Daily Stock Market Report (Thur 6 Mar 2025) - NTBR, KMR, HTG, ITV, RWA, ASTO, SPI, TFW, ELM, HSD, SSON, VSVS, HBR

6th Mar by Graham Neary

62 comments 6657 reads

Good morning! It's a very busy day for results. Our Agenda is now complete.

1pm: today's bumper report is finished!

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Reckitt Benckiser (LON:RKT) (£35.5bn)	FY Results	Lfl sales growth in line with guidance. Adj op profit +9% with margin improvement to 25%.
Informa (LON:INF) (£10.8bn)	FY Results	Revenue +11%, adj op profit +17% driven by underlying growth and acquisitions.
Rentokil Initial (LON:RTO) (£9.7bn)	Final Results	Revenue flat and operating profit down 12% in line with forecasts which were revised down in September. Weakness in North America.
Melrose Industries (LON:MRO) (£8.7bn)	FY Results	PBT +36% at the top end of guidance. Big increase in net debt to £1.3bn amid ongoing supply chain challenges.
Admiral (LON:ADM) (£8.6bn)	Annual Financial Report	Customers +1.4m (+14%), UK insurance customers +19%. Turnover +28% and group profits +90%. Market softening in 2025.
Schroders (LON:SDR) (£5.9bn)	Strategy Update and Annual Results 2024	AUM +4% to £779bn, net new business down. Operating profit -3% but ahead of previous expectations. Launch of a 3yr strategy which aims to deliver £150m of annual savings.
Entain (LON:ENT) (£4.7bn)	FY Results	Net gaming revenue +6% at the top end of guidance, after a return to organic sales growth. Margin expansion in online sales ahead of expectations.
Harbour Energy (LON:HBR) (£3.1bn)	FY Results	Major acquisition completed in Sept. Production volumes +40%. Loss making after effective 108% tax rate.	AMBER (Mark) An accounting loss due to a very large tax charge appears to have spooked the market today. However, this probably isn’t the most important metric, as the prodigious free cash flow funds a large dividend. However, FCF seems highly dependent on the oil price.
ITV (LON:ITV) (£2.6bn)	FY Results	Increase in advertising revenue offset by the expected fall in ITV Studios revenue. Adj EBITA +11% thanks to improving margins.	AMBER/GREEN (Megan) It’s a decent set of numbers, but not enough to light the fire that the turnaround investment case so desperately needs. I am mollified by the dividend (yielding 7%) and the untapped value in the Studios business.
Smithson Investment Trust (LON:SSON) (£1.9bn)	Annual Financial Report	NAV total return +2.1%, comparator index total return +11.5%.	AMBER (Graham) Despite heavy buybacks in recent years, the shares traded at an average discount of over 10% during 2024. After…

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Jack Torrance

6th Mar

Re. special situations, I remember getting badly burnt on the split of Electra Private Equity into Unbound and Hostmore (TGI Fridays). On paper, it looked like a ‘no brainer’ with excess value. If there is immediate, excess value, the current price should factor in most of it.

mabie41

Is there some news we have not heard about to cause this 2 day drop

portugull

I wonder if anyone holding GBG (LON:GBG) which is down nearly 20% in the last 3 months to 307p has any views on the share price weakness. I hold.

Nurzel

Hi abtan, the loan note structure is fairly typical when a private equity firm acquires a U.K. company. In this instance, Preservation Capital has put it in place for its investment in Parmenion.

Private equity firms typically put 90% of their capital into a company in the form of loan notes that accrue at a low teens rate per annum and the remaining 10% in the form of common equity.

There are 2 main reasons for that (1) mgmt typically mainly invests in the common equity and as the business generates a return higher than the accrual rate on the loan notes all the remaining value accrues in the common equity, ie creates an equity kicker in the common equity and mgmt can make a lot of money if business performs well and (2) provides some downside protection to the private equity firm as the common equity (where mgmt owns a larger percentage) gets wiped out first if business does not trade well

Agree that AssetCo is undervalued as businesses like Parmenion go for ~15x EBITDA and there are plenty of PE-backed consolidators in this market that would love to get their hands on this business.

Douglas1971

Synectics (LON:SNX) I hold. Unbelievable. Must be Whitehall still unwinding. Keep the faith.

Rusty2

Synectics (LON:SNX) Obviously l'm not aware of anything. I suspect there is a large seller, Whitehall? They hold about 25.7%, if it is them, there will a RNS if they go below 25%. There has been a lot of volume in the last 3 days. Shares are only down 20% but it just seems a weird reaction to the update. They have bounced a bit today off the lows.

JohnDoe2378

Hopefully seller now gone

Silver Moon

JSLDUK, I've a strong stomach but no cash. There is wiggle-room though by performing juggling acts. For instance, due to my portfolios trending towards dividends I sold some BAE Systems (LON:BA.) this morning adding to Endeavour Mining (LON:EDV) if this is any help.

