Daily Stock Market Report (Tue 10 June 2025) - BPM, FTC, HOC, GBG, SXS, BWY

Tue 6:06am by Graham Neary

81 comments 5109 reads

Good morning!

Congrats to shareholders in Spectris (LON:SXS) - news emerged yesterday afternoon of a possible cash offer at £37.35 (a premium of over 80%!).

Spreadsheet that accompanies this report: link.

We ran out of time for today, cheers!

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Frasers (LON:FRAS) (£3.3bn)	Response to REVB statement	Frasers confirms it is considering a possible offer for Revolution Beauty (LON:REVB), which would be all cash if it is made.
Spectris (LON:SXS) (£3.2bn)	Response to Media Speculation	Possible cash offer from private equity at £37.35 plus £0.28 interim dividend. Due diligence ongoing.	PINK (Graham) [no section below] This should have a decent chance of going ahead given the very large (80%+) premium to the prevailing share price and the cooperation of the Spectris board, who are providing access to “confirmatory due diligence”. However, the shares are today trading at a 14% discount to the mooted takeover price, suggesting perhaps that the timeline for the transaction could be a lengthy one, and that there is still scope for it to run into some obstacles. The cheap UK market continues to throw up juicy opportunities for sophisticated foreign buyers, in this case a global (but US-headquartered) private equity firm. Spectris shares had been trading on a P/E multiple of 12x.
Bellway (LON:BWY) (£3.2bn)	Trading Update	Fully sold for y/e 31 July 25, FY units 8,600-8,700, “on track” to deliver FY volume and profit growth. Average selling price exp £315k (FY24: £308k). Forward order book +7.7% at 5,759 homes, expect further increase before year end.	AMBER (Roland) [no section below] Today’s update from the housebuilder supports the view that housing demand may be recovering, with management guiding for cumulative volume growth of 20% in the two years to 31 July 2026. As far as I can see, profit expectations are unchanged today. These suggest to me Bellway’s return on equity will remain in mid-single digits in both FY25 and FY26. The company is promising an update on its capital allocation plans later this year which may alter this view. But for now, I’d argue this level of profitability means the shares could be fairly valued at a slight discount to book value. Bellway’s share price has risen by 17% since I covered it in February, so I’m edging down our…

Name (Mkt Cap)

RNS

Summary

Our view (Author)

Frasers (LON:FRAS) (£3.3bn)

Response to REVB statement

Frasers confirms it is considering a possible offer for Revolution Beauty (LON:REVB), which would be all cash if it is made.

Spectris (LON:SXS) (£3.2bn)

Response to Media Speculation

Possible cash offer from private equity at £37.35 plus £0.28 interim dividend. Due diligence ongoing.

PINK (Graham) [no section below]
This should have a decent chance of going ahead given the very large (80%+) premium to the prevailing share price and the cooperation of the Spectris board, who are providing access to “confirmatory due diligence”. However, the shares are today trading at a 14% discount to the mooted takeover price, suggesting perhaps that the timeline for the transaction could be a lengthy one, and that there is still scope for it to run into some obstacles. The cheap UK market continues to throw up juicy opportunities for sophisticated foreign buyers, in this case a global (but US-headquartered) private equity firm. Spectris shares had been trading on a P/E multiple of 12x.

Bellway (LON:BWY) (£3.2bn)

Trading Update

Fully sold for y/e 31 July 25, FY units 8,600-8,700, “on track” to deliver FY volume and profit growth. Average selling price exp £315k (FY24: £308k). Forward order book +7.7% at 5,759 homes, expect further increase before year end.

AMBER (Roland) [no section below]

Today’s update from the housebuilder supports the view that housing demand may be recovering, with management guiding for cumulative volume growth of 20% in the two years to 31 July 2026. As far as I can see, profit expectations are unchanged today. These suggest to me Bellway’s return on equity will remain in mid-single digits in both FY25 and FY26. The company is promising an update on its capital allocation plans later this year which may alter this view. But for now, I’d argue this level of profitability means the shares could be fairly valued at a slight discount to book value. Bellway’s share price has risen by 17% since I covered it in February, so I’m edging down our…

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bohenie

Tue 12:39pm

B.P. Marsh & Partners (LON:BPM) - Hi Graham and agree your analysis today - Also watched the Investormeetcompany webinar this morning Interestingly, they now have a well known Fund involved - Wellington and a seller PSC which has been bought by a hedge fund. My question - will they now think of moving to the main market - or is there attraction in IHT relief esp for Brian Marsh - if indeed it qualifies ?

Camtab

Tue 12:57pm

Donald I am not so sure that I would agree it is anything to do with morals. I am not sure investment full stop has anything to do with morals. But I wouldn't argue with you that a rebalancing is overdue. However it is also worth mentioning that central government is there to provide service to us all and that has to be funded. At the moment all one hears is how to avoid and reduce taxes because that is appealing to individuals. At some point we have to make the decision do we support our country or ourselves. With defence required to draw more on public finances, no solution to our NHS problem in sight, energy recalibration in process, we need to find ways to invest in our country, in my humble opinion. Therefore expecting Pension Funds to invest in the UK holds water. The issue we need to address is how do we increase the competitiveness of UK companies and get UK companies on the screeners. The British people are known for ingenuity and creativeness it will be much needed in the coming years. Just my view from the bridge.

