Daily Stock Market Report (Wed 27th May 2026) - ZTF, BPM, CHRT, BOWL, HDD, PETS, HICL, SMT

I wrote last week about Chinese, Indian and Korean vessels making it through the Strait of Hormuz.

Yesterday, two more supertankers made it through the Strait: one from Singapore and one from Greece. A few Iranian oil tankers also passed through without incident.

According to Bloomberg, tankers are travelling together in small groups - safety in numbers, I guess. They are crossing through a diplomatic grey area, without a US escort but likely having some sort of agreement with Iran.

It’s possible that other vessels have also made it through, but have not been detected due to signal interference.

I find this one of the most intriguing elements of the conflict: commercial vessels floating through waters where jet and drone attacks are also occasionally taking place, and (allegedly) where mines are being placed!

The best-case scenario is that a deal is announced in the next few days. I’ve trained myself to be an optimist - it feels necessary as an equity investor - so I’m going to hope this happens very soon, that commodity prices go back to normal, and our focus can then move on to something else. Negotiations between the Trump administration and Tehran continue.

Overnight market movements:

• The FTSE is set to open down 0.1% at 10,490

• S&P 500 is unchanged at 7,525

• Brent crude (July delivery) is down 2% at $97.90

• Gold is unchanged at $4,530

• Bitcoin is down 0.5% at $75,700

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Finished for the afternoon, thank you. Spreadsheet accompanying this report: link.

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Companies Reporting

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Graham's Section

B.P. Marsh & Partners (LON:BPM)

Up 2% at 688.55p (£248m) - Final Results for the Year to 31 January 2026 - Graham - GREEN =

(At the time of writing, Graham has a long position in BPM.)

I’ve been consistently positive on this insurance investor, and I don’t think today’s results are going to change my stance. So let’s review it quickly.

Key points:

• NAV increases 10% to £360m

• Total shareholder return (including £8m of dividends) of 12.8%

• NAV per share 1,009.9p, or 959.8p fully diluted.

• The equity portfolio generated a return of 21.4%

Following £8m of dividends paid in FY January 2026, BPM is planning to pay £13m in FY January 2027 and £7m in FY January 2028. This follows some very successful investments and disposals, which gave rise to an unnecessarily large cash balance. The cash balance is currently £29.6m.

Board changes: Founder and Life President Brian Marsh OBE stepped down from the Board yesterday, after 25 years as Executive Chairman and then a brief period as non-Executive Chairman.

On the topic of Brian Marsh, it has been rumoured that COO Alice Foulk is his daughter. I contacted the company’s PR representatives back in March about this and they informed me that Brian and Alice are not related. So the accusations of “nepotism” don’t seem to have any factual foundation.

He is still the largest shareholder, owning 39% of the business:

When I founded B.P. Marsh my belief was simple: that patient, partnership-led investment alongside talented entrepreneurial management teams could create exceptional long-term value. More than three decades on, with Net Asset Value having grown to £360.2m and a portfolio spanning international insurance and financial services markets, I believe that philosophy continues to be valid…

What gives me greatest pride, however, is not simply the financial performance, but the culture and reputation that the business has built over many years, one based on integrity, long-term thinking and genuine partnership.

The company has a new non-Executive Chair, Rebecca Shelley, with a background primarily in corporate communications (e.g. Group Communications Director at Tesco and Prudential).

CEO Dan Topping summarises the year in review:

The year was characterised by disciplined capital allocation and the continued expansion of the Group's international specialty finance and insurance distribution portfolio. B.P. Marsh increased exposure to several of its strongest-performing investments, including Pantheon, XPT and ATC, whilst also deploying capital into a new generation of high-growth insurance intermediaries, underwriting agencies and complementary financial services businesses.

And discussing how the business is handling a weaker insurance market:

Whilst commercial insurance pricing softened across certain markets during the year, the Board believes the Group's portfolio remains comparatively well insulated from broader market cycles. A significant proportion of the Group's investments are early-stage or recently established businesses focused predominantly on generating new business opportunities, rather than relying heavily on the renewal of historically priced insurance portfolios. As a result, many portfolio companies are driven more by entrepreneurial growth, talent acquisition, product development and market share expansion than by prevailing premium rate conditions alone.

