Daily Stock Market Report (Tue 21st July 2026) - YU., MARS, KIE, MONY, STEM, MTO, MHA

Yesterday saw the appointment of John Healey as the UK's new Chancellor.

Healey was Defence Secretary from 2024 to 2026, where he wanted to increase defence spending to 2.5% of GDP. He ended up resigning from this post in June of this year, arguing that Rachel Reeves and Sir Keir Starmer had not committed enough to defence spending in the wake of the US-Iran war and the situation in Ukraine.

I don’t know much about Healey’s priorities other than this episode. He has been an MP for nearly 30 years, with plenty of time served as a backbencher.

Meanwhile, Burnham’s first act as PM yesterday was to cut VAT on electricity bills from October, with the rate falling from 5% to 0%, part of the “breathing space” agenda.

Overnight market movements:

• The FTSE is down 0.6% at 10,480
• S&P 500 is up 0.5% at 7,480
• Brent crude (October) is down 0.8% at $86.50/bbl
• Gold is up 1.4% at $4,060/oz
• Bitcoin is up 0.7% at $65,800

---

Roland Head joins me today.

Finished for today, thank you.

---

Companies Reporting

---

Graham's Section

SThree (LON:STEM)

Unch. at 215p (£263m) - FY26 Half Year Results - Graham - AMBER =

The decline continues here, with a sharp drop-off in profitability:

We did get a preview of these results in June, when I was neutral on this stock.

At those results, the company said it was on track for FY26 PBT of c. £10m. It says that again today, in the outlook:

As previously announced, the cost optimisation programme remains on track, with benefits weighted to the second half, underpinning FY26 PBT guidance of c.£10 million.

Note that there’s a heavy H2 weighting. PBT of only £2.7m in H1 leaves it all to do in H2, although the company will argue that it’s already laid the groundwork for a stronger second half.

The observations I made at the H1 trading update are worth emphasising again:

Contract fees underperforming permanent fees: I find this interesting, as contract fees ought to be more stable than permanent fees. But that’s not happening at the moment. Contract fees are down 8% year-on-year, while permanent fees are down 5%. (Remember that SThree is heavily weighted towards Contract, which represents 85% of fees).

Geographical spread: the biggest variance is actually geographical, rather than contract vs. permanent.

Spot the difference between continental Europe (DACH/Netherlands) and USA:

For me, this table is a good argument against the idea that recruitment is structurally broken. What it says instead is that recruitment can still thrive in very strong economic conditions.

But perhaps the sector is far more reliant on strong economic conditions than we previously realised?

Here is an excerpt from the company’s review of DACH (Germany, Austria, Switzerland)::

Germany saw Contract decline 12% YoY, with overall net fees down 14%, reflecting lower levels of demand for Technology skills (down 18%), its largest vertical, particularly in software development, amid an ongoing shift in demand towards ERP cloud migration and roles across the AI value chain. Performance continues to reflect a challenging trading environment, with the expected uplift in job flows from the reform of the debt brake and the government's €500 billion investment fund yet to emerge.

In other words, what’s being blamed is a combination of weak Technology demand and a lack of fiscal support from the German government.

Switzerland and Austria were also very weak: in Switzerland, Engineering fees collapsed by 55%, so that total Swiss fees fell 24%, “with broader market softness reflecting continued cautious client sentiment”.

In the US, by contrast, there was:

…robust demand for Engineering and Technology skills linked to power generation and the AI value chain. This reflects sector-wide investment to meet rising electricity demand from AI applications, data centres and electric mobility, alongside ongoing grid modernisation to address climate-related challenges.

AI is clearly having a big impact, with Technology roles in strong demand in the US, while Europe goes in the other direction.

CEO comment (with emphasis added by me):

"Trading momentum improved through the first half despite continued macroeconomic and geopolitical uncertainty, with strong performances in the USA and Japan, stable year-on-year new business activity and a return to growth in our contractor order book. While market conditions remain mixed across our geographies, we are encouraged by the improving trends we are seeing in a growing number of countries and by the continued resilience of our Contract business.

We anticipated early on how our industry was set to evolve and, over recent years, implemented clear strategic initiatives. The benefits of these decisions are increasingly visible. We have simplified the business, focused on markets where we have the right balance of scale and opportunity, and successfully completed the rollout of our Technology Improvement Programme. Operating on a single global cloud-based platform has enabled us to build an operating model centred on shared services and economies of scale, which is delivering productivity gains, improved execution, and the data and process backbone to deploy AI and new capabilities at scale and pace. We are now a focused, scalable, less complex and tech-enabled business with a clear operating model…

I’ve spoken to management here before and they are very proud of the Technology Improvement Programme, arguing that it sets them up for the future in a manner that isn’t matched by other recruiters.

Net cash ended H1 at £43m (a year ago: £48m) and the interim dividend is unchanged at 5.1p. Note that this dividend is not backed by earnings per share.

