Daily Stock Market Report (Wed 4 June 2025) - SNX, SFOR, RFX, BME, SMWH, DSCV, PAG, N91

Wed 5:59am by Roland Head

55 comments 5392 reads

Good morning!

It looks like a relatively quiet day for news, but Megan has been speaking with the CEO of Ramsdens Holdings (LON:RFX) and has now posted a review of her thoughts on today's interim results below.

Update 14.00: today's report is now complete. Thanks for all your comments, see you tomorrow!

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
B&M European Value Retail SA (LON:BME) (£3.3bn)	Full year results	Rev +4% at constant currencies thanks to 70 new stores. B&M UK business below expectations owing to market headwinds. FY26 outlook: impact of additional costs is said to be reflected in current consensus forecasts - in line?	AMBER (Roland) Today’s results highlight negative LFL sales in the UK business and debt levels slightly higher than I’d like to see. But the group’s 10% operating margin and strong cash flow suggest to me that there’s nothing here that the incoming CEO shouldn’t be able to fix. With B&M now trading on nine times forecast earnings and offering a possible 4.8% yield, I’m starting to think this is worth considering as a contrarian play.
Paragon Banking (LON:PAG) (£1.8bn)	Half year results	Net interest margin 3.13% ahead of previous expectations. Underlying profits +2.1% to £149m. Motor finance provision of £6.5m. Return on tangible equity of 17.8%.	AMBER/GREEN (Roland) [no section below] Today’s results from this buy-to-let mortgage specialist showcase robust profitability and suggest the bank expects a minimal impact from its modest exposure to motor finance. A slight increase in bad debt levels is a reminder of the risk of the company’s property exposure, but does not seem a serious concern. At c.1.3x book value, the shares aren’t as cheap as they were. However, strong profitability suggests to me that the value remains fair. On balance I can see plenty to like here. I’m comfortable taking a moderately positive view on this initial review.
WH Smith (LON:SMWH) (£1.3bn)	Trading update	Lfl sales +5% in the remaining travel business in line with expectations. Growth in North America remains slow (+2%). Sales of high street business due to complete by the end of June.	AMBER (Megan) There’s dubious management waffle, and then there is this from WH Smith: “forensic approach to space management”. Presumably that refers to stocking the shelves, but that doesn’t distract me from the slightly disappointing…

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Aislabie

Wed 11:24am

Re ITM Power (LON:ITM) Stocko has a 2026 forecast at of £56mm for revenue which follows the numbers in the Zeus (house broker) report from early May when they had a price target of 70p! There is also a 2027 forecast of £76mm but with the contract volatility it is very hard to put much credence behind what appears to be a simple projection of current activity. Note also that nobody is forecasting profits in the next couple of years. I have taken out some profits as this looks a bit frothy in the short term.

LindenP

Wed 11:31am

Thank you, Roland, and to Megan for her (now published above) detailed review of the WH Smith (LON:SMWH) situation. Very helpful to have the insight around the debt position — a valid concern.
By the way, while I agree there's some typical business jargon in the update, I actually found the phrase, “forensic approach to space management” quite striking. Given the premium cost of floor space at airports and stations — and the hurried passenger flow — it suggested to me they’re really focusing on operational detail in the travel segment now that the high street side is no longer a distraction.

rmillaree

Wed 11:40am

ITM Power (LON:ITM)

i did do my own sketchy chat gpt stab in the dark that seemed to think if ITM is the sole supplier of electrolysis modules then 300+ WM may be a couple of hundrenb million dollars worth of sales ona good day. I dont know if that chat gpt number has any basis in reality - but it has certainly piqued my interest a bit. Not sure how long it may take them to deliver such a contra - so it could be over several years if it does go ahead. But ramp up from 10MW to 120 MW to 300 MW - kinds shows that the numbers are trending nicely. Hopefully its not just all hot air like their products :).

