Daily Stock Market Report (Mon 1st June 2026) - MEGP, BSIF, EZJ, PAF, RGG, CER, APN

On Friday afternoon, President Trump said he was making a “final determination” on a deal with Iran. Unfortunately, we did not get a clear resolution with Iran and the US said to be exchanging messages over the weekend on changes to the proposed agreement.

Iran wants “exclusive authority to determine the nature of transiting vessels” in the Strait of Hormuz, according to Iranian TV quoted by Bloomberg.

The proposed deal does allow $12 billion of frozen funds to be returned to Iranian banks within 60 days - that’s half of the total frozen amount.

Other major headlines:

• The Israeli military has advanced deeper into Lebanon than it has for 26 years, planting its flag on the landmark Beaufort Castle.

• In tech news, Nvidia is going to directly compete with Intel in the PC market, launching a new “RTX Spark Superchip” for laptops and desktops.

Overnight market movements:

• The FTSE is set to open down 0.2% at 10,380

• S&P 500 is up 0.3% at 7,600

• Brent crude (August delivery) is up 2% at $93.30

• Gold is down 0.5% at $4,500

• Bitcoin is down 0.6% at $73,250

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All done for today, thank you. Spreadsheet accompanying this report: link.

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Companies Reporting

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Graham's Section

easyJet (LON:EZJ)

Up 9.5% to 435.8p (£3.3bn) - Response to Possible Offer for easyJet - Graham - TAKEOVER (AMBER/GREEN =)

On Friday, a US-based private equity investor called Castlelake, specialising in “asset-rich and cash-flowing opportunities in the private markets”, announced on its website that it was “in the early stages of considering a possible offer” for easyJet.

It acknowledged that it had not yet spoken with the easyJet Board.

That announcement went up as an RNS this morning.

This morning, they also announced that they and their funds now own 2.1% of the company.

Response to Possible Offer for easyJet: the Board of easyJet have been quick to respond.

The Board is clear in its duty of aiming to maximise shareholder value and will consider any proposal, should one be made. In any assessment, the Board will be especially mindful of its valuation and deliverability.

Valuation: the Board notes the highly opportunistic timing when easyJet’s share price is temporarily depressed due to the current situation in the Middle East and its impact on customer confidence and jet fuel prices.

Deliverability: the Board notes the considerable regulatory, financial and other execution challenges associated with a potential takeover of easyJet.

They also note their “investment grade balance sheet with a net cash position”, suggesting that they are under no financial pressure to agree to any takeover.

Graham’s view

On valuation, it's true that EZJ shares have had a rough year, underperforming the FTSE:

The Financial Times published a helpful article on Saturday, providing lots of context to the story.

A few nuggets from that:

• Castlelake is profiting handsomely from a 2023 investment in the distressed Scandinavian Airlines (SAS), where it is now being bought out by Air France-KLM.

• An experienced investor in the aviation sector, Castlelake is said to currently own some of easyJet’s aircraft leases.

• Analysts believe that easyJet’s fleet is worth more than its market cap.

So it all adds up: Castlelake has an intimate understanding of easyJet’s fleet, and may see an opportunity that mirrors its SAS investment.

We don’t cover easyJet very often in this report, but here are a few observations I’d make from the interim results published 11 days ago:

• Net cash was £434m, calculated as cash of £3.4bn minus borrowings of £2.0bn and leases of £1bn.
• The fleet included 356 aircraft, average age 11 years, with 208 aircraft owned.
• Net assets on the balance sheet, excluding intangibles, were £2.9bn. easyJet's market cap as of Friday's close was £3bn.

So the company does appear to have a position of strength, in balance sheet terms, and its balance sheet is valued cheaply by the market.

Earnings are less impressive: the H1 headline loss was £552m, worse than H1 last year, despite a good load factor of 90%.

And the outlook statement said “there remains uncertainty over the FY26 financial outturn due to the current external environment with fuel prices remaining elevated and lower than normal visibility of forward bookings.”

Where I think the easyJet Board’s response to Castlelake is strongest is on the regulatory point: any takeover would face an enormous quantity of red tape. Even in a post-Brexit world, it’s very difficult - maybe impossible? - for a non-EU entity to buy a UK airline outright.

I’m therefore leaning towards the conclusion that a takeover by Castlelake alone is very unlikely. Castlelake themselves probably know this, but see enough value in the shares to make an investment worthwhile. Their purchase of a 2% stake looks more like a value investment to me, rather than a serious takeover attempt. They may also believe that their presence could trigger other parties to consider a takeover.

I’m therefore going to leave our AMBER/GREEN stance unchanged. The asset value at easyJet is interesting, but the market is right to be sceptical of the £1bn PBT target, which doesn’t seem to be on the horizon yet.

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Rentguarantor Holdings (LON:RGG)

Up 12% at 32p (£47m) - Trading Update and Strategic Growth Opportunities - Graham - AMBER/GREEN ↑

I turned neutral on this one in April on the grounds that the company was “growing very rapidly, beating expectations, possibly turning a small profit, and holding a reasonable amount of cash”.

