Daily Stock Market Report (Fri 15th August 2025) - LST, RGG, TEK, OCN
Welcome to Friday's report - this one might be shorter than usual!
Have a fine weekend everyone!
Spreadsheet accompanying this report: link (last updated to: 24th July).
Companies Reporting
| Name (Mkt Cap) | RNS | Summary | Our view (Author) |
|---|---|---|---|
Ocean Wilsons Holdings (LON:OCN) (£323m) | 6.2% Q2 return, 5.1% year-to-date return (in USD). NAV per share £19.48 prior to £109m tender offer. | PINK (recommended merger with Hansa) Some quick maths suggests that an OCN share is going to be traded for HAN and HANA shares currently worth £11.57, if this deal goes ahead. When I made the same calculation last month, with higher HAN/HANA share prices at the time, the corresponding figure was £12.30. OCN shares are trading at £11.48, so there is a small discount available for those speculating on the deal going ahead. Of course the discount is much larger against OCN's own NAV, and I'm inclined to think that the share price would respond positively to news that the deal was voted down by shareholders! But today's update reflects on what might happen if shareholders do that, with the directors warning that there would be "limited scope for further buybacks". It seems that rather than HAN's discount narrowing in advance of the merger, we have instead seen OCN's discount widen. It's hard to know what to make of this - for investors who hold one or both shares, the discounts do offer some margin of safety. But the market as a whole does not seem interested in either of these investment vehicles right now. I have to think that sentiment should improve if the deal goes ahead, for the reasons we've mentioned before - scale, liquidity, and membership in the indexes. | |
Rentguarantor Holdings (LON:RGG) (£34m) | SP +18% Moves from Aquis to AIM today. | AMBER/RED (Graham) I'm glad to see a company joining AIM rather than leaving it. On valuation grounds, however, I do take this one down a notch as I think the market cap has edged over £40m today, which seems rather high to me vs. trailing revenues. It's an illiquid stock with high insider ownership, so the exact share price is debatable, but it officially closed on Aquis at 27.5p yesterday, and the London Stock Exchange says it's at 32.5p today. | |
Tekcapital (LON:TEK) (£16m) | Innovative Eyewear: Q2 revenue up 88% (y/y) to $579k. Tekcapital: Q2 net loss $2.1m due to tariffs. | AMBER (Graham) [no section below] Tekcapital is not shy when it comes to issuing announcements - there have been five in the last month! It recently came to light that one of its portfolio companies (Microsalt) failed to disclose early loan repayments which were made from Microsalt back to Tekcapital. As the largest shareholder in Microsalt, surely Tekcapital should bear some responsibility for this corporate governance failure? Tekcapital itself raised new equity recently, and today's update confirms net losses for it over the past six months. As noted by Roland, the company trades at a deep discount to its officially-stated portfolio value ($61.5m as of Dec 2024). But the true value of this portfolio - a small set of small companies - is highly uncertain. | |
Light Science Technologies Holdings (LON:LST) (£11m) | Three contracts worth £0.5m (1 new contract, 2 re-tendered contracts with existing clients). | RED (Graham) Staying RED on this due to the solvency question and the lack of market estimates. |
Graham's Section
Light Science Technologies Holdings (LON:LST)
Down 11% to 2.85p (£9m) - CEM Contract Wins - Graham - RED
This is a group of three companies - Contract Electronics Manufacturing (CEM), AgTech (AGT) and Passive Fire Protection (PFP).
I’m RED on it by default due to the presence of a going concern warning in the most recent half-year report.
Digging into that a little deeper, this is what they said earlier this week:
The Directors are satisfied that the Group has sufficient financing in place to continue to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of this report and hence have prepared the financial statements on a going concern basis.
The Directors acknowledge that there is uncertainty on the level and timing of revenues within the Group, and there would be a possible need to raise additional funding and / or renegotiate the terms of its borrowing facilities, or obtain a temporary covenant waiver, should the Group's expectations for revenue generation over the coming 12 months not materialise as expected. The Directors note that this material uncertainty may cast significant doubt on the group's ability to continue as a going concern.