Mutandis13

Wed 12:10pm

In analysing the net debt position of WH Smith (LON:SMWH), at first glance it does seem high (240% gearing at their YE and 305% at the interim stage), it is worth breaking down the make-up of the net debt position. for example, at their YE:

Lease liabilities represented the majority at £626m, with an average life of 4 years; the repayment of this will be covered in arriving at the earnings of the business through depreciation and interest over the next 4 years (for example over £180m lease payments were covered in FY24 in arriving at earnings).

£371m is a convertible bond (convertible at £24.99 on 7 May 2026), if conversion does not take place, then it must be repaid, this is currently covered by a revolving credit facility that expires 3 years after the conversion date. If necessary, this could be paid down over approximately 3 years after May 26 from free cash flow(FCF) after paying dividends (FCF in FY24 was £144m and dividend payments £41m).

The balance of the net debt is £61m.

In addition, there is the £75m of cash refund from the pension buy-out (£50m of this is earmarked for share buybacks) and another £12m held in an investment fund for 2 years. An argument could be made to use this refund to reduce the net debt by holding cash equivalent to one year's lease payments, something that Greggs (LON:GRG) does and, with Smith's plans of expanding their real estate of travel shops, this might be a more conservative approach.

Silver Moon

Wed 1:04pm

Hi Jonno, I'd like to know what is the mean that gold will revert to, cheers!

Bouden54

Wed 1:24pm

I think AJ Bell are quite a bit lower than that, although haven't checked recently so might be wrong. Hopefully it will force the other providers to be more competitive.

Pimlico on Thames

Wed 2:35pm

Blackstone announce agreed final bid for Warehouse Reit (LON:WHR)

"following the announcement made on 30 May 2025, they have agreed the terms of a recommended cash acquisition"

Terms "for each Scheme Share: 109.0 pence in cash (the "Final Offer Price")

which, together with the third interim dividend of 1.6 pence per Scheme Share declared on 19 February 2025 and paid on 11 April 2025 (the "Interim Dividend"), results in a total cash consideration paid to the Scheme Shareholders (who received the Interim Dividend) of 110.6 pence"

Given the initial bid was launched 3 March and this is the "final" of several bids, it seems parsimonious that they needed to refer to the dividend announced before the share was in play and which has already been paid.

Wed 4:47pm

Hi Mutandis13, as someone with a very limited understanding of debt management at the moment, can you explain for me... are you saying you think it is worrying, or that it's not a major worry for you? Thanks.

Camtab

Wed 4:54pm

One of the most remarkable trading days in a stock I have seen Aislabie. This morning I looked and they were up 22%, by the close down 13% with 38m shares traded. Wow what a rollercoaster. I don't say it with any glee as I believe they will in due course go much higher and I don't enjoy others losing money. Be interesting to see whichof the Instis bailed.

djlcollinge

Wed 4:55pm

Great results by Ramsdens Holdings (LON:RFX) . Decent company who passed several dividend growth (Roland Head) and multibagger screens (mark Simpson). I'd be thinking about price value but the metrics suggest the firm could be a multibagger. They are more than the price of gold

Richard Leishman

Wed 5:05pm

Pretty sure IG only pays interest on up to £100k cash across all IG accounts.

ken mitchell

Wed 5:10pm

I sold B&M European Value Retail SA (LON:BME) on my sell on iffy news rule the first time they issued a disappointing update, Though the share price has halved since I’m not tempted to buy again, based only on anecdotal evidence.

The first is that their stores seem to be much emptier these days sometimes with just one till open and no queues instead of the queues at several tills open. This has been the case in several stores. . The other bit is are they expanding too rapidly? They seem to be opening a lot of new stores and where I live with the 2 stores too near each other and so attracting the same customers.

Roland Head

Thu 5:50am

Hi Ken,

I agree that one risk with B&M European Value Retail SA (LON:BME) is the store opening plans - I am not sure how many more the market will bear.

However, other large retailers (e.g. the supermarkets) have got this right and I'm hopeful that the new CEO will take a hard look at store opening targets if needed.

Slowing store openings would also aid deleveraging.

