Daily Stock Market Report (Tue 12th August 2025) - SUS, BWY, PAY, ENT, SPX, ATYM, WJG, XAR, ZOO

Good morning!

Wrapping it up there, thank you.

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Spreadsheet accompanying this report: link (last updated to: 24th July). Now includes Company Names for easier searching, as suggested by you!

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Companies Reporting

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Graham's Section

S&U (LON:SUS)

Up 4% to £19.41 (£236m) - Trading Update - Graham - GREEN

S&U made a recent announcement re: the motor finance legal situation, which we commented on here.

The market cap hasn’t changed since then, and is around the company’s last-stated book value (£238m as of Jan 2025).

As I said then, my belief is that book value is around the baseline of what I consider S&U to be worth. Given its track record, growth prospects, and well-aligned management team, I think this family business is worth at least book value, and personally I think it’s worth more than that.

I did downgrade my stance on the stock while legal/regulatory issues were hanging over it, but they now appear to be in the rear-view mirror.

Today, the company gives us a trading update for the period from mid-June to the end of July, i.e. from the date of the AGM to the end of the company’s H1 period.

Chairman Anthony Coombs is feeling better and better about the business, and reiterates his approval of the Supreme Court decision:

…favourable trends have continued and even accelerated; they have been accompanied by external events, most notably the Supreme Court decision on motor finance commissions of a fortnight ago, which will add confidence and stability to the markets we serve and therefore attract investment into them.

As a result, the expected resurgence in profitability for the Group is beginning to materialise and is expected to gain momentum in the second half of the year.

Advantage Finance: this division is growing faster than the used car market as a whole; the Finance and Leasing Association said the market grew 6% in June.

Basking in joy following the Supreme Court decision, Coombs says: “it was also heartening to see the Supreme Court handing down the severe criticism the claims management sector has for so long deserved.” He doesn’t mince his words!

Turning to the FCA, Coombs says that Advantage Finance is “in a very strong position to disprove any unfair relationship claims under the Consumer Credit Act or Consumer Duty, given the size and proportion of commissions paid relative to the total charge for credit, and its excellent customer relations”. I am not a lawyer but for what it’s worth, I totally agree!

Aspen Bridging: in the absence of regulatory intervention, it has been (relatively) plain sailing at the property bridging division.

…after a dull June, it is very encouraging to see Aspen end July with record advances at £28.6m in July, and at £106.4m for the half year. This was 15% up on 2024.

The number of late payers “was below budget at half year”.

Borrowings: £185m has been borrowed out of total facilities of £280m. As the company is now back on a growth track, it is expected to need additional funding within the next two years. As I said before with the likes of H&T (sadly departing us), I like it when financial companies are stretching their borrowing in order to expand their loan book.

Outlook:

"The skies are now brighter for a return to steady sustainable growth than at any time since the pandemic. The difficult regulatory and economic conditions of the past two years have served to prove the resilience of our businesses. Of course, challenges will always remain, but the S&U corporate tanker is undoubtedly turning."

Graham’s view

I’ve been GREEN on this for a little while now, and there’s no reason at all to change stance today.

It is no longer a bargain in balance sheet terms, although I’m curious to see what the new book value might be as of July.

In earnings multiple terms, it’s also a little expensive relative to other lenders, trading at 9x forward earnings according to the StockReport. But again, I think the quality of this business can justify that multiple.

The StockRanks agree with my positive assessment:

Family businesses, as a category, have produced many successful long-term investment opportunities - and I view this as falling into that category.

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Roland's Section

Bellway (LON:BWY)

Up 2% to 2,484p (£3.0bn) - FY Trading Update - Roland - AMBER/GREEN

Bellway p.l.c. ('Bellway' or the 'Group') is today issuing a Trading Update for the year ended 31 July 2025 ahead of its Full Year Results announcement on Tuesday 14 October 2025.