So the situation is perhaps more finely balanced than my automatic RED suggests. Even if the company needs to raise funds or get a covenant waiver, that may not be such a terrible problem. But the point of being RED is to highlight an issue for readers - it’s up to you to decide if you are willing to live with it!
Turning to today’s update, we have news of three contracts, their total value being £0.5m.
But there’s a problem that I already raised on Wednesday - LST’s broker doesn’t yet provide forecasts, only saying that they “expect to initiate research coverage on LST in due course”. They were hired as LST’s Nomad in June.
So there are no live forecasts available, and limited guidance from the company itself.
From today’s announcement:
These contracts demonstrate an increasingly robust conversion of the Group's strong quoted pipeline, which… currently stands at over £58m across its three divisions.
I’ve learned to be very careful with pipeline figures - these are hoped-for contracts.
Graham’s view
I wish the company well, but I have to be RED due to the solvency question and the lack of forecasts. The share price falling by 10% on the same day as this contract win announcement suggests the market is unimpressed. With the company having generated £12m in revenues last year, the significance of £0.5m of contract wins is certainly unclear to me.
The founder-CEO is well-aligned as the largest shareholder. I’d be open to learning more about this one!
Rentguarantor Holdings (LON:RGG)
Up 18% to 32.5p (£41m) - First Day of Dealings on AIM - Graham - AMBER/RED
I mentioned this in April when it let the market know of its intention to move to AIM from Aquis.
That has now been put into effect.
The company “provides a professional guarantor service to support tenants in securing a rental property”.
I think their service costs about one months’ rent, or a bit more than that for people who finance the fee.
They raised £1m (gross) in new equity in June:
The net funds raised through the Subscription will be utilised to fund the expansion of the Company's business over the forthcoming year, principally in terms of the hiring of additional staff and marketing activities, as well as the provision of general working capital and for the costs associated with the Company's intended move of the public quotation for trading in its Ordinary Shares to AIM.
Graham’s view
I’d like to be more positive on this. In theory, I agree that there should be plenty of demand for RGG’s guarantor services, as renting becomes more common. But historic accounts up to this point show the company making losses and raising fresh equity pretty much every year - so it looks like it’s still in startup mode.
On top of that, I calculate the market cap as c. £41m currently, which is over 30x last year’s revenue figure. Even with revenues growing strongly, my value investor instincts make it tricky to be positive - or even neutral - on a share trading at this valuation.
I’m therefore going to nudge my view on this down by one notch, to AMBER/RED. But it’s refreshing to occasionally see a company joining AIM rather than leaving it!
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34 comments
Hello all, especially Graham. Could you please check this calculation of OCN post merger?
Hansa has today published its post merger NAV, assuming that the merger proceeds. It quotes £4.55.
OCN is entitled to 1.4925 new Hansa shares in the merger. These being a 2:1 mixture of HAN and HANA.
For the sake of simplicity, I have calculated that HAN and HAN have the same NAV.
£4.55 * 1.4925 * 3 = £20.37.
OCI right now is £11.90.
A 41% discount to NAV.
Which is why I've filled my boots. Or am I wrong?
Sorry, I meant HAN and HANA.....
I believe this is correct and makes sense, given that OCN and HAN/A need to be on the same discount until the merger is completed based on the proposed exchange ratio of 1.4925 (HAN/A are also on ~40% discount). Otherwise, there would be an arbitrage opportunity. I would also expect the NAV discount of the merged entity to come in to ~20% post merger in line with other similar Investment Trusts, esp. given majority of holdings will be publicly listed equities.
Hi Graham, appreciate your latest thoughts on Ocean Wilsons Holdings (LON:OCN) . Your end of July DSMR view was that a OCN/HAN combination had a fair price of 12.30. With both on a 30%+ discount to NAV is this a remarkably good deal at current 11.50 price?
