Daily Stock Market Report (Wed 4th March 2026) - Market Backdrop, SCE, GMS, VTY, SRT, CRN, MWE

Morning!

Market Backdrop

After a pretty tumultuous couple of days in response to the events in the Middle East, I am expecting some calmer waters today with the FTSE opening up 0.3% at around 10480. The moves in equity markets have been dominated by risk-off sentiment rather than necessarily companies with Middle Eastern exposure. For example, the spot oil price has responded understandably positively to the Straits of Hormuz being closed, as 20-30% of global oil supply typically passes through there. In response, companies heavily reliant on energy as a core input have sold off, but many oil producers haven’t really responded positively. That oil producers don't immediately soar may be logical; the market may be pricing a rapid resolution to the current war and a return to normal over a relatively short time. However, that makes the sell-off in oil consumers illogical. We can’t have both. Which leads me to conclude we have simply seen investors run for the hills.

Nowhere has this risk-off attitude been more obvious than in some of the smaller companies. Even companies with high StockRanks and no exposure to the ME or oil have had a pretty brutal sell-off. This leads me to conclude that stop-losses may have had a part. These can be an important part of an investor's risk management process. However, in times like these, they should probably be renamed “Guaranteed Losses” instead of “Stop Losses”, as they tend to get triggered at the worst possible times. This is especially true if investors choose to use them on smaller, more illiquid stocks. Ed looked at the question of applying stops to the NAPS portfolio recently. They were no panacea. While drawdowns were slightly reduced, so were returns. So if you have bought high-quality companies that are cheap and have improving fundamentals, there seems little reason to panic sell now.

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08:00  Summary complete

Spreadsheet accompanying this report: link.

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Companies Reporting

* Market caps at previous trading day’s close

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Graham’s Section:

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Mark’s Section:

Surface Transforms (LON:SCE)

Up 20% at 0.11p - Major Customer Update: Loss of Contract - Mark - BLACK/RED

Just a brief comment on this one as it appears on the most viewed list, but after a 95% fall in the share price yesterday, it is way below our £10m cut-off.

The share price fall yesterday tells you it is really bad news:

The Company has been informed by General Motors ("GM") that it is re-sourcing its supply of brake disks with effect from 31st March 2026.

We knew they had customer concentration but I’m not sure this was ever revealed how concentrated they were:

GM is the Company's most significant customer and in FY 2025 formed £15.3m (84%) of revenues and 85% of discs sold and was under contract until 2030.

It seems likely that GM have finally lost confidence in the company to deliver brake discs at the agreed timing and price, which means they will almost certainly want their money back instead of brake discs:

Additionally, since November 2024 GM has provided the Company with operational support and financial assistance including advance payments of £14.4m.

Their last trading update revealed that they had £1m of gross cash and had £13.3m of customer pre-payments outstanding. They also had £9.1m of current debt at 30 June 2025. There was £17.1m of PP&E and £6.9m of inventory. However, as these appear to be furnaces, brake discs and raw materials to make brake discs that are no longer wanted by their major customer, these should have a large haircut applied in any valuation.

This means that I don’t see a scenario where GM gets all the money they lent them back, let alone any return to shareholders. Indeed, the use the word “stakeholders” here suggests where this is going:

The Company has not yet had the opportunity to speak directly with GM about the termination, but the loss of this contract has a material impact on the Company's ability to trade and as a result the Directors intend to immediately engage corporate restructuring advisers to protect stakeholder's interests.

Given the history of production problems and missed deadlines, which has led to almost 20 equity raises during the company’s life as a listed business, perhaps the only ones truly sorry to see them go will be those who work for their broker.

Mark’s view

It goes without saying that the chances of the company avoiding insolvency are slim, and the chances of shareholders receiving anything in these proceedings is similarly remote. RED

Gulf Marine Services (LON:GMS)

Down 12% at 20p - Regional Events - Mark - BLACK/AMBER ↓ 

This news is perhaps understandable, given what is going on in the world:

…received instructions from a client in the Middle East, in response to the ongoing situation in the Gulf region, to immediately evacuate personnel from four vessels operating under its jurisdiction as a precautionary safety measure.

However, what is surprising is that their contracts don’t protect against this:

GMS is continuing to monitor the situation closely and is currently working to quantify the potential impact of the recent developments on its operational and financial performance.

