, and hence, I feel we need to take a more negative view here. Big questions remain as to whether they will ever be consistently profitable, let alone at a scale that justifies the current market cap. RED
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