Daily Stock Market Report (Wed 19 Feb 2025) - JET2, BKS, BA., CRE, TRCS, OMG, OHGR, KEYS

19th Feb by Graham Neary

57 comments 6872 reads

Good morning!

1.30pm: almost a clean sweep today, happy with that! See you next time.

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
HSBC Holdings (LON:HSBA) (£160.2bn)	Final Results	PBT $32.3bn includes one-off gains. Extends its “mid-teens” ROTE target from 2025 to 2027.
Glencore (LON:GLEN) (£43.0bn)	Preliminary Results	Adj EBIT -33% at $6.9bn, mainly due to lower coal prices. $0.10 per share divi, $1.0bn buyback.
BAE Systems (LON:BA.) (£40.2bn)	Final Results	Rev +14% to £28.3bn, adj EPS +10% to 68.5p. Order intake -10% but order b’log +11.5% at £77.8bn.	AMBER (Roland) Solid results from BAE and a useful 10% dividend increase. However, the valuation remains elevated by historic standards and I feel the shares are largely up with events, so I’m taking a neutral view.
Jet2 (LON:JET2) (£3.4bn)	TU	On prevailing trends, FY March 2025 PBT £560-570m. FY 2026: profit margins under pressure.	GREEN (Roland) Cost pressures are being felt in a number of areas, but Jet2 has a very strong balance sheet and is well run. Underlying growth is continuing. I think the shares remain reasonably valued.
Conduit Holdings (LON:CRE) (£719m)	Preliminary Results	GWP +24.8% to $1.16bn, ROE of 12.7% in “high catastrophe year”. Divi held. Exps for cont’d growth.	GREEN (Graham) I'm upgrading our stance as I'm very impressed by performance in 2024. The 2025 estimates incorporate high losses from the California wildfires but still suggest that ROE will be over 10%. In a better year, ROE will hopefully be back around 20%. And the shares are trading at a meaningful discount to their tangible net asset value.
Beeks Financial Cloud (LON:BKS) (£217m)	TU	H1 is in line, adj. PBT +31% to £1.8m. Confident that results for FY25 will be in line.	AMBER (Graham) Nasdaq and Mexican Stock Exchange deals should boost H2 revenue. Needed as only 40% of the full-year revenue forecast has been generated in H1. Valuation doesn’t make sense to me so I’m neutral.
Keystone Law (LON:KEYS) (£163m)	TU	FY25 rev & adj PBT to be “*slightly ahead” of market exps* due to Interest rates and new hires.	AMBER/GREEN (Graham) [no section below] I’m happy to leave Roland’s stance from Sep 2024 unchanged with KEYS on track to slightly beat expectations (revs £94m, adj. PBT £11.9m). There is “broad based client demand” and recruitment is “buoyant”. The share price has cooled…

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Rusty2

19th Feb

This new Tap system, will impact Trainline (LON:TRN), if people just tap their credit card, at the ticket barriers, then no need to use Trainline, if the fares are the same?

Graham Neary

Hi Michael, thank you for the kind wishes, I appreciate it!

The easiest way to access all of those articles is probably by following this link:

https://www.stockopedia.com/ed...

Scroll down a little and you should find all of the 12 stocks posted one after the other.

Best regards

Graham

Pimlico on Thames

Beeks Financial Cloud (LON:BKS) offering requires approval by the relevant exchange, giving it a significant moat, allowing higher margins and the ability to grow on a land and expand basis - as seen in Jo'berg. Happy holder

BnB

I use the “tap and go” system on the Manchester tram system and it’s super easy to use. Good point re Trainline, although I would still use that excellent app for long distance travel because of the advanced fare discount prices.

I use tap and go, on London Underground, it usually works ok, but the fares are fixed on that, unlike train fares. I never use Trainline (LON:TRN) l book direct, with my train company, same fares, no fees. E-ticket on my iPad, easy.

TheHitman

If you hover over "Discuss" on the left pane and click on "Screens & Ideas", you will find the articles very quickly.

This comment is under review

Anthony127

I agree Bouden 54. It is customary when Bloomberg announce CPI figures that they focus on the month to month change. In this case inflation has reduced by 0.1% which should give the BoE a little more confidence that inflation is being contained.

Annualising the figures is purely arithmetic and not in my view an indication of current performance.

April could be a key month, as Energy, Ultility and Council tax, will all have significant rises. Water rates up 20%, on average, gas and electric +5%, estimate, Council tax around 6%. These are large rises. Council tax is probably my largest bill.

rmillaree

Beeks Financial Cloud (LON:BKS)

I’ve never properly understood the investment thesis here. It seems to me that BKS is a data centre company that’s operating in an attractive niche (financial markets and exchanges). I can understand why it might deserve an above-average valuation, but at a market cap of £200m it’s trading at 5x forward sales (assuming it hits forecasts), 5x book value, and what seems to me eye-watering earnings multiples.

this company is expected to deliver 50% growth in sales and fourfold increase in profits (ok from low level) over 24 month period - thats pretty execptional growth imho.