That they need to quantify this suggests that this isn’t immaterial, or only a customer problem. Any disruption may impact the company’s cash flow profile and ability/willingness to start making the long-awaited shareholder returns.

Their broker Zeus add some useful colour:

GMS is currently assessing the implications of the vessel personnel evacuation for its revenues, and the rates it will be able to continue to charge the client during this period of operational cessation. We would expect this to be subject to discussions with the client. We are not making any updates to our forecasts today, and note that existing 2026 company guidance has not yet taken account of any benefit from the new vessel acquisition announced earlier this year, providing some element of potential mitigation for any revenues lost elsewhere. We await further updates on vessel activities, and any change to full-year 2026 guidance.

So it seems that they will likely still get paid, but the rates may be lower, and subject to negotiation. At the moment four out of their 14 (soon to be 15) boat fleet are impacted, but I don’t think we can rule out some of the rest of the fleet being affected. As their corporate name suggests, the bulk of the fleet is based in the Gulf.

Their NTAV is of course unaffected by these events. However, I can’t help feeling shareholders would actually prefer Iran to blast a few of the ships out of the water (assuming that all personnel are safely evacuated and they are suitably insured)! I have been unconvinced by their recent strategy of starting to expand the fleet again, before they have got the debt fully paid down or begin to make shareholder returns.

Mark’s view

The share price has been strong this year, with shareholders extrapolating recent contract wins and extensions into a brighter outlook. The only major upgrade has come from the additional ship being added to forecasts, and we await their formal guidance for FY26:

If I held, I think I’d be tempted to take profits at this point.Unlike many recent fallers, this appears to face a genuine risk to operations and the disruption could have a negative impact on 2026 outlook, especially if other contracts in the region end up being affected.

Balancing this, I expect them to be paid during suspension of operations, just at a potentially lower rate, so it won’t be a serious impact, unless operations are suspended beyond expiry of contracts. And this remains a SuperStock:

Overall, world events increase the risk here and I think it is probably right to reflect that in a more circumspect view, until it is clear that missiles are no longer flying around the Middle East. AMBER

Vistry (LON:VTY)

Down 17% at 522p - Full year results for the year ended 31 Dec 2025 - Mark - BLACK/AMBER =

These results aren’t anything to write home about, with revenue down 4%:

But they aren’t terrible either, with adjusted EPS rising 6% and coming in above the 55.7p consensus in Stockopedia. (Sadly companies of this size don’t tend to use brokers who make their research publicly available so we can’t check directly.)

Adjustments:

There remains a large gap between adjusted and statutory figures. Exceptional items have once again proven to be less exceptional than one would have hoped for:

Building safety provisions appear to have netted off as they have already been provisioned for, but remain a cash drag. Restructuring costs are back, but perhaps less material than they would be elsewhere given the scale of the business. The CMA commitment at least seems one-off:

The Group, together with six other UK housebuilders, entered into a voluntary binding commitment in response to the potential concerns investigated by the UK Competition and Markets Authority (CMA). Under this commitment, the participating housebuilders will contribute £100m in aggregate to His Majesty's Government, to be allocated to programmes that fund and support the construction of affordable homes in England, Scotland, Wales and Northern Ireland. The Group's share of this contribution is £12.8m.

Outlook:

I don’t think any of these explain today’s share price weakness, which is focussed on the following guidance:

· The Group expects to deliver good year-on-year revenue and volume growth, and an improvement in adjusted profit before tax in 2026, albeit with a lower overall margin reflecting the incentives offered during the current sales initiative.

· The shape of profit delivery is expected to be similar to that in 2025. This is due to the greater margin impact of the sales initiative in the first half, and the step up in demand expected from the affordable housing stimulus in the second half.

Their focus on volume but at the cost of margin, means they expect profits to be flat on 2025. The StockReport shows expectations were for a 19% rise in EPS so this is undoubtedly a miss versus prior expectations, even if we can’t see the details. From secondary sources, it seems that Stifel expects this strategy to push down consensus profit forecasts by about 5-10%.

Balance sheet:

Things look better on this front with net debt declining to £144.2m from £180.7m the year before. However, as we find with an embarrassingly large number of companies, they shoot their buyback bolt prior to a profits warning, and then don’t have the capacity to renew it:

Remaining £29m of the current £130m share buyback programme to be completed, with no further capital distribution proposed on the back of the 2025 results in order to prioritise debt reduction. Future distributions to be reviewed at the half year.