Graham’s view

I’m very glad to be a shareholder here again, but there are a few details worth ironing out.

Firstly, the NAV per share as of year-end is before a 22.3p dividend that was paid in March. So I reduce the current NAV per share to 937.5p.

This gives a discount to NAV today of 26% according to my calculations.

I’d also like to reiterate that the diversification of the portfolio is limited, due to some large positions:

The company has even continued to increase its stake in Pantheon in the new financial year, as noted here.

To help quantify the concentration, I’ve calculated the Herfindahl-Hirschman Index for the portfolio. I get an HHI of 1300 which is actually better than I expected.

The effective number of holdings is given by dividing HHI into 10,000. In this case, I get 7.5 holdings - so the level of concentration is equivalent to holding 7 or 8 different positions. Just something to be aware of, in case you are treating this like some sort of mutual fund - it’s more concentrated than that.

Personally, I’m not worried by this level of concentration. My own portfolio is far more concentrated, and BPM is just a small slice of that. I would even be open to owning more BPM at the current valuation. But before closing, I should mention a few more of the risks:

1. Brian Marsh’s holding - what might he plan to do with it?

2. The next generation of managers - they are all very highly experienced and trustworthy, but they also have very big shoes to fill. Very similar to the Warren Buffett question (disclosure: I’m long BRK.A).

3. Similar to Judges Scientific (LON:JDG), they may find it challenging to source good deals that move the needle and that they understand, now that they have a larger pool of capital to invest.

As I said, I am comfortable with all of these risks and would be happy to own more BPM. But I’m open to any counter-arguments!

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Cohort (LON:CHRT)

Up 8% at £13.34 (£627m) - Full Year Trading Update - Graham - AMBER/GREEN ↑

Great news here - revenue and adjusted operating profit are ahead of expectations.

FY April 2026:

• Revenue £303m (consensus expectations: £293.9m)

• Adjusted operating profit of c. £36m (expectations: £34.7m)

• Order intake £313m which the company points out is ahead of revenues

• The closing order book therefore grows to a new record c. £620m, although only 1% higher than last year’s £615m order book.

Cohort has therefore beaten revenue expectations by 3% and operating profit expectations by almost 4%.

Visibility is excellent:

The order book underpins c.£253m of current market revenue expectations for the new financial year (30 April 2025: £230m) or c.80% cover.

This is the same percentage of cover that the company enjoyed at the time of last year’s trading update, also near the end of May.

Cash: net funds ended that year at around £3m, much improved from the £32.5m of net debt at H1. They expected net funds to be even stronger, but some expected receipts slipped into Q1 of the new financial year.

CEO Comment:

"I'm particularly pleased with the strong maiden full year contribution from EM Solutions. The business has made good progress in capturing opportunities for growth and collaboration with other Cohort subsidiaries.

"Our strong balance sheet and liquidity provides a robust platform from which to continue to invest in the business while considering further targeted acquisitions.

"The high level of order cover provides confidence in a strong 2026/27 financial year."

Graham’s view

We’ve been a little cautious on this one, worried about the H2 weighting it needed to hit full-year forecasts and the high valuation.

We were wrong on the first count, although I think there is still an argument to be made that the valuation here is punchy. The ValueRank is only 19, and Stockopedia categorises it as a Falling Star.

But when the facts change we should change our minds, and it turns out that there was nothing to fear about the H2 weighting - the company has more than fully delivered on what was expected in H2.

Defence has been a great sector in which to invest, given the unfortunate geopolitical trends of recent years. Cohort provides a wide variety of surveillance, communications, sonar and underwater systems. With the company continuously enjoying robust demand, and demonstrating sturdy earnings forecasts, I’ll nudge us up to AMBER/GREEN today.

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Hardide (LON:HDD)

Up 16% at 59.2p (£47m) - Significant further order intake North America - Graham - GREEN ↑

Hardide provides “advanced coatings that solve performance challenges in abrasion, erosion and corrosion resistance”.

The share price is up by nearly 70% since I looked at only last month. The 1-year chart is quite amazing:

Interim results for the company posted a week ago showed revenues up 71% (to £4.8m) and operating profit jumping to £1.3m (from breakeven).

