Daily Stock Market Report (Tue 24 June 2025) - SSTY, CML, IGP, STEM, MER, G4M, TEP

Tue 6:02am by Graham Neary

41 comments 4586 reads

Good morning! We have a backlog section from Roland to kick us off.

Spreadsheet accompanying this report: link.

The Agenda is complete.

We ran out of time for today, thanks everyone.

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Rio Tinto (LON:RIO) (£68bn)	Investment of $1.6bn to develop Hope Downs 2	Rio & Hancock Prospecting are developing a new iron ore mine in the Pilbara, W. Australia.
Bunzl (LON:BNZL) (£7.6bn)	Trading Statement	H1 revenue +4% CCY, organic rev flat. Trading in line with exps, op margin c.7%, adj op profit lower.
Telecom Plus (LON:TEP) (£1.7bn)	Full Year Results	Adj PBT +8.1% to £126m, in line with exps. Customer nos. +15%. FY26 adj PBT to be £132-13	GREEN (Roland) This unusual business continues to perform well and support an attractive dividend. While the business model has some inherent risks, in my view, Telecom Plus has executed successfully for over 20 years as a listed business. I don’t see any reason why this can’t continue. Management believes growth opportunities remain and I would tend to agree. While the shares aren’t obviously cheap, I think the current valuation can continue to support attractive returns for income investors.
Sirius Real Estate (LON:SRE) (£1.46bn)	€150m Revolving Credit Facility	New facility to support acquisitions and provide refi liquidity. Margin c.3.2% (1.2% + EURIBOR)
Trainline (LON:TRN) (£1.2bn)	DPAYG trials contract signed	Confirms DPAYG trial contract signed, as we recently discussed here. Trials start Sep-Nov for 9mo.
Foresight Environmental Infrastructure (LON:FGEN) (£503m)	Full Year Results	NAVps -6.3% to 106.5p, dividend of 7.8p, 1.32x cover. £88.6m from disposals. £30m buyback ongoing.
Hunting (LON:HTG) (£436m)	Acquisition of “FES” & Capital Allocation Policy	UK firm FES is a subsea fluid transfer specialist. Acquired for £50m (7.5x adj EBITDA).
Mears (LON:MER) (£335m)	Trading Update	Strong H1 trading, FY25 results to be modestly ahead of expectations; revenue >£1,055m & adjusted PBT >£54m. Updated forecasts from PanLib: FY25E EPS: 47.1p (prev 44.9p) FY26E EPS: 39.0p (prev 38.8p) FY27E EPS: 27.3p (prev 37.1p)	AMBER/GREEN (Roland) [no section below] Mears says H1 saw strong growth in maintenance-led activities, driven by regulatory factors and underpinned by 100% contract retention over 12 months. Management-led activities have normalised (i.e. fallen) as asylum seekers are rehoused from temporary to long-term accommodation. Overall margins have improved and profit…

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kasbahman

Tue 9:50am

Thank you Brothersinarms.

I subsequently discovered the same figure in the broker notes. The £10.6m represents 58% of the group's revenue. The broker also mentions that the adoption to the subscription based model will improve.

This transition will take at least 3-5 years IMHO as I recall Sage went through the same migration with a lot of resistance to the point where the perpetual licence holders were no longer given the opportunity to take advantage of new features unless they accepted the new terms! However, nowadays, it is very much the run of the mill that software (particularly SAAS) is only offered on a monthly/yearly subscription basis.

I am therefore expecting revenue during the next few years to slightly decline while this transition is progressing unless they increase their maintenance and support fees to buffer the reduction. It would also be likely that Intercede (LON:IGP) will have to increase their subscription prices as the adoption matures. From that point onward, it should be highly profitable and very sticky.

My final point is that the RNS should really declare this as it is material in relation to revenue (58%!!) rather than be dependant on brokers.

Pimlico on Thames

Tue 11:00am

I see Serica Energy (LON:SQZ) , and to a lesser extent other UK O&G producers in a bit of a heads you win, tails you win situation. (I hold SQZ and ITH)

The recent rise in prices and any longer term price strength being the obvious positive.

On the flip side, the EPL (energy profits levy) ends if average oil price falls below, $71.40 per barrel, and £0.54 per therm for gas, for two consecutive quarters. With low prices for most of this quarter, if prices settle back for the summer, that could spell the end of the EPL.

The bonus ball for SQL is that they have already carried out their summer shut down work at Triton as part of their storm and other repairs, so will be returning to full output in the next few weeks. Half year results 7 August and xd this Thursday, 26 June.

jamesalastair

Tue 11:14am

Stokco is only as good and quick as the data provider. If you wish more speed, consider spending 30k a year on a Bloomberg terminal.

TheRaven

Tue 11:23am

Fair enough, but a response from the green button folk along the lines of, we’re looking into it, instead of no response at all, would at least be polite no?

ken mitchell

Tue 11:50am

Cavendish (LON:CAV) have confirmed the Sky News story (how Do they get these scoops?) that they’ve had an approach for their private M&A and debt advisory business). I’m pleased that they’ve rejected it, but it perhaps is a reminder that Cavendish (LON:CAV) still looks very good value.

Cavendish (LON:CAV) (I’ve got a full holding) got a green rating from Graham when he analysed their update on April 4th and when the share could be bought for 8.5p.