The share price is up by 37% since then, making the valuation on historic financials even more stretching. The ValueRank is only 4, and Stockopedia categorises it as a “Sucker Stock”:

Let’s review today’s trading update for the first five months of the year.

• Revenue +155% to c. £2m

• No. of applications +82% to 6,288

• No. of contracts + 127% to 2,318 (with higher average contract value).

We already knew that Q1 revenues had doubled year-on-year, but this takes the growth to another level.

May saw another very sharp increase:

The Renters' Rights Act 2025 (the "Act") came into force on 1 May 2026. The Company has been anticipating the Act to cause a structural shift in demand for rent and property damage guarantees in the UK. In May 2026, the Group delivered record unaudited revenue of c.£700k during the month - a significant increase of approximately 115% compared to the average monthly revenue of c.£325k during the first four months of the year. This was driven by a material uplift in new guarantee issuances and higher adoption of the Company's solutions across core customer segments within the private rental sector.

Estimates: The company’s statement says that the 2026 profit result will be “within the market expectations range” as that range was quite wide (from a £0.5m operating loss to a £0.3m operating profit).

Looking at Cavendish’s estimates in isolation, they have upgraded their revenue and profit forecasts today as follows.

Revenues:

• 2026 revenue forecast raised 25% to £6m

• 2027 revenue forecast raised 28% to £11m

• 2028 revenue forecast raised 28% to £18.8m.

Profits:

• New 2026 PBT forecast £0.2m (previous forecast was a £0.5m loss)

• 2027 PBT forecast £2.3m (previously £1.1m)

• 2028 PBT forecast £5.9m (previously £3.9m)

CEO comment:

“The Company's performance in May 2026 marks a clear shift in demand for our professional guarantor service. The structural changes to the sector resulting from the Renters' Rights Act are driving sustained growth across our core customer segments and reinforcing the relevance of our solution.

"I am also pleased to have officially launched our expanded service Offering, now including the ability to settle property damages, which I believe is a critical step in positioning RentGuarantor as a comprehensive service that simplifies the core aspects of securing rental accommodation in the UK.”

AI investment: RGG is accelerating various automation and AI tools, to meet anticipated volumes.

• AI deployment in existing systems and document processing tools

• Targeted hiring in data science and engineering

• Upgrading IT infrastructure.

One of their NEDs is spearheading this, a Professor of computer science.

Graham’s view

The use of AI is positive but also mandatory in the current environment for almost every business. Listed businesses in particular are expected to demonstrate that they are on top of this trend.

What makes RGG really interesting is its positioning in the property market - and its explosive growth.

I’m relieved that I already switched to neutral. But after a big upgrade, perhaps this is not even enough.

It’s very unlike me, but I’m going to tentatively turn AMBER/GREEN on this. It goes against all of my value instincts. But we don’t often get to see companies more than doubling their revenues. This rent guarantee product appears to be gaining traction and to be very well-matched to the new regulatory regime, which in general makes tenancies riskier. There is a real logic behind the explosive growth that it’s achieving.

Hitting 2028 forecasts won’t be easy. They would have to hit current 2026 revenue forecasts (£6m) and then treble revenues over the subsequent two years. But if that is realistic, then these shares will no longer appear to be so expensive. The 2028 forecasts suggest that 3.6p of earnings per share is possible.

This might be my worst call ever, but I’m going to turn moderately positive on RGG, to reflect the possibility that it will grow into its current valuation over the next few years. Because if it does that, then I do not expect the share price to stand still.

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Roland's Section

ME International (LON:MEGP)

Down 25% at 110p (£412m) - Trading Update - Roland - BLACK (AMBER ↓)

Commiserations to holders here – shares in this quirky founder-led business are down by c.25% in early trading this morning following a big profit warning.

What’s gone wrong?

ME Group says that the impact of the Middle East conflict has hit consumer confidence and “reduced demand for official photo ID amid ongoing travel uncertainty”.

Although the majority of the group’s H1 (Nov-Apr) was in line with expectations, trading softened in April, particularly in the French photobooth and laundry operations.

Group-level revenue figures provided today suggest a sudden slowdown in April:

• H1 group revenue: +2%

• PHOTO.ME revenue -17% in April (H1: -6%)

• WASH.ME revenue +3% in April (H1: +17%)

• H1 revenue from equipment sales: -14%

The photobooth and laundry businesses generated 88% of revenue and 93% of operating profit last year, so are effectively the whole business.

Outlook

Management report “an improvement in trading through May” but do not expect trading patterns to normalise while the Middle East situation remains unresolved.

Profit guidance for the full year has been cut:

Consequently, the Board is taking a more cautious view to the full-year outlook, and it now expects FY 2026 profit before tax to be in the range of £69 million to £74 million.

Using last year’s results as a guide, my guesstimate is that this could give a revised adjusted EPS figure of c.14p, at the mid-point. Previous consensus on Stockopedia was for 15.7p, so this would be a cut of 11%.