I’ve been neutral on Bellway and most of the other big housebuilders recently, as I’ve felt the outlook has been likely to remain subdued due to a combination of affordability pressure and cost inflation. However, today’s update from Bellway reads fairly well to me and appears to be slightly ahead of expectations, at least on some operational metrics.

FY25 trading summary: today’s full-year figures for completions and selling prices are marginally ahead of June’s guidance:

• Housing completions up 14.3% to 8,749 homes (previous guidance 8,600-8,700)

• Average selling price up 2.6% to £316,000 (previous guidance “around £315,000”)

• Private reservation rate rose by 12% to 139/week, including bulk sales

• Overall reservation rate including social housing rose by 6.2% to 171/week

• Forward order book 5,307 homes (FY24: 5,144)

• Accelerated land purchases, buying 8,120 plots (FY24: 4,621 plots)

• Year-end net cash of £42m (FY24: net debt £10.5m)

The company says customer demand has been aided by good mortgage availability and stable mortgage interest rates over the last year. Overall pricing and incentives remained stable across the business, with cost inflation running in “low single digits” – similar to comments from other big housebuilders.

Resourcing for new builds doesn’t seem to be an issue; Bellway says that both building materials and subcontractors have good levels of availability at the moment.

Profitability: Encouragingly, the company explicitly mentions the importance of improving return on capital employed and promises an update on capital allocation and targets with its full-year results on 14 October.

ROCE at Bellway and most other big housebuilders has trended sharply downwards since interest rates rose and the Help to Buy scheme ended:

At less than c.8%, I don’t believe the company is likely to be earning a return in excess of its cost of capital, so some improvement is needed to justify the stock re-rating to trade at book value or above.

FY26 outlook: CEO Jason Honeyman expects to maintain “broadly flat average outlet numbers” this year, with a similar private sales rate to FY26. This is expected to support around 5% growth in completions to c.9,200 homes.

Looking further ahead, Bellway believes the industry should benefit from recent government planning reforms, although the company says it’s continuing to experience delays at the moment.

The company hasn’t provided any specific financial guidance today and doesn’t mention FY26 consensus forecasts. However, today’s neutral market reaction reflects my view that the outlook statement is largely in line with expectations.

Roland’s view

Bellway’s management are extremely experienced and I view this as a well-run business and one of the better quality housebuilders. I don’t see anything to dislike in today’s statement.

The shares were trading at book value in the aftermath of Labour’s general election win last year, but have since pulled back somewhat:

The business has generated returns above its cost of capital through past housing cycles and I don’t see why this shouldn’t be the case in the future. On that assumption, the stock’s current discount to its c.£30 book value could be a potential buying opportunity:

I’ve previously been AMBER on Bellway but am going to notch up our view to AMBER/GREEN today in reflection of the undemanding valuation and mildly-positive tone of today’s update.

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Spirax (LON:SPX)

Up 12% to 6,800p (£5.0bn) - Half-Year Results - Roland - AMBER

Trading in line with expectations; reiterating full year guidance

Today’s results from this industrial group and former high flyer have met with a surprisingly rapturous reception, given that they are explicitly no more than in line!

However, when we look at Spirax’s five-year share price chart, investors’ relief might be easier to understand:

Today’s update is the second time the company has reiterated its 2025 guidance (May’s update was also in line). So perhaps there is some hope that a series of earnings downgrades has now come to an end:

With the scene set, let’s take a look at today’s half-year results.

H1 2025 summary

These interims cover the period to 30 June:

• Revenue -1% to £822.2m (+3% organic constant currency)

• Adjusted pre-tax profit up 1% to £139.9m

• Reported pre-tax profit down 30% to £87.9m

• Adjusted EPS flat at 137.6p

• Interim dividend +3% to 48.9p per share

Today’s profits are heavily adjusted – rather more so than usual for this business. As I suspected, this reflects two large items:

• Amortisation of acquired intangibles: £17.4m

• Restructuring charge to simplify organisation and optimise manufacturing footprint: £34.6m

The first of these items is routine, the second is not. As this looks like a genuine exception, I’m not too concerned.