Graham’s view

We’ve been neutral on this and I’m inclined to stay neutral on it today, although I am leaning towards a possible downgrade.

Consensus forecasts say that FY November 2027 will be much more profitable than the current year:

These forecasts result in a forward P/E multiple that isn’t too extreme (21x):

Combine that with a high dividend yield and asset backing, and you get a high ValueRank. It even qualifies as a Super Stock:

Today’s balance sheet shows equity of £211m, or £194m after deducting intangibles. Most of the company’s assets are in the form of receivables, which is a good thing (much more liquid than PPE).

So I do think that the balance sheet is a form of strength, while acknowledging that the cash balance is likely to be volatile.

I’m less confident in the earnings outlook, as hitting forecasts requires a big H2 weighting in the current financial year, and then a near-trebling of profitability next year.

That’s all possible but for me it heightens the risk of a profit warning.

EPS forecasts have been stable for a while, after having been downgraded previously:

For now, I think a neutral stance remains the right call for us.

---

Roland's Section

Yu (LON:YU.).

Up 2.7% at 1,685p (£292m) - Trading Update and notice of results - Roland - GREEN ↑

Yü Group PLC (AIM; YU.), the independent supplier of gas and electricity, and meter asset owner and installer of smart meters, to the UK corporate sector, is pleased to confirm trading is in line with expectations and provides an update on trading for the six months ended 30 June 2026.

I last covered this business utility supplier in March, when I reviewed Yu’s full-year results.

At the time I took a broadly positive view, notwithstanding a couple of niggles. Today’s half-year update suggests to me the group is continuing to deliver real growth and market share gains:

• H1 revenue +19% to c.£405m, in line with management expectations. “The group continues to gain market share despite a warmer than expected winter period reducing consumption”.

• Meter point growth: the number of meter points managed by the company has risen by 43% to 153k over the last year, supporting the company’s target for 7-9% market share in 2028.

• Contract book +45% to £1.7bn, ahead of management expectations: this represents customer contracts for future energy supply.

• Smart meter installs up 27% to 12k, with meters owned up to c.55k. These are expected to generate an annualised, index-linked annuity income of £3.0m (H1 25: £1.8m).

• Yu’s hedging facility with Shell (disc: I hold SHEL) has been extended to 2032. This trading agreement allows the company to buy electricity and gas at fixed prices (to support customer contracts) without requiring Yu to post collateral to offset commodity price movements. It’s a useful asset to the business as it effectively reduces the capital needed to support growth. The current facility has the capacity to support annual revenue of >£2bn, providing a clear growth runway.

Outlook

The combination of a mild winter and the Iran war are both cited as short-term headwinds – both factors may have put some pressure on consumption.

In addition, I imagine elevated energy prices mean that customers will be reluctant to sign up for new fixed price contracts, preferring to delay in the hope that better prices will be available later in the year.

Despite this, expectations are unchanged today. Updated broker notes from both Panmure Liberum and Cavendish confirm that there is no change to forecasts this morning. This leaves Yu trading on a fairly modest multiple, with a useful 4%+ yield (one of the highest in the UK utility sector):

Roland’s view

Yu has been an impressive growth story, six-bagging since its 2016 IPO:

Quality metrics are also very strong indeed:

The business remains under the leadership of founder Bobby Kalar, who has a 50% shareholding. I know some investors are wary of small caps with controlling shareholders, but in this case I see it as an attraction. Kalar’s annual dividend income was c.£5.8m last year, by my calculations, representing a multiple of his (generous) total remuneration of £1.2m.

When a CEO’s dividend income exceeds his remuneration, I generally see this as a strong sign of shareholder alignment.

I am positive on this business and share the StockRanks’ view of this business as a Super Stock. However, Yu’s business model is not without risks:

• Yu is exposed to the UK economy through demand growth and more specifically bad debt (companies that cannot pay their energy bills). Low margins mean that relatively small increases in bad debt could have a material impact on profits.

• Liquidity: despite the benefit provided by the Shell hedging facility, this is a business that requires significant liquidity to support working capital movements and contract wins. My understanding is that Yu also uses invoice factoring to aid cash flow through the year. The company reports a gross cash position of £129m today, but forecasts from Panmure Liberum suggest the year-end net cash position could be c.£50m. In my view, this is a business that needs strong liquidity, so I don’t view net cash as surplus to requirements.

• Competition: Yu is generating attractive returns and competing for market share in the UK corporate sector. Larger competitors may try to limit the group’s growth by using their superior scale to offer more competitive pricing (something Telecom Plus recently reported in the consumer sector).

I was AMBER/GREEN on Yu following the group’s full-year results in March. The shares have edged lower since then, but forecasts have held up and continue to show double-digit EPS growth next year:

I’m going to move my view up by one notch to GREEN today.

