Daily Stock Market Report (Thur 2 Jan 2025) - TMG, POLB, RCDO

2nd Jan by Graham Neary

38 comments 4297 reads

Good morning! Graham here, back after taking some time off. Let's see what companies we have reporting on the first business day of the new year!

Companies Reporting

Unfortunately there is almost nothing of interest today:

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Mission (LON:TMG) (£22m)	Disposal and capital allocation update	Mission has sold a subsidiary for £17.4m, proceeds will repay debt.	AMBER/RED (Roland)

Backlog

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Ricardo (LON:RCDO) (£261m) - 17 Dec 24	Sale of Ricardo Defense & Acquisition of E3 Advisory	The UK engineering consultancy group is exiting defence and doubling down on its focus on the environment and energy transition.	AMBER (Roland)

Summaries

Mission (LON:TMG) - Up 20% to 29p (£27m) - Disposal and Capital Allocation Update - Roland - AMBER/RED

Mission has sold a US-focused subsidiary for up to £17.4m. This deal should repair the group’s balance sheet and provide some protection for the company’s equity. However, I think there’s a risk the company may have sold one of its more profitable units in order to achieve this goal, so I’d like to see updated guidance from the company before considering a more positive stance.

Ricardo (LON:RCDO) - unch. at 419p (£261m)…

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Barry Addison

2nd Jan

yes I think I may have misunderstood, Probably there are 6 titles in the pipeline. Not sure anybody would have time to read all 6 titles in a year anyway!

yiannos1

Less than 1% is simply less than 1%.

It’s not 6m!

All the best

Thanks for doing the analysis on Poolbeg Pharma (LON:POLB) this morning Megan. Even though it's RED, you're still more positive than me.

eParo

Microlise (LON:SAAS)

Jonathan Lee, Non-Executive Chairman, purchased 19,417 ordinary shares of 0.1p in the Company at a price of £1.03 per Share.

A buy signal? Board reckons the cyber incident will not have any material impact. Surely customers are not going to be happy?

davidjhill

Poolbeg Pharma (LON:POLB)

Bit surprised at some of the commentary on here on this one.

Firstly - let's be clear Cathal has done this deal and as an 8% shareholder he is doing it because he sees more value with the two together than on their own and he wants a Nasdaq listing,

Secondly - HOOKIPA have $50m of cash and will raise another $30m (I suspect this has already been done but lets see) so the combined business will have $100m of cash (not the $40m in Megans note above)

Poolbeg Pharma (LON:POLB) shareholders should therefore be left with 40% of something with cash of some $100m and an interesting set of drugs in various stages of development versus a market cap prior to the announcement of $45m so not a million miles away from the 40% fully diluted shareholding.

Cathal is going to be Exec Chairman and the Hookipa CEO (who is new - only appointed in July) will be CEO.

Cathal runs a notoriously tight ship financially whereas Hookipa has been heavily cash burning for a while now (not long ago this was a stock at close to $200 so it has fallen 99%!) so that seems contradictory. My guess is that Cathal has spotted value and there are plans to radically reduce cashburn through synergies and cost reductions to create a business with a strong war chest for a couple of other acquisitions.

This is not a done deal yet so Cathal will not be on the airwaves talking about it until it is agreed. Be interesting to see how Hookipa shareholders view it this morning.

bensummers

is there any January effect for the UK stock market - particularly small caps - have there been any studies?

Epitychia

Have a look at the 'The Seven Secrets of the UK Stock Market' on Amazon.

sevenccc

Hi Barry

I believe the entire essence of the set up here at Stockopedia is to steer us all away from investing in dross like Poolbeg Pharma (LON:POLB) . The Stock Rank and classification systems couldn't be clearer and on a normal day this shouldn't even justify comment from the team, imo. Others may take a different view but I regard this as a bonus article probably only getting airtime because of the serial entrepreneur/promoter at the helm and the time of year.

In the meantime the strange false market of the holiday season seems to be quietly positive on first day of trade. Long may it continue! Best of luck for the year ahead. Agree with your rating here.

InvestmentHunter

indeed - buy and holder Bloomsbury Publishing (LON:BMY) . There is top draw research on the investor relations website - https://www.bloomsbury-ir.co.u...

Daniel Morgan

Quadrise (LON:QED)

I would be grateful if you could give your views on QED – Quadrise which has quadrupled recently, after years in the doldrums.

HNY.

SheriffJEB

As a holder of M P Evans (LON:MPE) , I commend Mahad's excellent post, noted above. It explains the business model and provides very detailed financial analysis which he is generous to share. Since his approach is primarily financial and Ed's inclusion of the share in his 2025 NAPS portfolio is also driven by metrics, I thought I would add a couple of non-financial factors to consider, one negative and one probably positive.