Hi Tim, I've commented on OCN again. It's interesting alright - tempting discounts, and I'm inclined to think that sentiment should improve after the merger (assuming it goes ahead). But it's a guessing game! The underlying portfolios aren't super exciting but they do offer tremendous diversification.
Thanks Graham - it is definitely an interesting situation!
Please see my new note above
Please see my new note above
At risk of thrashing a dead donkey, may I suggest Daniel Thwaites (@THW), the Lancashire brewer and pub chain. It has a stock rank of 84, yields 3,7%, and sells at a discount of close to 80% of its £4.31 per share book value. It has recently surfaced on Lord Lee's radar screen, and even earned a mention in the Investors Chronicle, which probably explains the recent spurt in its share price.
At first sight it looks too good to be true. However, the main problem is that it is family controlled, which insulates it from takeover, and it suffers from weak and inbred management. The chairman, who is also chief executive, is the son in law of the former chairman, who still sits on the board which she first joined in 1974.
As a local lad, I like to support local businesses so invested in Thwaites at 115p in 2012 when it was paying a 4.46p dividend. Having cut its dividend at the time of Covid, its payout of 3.5p has still not recovered to pre-Covid levels, and the share price, even after the latest jump, is still well short of what I paid in 2012.
My main reason for remaining invested, in what is one of my worst investments, is the access it gives to the 25% shareholder discount scheme which helps reduce costs when visiting relatives in the North. However, the quality of Thwaites inns in the North is not a match for the Young's and Fuller Smith Turner hostelries that I visit.
Whilst several of my London acquaintances refuse to frequent JD Wetherspoons hostelries on account of Tim Martin's strong pro-Brexit views, I can only dream that one day the Thwaites family could recruit someone with his entrepreneurial skills to revive their business.
Daniel Thwaites (OFEX:THW) . You are right it has performed badly.
The point was made at the recent AGM that the best investment they could make was buying their own shares, increasing NAV per share even further and EPS, and they have been doing so. I think they will continue to do so.
They look to me as if they are set to go, they have completed the investment in the new hotel in the Lakes which was a huge investment and apparently now it is doing well (Langdale Chase ).
Although the family own a significant amount, I do not think they all think the same and I bet that an offer near asset value would be accepted. I also believe that the hotel valuations are reasonable, most sales of assets have been around asset value in the books, though it is true none of the new investments have been sold.
Despite covid they have not issue any new shares and debt levels are reasonable, much lower than Shepherd Neame (OFEX:SHEP) as a proportion of assets for example.
In mitigation there have been some substantial sellers over the last few years which the market has had some problem digesting, hopefully in future the company will buy any large blocks for sale at or near these prices.
So little on the agenda today and take minds off DT - a question - I hold 3 pubs - Fuller Smith & Turner (LON:FSTA), Young & Co's Brewery (LON:YNGA) and £JDW.
I should sell at least one but which -tricky. I'm tempted to hold JDW but finding it difficult to decide on the other two. Any thoughts please ?
Cant help, I hold FSTA and YNGA. Bought the latter back last week after its share price underperformance. FSTA give a good shareholder discount perk if you stay and eat, though not usable on the daily special discounter menu. They did put drinks on a separate tab though. YNGA have a shareholder discount scheme, but a share I tend to buy and sell.
Can you get any of these discounts if you hold the shares in an ISA like the one provided by iWeb?
Mine are held in ISA at AJ Bell. I just emailed them a copy of the contract note. Check the minimum shares that have to be held. YNGA is just 1 . FTSA is 1000. Though just had a look at YNGA and it looks like they may have suspended it although I had a voucher earlier this year. Maybe check via email: shareholders@youngs.co.uk
Thanks folks - I am not tempted by the discount card -(maybe in younger days) and have opted to sell YNGA. Now considering M P Evans (LON:MPE) or Anglo-Eastern Plantations (LON:AEP) but will hang on for any weakness in pricing.
