Daily Stock Market Report (Thur 5th February 2026) - CPG, SPSY, HEAD, CTA, PTEC, TUN, FUTR, TBLD, STB, ARC

Good morning! Mark and I are covering the news today.

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That's all, folks!

Spreadsheet accompanying this report: link.

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Companies Reporting

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Graham's Section

Playtech (LON:PTEC)

Up 4% to 290.5p (£898m) - FY25 Trading Update - Graham - AMBER =

A strong update from this provider of technology to the gambling industry:

Playtech plc (LSE: PTEC) is pleased to report strong trading in H2 2025 driven by performance in the US and Mexico in the fourth quarter. As a result, the Company now expects Adjusted EBITDA for the year ended 31 December 2025 (subject to audit) to be at least €195 million, significantly above the current analyst consensus.

Analyst consensus is helpfully provided as follows: €150 million - €187 million, with a mean consensus of €177 million across 8 analysts.

So this is a 10% beat against consensus.

Revenues are not specifically mentioned, but of course I do expect a revenue beat, perhaps also accompanied by lower-than-expected costs.

It’s a little unusual to see a 4% share price rise against a 10% earnings beat, but the outlook is cautious:

For 2026, the Company remains mindful of ongoing sector headwinds including the scheduled increase to gambling taxes in certain markets including the UK.

However, the Q4 revenue trends seen in the Americas mean that Playtech enters 2026 with good momentum, as returns on the Company's investments in recent years accelerate.

Looking ahead, Playtech is “confident in its outlook for 2026 and its medium-term targets of €250-300 million of Adjusted EBITDA and €70-100 million of Free Cash Flow.”

I would interpret this as an in-line statement for 2026, with strength in the USA and Mexico offsetting UK weakness given the recent hike in gaming duties.

A snippet from the CEO comment:

While we remain mindful of wider sector headwinds, I am excited by the momentum we are building and the significant growth opportunity ahead.

Graham's view

There was some big drama here in October, with Playtech being named in a defamation lawsuit by its competitor Evolution AB. There were allegations of murky dealings by Playtech with a private intelligence firm:

Subsequent reporting by Next.io said the following:

In the newly submitted court documents, it was revealed that Black Cube had signed two letters of engagement (LOEs) with Playtech as part of their relationship…

In the first letter, Black Cube was offered £150,000 if it found evidence of wrongdoing, £175,000 if an article was published in a major media outlet, £350,000 if a regulator began an investigation and £500,000 if one of the business’ licences was revoked.

Following the report’s release, Playtech paid Black Cube £675,000 in success fees for the satisfaction of the first three goals.

However, there has been little media reporting on the matter since then. It doesn't sound like we can expect a quick resolution: the trial may run for the rest of the year.

I expressed my view on the case back in October: I didn’t take sides, and I assumed everyone involved was in some way at fault. And I was neutral on Playtech shares.

Since then, we’ve had the announcement of higher gambling taxes in the UK. But as we’ve seen this hasn’t impacted Playtech 's outlook very much, thanks to its geographic diversification.

This leaves me in a bit of quandary: what view to take on Playtech shares today?

In October, I said that I would be AMBER/GREEN or GREEN if the lawsuit with Evolution was settled. I do like this business and I don’t consider it to be expensive here.

Value metrics as of last night:

It’s a close call, but on balance I’m going to stay neutral today. The Evolution lawsuit is still an outstanding matter and today’s update, while upgrading the 2025 result, has not explicitly raised guidance for 2026. For 2026, it is essentially “in line”.

So I’m not going to budge on PTEC shares today: I'm still neutral, but eager to find a good reason to upgrade my view.

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tinyBuild (LON:TBLD)

Up 13% to 8.5p (£34m) - Pre-Close Trading Update - Graham - RED =

tinyBuild, a premium video games publisher and developer with global operations, announces a trading update for the twelve months ended 31 December 2025 ("FY 2025").

