Daily Stock Market Report (Tue 3 June 2025) - ADF, GLE, GHH, CHG, KIE, BATS

Tue 5:53am by Roland Head

33 comments 5136 reads

Good morning and welcome to today's report.

The agenda is complete.

Mello 2025: just a quick reminder that this fantastic investor conference is getting underway in London today. Ed, Graham & Mark will be there as will many of the companies we report on in these pages. I believe a few tickets may still be available - we are able to offer a discount code "STOCKOPEDIA50", which can be used at this link.

Warren Buffett's evolving style: finding our own style as investors can be a key element of success. Alex has published an interesting new article today charting the evolution of Warren Buffett's style over his career as an investor - it's well worth a read.

14:20: we're wrapping up the report for today - see you tomorrow!

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
British American Tobacco (LON:BATS) (£73.5bn)	H1 trading update	On track for FY25, revenue slightly ahead of guidance, exp FY rev +1-2%, adj op profit +1.5-2.5%. Market share -0.1% in top markets, but +0.1% in core US market. US on track for return to revenue and profit growth in H1 and FY.	AMBER/GREEN (Roland) [no section below] This business has faced some headwinds over the last year or so, but still appears to be on track to deliver operationally. While leverage is slightly higher than I’d like, I can’t ignore the prodigious cash generation and tempting 7.4% dividend yield. BAT’s £10bn shareholding in ITC (NSI:ITC) and its significant next-generation business are additional attractions that could help to support the longer-term evolution of the group, in my view. I’m comfortable maintaining Graham’s previous moderately positive view today.
Rotork (LON:ROR) (£2.6bn)	Share buyback programme	Commenced buyback programme up to £50m.
Pennon (LON:PNN) (£2.4bn)	Full Year Results	Rev +15%, adj EBITDA flat at £335.6m. Adj LBT of £35.1m. Outlook: return to profitability.
Chemring (LON:CHG) (£1.3bn)	Interim Results	Rev +5%, adj PBT +6% to £24.1m. Record order book of £1.3bn, outlook in line w/ exps.	AMBER (Roland) Today’s results from this defence contractor look solid enough and show very strong growth in the order backlog. However, much of this seems to be being driven by Energetics, with weakness elsewhere in the business. This situation may improve in H2, but I can’t help feeling that a fair amount of growth is…

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intuitive6191

Tue 8:58am

M J GLEESON

In quite a short trading statement M J Gleeson managed to include just about every possible reason for a profit warning.

"The pace of the housing market recovery has not been sufficient to offset the cumulative impact on Gleeson Homes' gross margin of a number of headwinds through the year. These include increased build costs, flat selling prices, the continued use of incentives and several bulk sale transactions."

Just in case Investors didn't get the gloom message the report also states that they were unable to conclude a disposal in Yorkshire, which was included in market expectations .With a final blow the 2026 statement manages to put out further bad news with possible Planning delays.

I don't hold but would want more clarity here. Are the board addressing these issues? What is the key issue which needs to be resolved?

Hopefully holders will get some answers here.

The Phoenix

Tue 9:14am

Just reading John Auther's latest ramble does anyone more cleverer than me understand the possible incoming of section 899.

My understanding is that it will be a tax levied by the US treasury on foreign held US assets that the treasury decide are treating US companies unfairly. It will be reviewed on a rolling three month basis and will fluctuate potentially between 5-20%.

This could lead to a huge repatriation of funds and could raise US borrowing costs if foreigners were taxed for holding US treasuries.

According to the article if it gets through the odds are it wouldn't be lifted by a future Democrat president and it seems it could be a bigger issue than the tariffs.

Interested to here from anyone who understands it better, possible positives and negatives for different asset classes but it seems to me the current US administration wants to almost discourage foreign investment in the US but equally who will buy all the bonds they need to issue.

NeilS

Tue 9:41am

I’m wondering if the following wee snippet might have negative implications for valuations in the recovering REIT sector? A quick google search just now tells me that city legal firms are just setting up their breakfast briefings/seminars for clients in the sector so it’s very early days for assessing the impact.

“Commercial landlords have been warned they could be told to repay ‘massive’ sums received from insurance commissions after a High Court judge told the owner of London’s Trocadero Centre to return payments to a tenant.”

bohenie

Tue 9:57am

Wonder if there might now be suitors circling the company. Harwood is on board already.

rwh3ue

Tue 10:37am

Article in The Times says:

"Criterion received commission, sometimes close to 60 per cent of the premium, from brokers when it charged Picturehouse and other tenants for insurance cover from insurers between 2015 and 2023.Picturehouse, part of Cineworld, argued it should not be liable for the part of insurance premiums which covered commission passed to its landlord.Mr Justice Richards said the landlord’s commission was not for the purposes of “keeping the centre insured” as per the terms of the lease agreement but for “providing the landlord with an opportunity to profit at the tenant’s expense”.

I hold some reits like BBOX, SGRO, SREI - should I be concerned?

Pimlico on Thames

Tue 10:56am

Did you mean Volution (LON:FAN) ?

Trident

Tue 11:13am

Since I m not in the market for buying property I have been blithely unaware of the level of property stamp duty, and was astonished to see that stamp duty on a £2m home would be around £153K. Now there will be some who say the 'rich' can afford it, but the fact is this looks like a tax that only the very rich would likely want to afford, so can well imagine a logjam at the top end where older folk who want to move into small homes or need to because of health issues, can't find willing buyers.