Kevin Holloway

Tue 1:19pm

Yes I agree, and share price only up about 2% so fully factored in

mammyoko

Spectris (LON:SXS) - just seen your suggestion that regulatory hurdles likely account for the large potential mark-up on offer here. Grok thinks the closest analogy is Spirent Communications (LON:SPT) and that Advent will need to obtain similar (if not identical) clearances. The Spirent clearances have been ongoing since the bid was announced on 28th March 2024 but that bid did run into some regulatory issues and Spirent also announced weak trading which may have delayed closure. Obviously, the same could apply to Spectris.

However, according to a (rather lazy), Grok which refused to provide me with an average daily discount to bid price for Spirent, the average discount using the few closing prices it was prepared to use, suggested that the discount there has been much less than 18%. I'll continue to hold for a few months to see how this pans out as I would be happy enough to get 18% per annum on this from funds diverted from Supermarket REIT where I doubt there's a further 18% upside in the next year.

Pimlico on Thames

Tue 1:57pm

Just topped up opening position in HSS Hire (LON:HSS) .

PE of 6 with 8% yield. Should be beneficiary of government infrastructure projects.

Howard Adams

Tue 2:09pm

Inward investments into Europe and UK .... data centres and real estate. A large investment site for data centre in Newcastle ...

Regards

Howard

timarr

Tue 3:01pm

Hi abtan

Under normal circumstances I'd consider the debt levels at GYM (LON:GYM), Everyman Media (LON:EMAN) and Avation (LON:AVAP) to be avoided. I've a very simple process - avoid excessive levels of debt, even if the assets look like they cover them. But if you think the cashflow warrants a look, I should probably do so. Certainly my local Pure Gym is always full these days whenever I can drag my sorry soul to it ...

LSL Property Services (LON:LSL), Gamma Communications (LON:GAMA) and Wise (LON:WISE) I hold. The former (I think) was after you pointed the board in its direction. It continues to look interesting. I also note that the vaguely similar Property Franchise (LON:TPFG), which I hold in volume, has taken off for no particular reason.

Gamma Communications (LON:GAMA) is cheap, but the sector needs consolidation. It'll be interesting to see which side of the equation they end up on.

And as for Wise (LON:WISE) - well, I've said enough. I don't need to further boost my confirmation bias ...

I'm wondering when we'll start to see bid action in the fund managers. They're all horribly undervalued due to market conditions, although the pick of the bunch (IMO) Tatton Asset Management (LON:TAM), reported excellent figures today.

Of course, Trump could wake up tomorrow and decide to annex Mongolia or make Trumpcoin the official US currency or replace Jay Powell with Jim Cramer or, well, pretty much anything. Best to enjoy the good times while they roll ...

Tue 4:22pm

Hi jamesalastair

My concern with Croda is they have lost a lot of their pricing power which I see in the market (as well as farming, I am a chemist). Their falling margins bear testament to this.

Can't disagree with that. Alex Sweet gave a really excellent overview of the history here: https://sweetstocks.substack.c...

To summarise - they exploited their customers and it's eventually cost them. Not necessarily unrecoverable but not easy.

On Victrex (LON:VCT) I don't think Goodwin (LON:GDWN) (which I hold) is a competitor. They're in different parts of the market. Victrex's problem is that it's found it hard work to develop new markets for PEEK.

In both cases the valuations are, if not compelling, at least interesting but I'll happily concede that these probably aren't the cheapest stocks around ...

... oh, and the point on energy costs is well made. Croda have international factories so less of a problem, but Victrex don't. I don't see how the UK ever competes with cheap hydro-electric from the likes of Norway and Iceland, but at least if we didn't have the current stupid price setting mechanism where everyone pays at the marginal rate, there would be room for some regional price reductions.

Of course, the politics of that are difficult - persuading the heavily populated South East to pay more for energy than other parts of the country is tough, but maybe it would concentrate minds a bit more ...

Off topic. Time to move on.

The Phoenix

Tue 4:59pm

Hi Camtab i personally think we need to find a way to get the nigh on 9 million economically inactive back to work even 10% would surely make some form of a dent. I think the problem you have is the average working middle ranking Jo is thinking I pay 20/40% income tax , 8% national insurance, 2.5k average council tax from net income, car tax, insurance tax, fuel tax, vat on car parts and repairs, cgt allowance reduced to 3k that they feel they are paying in more than their fair share already.

You are correct we have virtually no army and no one seems to want to sign up to the army either these days.