We’ve been critical of this video game company in the past, for good reason:

However, everything has a price and it’s worth checking if this might offer some value at some low level.

Trading update highlights:

• Revenue slightly ahead of expectations

• Positive EBITDA in H2

• Cash over $4m is “slightly above expectations”.

• The pipeline for 2026 is strong.

They say the company “continues to invest carefully in new IP ahead of high-potential releases”.

That has been the problem in the past: enormous levels of investment that simply didn’t pay off. Eventually it had to raise $12m to plug the gap, in early 2024.

That didn’t entirely fix the problem, as you can see from the current cash balance of $4m.

At the last set of full-year results, published in April 2025, they still had a going concern warning.

The interim results published in September did not have a going concern warning, with the Directors instead concluding that “there are no material uncertainties related to events or conditions that might cast significant doubt upon the Group's ability to continue as a going concern”.

That’s a positive, but do bear in mind that interim results are not audited and are held to a softer standard than full-year results.

Continuing with today’s statement:

We are managing our well-diversified catalogue of over 100 titles to maximise revenues from classic titles such as Hello Neighbor, and more recent franchises such as Deadside and VOIN. Among our latest launches, The King is Watching and Of Ash and Steel have performed well, delivering above expectations.

Our catalogue generates predictable cash flows, supporting the strategic investment in high-potential new IP such as Kingmakers, SAND and The Lift, and allowing us to expand evergreen franchises, such as SpeedRunners 2 and Streets of Rogue 2…

They say their release schedule is "heavily weighted towards the second half of the year”.

Outlook

The pipeline for 2026 and beyond is strong, it includes several larger-budget (above $1m), high-potential games alongside continuous investment in the catalogue, including updates, DLCs and platform launches.

Graham’s view

I’m inclined to leave this on RED for the following reasons.

1. Checking today’s forecasts from Progressive (many thanks), Tinybuild is forecast to remain loss-making in FY December 2026 (adj. PBT minus $0.8), after posting a loss for 2025.

2. The company’s focus on adj. EBITDA instead of real profits continues to put me off. They do at least include their software development costs in this measure, except where there has been a surprise impairment).

3. Balance sheet tangible value is close to zero.

So I’m still negative on this. I acknowledge that this stance might be a little harsh considering that the $4m cash balance could weel be enough to keep the wolf from the door for the foreseeable future.

When we get full-year results, I might upgrade to AMBER/RED, if it has become abundantly clear that a fundraise will not be required any time soon. We might get FY27 forecasts before too long, which will be a big help.

One final positive factor worth mentioning is that the CEO is a co-founder who owns 58% of the company. So we should normally expect very strong alignment - although that alignment hasn't paid off yet!

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Mark's Section

CT Automotive (LON:CTA)

Up 8% at 25p - Trading Statement - Mark (I hold) - BLACK (AMBER/GREEN =)

(At the time of publication, Mark has a long position in CTA.)

It’s a mixed update from this automotive supplier, and a slightly confusing one for me. They say:

As previously announced the Group expects to report revenues for FY25 of at least $113 million, in line with current market expectations, with net debt at 31 December 2025 expected to be $7.7 million. Adjusted profit before tax is expected to be at least $10.0 million.

And those expectations are given as:

Immediately prior to this announcement, the Company believes that market expectations for the year ended 31 December 25 were for revenues of $113m and adjusted Profit Before Tax of $10.5m respectively.

However, the last note from their NOMAD and sole broker, Singers, on Research Tree is from 6th August, which had $122m revenue. It did have $10.5m adj. PBT though, so I can only imagine when the company said this in their HY results in September, Singers cut the revenue forecasts, leaving PBT the same:

The Company remains on track to hit FY 25 market expectations for profitability . Market conditions, including uncertainty around tariffs, resulted in an initial level of customer caution and, combined with recent customer adjustments to program launch timing, revenues are now expected to be slightly softer. Crucially, latest customer information indicates no change to longer term production volumes to FY 26 and beyond.