This buyback is said to be in lieu of dividends, so the lack of extension perhaps means they don’t see any chance of a short-term improvement in trading.

Strategy:

Vestry has been undergoing a change of strategy over the last few years, with a focus on a partnership model. The idea is that it is moving away from traditional speculative housebuilding to focus on a high-volume, "capital-light" model centered on affordable, mixed-tenure housing. By removing the need to hold a large landbank, this should make the returns on capital much higher, and free capital for shareholder returns. That the buyback is not extended may be another sign that things aren’t moving as quickly as many would like in this area.

Vistry Group is trying to emulate the US-based homebuilder NVR, and its shareholder register is stacked with US funds that appear to have bought in to back this transition:

While progress is perhaps slower than many would like, there are signs that there may be progress, as they say:

In November 2025, Homes England issued bidding guidance under the £37bn 2026-2036 SAHP, confirming bids would be invited early in 2026. Vistry is well positioned to deliver at pace with Homes England, the Greater London Authority and our other partners, with the programme targeting 300,000 homes over its term. Bidding opened at the end of February for Homes England's part of the SAHP, and our bid is in the process of being submitted. We are hoping to have a high degree of visibility of Vistry's grant under the programme by the half year.

Vistry's current status as a Strategic Partner under the 2021–2026 programme suggests it is in a strong position to win significant business under the 2026–2036 successor programme. In September 2025, Vistry and Homes England launched Hestia, a £150 million joint venture designed to accelerate large-scale, mixed-tenure sites which aligns directly with the long-term goals of the new SAHP. So it would seem to be  highly unusual for them not to play a major part in this programme.

CEO Retirement

The primary architect of the partnership strategy is Greg Fitzgerald, the Group's Executive Chair and CEO. He spearheaded the pivot in September 2023 to dismantle the group's traditional housebuilding arm and merge it into a single, partnerships-focused entity. So it is perhaps a little more worrying than usual that he:

...has informed the Board that he intends to retire from the Company. Greg's retirement will see the separation of the Chair and CEO roles.

This seems well planned with him remaining in the role “for up to 12 months, or until a successor is appointed.” However, you do have to wonder if he thought the strategy was about to really transform the company (and share price), why would he choose now to retire?

Mark’s view

When Roland reviewed the company’s trading update he made no change to our neutral view, saying:

Vistry’s move to a capital-light partnership model also has the potential to drive a re-rating as its capital requirements fall. With the shares now trading c.10% below tangible net asset value, I’m tempted to move up to AMBER/GREEN, but the group’s stubbornly daily net debt position means I’m going to maintain my previous neutral view for a little longer.

Given today’s profits warning, his caution looks warranted,and the temptation is now to go for a reduced stance, instead of an improved one. However, the scale of today’s share price fall appears to exceed the size of the warning and puts the company trading well below tangible book value, despite them transitioning to an asset-light model where that tied up capital will be freed and eventually returned to shareholders. Today’s separate announcement that the Chairman & CEO will retire raises some questions about the speed and success of this strategic shift. However, I don’t see the fundamental tenets of this move being challenged. Hence I think it makes sense to keep our neutral stance of AMBER.

MTI Wireless Edge (LON:MWE)

Up 4% at 57.5p - Final Results - Mark - AMBER/GREEN

I commented on this on the DSMR a couple of weeks ago, when the main headlines were revealed. Therefore, there is little surprise in these results:

· Revenues increased 13% to US$51.5m (2024: US$45.6m)
· Profit from operations increased 29% to US$5.81m (2024: US$4.51m)
· Profit before tax increased 12% to US$5.41m (2024: US$4.81m)
· Net Profit increased 11% to US$4.66m (2024: US$4.19m)
· Earnings per share increased 17% to 5.86 US cents (2024: 4.99 US cents)
· Net cash of US$9.4m at 31 December 2025 (31 December 2024: US$6.0m)

I felt they over-egged the language they used in the Trading Statement, but these were still good results. It is the breakdown between divisions that is the key thing for me:

Antennas

In 2025, revenues from this division increased by 11% reflecting a sharp increase in demand for higher margin military antenna solutions that led to a 15% rise in divisional operating profit. Military antenna sales increased 50% over 2024 and represented 55% of the antenna division's total revenue…

Water Control & Management

Mottech had another good year showing revenue growth of 10% over 2024 with recurring revenues from services and maintenance continuing to grow. Operational profit was lower than 2024 but met our internal forecasts as we invested more in development and marketing efforts, the fruits of which we expect to see come through in future years.