A quick check of the cash flow statement also suggests to me that underlying cash conversion remained strong, with free cash flow of c.£85m before working capital movements and acquisitions – this compares well with the reported net profit figure of £63m for the period.

Trading commentary suggests sales have stabilised and returned to growth in some parts of the group, with a return to organic growth in two of the company’s three divisions:

On an adjusted basis, margins were also stable across these three divisions, with a group average adjusted operating margin of 19.3% (H1 24: 19.4%).

Spirax reports global industrial production (IP) growth as a metric to help investors gauge underlying conditions in its markets. The figures provided today show global IP growth of 2.5%, suggesting that the company’s 3% organic revenue growth was slightly ahead of its overall market.

Geographically, management doesn’t seem to have anything positive to say about any of the company’s key markets.

• EMEA: key markets such as Germany, France, Italy and the UK are said to have “contracted” during H1;

• Americas: the USA “remained weak”;

• Asia Pacific: trading conditions in China were “challenging”, with customers reducing large project expenditure. In Korea, customers deferred major capex decisions due to political instability.

A quick check of the numbers suggests that in terms of impact, Asia may have been the biggest drag on H1 revenue – EMEA and the Americas were both flat or better, but sales fell by nearly 10% in Asia Pacific:

However, CEO Nimesh Patel is keen to emphasise that Spirax’s core competency in electrical steam generation has the potential to play a key role in decarbonisation of industrial processes. He sees this as a structural growth opportunity as global industry electrifies and moves away from using fossil fuels for heat.

The suggestion seems to be that any short-term weakness could become less significant over time, as structural demand outweighs cyclical variations.

Outlook: H2 trading in China is expected to remain challenging, due to uncertainty about tariffs and their impact on global trade. However, Korea is expected to improve now the political situation has stabilised. Spirax expects strong demand for its biopharma and semiconductor-related offerings.

Financial guidance for 2024 remains unchanged with organic revenue growth consistent with 2024 (+4%) and “well ahead” of expected global IP growth of 2.5%.

Adjusted operating profit is expected to increase by “mid-single digits” on an organic basis, supporting an operating margin above the 19.4% adjusted figure reported for 2024.

Restructuring efforts in H1 are expected to support annualised cost savings of £35m, with delivery split across this year and next year.

I don’t have access to updated broker notes today, but consensus forecasts prior to today suggested adjusted earnings of 290p per share for 2025, slightly ahead of the 286.3p per share reported in 2024.

These estimates put the stock on a FY25E P/E of 23.5 after this morning’s gains, falling to a P/E of c.20 in FY26.

Roland’s view

Spirax is exposed to the headwinds created by tariffs, changing patterns in global trade and regional economic slowdowns. Today’s results make it clear that the company is still struggling to achieve a decisive return to growth.

However, underlying performance seems fairly robust to me and I think it’s worth remembering that this business still has pretty solid profitability metrics, despite some recent weakness:

While the shares aren’t obviously cheap at current levels, I think the business could justify a premium valuation if it can return to above-inflation levels of growth.

How difficult is this likely to be? It’s hard to say. I think Spirax is a high quality business with differentiated products and intellectual property. But I also see the company as one of a number of UK industrial groups that may have enjoyed outsized benefits from the era of peak globalisation and cheap money – they were big enough to make the most of the opportunity, but small enough to enjoy above-trend growth.

This landscape is now changing, but I’m starting to feel the aggressive de-rating of the shares over the last few years could mean much of this risk is priced in. Spirax’s share price is still around 60% below its 2021 peak.

When considering the stock’s decline, I think it’s also worth noting that the recent decline in sales and profits has been relatively small. In my view, the shortfall in profits could quite easily be reversed with a return to modest revenue growth:

I took a cautious view on Spirax in May, at AMBER/RED.

While I think the company still has plenty to prove in terms of a return to growth, today’s results suggest to me the business has stabilised and is probably fairly valued at current levels.

On this basis, I’m going to move our view up by one notch to AMBER.