Today’s update is as follows:

Hardide plc (AIM: HDD), the provider of advanced surface coating technology, is pleased to announce that it has received orders from its large North American energy sector customer to cover the remainder of that client's anticipated requirements for the course of financial year ending 30 September 2026... The value of the contract is £2.4m and is greater than the Board's previous expectations for this current financial year. This will have the effect of materially improving revenue and overall financial performance expectations for FY26.

The company also says that “Operational improvements delivered in recent months have enabled Hardide to deliver its existing order book at a faster rate than previously anticipated.”

CEO comment:

We expect these orders to continue into the next financial years and, as we work more closely with the customer, are developing a mutually beneficial schedule for orders and deliveries which will underpin FY27.

Estimates: Cavendish have increased their FY September 2026 forecasts as follows.

• FY26 revenue forecast increased by 8% from £12.4m to £13.4m

• FY26 adjusted PBT increased by 17% from £2.9m to £3.4m

The net cash estimate also gets a boost, from £3m to £3.3m.

The new EPS forecast is 4p, so the shares are trading on 15x earnings at the current share price, already reaching close to Cavendish’s target price of 60p in this morning’s session.

There aren’t yet any forecasts for FY September 2027. Cavendish say: “We expect further trading momentum will drive earnings and anticipate FY27E will show a robust advance.”

Graham’s view

I’m going to respect the momentum here and turn fully GREEN for now.

Long-term, I don’t know if this is a quality business. It has been listed for over 20 years and for most of this time has been loss-making and not very impressive.

Suspecting that its fortunes may ride on demand from a small number of customers, I've checked last year's annual report. The Risks section of the report confirms that the company’s top six customers accounted for c. 70% of total sales last year. The report also notes that revenue growth in FY25 was “driven particularly by two large new customers” (from the US and the Middle East respectively).

Therefore, we can say confidently that the company's success is driven by a very small number of customers. Which makes this a rather double-edged situation.

That said, I won’t argue against the momentum this share is currently enjoying. Recent results have genuinely been excellent and if they hit the latest Cavendish forecasts, they are on track to achieve spectacular ROE and ROCE this year of c. 47%.

Last year’s result was already excellent, according to Stockopedia:

So to my eyes, this share is offering a little bit of everything: quality, growth and momentum. And I don’t think that the value on offer is all that bad against the latest, upgraded FY26 forecasts, with FY27 having the clear potential to be even stronger than the current year. Customer concentration is probably the main source of risk. 

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Roland's Section

Zotefoams (LON:ZTF)

Up 7% at 426p (£211m) - Trading Update - Roland - AMBER/GREEN =

Today’s trading update from high-performance foam specialist Zotefoams covers the four months to 30 April 2026. It’s short but mostly positive.

Key points:

Group revenue rose by 26% year-to-date to £64.1m, or by +7.1% on an organic basis.

This result reflects a flat organic performance in the group’s largest region, aided by growth in smaller markets and a contribution from a recent acquisition:

• EMEA: revenue +24% to £50.1m, although this was boosted by a £9.8m contribution from Spanish firm OKC, which was acquired in November. Excluding this, EMEA revenue was flat at £40.3m (FY25: £40.4m). Management says this reflects lower footwear revenue, but continued growth in Transport & Smart Technologies.

• North America: revenue up 30% organically to £12.1m. Reflects increased manufacturing capacity from “our second low-pressure vessel” and good demand in Consumer & Lifestyle and Transport & Smart Technologies.

• Asia: revenue of £1.9m (FY24: £1.0m), showing “good growth”. Continuing to invest in new facilities in Vietnam and South Korea which are expected to be operational “towards the end of the year”.

As a reminder, Zotefoams now reports revenue according to the markets in which the group generates revenue, rather than by product type. The downside of this approach, in my view, is that it obscures the performance of the company’s various product verticals and makes it difficult for us to gauge revenue growth or margins in different areas, beyond what the company chooses to disclose.

Financial performance for the period is said to have been in line with expectations, reflecting operational improvements and cost savings.