I hold MPE, excellent company. I bought the brewers for business reasons , not the perks btw.
Agreed re M P Evans (LON:MPE) (I hold), I know less of Anglo-Eastern Plantations (LON:AEP) . Check out shareholding structure as well as financials. MPE under effective control of families who have been in it for generations who manage and account prudently (I am told) but with a chunky (c25%) holding by an industry rival as a result of a failed bid quite a few years ago at (from memory) about 1100p. AEP has an individual with a 50%+ shareholding. Also MPE solely Indonesian palm oil (apart from small residual property holding in Malaysia being developed and sold off via joint venture). AEP I believe have rubber as well as palm oil and Malaysian as well as Indonesian operations - not sure whether that's better or worse. Both vulnerable to downward swing in commodity prices if we get a global recession and to overseas government tax changes to grab more of the revenue if there's an upswing in prices (as happened after Ukraine invasion). I'd be grateful to hear from any subscribers with better knowledge of either/both.
thanks for this - having looked through both coys this morning think I'll go with MPE. Added bonus with them is the Aim status and thus IHT bonus (even though now halved). But I'll hang around a bit see where the price goes.
I originally held Whitbread (LON:WTB) shares for investment reasons, but after selling out I retained the minimum number of shares to allow me to continue to get the discount card that gets you a free breakfast at Premier Inns.
I am sure that saving £11 about 5 times a year is not a major return, but I get some satisfaction in getting a free breakfast at each stay.
I think you might also get a discount on the attached restaurant (Beefeater or Brewers Fayre or whatever), but I don't normally use them.
You might also care to look at R E A Holdings as another player in the palm oil league. Long established and reputation for treating employees in a good old fashioned paternalistic way financing housing. medical centres, schools etc.
NB they also have a 9% Pref listed.
I have held Fuller Smith & Turner (LON:FSTA) for some time and also have a shareholder card.
Would note that youngs has a higher SR.
the last 2 JDWs I visited were underwhelming.
I suggest you conduct some detailled research over the weekend. Given the chance I would buy Butcombe (you can't it is private) as the food and pub was excellent and they have the best no alcohol beer.
Of course the nicest pub doesnt necessarily make the largest profit.
One should not overlook Shepherd Neame (OFEX:SHEP) . Very impresssive presentation at the last Mello. Good pub & hotel portfolio. Good demographic outlook. Solid value SR.
And very good shareholder discount scheme.
CAMRA still have an investment club that covers the sector in depth.
The Campaign for Real Ale (CAMRA) offers an investment opportunity for its members through the CAMRA Members' Investment Club (CMIC). Here are the key details:
CMIC presents a way for real ale enthusiasts to support the industry directly while seeking a modest, long-term return on their investment.
And I believe they own a substantial amount of Daniel Thwaites (OFEX:THW)
Less than 1% though.
I cut my losses in the constant fund raiserTekcapital (LON:TEK) a couple of years ago. Lucyd eyeware shows no signs of being any better than MicroSalt (LON:SALT) . I am not sure how the manager keeps getting investors to put more funds in. I would avoid.
Yes it is a mystery to me how they got those floats away at such a pre-revenue, let alone pre-profit stage? Belluscura (LON:BELL) is nearly bust and both MicroSalt (LON:SALT) and Innovative Eyewear (NAQ:LUCY) could both run out of funds before ever getting close to profitability. Clifford Gross might be a good salesman but I wouldn't touch Tekcapital (LON:TEK) again. I was lucky enough to come out of it with a profit during the hype phase, but it is a salutary lesson to avoid 'story stocks'.
Ditto
The modest list of company updates above tells me this is a day to head for the golf course and then settle in for the first game of the Premier League season!
Why does the cricket season seem to have finished in mid August??
Because all our fast bowlers are knackered? And our national captain crocked?
Rain stopped play.
Merely an interlude. It will start again September.