---

MONY (LON:MONY)

Down 6% at 192p (£1.00bn) - Half-Year Financial Report - Roland - GREEN =

We turned positive on price comparison group MONY in April, when Graham flagged the seemingly excellent value on offer. The shares have enjoyed a good run since then, but have pulled back slightly following the publication of today’s half-year results:

HY26 results summary

Today’s headline figures do indeed seem a little underwhelming:

• Revenue up 1% to £227.1m (+6% LFL)

• Pre-tax profit up 1% to £46.1m

• Adjusted earnings per share up 5% to 9.7p (aided by the impact of buybacks)

• Interim dividend up 1% to 3.36p

• Net debt up 73% to £31.8m

However, drilling into the group’s segmental results suggests to me that the underlying performance of most of the group was much stronger than these headline figures suggest:

We can see that all of the group’s core businesses all delivered fairly respectable levels of growth in H1:

• Insurance: headwinds eased in car insurance, with average premiums down 5% year-on-year, improving from a decline of 9% in H2 2025. MONY says a new AI-enabled Price Optimiser tool is helping motorists save an additional £25 on average.

• Money: current accounts and loans are highlighted as areas where performance improved.

• Home Services: strong growth, flagging up the continued recovery in the Energy Switching market.

• Travel: MONY has moved to having a minority shareholding in its Travel business so no longer reports revenue in this segment. For comparison, Travel generated £6.2m of revenue in H1 25. Stripping this out implies underlying H1 26 revenue growth of c.4%.

Cashback: this was the main area of weakness. MONY’s cashback business was built around the acquisition of Quidco in 2021. Cashback revenue fell by 13% last year, when I estimated that Quidco was only likely to be generating single-digit returns on capital employed.

I’m not convinced this deal has generated much value for shareholders. Fortunately, the current CEO seems to be focused on driving organic growth, rather than making expensive purchases.

Growth initiatives: press reports over the last few days have flagged up the launch of MoneySuperMarket’s investment platform. This has initially been launched as a fund supermarket “enabling customers to invest from as little as £1”.

Other new products in the pipeline include:

• SuperSaveClub Insurance - “our own digital broker enabling monthly payments for members at no additional cost”.

• MoneySuperMarket Business Banking - “our first dedicated SME proposition, waitlist now open ahead of launch next month”.

MONY’s aim is to transform its MoneySuperMarket app into a super app that will become a “financial companion, going way beyond comparison”.

I can see the logic in this. Although investment, insurance and business banking are competitive markets, it’s possible that MONY will be able to leverage its brand and loyal customer base (SuperSaveClub has 2.5m members) to expand its reach.

Profitability & Balance Sheet: strong quality metrics and strong cash generation have historically been hallmarks of this business:

Today’s results show profitability remains intact, with an H1 operating margin of 27% and trailing 12-month return on capital employed of 40%.

The only area that did suffer in H1 was cash flow, with operating cash flow down by 17% to £36.2m. The highlights several reasons for this:

• Expansion into channels with longer cash collection cycles (e.g. Energy)

• Stronger revenue growth in June (cash won’t be collected until H2)

• Reduction in amounts owed to Quidco members

Cash conversion is expected to improve in the second half of the year and I don’t think there’s a serious concern here. But I’ll be interested to see if the evolving mix of revenue does have an impact on full-year free cash flow conversion.

Outlook

My feeling is that there’s some wiggle room in today’s statement from Peter Duffy:

Our recent trading performance and the breadth of our portfolio combined with disciplined cost management, gives the Board confidence that we will deliver Adjusted EBITDA for 2026 within our current published consensus. We remain well positioned to deliver sustainable, profitable growth.

Consensus forecasts are included in today’s results and are available on MONY’s website.

Current consensus for FY26 adj EBITDA is £140m to £148m, with a mean of £145m. My reading of today’s outlook guidance is that EBITDA is expected to be within the range of expectations, but could be towards the lower end.

I would guess that this lies behind today’s share price drop.

Unfortunately we don’t have access to broker forecasts for MONY, so can’t see more detail until updated consensus estimates filter through to the StockReport.

Roland’s view

Notwithstanding the risk of a slight downgrade to consensus, I continue to think MONY shares probably offer good value. At around 195p, the stock is trading on a forward P/E of 10, with a 6.4% dividend yield:

If past years are a guide, these earnings will convert fully into free cash flow, providing strong support for the dividend and perhaps further buybacks.

Looked at a different way, MONY’s trailing 12-month profits currently offer an EBIT/EV yield of c.11%. For a business with minimal leverage, high margins and strong cash generation, this seems too cheap to me unless the business is about to go into decline. I continue to see this business as a potential takeover target, as Graham highlighted in April.

While AI may present some risks, on balance I think the combination of product complexity and commercial and regulatory barriers to entry in the financial sector are likely to protect MONY’s platform, as long as it continues to evolve.

The company’s continuing move towards becoming a financial platform could help create a moat, if it gains traction.

Although MONY shares aren’t quite as cheap as they were a few months ago, I’m comfortable leaving our GREEN view unchanged following today’s results.