Could be plenty more upside to come along with the (outside?) possibility of a bid.

Here’s the brief statement from Cavendish today.

“Cavendish plc
("Cavendish" and together with its subsidiary undertakings, the "Group")

Response to press speculation

The Board of Cavendish notes the recent press speculation and confirms that it has received interest in the private M&A and debt advisory business of the Group. This was rejected and there have been no further discussions.

The Group's strategy is to focus on growing and evolving as a full service, fully integrated, small and mid-cap investment bank with the potential for adding additional business offerings rather than reducing them. Cavendish has already generated significant revenues and won a number of live mandates as a result of the integrated business offerings within the Group.”

Tue 11:52am

Thanks Pimlico on Thames. I agree with all of it. Just hope that there aren’t more Triton breakdowns. So must they!

Lincs

Tue 11:57am

I have held for over a year and enjoy an 8% divi. I am still bullish and have no reason to consider selling. In fact I'm likely to top up if any dips come along - although I'm getting towards my usual limit. Very labourous but have you read through the news items? Freely available, extensive and very informative if you are considering investing.

Brothersinarms

Tue 12:16pm

Actually kasbahman, I only agree partly with this. Yes, Intercede (LON:IGP) subscription revenues will grow from increased take up of their new subscription products (e.g. SecureVault) and increased take up in their mid and SME markets of MyID MFA MyID PSM rollouts through channel partners. There may also be increased focus on subscription pricing at the higher end CMS from corporates. However, I don't see much of a transition to SaaS in the government CMS space where they prefer to have everything on prem rather than in the cloud and like the capex nature of upfront licence purchases followed by the 20% annual S&M to keep it secure and not dependent on any cloud provider.

So no, I don't see Intercede (LON:IGP) revenues declining. Licence sales were only 13% of FY25 and I don't see many of those transitioning to SaaS going forward.

On a positive note, it does look like an expansion of MyID CMS across the US DoD is getting closer. I suspect the $200k server order in March was for them as they move beyond proof of concept and for the first time, they mention potential upside from increased DoD spending. That is likely to be a record contract although timing of course is uncertain when dealing with governments :-)

Tue 1:00pm

Interesting comment Brothersinarms.

My experience in dealing with governments (UK and US military) that they have annual budgets which they must spend in order to maintain funding or have (usually) an increase funding for the following year. This I assume is the basis of your argument. ie Capex nature etc. I don't disagree with you on that score.

However, where you have a sticky customer because the product you are providing has limited competition, the software publisher has more influence in the way they price and structure the software licence agreement. Over time, the governments will follow what is on offer the table. So changing to subscription will become the default model. What does happen in practice to over come this problem is that the subscription model is amended to run for say several years but paid all upfront. This is what I have found in my working journey.

Of course the revenue paid in advance would not all be treated as current year income but carried forward as deferred income. Hence, part of my argument for the potential albeit small drop in revenue.

However, as you say with new products in the pipeline, this may compensate for the affect on revenue in future years. As you mention that lumpy revenue only makes 13.8% of total revenue. I would expect this to decline and become immaterial over time.

Lets see what happens in the H1 (September 2025) and FY26 results.

Tue 1:40pm

Re Intercede (LON:IGP) Fair point kasbahman.

boringchess

Tue 2:41pm

How they get the scoops: insiders approach them offering the info for cash

sheeza

Tue 3:05pm

Thanks

johnsmith68

Tue 3:50pm

Anybody have any insight as to why Trifast (LON:TRI) has shot up today on no news (up 17% last I saw)? I'm guessing it's been tipped somewhere maybe?

Archer

Tue 5:30pm

I also hold Pollen Street (LON:POLN) and have just recently topped up. I bought them due to the favourable dividend, good value with reasonable revenue growth and very good price to free cash flow. The latter was important to me as I’m planning to use Dividend returns and a tax free income stream from my ISA. They haven’t grown as much as some high dividend shares recently but if interest rates do come down I’d hope they will look more attractive to investors.

spmarriott

Tue 5:55pm

Thank you both. I need to get my hands on some decent research on the company

Rusty2

Tue 5:56pm

Can't find anything on Trifast (LON:TRI), Capita (LON:CPI) also up about 8% on no news. Record (LON:REC) was a share tip, IC.

Redice

Tue 6:00pm

https://www.investormeetcompan...

This might be a place to start if you are looking at Pollen Street

Tortoise investor

Tue 6:35pm

As someone in the PR industry I'm sceptical Sky News pay for that. I'm not even sure how that would work in practice and is Cavendish news really so interesting to the population that Sky News would pay for an exclusive? Surely it's either PR folk leaking a story for the fun of it and to keep a relationship with a journalist going, and/or someone is deliberately trying to manipulate a situation - e.g. leak info to apply pressure or sell shares?!

David Wordsworth

Tue 7:52pm

SThree (LON:STEM)

I’m afraid I agree. Had a small-ish position and sold at a loss for the same reasons. Just scratching my head about the complete lack of recovery.

Tue 8:18pm

Many thanks

Daily Stock Market Report (Tue 24 June 2025) - SSTY, CML, IGP, STEM, MER, G4M, TEP

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Graham Neary

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