The integration of OKC (Overseas Konstellation Company) is also progressing to plan. Zotefoams paid up to €36m for OKC last year, which represented a 7.4x multiple of EBITDA. It’s said to be a leading specialist foam producer in Europe, with particular expertise in applications for “protective components, acoustic insulation and specialty packaging”.

In other words, OKC is mainly additive to the Transport & Smart Technologies side of the business, which should aid further diversification.

2026 Outlook - there is no change to guidance today:

The Board is encouraged by the solid start to 2026 and its full-year expectations remain unchanged. Whilst mindful of elevated uncertainty in the macroeconomic backdrop, we continue to expect demand in key target markets, together with the contribution from OKC, to more than offset the moderation in Footwear.

Roland’s view

I have been encouraged by the changes made by CEO Ronan Fox, who has curtailed speculative investment and focused on growth opportunities in the group’s core lines of business. This has led to several earnings upgrades over the last 12 months:

The result of these changes – so far – has been an improvement in quality metrics and and respectable revenue growth:

The Normalised EPS figure on the StockReport suggests Zotefoams’ adjusted earnings are expected to fall this year, but that’s not actually the case.

Last year’s results and forecasts from house broker Singer Capital in March show that the following progression is expected:

• FY25 actual adj EPS: 38.0p

• FY26E adj EPS: 40.8p (+7.4% vs prior year)

• FY27E adj EPS: 43.5p (+6.6% vs prior year)

• FY28E adj EPS: 47.3p (+8.7% vs prior year)

In other words, earnings are expected to continue growing at c.7% per year over the next few years.

One catalyst for this is expected to be the company’s new manufacturing and design facilities in Asia, which should come on stream later this year. Strong growth in markets such as aerospace and space is also helping to drive growth.

The expansion of the Transport & Smart Technologies business should also provide a second benefit for shareholders by reducing Zotefoams’ dependency on core customer Nike (NYQ:NKE), which I believe may have generated around half the group’s revenue in 2025.

If Zotefoams can continue to deliver on current forecasts then the shares might be too cheap at current levels.

However, by way of caveat I would note that the StockRank has fallen steadily since March, from 93 to 76:

There is clearly still some risk of macro disruption and perhaps more importantly, of further weakness in Footwear.

I’m fairly sure Zotefoams’ fortunes remain quite closely-linked to demand from Nike, whose earnings forecasts were recently downgraded (again):

I would speculate that one reason for the change in Zotefoams’ reporting might be to make it harder for shareholders to gauge the group’s exposure to Nike, which wasn’t disclosed last year (previously, it had been).

For this reason as much as anything else, I am going to resist the temptation to upgrade to be fully positive today and retain my previous AMBER/GREEN view.

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Hollywood Bowl (LON:BOWL)

Up 14.5% at 298p (£500m) - Half-Year Results - Roland - AMBER/GREEN =

Today’s half-year results have received a warm welcome from investors, despite the company’s unchanged full-year guidance.

Given that FY26 forecasts are for broadly flat earnings, today’s double-digit share price gain suggests to me that investors may have expected bad news. Indeed, BOWL shares remain below the 300p level last seen a year ago:

The main risk here seems to be that profitability has been under pressure from inflation and stagnant consumer spending – my reading of today’s results suggest activity levels may have fallen slightly in the company’s venues.

Operating margins have fallen steadily over the last few years:

Let’s see whether today’s results show any change to this trend.

Half-year results summary

Today’s headline figures look strong at first glance:

• Revenue up 9.5% to £141.5m

• Adjusted pre-tax profit up 8.1% to £32.1m

• Adjusted earnings up 11.3% to 14.51p per share

• Interim dividend up 10.2% to 4.52p

• Net cash up 14.3% to £26m

However, I think there are a few niggles to consider:

• Like-for-like revenue growth 2.3%

• UK LFL +2.6%

• Canada LFL +0.5%

• Reported pre-tax profit down 3.9% to £27.2m

Revenue growth: fewer games?

The contrasting performance metrics provided today make it clear that customers played fewer games at Hollywood Bowl venues during the first half of this year.

UK:

• LFL revenue +2.6%

• Average Spend per Game +7.6% to £12.77

Canada:

• LFL revenue +0.5%

• Average Spend per Game +9.7% to CA$19.10

Hollywood Bowl says LFL performance in Canada was affected by snowstorms that caused some centres to close for several days. But there are no such excuses for the UK business, where the company admits to “a modest reduction in game volumes”.