Adding to the confusion, Refinitive, who supplies Stockopedia’s data, appear to be picking up an even earlier note:

There’s no doubt that the trend in revenue forecasts has been down here, even if we are struggling to see all of those forecasts. This shouldn’t be surprising, global automotive volumes were undoubtedly weak in 2025.

In terms of profitability, it seems like they will come in very slightly below, having been hit by a few launch gremlins in Q4. However, they say these are now resolved. It also means that they did around $6m PBT in H2 versus $4.2m in H1, showing good momentum half-on-half.

The net debt comes in at $7.7m. In the video narrative, the CEO says that this is ahead of expectations. Without being able to see an updated note, it is hard to be sure. However, net debt at the half year excluding leases was $12.1m, so it seems that their operational cash flow has been particularly strong in H2, despite the capex burden of several new program launches. They say they are targeting lower inventories in 2026, so we can also expect a cash boost from this going forward.

Outlook

This is what they say:

Due to ongoing market uncertainty, the Board is taking a conservative approach to FY26 revenue and profitability which is now expected to be modestly ahead of FY25, with the benefits of recently launched programs contributing more fully as they mature through the year.

This means that the revenue forecast will clearly be behind previous forecasts, even if we don’t know what the current ones are. Profit forecasts may be slightly behind but are less severely affected.

Valuation

All of this forecast shenanigans perhaps underlines how as investors we often get caught up in a game of guess the number, rather than looking at the big picture. We miss the wood for the trees, as it were.

Even if we assume that forecasts are a bit behind the times here, we have a company trading on a P/E of between 2-3:

Net debt is under-control and reasonable, cash flow seems good and profits are growing modestly. Adding to this, the medium term outlook is actually quite strong:

Building on new contracts which CT Automotive has secured in H125 (and announced in our interim results in September), CT Automotive has secured a further 7 contracts in H225 with annualized revenue of approx. $10 million*. Program launches are scheduled for 2027 and 2028. This brings total new contract wins for CT Automotive in FY25 to 15 with an expected annualized revenue of approx. $47 million when all programs are fully operational by 2028. This is a significant improvement on new business wins in previous years (FY24: 8 new contract wins).

While there will be some attrition as historical programs end production, the increase in contract wins should see improving profitability throughout this period as they say “Our operations are positioned to accommodate increased production without additional cost pushing profitability directly to the bottom line.”

CFO Resignation:

The share price has been weak going into this update as it was announced last week that the Chief Financial Officer resigned from his role with immediate effect. This sort of thing is always a worry as you tend to fear the worst when a CFO leaves suddenly. IIRC there had been a few clumsy mistakes in the past, and I wonder if this has caught up with him.

Until we have a new CFO and audited accounts, this will always be a cloud that hangs over the business. I would have liked to have had some further statement on this today, even if it was carefully worded.

Mark’s view

The market appears to have had a bit of a relief rally this morning as nothing untoward has come out of the woodwork. I think we technically have to mark this as BLACK today, as FY25 profitability is slightly behind forecasts, and FY26 isn’t as strong as the last note we can see. However, with a price earning ratio of around 2, this is just stupidly cheap, even for an industry that will never be particularly highly rated. (The automotive industry tends to be highly competitive and capital intensive.) It is an industry that has good visibility of programs, which tend to be awarded several years in advance. So while the actual volumes and revenue suffer from variability in demand, the direction of travel for an individual company tends to be somewhat predictable. Here the medium-term trajectory is positive, with upcoming program launches through to 2028 likely to add directly to the bottom line. Assuming no huge skeletons appear in the closet from the CFO resignation, it seems very hard to lose money from today’s share price level. Positive business momentum and strong cash flow with a sub-3x P/E just seem like a puzzle that has to be resolved one way or another, so I am sticking with our broadly positive view of AMBER/GREEN.