Tue 5:02pm

Hi Tim I'm far from an expert or clued up on this but as far as I understand it UK's electricity is based on the price of gas even though we have as far as I'm aware stacks or windmills and solar.

As such what is stopping the Government from basing it say on the price of UK wind electricity (assuming its cheaper) ?

DavidMcCabe

Tue 5:19pm

Hi Phoenix,

It is because the half hourly wholesale price is set using the most expensive form of generation required to balance the market. In short, marginal cost pricing. In the UK this is gas generation. Renewable are cheaper, not the reason prices are high.

If you google 'why are electricity prices based on gas' there is a pretty good AI answer.

David

Tue 5:45pm

Hi TP

DaveMcCabe is absolutely correct.

Roughly gas prices set the electricity price 98% of the time, while gas only produces 40% of our electricity. Renewables are far cheaper but consumers don't get the benefits of this investment and we end up with politicians arguing that we need more fossil fuels when this is unlikely to make a damn bit of difference to the prices we pay. If all of our electricity was produced by gas we'd pay exactly the same.

Battery storage solutions are part of the answer - situations where energy prices are set by gas making up a tiny percentage of the overall electricity output are not uncommon - but ultimately we need nuclear to take up the slack. And that's a decade away, at best. Oh, and improving the distribution network is essential, but try telling that to people who don't want nasty metal towers in their neighbourhood.

Energy pricing has to be reformed, and one solution is to regionalise. So if you have a lot of renewables in your area then you get the benefit of that. Trouble is, most of the voters live in SE England and don't have access to renewables - and don't want the nasty windmill things near them.

It's a massive issue and if we really want to get to net zero - and let's face it, it's not a question of if, but when - we need to address it now. Given this government's ability to dodge the difficult questions I can't say I'm confident, although they're doing better than the last lot who simply ignored the issue. Sizewell C, etc, will help but it will take way longer than people will tolerate.

But of course, Farage claims that more oil from the North Sea (a decade away, the wrong sort of oil and not enough of it) and restarting coal mining in Wales (let's see Gen X going down t'pit - he'll need a lot of willing immigrants to make that work) will solve the problem.

It's delusional, start to finish. Change is needed, and now, not later.

abtan

Tue 6:22pm

Hi Timarr

Interestingly enough I totally agree with you on not investing in companies with too much debt. I definitely prefer companies with a net cash position.

However, for indebted companies if I see:

a credible path to debt reduction;
high cash generation (>10% free cash flow yield pre-expansionary capex is my usual target),and;
an unloved share price

the contrarian in me always likes to take a deeper look.

---

AVATION

I don't think I'll change many minds on Avation (LON:AVAP), but perhaps these guys will:

https://east72.com.au/wp-conte...

Pages 4-24 (it's long!) explain why there could be value here.

EVERYMAN MEDIA

On Everyman Media (LON:EMAN) I personally think that the debt will be paid down rapidly now that expansion has slowed.

x2 new venues are expected to open this year, down from x3 last year and x6 in 2023.

I think that it's also worth noting that with H1 almost done, UK box office admission (£) and # YTD figures are +20% and +11% higher respectively vs last year.

This +11% figures excludes May, which should be an excellent month, as I'm still waiting for official figures to be published.

GYM

On GYM (LON:GYM) non-lease debt is indeed very high as you point out.

However, interest payments are mostly covered by cashflow and I believe (or rather hope!) that the company is at an inflection point whereby all costs will be comfortably covered by cash flow and debt will start to reduce materially.

I've included Pure Gym's trajectory over the last 4 years for reference.
This is their UK business only.

For context The Gym Group's Revenue and PBT for 2024 were £216.3m and £4.4m respectively.

Here's hoping things progress as I hope they will.

Tue 6:49pm

Thanks David

Tue 6:52pm

Thanks as always Tim.

Richard Goodwin

Tue 6:55pm

My recollection is that was the original point of PEPs (predecessor of ISAs) way back in the 1980s

Tue 7:16pm

I doubt it will qualify for IHT relief as surely it counts as an investment company?

Harry Hindsight

Tue 9:59pm

Companies on the RNS list.

Seven are under £100k - have no interest whatsoever - get a SR or 50 then will have a look but before then not interested.

I'm not some seed capital private funder wanting a way out.

Yes Rolls Royce after billions of years can now produce a Small Modular Reactor (SMR) or is it a Small Nuclear Reactor (SNR) - whatever presume Not In My Back Yard - understandably methinks (not the tech but the 10 years of concrete mixer trucks etc tearing up the highways).

I'm investing in UK Uranium mining companies.

Tue 10:27pm

Needs fuel, which of course is provided by Kazakistan and processed in Russia - not Scunthorpe.

Bit like rare earth minerals and magnets - again not processed in er Tunbridge Wells.

Burnt Onions

Wed 5:58am

Abtan, thanks for posting that piece on Avation, very informative.

Daily Stock Market Report (Tue 10 June 2025) - BPM, FTC, HOC, GBG, SXS, BWY

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Graham Neary

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