Sadly, ME Group’s management hasn’t included details of previous expectations in today’s RNS. Broker notes for ME Group are also no longer available on Research Tree. This means we’ll have to wait for revised EPS estimates to filter through to Stockopedia in the coming days to see if my estimate is correct.

Roland’s view

On the face of it, today’s c.25% share price drop seems quite harsh, if my estimate of an 11% cut to EPS is broadly correct.

However, this is the second profit warning in six months.

A look at the bigger picture has also left me wondering if the management of this business has faltered slightly over the last year:

• The publication of last year’s results was delayed to give the auditors more time, resulting in its shares being suspended – I think this is poor for a FTSE 250 company.

• When the results were published, we then learned that ME Group had previously incorrectly accounted for the cash in its vending machines – surely a well-established procedure?

• Family members involved in the management of the business have been reshuffled somewhat this year, with founder Serge Crasnianski’s son Vladimir promoted to Deputy CEO.

• A professional chief operating officer was appointed in March, taking over the duties of the founder’s daughter.

I might be reading too much into these events, but founder-led businesses can sometimes have issues with management succession. Given that CEO Serge Crasninanski is 83, I think ME’s future leadership could be a factor investors might want to consider.

With this caveat aside, I think it’s fair to say that ME Group shares still look quite decent value following today’s warning. I estimate the forward P/E a c.8x, with a potential dividend yield of 6%-7%.

There’s also presumably some recovery potential if the Middle East conflict is resolved fairly soon.

In principle I think this remains a good, cheap business, but given the headwinds reported today and the lack of consistency from this business over the last six months, I think a more cautious view is prudent.

I’m going to downgrade our view to neutral today, to reflect this profit warning and my more mixed view on this business.

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Pan African Resources (LON:PAF)

Down 11% at 122p (£2.5bn) - Operational Update ahead of year ending 30 June 2026 - Roland - AMBER =

Today’s full-year update from South African gold miner Pan African seems a little disappointing to me. The market clearly agrees – the shares are down by c.11% as I write.

FY26 update (y/e 30 June 2026)

Today’s update which shows costs at the top end of guidance but production at the bottom end:

• FY26 gold production to be c.275,000oz, at the lower end of FY26 guidance of 275-292koz.

• FY26 All-In Sustaining Costs (AISC) to be $1,870/oz, at the top end of FY26 guidance for $1,820-$1,870/oz.

This leads me to expect that FY26 profits are likely to be at the lower end of expectations, perhaps slightly below consensus.

Lower production last year appears to relate to the ramp-up of production at Tennant Mines:

Excellent production performances from the Elikhulu Tailings Retreatment Plant (Elikhulu) and Mogale Tailings Retreatment (MTR) surface operations and the Evander and Barberton Mines underground operations offset slower than anticipated ramp up of production from Tennant Mines

Some of the other news in today’s update is more positive – the company confirm it has moved to a net cash position and has secured

FY27 Outlook

Output from Tennant is expected to “increase significantly” in FY27, but the overall impact on group production is only expected to be modest. Costs are also expected to continue rising:

• FY27 production guidance of 280,000oz to 302,000oz, an increase of 6% at the mid-point.

• FY27 AISC up 13.6% (midpoint) to between $2,075/oz and $2,175/oz.

• FY27 capital expenditure revised upwards to $324m (+21% vs $267m previously).

The bulk of next year’s capex is aimed at expanding production and cutting AISC “over the next years”. Management says most of the increase is due to plans to expedite the development of the White Devil open pit and install a fixed crusher circuit and filter belt at the Nobles plant to support future production growth.

Pan African’s efforts to continue expanding production could pay off if the gold market remains strong – even at current levels the profit margins on offer look very attractive to me.

However, the risk is clear enough – the price of gold is falling, but spending is continuing to rise.

Consensus forecasts prior to today suggested earnings would continue to rise in FY27, despite these headwinds.

However, today’s guidance suggests to me that the earnings picture is now likely to be broadly flat next year – unfortunately I don’t have access to any broker notes:

Roland’s view

Personally, I can’t help feeling the gold bull market may have peaked. The gold price is down by 17% from the $5,420 high seen in late January and the chart suggests to me that recent lows could be tested if no further catalyst emerges:

Miners tend to be a leveraged play on the underlying commodity and we can see this with Pan African. The company’s share price has fallen by 32% from the 180p high seen at the end of February – roughly double the decline in gold over the same period:

Taking a broader look, I think Pan African’s management deserves some credit for building a much larger business and timing their efforts to profit from the strongest gold market for many years. On a five-year view, this stock is still a five bagger:

I’m also pleased to see the business has now moved into a net cash position. Assuming this is maintained, it should help to de-risk the business if the gold price does continue to fall.

Looking ahead, my assumption is that the forward valuation of c.8x earnings remains largely unchanged. That seems about right to me.

The StockRank of 71 and High Flyer styling also suggest to me that further gains could be dependent on the price of gold, making the shares somewhat speculative in my view:

To reflect this situation, I’m going to leave my previous neutral view unchanged today. AMBER.