Roland

Thu 8:26am

Hi LindenP, personally I'm not too concerned about the debt level. WH Smith (LON:SMWH) within their results announcement helpfully show the split of their net debt between conventional debt (loans, overdrafts, bonds etc.) and "debt like" leases (pre 2019 leases were not included in debt). Of their £1,055m of net debt, £601m were leases., of which £120m was payable within the next 12 months (i.e. a current liability), a similar amount to that at the previous year-end and the 2024 half-year.

Retailers typically have a good portion of their net debt as leases, with Smith in expansion mode this will likely increase. Worth keeping an eye on though that they do not over-commit.

Hope that helps, rather than confuses!

Thu 9:23pm

Thank you Mutandis13. In my ignorance I'm wondering if the lease liabilities you mention are all for the travel business or if some are for the the high street and will become the debt of the new owners when the transfer takes place?

11:03am

LindenP, that is a very good point and will take some of the lease debt off the balance sheet. It is worth bearing in mind though that the average lease length for WH Smith (LON:SMWH) is 4 years for the Group, but the average lease length for just the High St. division is just 2 years, so it is likely to be a smaller proportion. They do not split the lease liability by division in their accounts.

Just one further point on lease liabilities, where a lease includes a payment based on revenue, most of the travel leases do, then this variable lease payment is not included in the liability. Over a third of WH Smith (LON:SMWH) lease costs in 2014 were related to revenue performance.

12:58pm

Thanks again Mutandis13. I guess we'll have to wait and see what the figures look like for the travel after the official transfer which I believe is imminent but I can't recall the exact date off-hand.

intuitive6191

1:04pm

B&M was one of the shares I was looking out for this week. I thought that the figures were slightly better than expected but was not surprised by the poor share price reaction.

I would say that from my experience, the stores are less busy and the prices not as competitive as when the company first came to the high street. It also seems that there are now less staff and the store fronts are looking a bit tired. I would guess that some form of cost cutting is underway.

Rather more concerning is that the store interiors and presentation of the merchandise seems very static. Narrow aisles and tall shelving are made more cramped by the very old product aisle baskets. I never see anyone buying out these baskets and wonder why they are still used.

The world moves on and B&M seems stuck in retailing space. The weaker budget opposition below B&M is slowly been culled and the competitors above them- Aldi and Lidl with middle aisle promotions and the likes of Home Bargains seem to have more retailing flair and a more aggressive business strategy.

One dynamic in the retailing world that may change is the use of planning objections to block rivals stores when they are proposed near the rivals existing sites. As part of a the planning overhaul, this might be changed and help certain retailers more than others. Aldi have cried foul here and will probably benefit, but it could be that B&M could also benefit

I dont hold, but would suggest to holders to ask how many B&M proposed sites are being blocked by rivals planning objections. This might give an indication how the quickly older stores are replaced with more appealing stores.

1:28pm

intuitive6191 - some interesting thoughts on B&M European Value Retail SA (LON:BME) , thank you for sharing. I wasn't aware of the planning considerations you mention but can see that this could impact the discounters' store rollout plans.

Anecdotally, I would also say that my local B&M feels a little more tired and scruffy than I remember a few years ago.

However, I would say that freshening up the offer and store presentation would not necessarily need massive changes. In my view, it's the kind of thing that an experienced and fresh CEO would quickly get to grips with.

The incoming CEO seems to have a decent CV with senior experience at many supermarket/discount retailers. Hopefully he will pick up where former owner-CEO Simon Arora left off, after a rather disappointing period under Alex Russo.

Rusty2

2:44pm

I think the Range are eating B&M European Value Retail SA (LON:BME) pie. Better presented stores, don't look like DIY sheds, better stock and more competitive prices. I agree too many stores close together in small towns.

I rarely buy anything in B&M European Value Retail SA (LON:BME) anymore.

No stock is listed online, so you don't know if it is in stock, also no click and collect.

Dunelm (LON:DNLM) are also competing on some products.

Daily Stock Market Report (Wed 4 June 2025) - SNX, SFOR, RFX, BME, SMWH, DSCV, PAG, N91

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Roland Head

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