Daily Stock Market Report (Thur 20 Feb 2025) - WG., ARBB, ZOO, ADVT, BEG, AAL, SRT, ITH, HAS, SAFE

20th Feb by Graham Neary

66 comments 5536 reads

Good morning! The Agenda is ready now.

1pm: that's a wrap! Thanks everyone.

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Lloyds Banking (LON:LLOY) (£38.1bn)	2024 results	2025 guidance: ROTE c. 13.5% (2024: 12.3% or 14% before provision charge for motor finance)
Anglo American (LON:AAL) (£28.7bn)	FY Results	$3.1bn loss includes $3.8bn impairments. Reduced carrying value of De Beers by $2.9bn.	AMBER (Mark) At 18x earnings and flat forecasts, it is hard to see a positive investment case, even for those bullish on copper.
Centrica (LON:CNA) (£6.8bn)	Final Results	2025 outlook unchanged. Path towards £1.6bn run-rate EBITDA by the end of 2028.
Mondi (LON:MNDI) (£5.7bn)	Final Results	Rev +1%, adj. EBITDA -13% largely due to lower forestry fair value gain. Order books improving.
Ithaca Energy (LON:ITH) (£2.2bn)	FY24 TU	Full year performance at top end of management guidance. Strong Q4 production, cost control.	AMBER/GREEN (Mark) A strong operational performance and a 16.7% dividend yield will appeal to income investors looking to diversify away from more accident-prone sector peers.
Safestore Holdings (LON:SAFE) (£1.3bn)	Q1 TU	LfL revenue +2.9% (constant currencies). LfL occupancy improves to 75.9%.	AMBER/GREEN (Graham) My first impression is that there's an appealing discount here vs. tangible NAV. Additionally, the LTV calculations and related commentary from the company suggest that leverage is not a concern. So I'm tentatively positive on the outlook for shareholders.
Hays (LON:HAS) (£1.2bn)	HY Report	LfL net fees -13% (perm -19%, Contract -9%). Op profit -56%. Ongoing macro uncertainty.	AMBER (Mark) These weak results were expected. Long term, they will benefit from a sector recovery. However, there is little sign of that in the short term, and an H2 EPS weighting adds to the risk.
Indivior (LON:INDV) (£1.1bn)	Final Results	FY24 Net Rev +9%, Adj. net income flat at $223m. Ahead of guidance.
Home Reit (LON:HOME) (£301m)	TU	£12.2m cash, no debt, Jan25 rent collection £1m	RED (Mark) [No section below] Remains suspended and in wind-down
AdvancedAdvT (LON:ADVT) (£193m)	TU	Materially above the current market expectations (FY25 Rev. & Adj. EBITDA of £41.0m & £8.4m)	AMBER (Graham) The valuation here doesn't put me off. When you consider the low enterprise value, ADVT's software businesses aren't being priced too expensively. The overall structure is a little odd but it's not supposed to make sense: it's about whether…

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The Phoenix

20th Feb

Hi Rusty hoping its true where are you seeing the 700 billion euro's ?

Samsgrandad

Jarvis Securities (LON:JIM)

Well I think the last thing to worry about is dilution from a fund raise after announcing this dividend and why on earth would a share split happen. There have been complaints from users of Jarvis settlement via other brokers. This sounds like the problem discussed at the beginning of the FCA examination when white label deals with some other brokers were suspended presumably for lack of care by the third parties regarding customer outcomes and/or money laundering and not the other way around. I note from their website they still administer the Goldman-Sachs employee isa so while they might be the Ryanair no frills end of the market, they are respectable and on the few occasions I've had a complaint over 20 years as a customer, it has been quickly rectified after an email to senior management. Compare charges with the rest of the market.

Rusty2

It has been on the news, it is being debated by the EU at the moment.

topvest

This Achilles Investment Company Limited IPO is very interesting https://www.londonstockexchang...

Christopher Mills and Robert Naylor have raised £54m gross to actively target the alternatives sector. There is some unbelievable value appearing in renewables and infrastructure at the moment. Unfortunately, the new float is on the Specialist Fund Market but worth following to see what they do.
I have been buying more top quality trusts on very high discounts and c10% covered dividends. Greencoat UK Wind (LON:UKW) and Renewables Infrastructure (LON:TRIG) are unbelievably cheap. I am fully positioned on renewables and real estate, but may add a few more infrastructure trusts. I won't go above 15% portfolio allocation to alternatives: that is my red line.

John LA

Sad, a really capable team of engineers, good delivery reputation in oil& gas, AMEC was not a great fit.

JSLDUK

Where would Ukraine invest the 700 billion had though a lot of the west buy their equipment from US companies? There are a few UK ones but wouldn’t this be going against Trump? In terms of the US reducing by 8% they are so far ahead of the rest of the world on defense suspect they would still be top with a big cut

BnB

Watchlist for now. Plenty of time to dip in if/when interest rates finally turn down.