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Future (LON:FUTR)

Down 5% at 482p - Trading Update - Mark (I hold) - AMBER/GREEN

Background:

I’ve got to admit, I am pretty confused by the recent price action of the shares in this company, so it is worth reviewing where we are:

In the middle of last year, they traded in a £7-8 range, which seemed quite reasonable for a company on a forward P/E of 6, and most of the earnings turning into free cash flow.

While brokers didn’t seem to expect a profits warning, the market had other ideas, and despite no material change to consensus, the shares had dropped to around £6 when I reported on their FY25 results at the start of December:

I thought the results looked reasonable, and said:

These results have assuaged some of my concerns with the company. The results are in line, the adjustments don’t seem too bad, and the balance sheet looks stronger than in the past. There is still no tangible asset backing, and an H2-weighting for FY26 means some risk remains. This means that I can’t bring myself to upgrade our stance today. However, the very low valuation multiple and strong cash generation that is being used for bolt-on acquisitions, share buybacks and dividends mean that I see positive returns from current share price levels.

The market initially agreed with me and the shares rallied over 10%. However, since then the price dropped below £5. I can only guess that institutions that are the typical holder of this type of midcap were unimpressed with the strategy, which was for no major acquisitions, and bolt-ons dividends and buybacks. Backing up this assertion, the shares rallied strongly on the news of an acquisition a couple of weeks ago, suggesting institutions wanted action not buybacks.

I take the contrary view, when your shares are on forward P/E of 4, with 95% cash conversion guided, you should be buying back your shares hand-over-fist, in my opinion. The big question is if they are actually on that rating, given weak advertising markets.

Today’s Update:

Overall Group performance in the first four months has been broadly as expected with the Group on track to achieve market expectations for FY 20261 and performance expected to be H2 weighted as previously outlined.

Broadly, of course, means slightly behind, and appears to have caused the 5% drop in share price this morning. They had always guided a H2-weighting, and if they are setting us up for a miss on the 132p EPS forecast, I believe it will be slight. Which means that this will still show year-on-year growth and trade on a P/E of around 4.

Divestments:

There is an interesting addendum to this trading update:

In line with our strategy, the Group is proactively reviewing opportunities to optimise its portfolio to ensure all assets are driving the platform effect and that any excess cash is returned to shareholders, delivering sustainable shareholder value creation.

I’m not sure the average institutional holder will like them making their business smaller. But it makes sense to me. If they have non-core parts of the business that can be sold for a much higher rating than the market is valuing the whole business, and use that cash to buyback shares, this will undoubtedly add shareholder value.

Go compare:

It is interesting to go compare this business with Money Super Market which is separately listed. Despite a weak share price there, it still has a £900m EV, giving it an EV/Sales ratio of around 2x. The same metric applied to Go Compare would give it an almost £400m valuation. I don’t think it is worth this much, as Money Super Market is the market leader. However, I think it could be argued that Go Compare as a separate entity would be worth £250-300m. Selling off this may be a step too far for a management that are guiding no major changes to corporate structure, and you would question if now is the time to sell such a business when cyclical car insurance referral rates are weak. However, such a deal would enable them to largely wipe out their debt and commit to a large ongoing buyback. As a shareholder, I certainly wouldn’t complain about that.

Mark’s view

Given the strength of the free cash flow here, very low rating, and the possibility of hidden value within the corporate structure, I don’t see why a broadly in line for the first four months of the year should change my previously mostly positive view of AMBER/GREEN for this Quality-Value play. However, I am clearly out of step with the trading desires of the average institutional investor, who will control the short-term momentum here:

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Arcontech (LON:ARC)

Down 10% at 74p - Interim Results - Mark (I hold) - BLACK (AMBER)

It has clearly been a mistake for me to have started buying into this tiny software company prior to today’s update. While the share price has been weak, perhaps suggesting that some knew about the recent struggles reported today:

Arcontech's revenue was lower in the first half of this financial year with a net reduction in annual contracted revenue due to the loss of a long-standing customer and some downsizing coupled with a drop in one-off revenues. Churn is inevitable but we have been very successful maintaining our excellent customer base with a material proportion on multi-year contracts…We are now unlikely to make up the recurring revenue loss in the year which has been further impacted by lower levels of one-off revenue. We noted in our last full year's statement that one-off revenue was exceptionally high and not expected to continue at the previous year's levels.