This is on top of any interest rate changes makes for a poor state of affairs in exchange chains trading in the South particularly I would have thought?

Tue 11:19am

A bit of further digging, it seems to be partly related to the wording of individual leases. No doubt the wording may have varied over time and even by which law firm drew them up so I can imagine it might be quite a big exercise to discover where any organisation fits with it all. It certainly appears to be standard industry practice as far as I can tell as landlords cover the costs of determining and negotiating complex insurance policies.

I read for example that a block of flats is quite complex and expensive to insure because every flat contains a kitchen which of course is a major fire risk. I can imagine that commercial landlords and tenants are a bit more eyes wide open but who knows? It’s not something I knew about when I signed leases for my business.

Happy to stand corrected on any of this, I’m not a lawyer but like many, I have built an extensive pocket of REITs in all our family portfolios while discounts have been high over the past few years and the income is an attractive part of my pension income.

Boon

Tue 11:41am

Also while the Outlook reads as though H2 can still be delivered in Facilities by ADF (LON:ADF it is looking like some pipeline will be lost anyways. The limbo the US film industry is in with Trump proposed tariffs on production, will mean many will already be rejigging some productions to move from UK to USA, if the cost differential isn't huge.

Or further postponing the start of shooting, out of the FY.

I'm treating it as though a profit downgrade is all but certain when we get to months 9,10 of the FY.

Tue 12:08pm

If the bill gets through intact then this clause could be swinging around like the Sword of Damocles for the rest of our investing lives!
Who then is likely to want to put their capital at risk when Uncle Sam can tax you willynilly?

yadi

Tue 12:27pm

Mello meeting

I am at the Mello break , lots to absorb but couldn’t resist the temptation to check what’s happening on this site!

Mello is great this year and I am sure you get some feedback.

Archer

Tue 1:00pm

Yes I did mean Volution (LON:FAN) sorry.

Silver Moon

Tue 2:41pm

While the cats are away at Mello the mice will play, they could be looking at Mid-Cap Greatland Gold (LON:GGP) which has raised a Retail Offer. There's a lot going on at this company, I hold but the Offer is open to all PIs. There's no discount to be taken advantage of, I'm looking out ahead, a year of more for a good result.

JSchoffer

Tue 2:42pm

Anybody else get an ominous feeling about the recent strength from Ramsdens Holdings (LON:RFX) going into earnings release tomorrow? Feels like no matter what the report states there will be profit taking and sellers

laurie

Tue 2:52pm

It is worse...

Section 899

also called 'Revenge Taxes' or 'One Big Beautiful Bill'

...it is complicated, as clear as a brick wall and subject to change...

Here is the bill: https://www.congress.gov/bill/...; I used Ctrl F and searched for the number 899 to find the relevant bits.

Section 899 would increase the federal income tax rate on passive US income — such as dividends, interest and royalties — earned by people and institutions that are based in the targeted countries. The first increase would be five percentage points, rising by another five points each year to a maximum of 20 points above the statutory rate. -https://www.msn.com/en-ie/mone...

N.B. The UK is a targeted country due to our digital taxes, so it is a problem for everyone in the UK. The statutory rate of tax on US passive income is currently 30%. The UK-US tax treaty brings this down to 15% except on pensions where the tax rate is 0%.

I am working my way through the wording of the document, and I can't say that I have understood it yet, but it appears that this bill supersedes the treaty, so we will start paying the 30% statutory rate plus the initial 5% starting additional rate on dividends & bond coupons. This rises until we are paying 50% tax.

It appears to be relevant to non-US companies with US subsidiaries, too.

I assume there will be some backtracking when our capital leaves the US. Mine has left already, but I have had limited exposure for some months. For this to become another TACO trade, the market will need to say 'no'.

Here is some reading:

https://www.taxjournal.com/articles/section-899-

https://globaltaxnews.ey.com/news/2025-1085-united-states-new-irc-section-899-would-increase-tax-rates-and-expand-beat-for-certain-inbound-taxpayers [Ernst & Young]

Michael_P

Tue 3:25pm

That could happen, it is hard to know ahead of results. The strength today might indicate whispers of positive results are driving the price up and it may go up further on the results. Remember, recent strength isn't confined to this stock. Large swathes of the UK market (and many overseas markets) have been doing very well recently (see Edmund's article for some commentary on this).

Tue 5:46pm

Thanks Laurie I'm sure most of us on here will be keen to hear your further findings.

john2

Tue 6:10pm

I do invest a proportion of my money in the US, but the majority of the shares that I invest in are non-dividend paying. So from a selfish point of view, this measure will have very little effect on me. Microsoft (NSQ:MSFT) , the largest US company in my portfolio, currently yields 0.68%.

In 2024 the S&P500 yielded around 1.3%, while the FTSE 100 is currently yielding 3.38%. So a characteristically nasty proposal from Trump, but not one which I think will have an enormous effect on UK investors.

Tue 6:32pm

Agreed John but the counter is the UK is the second largest holder of US Treasuries.

Tue 7:14pm

OK I didn't think about treasuries. Personally I only invest in shares, so I do take your point.

Daily Stock Market Report (Tue 3 June 2025) - ADF, GLE, GHH, CHG, KIE, BATS

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Roland Head

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