1. Shareholder base.

The company was drawn to my attention about three and a half years ago by the son of a friend. He used to work for them in a fairly senior position. At the time, I was thinking I should have some commodity exposure to counter rising inflation. I've never liked commodity producers because they are generally price takers (world prices) and work on long timescales for projects and with soft commodities there's the weather too, so lots outside their control which can go against them. MPE is no exception. My contact was of the opinion that the company is conservatively managed (including the accounting) so the margin of safety is probably even greater than Mahad and Ed's figures would suggest. It has been in effect controlled by the Hadsley-Chaplin family for several decades. Although the chairman Peter H-C only declares a 4% interest, there are sure to be lots of other family holdings below the threshold for disclosure, including other families whose plantation interests were rolled into MPE. So a prudent approach is understandable and (to me) reassuring.

About 8 years ago, a Malaysian competitor, KLK, launched a takeover at around £6 or £7 a share which failed. The board commissioned a valuation of the plantations which came out nearer £11 a share (cf current share price 8 years later of £10). The much increased dividends also date from that time although they are still well covered by earnings. After the failed bid, KLK kept the holding they had built up and remain the largest holder at about 24%. Interestingly, in the last year, a representative of KLK has joined the board as a NED. KLK's market cap (on Malaysia's bourse) is about 10 times MPE's (although they are more diversified than MPE both horizontally and vertically). So another bid is possible at some point.

Finally on shareholders, MPE recently initiated a share buy back programme which was extended. Operated within European safe haven rules, it mopped up a few thousand shares most days. Just before Xmas, they announced that they would venture outside those rules (but still within their shareholders' authority) to enable them to buy larger holdings. Sure enough, a couple of days later they bought over 600,000 shares (over 1% of the company). Abrdn subsequently announced that their holding had dropped to below 5%. An overhang removed? Or more to come?

2. Political risk

Mahad mentions the risk of laws or international rules changing. I would be more specific about Indonesian risk. As a result of a deliberate strategic decision to focus in recent decades, MPE has reduced its activities to one country, Indonesia, and one commodity, palm oil. (The Malaysian property development joint venture is a hangover from their exit from that country and only has 200 of an original 2000 acres still to develop). A few months after my initial investment, Russia invaded Ukraine (a major producer of rape seed oil, for which palm oil can be substituted in some applications). The palm oil price and the MPE share price shot up and I was feeling quite pleased with myself. Very quickly, the Indonesian government changed the rules to grab most of the super profits and to protect the home market (where palm oil is a staple). This was more or less reversed once prices settled again. The MPE share price went back below my entry price. More drastically, back in history (1960s?) Indonesia nationalised plantations, granting them back on 30 year leases. So in my view political risk is real.

As ever, DYOR and a Happy (and prosperous) New Year to all Stocko staff and subscribers.

Mark Carter

An additional thing that I might mention: I remember a year or so ago MPE mentioned that it commissioned an independent NPV valuation of its shares. If they're buying back shares, then it's a sign that they think they're reasonably confident it's undervalued.

doctor dave

Quadrisen then....

Hi David,

I admire how you can turn a 40% decline in one day into something positive!

Hookipa Pharma (NAQ:HOOK) burns cash and the cash balance is not to be trusted as a long term thing; it has also managed to remain listed amd regained compliance after a reverse stock split1 for 10. Here I must emphasize that last years cash balance was $117.5 million at December 2023. Cash balance was $60 million at the end of September 2024!!

Poolbeg Pharma (LON:POLB) will be a zero in the future.

I believe he is the same guy that sold hVIVO (LON:HVO) at 30p to Institutional investors.

Well done to Megan for labelling this as RED.

NewInvestor1972

In Cathal’s defence he took hVIVO (LON:HVO) over as Open Orphan at sub 5p, I sold around 30p and got Poolbeg Pharma (LON:POLB) for free.

He is great at turning loss making pharma companies around. I’ll continue to hold to see what he does here.

Agreed. You'll see from my original comment that I only mentioned the company because it was a slow news day and it seemed an interesting structured deal which was difficult to fully understand . If there had been more RNSs to be covered I would not have mentioned it and simply suffered in silence.

Harry Hindsight

I actually got an o-level in Geography lol. Well at least got lots of 'hits'. Not sure the comment is incorrect though. Jurisdiction risk wherever is a huge investment decision and will only get more serious with natural resource depletions and protectionism. For me a warning that governments can do much as they please - UK and North Sea oil is the case in point. Shell delists 2025 my prediction.

jonno

Volex (LON:VLX)

Completely unloved! Can’t fathom any reason for the slow downward drift in the share price. On the 12 December the company stated that it was confident in meeting full year expectations, albeit earnings have been adjusted down for this year and next but not significantly.

Possibly the publicised Trump tariffs, given that Volex (LON:VLX) has global manufacturing facilities, including Mexico, which is one of the countries singled out by the unpredictable Trump presidency. The company has a strong relationship with Tesla, which might be seen as a positive.

The shares are very cheap. I hold but not tempted to add until the price stabilises.

Any thoughts?

Karl Baker

Does anyone know what prompted the rise of Serica Energy (LON:SQZ) today?

af20001

Most likely due to the rise in gas prices since Ukraine shut off the last pipeline supplying Europe with Russian gas yesterday, as Serica Energy (LON:SQZ) also pumps gas I believe.

Daily Stock Market Report (Thur 2 Jan 2025) - TMG, POLB, RCDO

Companies Reporting

Summaries

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Graham Neary

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