Management says that the impact of lower volumes was offset by “modest inflationary price increases” and continued progress using dynamic pricing to maximise yields at peak times. There was also improved uptake of add-ons such as VIP lanes and “a strong amusements mix”.

I would suggest this model of charging more for fewer games can work for a while, but probably not indefinitely given the current pressure on disposable income from higher energy costs.

Hollywood Bowl’s performance over the next 6-12 months may depend on whether other pressures on consumer spending ease.

Soaring costs eat margins

The company itself also has exposure to rising costs. While management is keen to emphasise that UK staffing costs remain under 20% of revenue, this ratio is 26% in Canada and these costs are still rising fast.

Total centre staff costs rose by 18.5% during the half year, while administrative expenses and corporate costs rose by 12.2% and 18.6% respectively.

The end result was that the group’s H1 operating margin fell to 24.0% (H1 25: 27.0%). There’s a seasonal H1 weighting to profits here, so my assumption is that H2 margins will be lower, reducing the group average for the year.

New centres - diminishing returns?

With group LFL revenue growth of just 2.3% in H1, we can deduce that total revenue growth of 9.5% was driven by new openings. The company confirms this:

• UK: rebuilt Liverpool centre and new Reading centre opened, with two more openings planned for H2 and four for FY27 and FY28. A further 20 potential locations have been identified and the company is targeting 95 UK centres by 2035.

• Canada: 1 new centre opened in H1 with a further planned for H2 and five planned in FY27. Now targeting 35 centres by 2032, bringing forward this target from 2035 previously.

I see Hollywood Bowl as a strong operator with a leading brand in the sector. But it’s a competitive business and I am not certain how strong the group’s competitive advantage might be against some other large chains.

Today’s results include a reminder of this: the company has reported a £2.8m impairment on a UK centre opened less than three years ago - this is the main reason for the fall in reported profits today:

It was the second to open in its local market and faces intense competition. While the centre is still cash generative on a CGU basis, it is not performing at the level we had originally anticipated.

Today’s impairment includes a £0.8m charge to the right-of-use assets (lease) for this centre, presumably suggesting that it is no longer expected to generate enough cash to justify its original lease cost.

This underperforming centre may be the exception to the rule. Hollywood Bowl may well be able to continue expanding profitably for many more years yet.

However, many consumer rollout models eventually reach a point where new locations offer diminishing returns. This is often because the market has become saturated or because the company has started to pay too much for new locations.

I think it’s worth noting today’s impairment and watching for any further such events.

Outlook

Broker Cavendish notes that today’s results cover 58% of its full-year EBITDA estimate, highlighting the H1 weighting I mentioned earlier.

Cavendish forecasts are unchanged today, reflecting the company’s in-line guidance:

The Group remains confident in delivering on expectations for FY26

The StockReport shows us that consensus figures drifted lower lower year and were downgraded in January, but have remained stable since then:

However, this morning’s share price rise (+15% at the time of writing) means that the P/E multiples shown in the StockReport this morning are now stale.

Based on FY26 adjusted EPS estimates of 23p (FY25: 23.6p), Hollywood Bowl is now trading on a forward P/E of 13.

Roland’s view

The group’s improved half-year net cash position and strong quality metrics are a reminder that this business does have some attractive characteristics:

However, pressure on consumer spending means the group’s earnings are currently expected to be flat, at best, this year despite the contribution from new centres.

Today’s impairment charge on a recently-opened centre is also an example of how expansion could put pressure on profits if the group ends up locked into leases on centres performing below original expectations.

The company’s current financial year ends on 30 September and profits are expected to return to growth in FY27. I think that much may depend on whether pressure on consumer spending eases. That’s linked, at least partly, to the situation in the Middle East – Ofgem has announced this morning that the standard domestic energy price cap will rise by 13% from July.

I’m going to give Hollywood Bowl the benefit of the doubt today and leave our AMBER/GREEN view unchanged. But I think the valuation is close to the point at which I’d mirror the StockRanks and switch to neutral in the current environment.