If we presume their customers are likely to be sticky - its obvious they need to put high upfront effort into new customers (that would suggests profit profile ise delayed will beyond point at which its reasonably obvious profits will be made) - decent % of turnover is expected to drop through to profits in 2026. It doesnt surprise me that company has high p/e - particulary if they qare expected to do double digit sales growth 2027 out. The forward sales ration here has virtually nil relevance imo- if company has nearly 20% of sales dropping through to "net profit" price to sales ration should be exepcted to be much higher thahn your average company fair where turnover ios offten for vanity purposes. Book value also an irrelevance if company can reaosnbaly be valued on ssutainable p/e multiple

I dont own (slightly stingy am ) i might be worried about level future growth beyond 2026 - i might be slightly worried that clients could be pimping them ref upfront capital costs. However i do most certainly see the attraction here ref this share - i can easily see scenario where they have great sticky customers with ine xcess of 100% earnings as freecashflow and p/e of under 20 by 2028 - they probably only have to keep trend going ref sales even if growth rate moderates

So whilst its not for me present i can see why shareprice is what it is - heyho for companies like this sometimes the main financials make it less appealing than prospects might be - if you kinda ignore the chunky capital costs i would like to think that operational gearing here would be mosty excellent.

Perhaps the correct middle ground here is that this company is not yet mature and its probably only in 2-3 years where we know whether the possible quality metrics pan out as fanboys girls et al would hope. I would rather go long than short for sure here even though i am sitting on the fence. I wouldnt disagree that this could easily be 100p or 500p or 289p and ultimately the proof of the pudding will be how company delivers going forward.

Would i be top slicing if i held and had doubled or trebled my mony ? hmmmm i know not

I think April will definitely be a key month.

In addition to the items you mentioned the employers NIC will also increase and that may be the largest tax increase of all.

I think that the Governments actions are rather inflationary and it isn't enough to talk about growth you have to create the conditions to make it happen. The BoE has the difficult job of taking fiscal policy into account while trying to contain inflation.

intuitive6191

I am expecting a significant increase in inflation Autumn 2025 - partly because of the above considerations.

af20001

I've tried to find a contract value for the Tracsis (LON:TRCS) announcement, but there's not even anything on the government bid tender documents/website.

shopping365

Firering Strategic Minerals (LON:FRG)

timarr

Tracsis are building a fare management system, which is a complex thing to do. There are significant risks associated with the development, although they're obviously hoping they can use existing technology without major changes. That can't be guaranteed.

It looks like the development / build-out costs are being covered, not clear if there's a profit element in there. Future revenues will be transaction based and that will depend on how many operators take up the service (all of them eventually, I should imagine) and how many people use it (Tracsis estimate 170 million journeys under PAYG eventually).

There's no way of estimating the future value of the contract - especially as no timescales are given and there's no revenue model provided. A transaction fee based model can be either a percentage of the total fare charged or a flat fee. In either case it's likely to be a tiny fraction of the actual journey cost, but obviously those fees add up at volume.

In short:

We don't know how much or how long the service will take to develop
We don't know which operators will start using it and when
We don't know what fees Tracsis will be able to charge.

As and when this goes live it would almost certainly be transformational for Tracsis, but will such a level of uncertainty an investment here at the moment is a punt. Possibly a worthwhile one, given that the company was probably undervalued already.

doctor dave

Beeks Financial Cloud (LON:BKS) Nasdaq type share trading on a UK exchange. In the US this would be twice the value. I'm happy that the more big customers they acquire the more other big exchanges will consider them: so, a virtuous circle. I hold.

Beeks Financial Cloud (LON:BKS) but would if on the US markets? NVIDIA (NSQ:NVDA) who many consider vastly overpriced is not that expensive, PE or PEG. It is very small, hardly anything under $1bn in the US gets any coverage. I hold both.

WarrantStar

I don't know much about the recent situation with Tracsis (LON:TRCS. But I do appreciate your well written summary of the pros and cons of the current investment proposition.

20th Feb

Hi WS

It's lot easier to be dispassionate about a stock when you don't hold it! But I have worked on fare management systems, they are a nightmare, so this could take longer to see revenue than the company hopes for. We shall see, but I think buying at the open yesterday would have been an OK call regardless.

MIK

21st Feb

Great many thanks Graham

Best, Michael

Daily Stock Market Report (Wed 19 Feb 2025) - JET2, BKS, BA., CRE, TRCS, OMG, OHGR, KEYS

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Graham Neary

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