Bouden54

Looks good news to help revive the sector. Agree, a lot of them look absurdly cheap - just bought some Greencoat UK Wind (LON:UKW) today and also hold Renewables Infrastructure (LON:TRIG) - these two have been particularly hit recently for no obvious reason.

Wonder if its worth buying some Achilles too? Would probably need to trade at a discount to tempt me.

Bouden54 - not much chance of Achilles opening on a discount in my view.

I don't think it will be Ukraine investing it, it is the EU, not just for Ukraine but also boosting the EU defences. Apparently it won't be announced until after the German election. Doubt the EU even know how it will be spent yet.
BAE Systems (LON:BA.) could benefit.
The US spends more than China but money goes a lot further in China than in the US.

Paultilley

From memory Simon Tucker at the recent AGM played down the seriousness of the situation and, contrary to legal advice, said he intended to fight the case. Not sure if that meant actually attending in person…,!
Anyone have a different take away from the meeting ?

You're probably right but will see where it trades next week. Looks like they're initially going to target a single company - will be interesting to see which one they choose. Would imagine market cap of below £500m if they want to have any real clout.

Andy Sav

Poolbeg Pharma (LON:POLB) from the RNS around 4:40 today, I see that HOOKIPA is withdrawing from the current takeover discussions

yadi

source of lloyds bank income

Chief Financial Officer William Chalmers pointed to a "significant and accelerating" tailwind to income from the structural hedge. The structural hedge reduces interest rate risk and smooths net interest income over the interest rate cycle.

Chalmers expects 2025 structural hedge income to be around GBP1.2 billion higher in 2025 than the GBP4.2 billion in 2024, with a further GBP1.5 billion growth in 2026 from 2025.

The CFO explained 90% of the hedge expectation for 2025 is "locked in", as is 75% for 2026, so "we are pretty certain" it is going to happen.

I thought only the Hedge funds do this sort of clever financial engineering. Good for them and good for the shareholders too with increased dividend.

Who said the banks were boring!?

Harry Hindsight

Year 1 - remove DEI initiatives & woke crap (8%)

Year 2 - sell more F16s and reduce F35 as unaffordable by anyone else (3% but increase over time) (why is UK developing another Eurofighter ? Nothing with a human in it will be in the air in the future anyway.)

Year 3 - keep Aircraft carriers afloat for longer and close the replacement programme - old tech. Ditto tanks but looks good.

Year 4 - hopefully by then the Defence Industrial Complex lobby has been cleaned up (30%)

Year 5 - now we can think of Taiwan (see Year 1 with Japan squadrons of F16 with top tech, Australia producing minerals rather than diversity reports and Musks Starlink comms systems controlling the show. (no savings just efficiency see year before)

Year 6 - as Dave Allen said "may your god be with you".

Chainsaw to EUROAID.

The Ox 2906

They were definitely a holder before but as you say they’ve reached the ceiling whereby it has to be announced.

abtan

21st Feb

Safestore Holdings (LON:SAFE)

I'm a little late here, but I thought that I'd throw in some of my own thoughts.

As an unbiased holder (ahem) I think the shares are undervalued looking 2-3 years out.

Modelling out:

the confirmed pipeline of openings + extensions;
approximate (mature) occupancy rates;
Very modest average rental price inflation (it's only been negative in 2 years as far back as I've looked);
7% admin inflation;
Relatively stable interest repayments
(c60% of debt is at fixed rates);
assume that gross profits stabilise at around 70%
(hopefully I'm being prudent, but this seems about right when looking at Big Yellow (LON:BYG) ,Shurgard Self Storage (EBR:SHUR) and when looking at historical margins for Safestore Holdings (LON:SAFE) )

then I would predict underlying free cash flow of c £120m by FY27.

The above excludes M&A.

The current market cap is £1.3b.

I personally believe that the shares should be trading at a free cash flow multiple of at least x15 given the relatively stable cash generation and modest growth - that would be a target market cap of £1.8b, which is 40% above the current value, or an IRR from today of c14%.

There's undoubtedly going to be something wrong with my assumptions, e.g. FX rates will not be constant, but given the short 2-3 year timeframe hopefully they won't be too far off.

In the meantime, I'm happy to collect the c5% dividend.

peterg

23rd Feb

I don't think Trump would object to European cash being spent in US arms companies - though he might want it to be in ones he has shares in.

MatthewBrazier

30th Mar

My view is that it is not ex-growth and wrote further about it here for anyone interested.

Daily Stock Market Report (Thur 20 Feb 2025) - WG., ARBB, ZOO, ADVT, BEG, AAL, SRT, ITH, HAS, SAFE

Companies Reporting

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Graham Neary

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