Archer

Agree awful performance in the circumstances 9 (I hold - currently). I think the Naked Trader was trading, but has certainly been caught out like the rest of us. Big question is whether acquisition potential will retain some interest in the company otherwise its share price is in further trouble. Need to decide what to do here.

ACounsell

Hi Jack,

You were not the only one I too was badly burnt on this one. Paul Scott took exception to my comments on how badly this turned out despite my acknowledging we all make our own decisions on investments (the DYOR mantra). At the time this looked a decent opportunity but things went awry very quickly. Memo to self never invest in anything that private equity sells into the market through an IPO - especially where excessive debt is involved.

spmarriott

Ramsdens Holdings (LON:RFX) getting clobbered today. Does anyone have a clue if there is stock-specific news, or if it's just these febrile markets?

charlie51

GBG. I hold ( a few) on the basis that it looks an attractive acquisition play at at least double the current SP. Richard Longdon has good form here as he was the chair at Ideagen before and changed GBG's advisors to those he used there when the last 'offer' was made. In its own right the company looks good value at these levels.

Ramsdens Holdings (LON:RFX) is only down 4.4%, that is nothing unusual, for a small cap on the AIM.

Jim Wall

7th Mar

FW Thorpe (LON:TFW) i hold here .. a couple of points to note if i may. they are extremely conservative in how they manage the company and how they comment - i dont think we should take that to mean it's ex-growth. it's highly likely it will grow across all metrics at year end and given the exogenous increases in costs very little can be inferred about medium or long term growth rates. within the group of companies, the highlighted dutch outperformance has faded a little (as they predicted in the annual report) but their largest company, thorlux, grew nicely. as did their spanish company, zemper. there are initiatives in place to boost sales are their other, smaller UK companies like TRT, Philip Payne et al and those are bearing fruit.

as for valuation, there is a large cash pile as you mentioned. i personally think that stripping out amortisation of acquired intangibles is fine as they do (alongside statutory numbers) and gives a truer reflection of earning power at the company - a fact borne out by cash conversion. on that basis i think they'll do close to 24p this year which puts the current share price at c. 11x factoring in that cash pile... which brings us to the last point and for me the most important part is that they are considering a share buyback .. to my knowledge that's the first time they've even publicly mentioned that possibility and it would certainly make the ex-cash valuations more relevant.. i understand that there are plenty of lower PEs out there but wood for the trees this is not a taxing level for a company that's delivered very high returns for decades.

jamesalastair

30% gold bullion and gold royalty companies (no miners though); 20% aerospace and defence equities; 25% cash; 25% UK and Scandinavian equities. I opened the Aerospace and Defence positions when we took in Ukrainian refugees two and a half years ago but have added on the back of the Mango Mussolini's approach to diplomacy. The Scandinavian positions are long standing and I just grin and bear it with UK small cap. The gold position and Wheaton Precious Metals (NYQ:WPM) positions are more than 8 years held, but I have been adding consistently over the past 2 years. Hard to know what to do especially now that Rachel from accounts wants half my farm when I pass on. My half swiss-German wife's family think you are a special kind of stupid if you don't hold at least 20% in bullion, but then they are all Austrian economists in their thinking.

abtan

River Global (LON:RVRG)

Hi Jack

Thanks for your comment. It's nice to have a reminder that things that look too good to be true can go wrong.

River Global (LON:RVRB)

Hi Nurzel

Thanks for taking the time to reply, it's much appreciated. The structure of the loan makes more sense now.

Presumably this implies that there is c£24m of debt to account for when valuing Parmenion (as 2023 interest costs were £2.4m @10% coupon = c£24m loan notes)

You seem like someone in the know, so if there are any other funnies not clearly obvious it would be great to hear them.

Thanks again.

Loan notes are equity-like instruments, given that they are either perpetual or very long dated and rank behind any debt and only ahead of common equity.

AssetCo has invested into Parmenion via loan notes and therefore receives an annual non-cash interest accrual.

The waterfall when valuing Parmenion should therefore be Enterprise Value - net debt - any pension deficit - any minorities - accrued value of loan notes and the remaining value accrues to the common equity.

Sir Christopher Mills made the point in a recent interview that most of AssetCo’s capital is invested into Parmenion via loan notes (ie it is very secured and downside protected) and even that value is not fully reflected in AssetCo’s share price.

Hi abtan,
I looked at my notes again and assetco holds £28m in Parmenion in the form of loan notes as of 2H 2024. Any remaining value above that would accrue to the common equity.

Thanks for confirming, much appreciated.

Daily Stock Market Report (Thur 6 Mar 2025) - NTBR, KMR, HTG, ITV, RWA, ASTO, SPI, TFW, ELM, HSD, SSON, VSVS, HBR

Companies Reporting

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Graham Neary

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