I had previously been buoyed by the fact that when they reported their FY25 results in September they said:

· Addition of a new high-end customer

· An increase in consulting income

· Enhancement of product functionality to appeal to a potential wider customer base

· Enlarged support team to strengthen customer relationships

· Active participation in several RFIs (Request for Information) with potential new customers

· Number of prospective clients has increased to be the strongest it has been for many years

While it is perhaps understandable that client conversion always takes longer than expected in current economic conditions, being so positive in the results commentary and then delivering a subsequent half with these numbers is a little embarrassing:

• Revenue decreased by 4.7% to £1,439,382 (H1 2024: £1,511,346) with recurring revenues down by 3% and one-off revenues down by 69%

• Adjusted EBITDA* decreased by 23.6% to £341,239 (H1 2024: £446,513) as the result of the revenue decrease noted above and continuing investment in staff

Cavendish reduce FY26 revenue forecast by 13.5% to £2.7m and Adj. EPS by 25.7 to 5.1p. At the current share price of around 75p, this is an uninspiring P/E of around 15.

However, things look better for FY27, with Cavendish pointing out that:

The outlook is optimistic despite the setback experienced in the first half; the pipeline is reported as the strongest in recent periods from a combination of new and existing clients: two POC projects are active; multiple RFP processes are at various stages; and investment in a new customer support manager has strengthened relationships with Tier 1 clients. Now that the opex base has scaled to support pipeline conversion, we expect any conversion ahead of expectations to show operational leverage to benefit profit and cash…

This means that they only make minor modifications to their FY27 numbers reducing FY27 EPS down to 7.3p from 7.7p. This makes the P/E a much more reasonable 10, for a cash-generative software business.

The thing that really changes the metric is the cash balance:

Net cash of £7,774,037 at 31 December 2025, up 8.4% (H1 2024: £7,166,839)

This is forecast to rise to £8.5m by the end of FY27, and would represent 85% of the current market cap. This figure is flattered slightly by £1.2m of deferred revenue, where clients have paid upfront for their services. However, this is fairly consistent, and not out of place for a software business.

The big question is what are they going to do with the cash. Although they pay a reasonable dividend, they have largely sat on their cash for years. There are some signs that they may

Our balance sheet remains robust with net cash of £7.8 million, £0.6 million higher than at 31 December 2024. This strong position allows us to continue to invest in our development team to ensure the work needed to bring on new customers is done efficiently. It also supports our strategy to look for new areas of business in order to augment growth in our core market.

Cavendish add some colour:

Given the strength of the balance sheet and potential opportunities in the market following a challenging 24 months for businesses similar to Arcontech, the board is continuing to take a more proactive approach to potential inorganic opportunities, and has entered into discussions with prospective acquisition targets. We do not anticipate that this is likely to lead to a transformative acquisition, but expect a complementary target, such as a trading platform that could be integrated into its solutions and existing office, at an attractive valuation.

So it sounds like there may actually be progress on this front in a way that would drive EPS growth. After all, a business of this size remains subscale to be listed, and risks around de-listing or a much larger competitor entering their niche, are every present at this scale.

Mark’s view

The company certainly has blotted their copy-book, reporting weak H1 numbers and issuing a profits warning, having been so positive about their pipeline in the FY results. Reading the broker’s note does make it seem genuinely more of an issue around timing, rather than something more ominous. They add interesting colour to both the sales pipeline and acquisition potential. Developments in these areas may help assuage concerns over an otherwise weak period for trading. Hence I struggle to be too negative, today. We haven't looked at this recently to base a view off, so AMBER seems about right at the moment. There is an attractive valuation, and some interesting potential, but this remains subscale and with a lot to prove following today’s warning.