Distribution & Professional Consulting Services

2025 was a great year for MTI Summit, delivering 20% revenue growth compared to 2024 and moving PSK from a loss into profit, accelerating this division's operating profit to being over four times higher than 2024….For MTI Summit and PSK, the increased defence spending by governments globally creates a very positive market environment to operate in, as defence is over 80% of total revenue. This is also reflected in the backlog of orders and future pipeline with demand primarily coming from Israeli defence companies providing solutions for the International and the Israeli market.

So as I expected, this is really a story of increased defense spending, feeding through to improving results throughout the business. Mottech saw declining profits, but again this wasn’t bad, as they flag this as a period of increased marketing.

Balance sheet:

This looks strong, with current assets significantly exceeding current liabilities. There is a jump in unbilled receivables but this doesn’t look out of place for a company growing its project work. Plus credit quality on receivables appears to have improved:

As at 31 December 2025 trade receivables of $928,000 (2024 - $1,790,000) were past due but not impaired….They relate to the customers with no default history.

Outlook:

They see these positive trends, again driven by the macro position:

Overall, MTI is well positioned across all three divisions, each benefitting from strong macro trends underpinning future prosperity. The first two months of 2026 have been in line with internal expectations and judging from the pipeline of potential opportunities, the Group is well placed to continue to seek to expand through a mix of organic and acquisition-led growth, supported by a strong financial foundation.

With Israel starting a war with Iran this week, I don’t see those trends for defence spending in Israel diminishing any time soon!

Mark’s view

There’s nothing in these results that leads me to change my previously broadly positive view on the investment case, and recent world events are likely to strengthen that. AMBER/GREEN

Graham's Section

Cairn Homes (LON:CRN)

Up 3% at 201p (£1.25bn) - Preliminary Results - Graham - GREEN =

I upgraded our stance on this to fully positive in January on the back of another very positive trading update.

Today’s results are excellent, as expected:

We were already given most of these numbers in January.

What really matters is the latest on the 2026 outlook, particularly as I’ve acknowledged that this is an unusual call for me: I tend to be nervous when it comes to housebuilders trading at a large premium to book value.

That remains the case here: today’s balance sheet shows net assets of €837 (nearly all tangible), as compared with a market cap that’s equivalent to €1.44 billion. That’s a 70%+ premium to book.

However, the particular conditions of the Irish property market - an extreme shortage of available properties relative to demand, combined with government policies that are designed to increase supply - suggest to me that this is a special case. In this very specific circumstance, I can get behind the idea that a well-managed housebuilder may deserve an unusually high valuation.

Fortunately, today’s outlook statement supports the idea that this stock deserves special leeway:

With exceptionally strong demand reflected in a record order book and a supportive policy and macro backdrop, Cairn continues to benefit from a fundamentally robust housing market characterised by structural undersupply. These conditions, combined with our disciplined capital allocation strategy and substantial investment in operational scaling, have created a platform for consistent volume growth and strong financial performance. As a result, the Group is now firmly positioned to achieve output of c.6,000 new homes between this year and next, including c.3,200 homes in 2027, resulting in a 35% increase in our output over this two-year period.

Cairn is upgrading guidance for FY26 as follows:

Revenue of c.€1.05 – €1.08 billion (previously c.€1.02 – €1.05 billion);

Operating profit of c.€180 – €185 million (previously c.€175 – €180 million); and

ROE of c.16.5%.

I would draw readers’ attention in particular to the very high and attractive ROE, and the company’s strong focus on those metrics as a KPI.

CEO comment:

“Cairn is now in its second decade in business. We are proud of the significant contribution we have made to housing in Ireland since we closed our first sale in December 2015, with over 12,000 new homes sold and 35,000 residents living in a Cairn-built community. Our commitment to growth is stronger than ever and we will accelerate our output to close to 18,000 new homes delivered by the end of 2027.

Graham’s view

Consistent with Stockopedia’s methodology around profit warnings and earnings upgrades, it makes sense for me to stay positive on Cairn as it continues to enjoy very strong trading.

There’s been a fantastic string of upgrades over the past year:

One interesting feature of the results is that the company has achieved all of this without raising its average selling price by all that much: from €383k in 2024 to €392k in 2025. And gross margin has increased only marginally. What’s really driving performance are a) volumes and b) tightly managed overhead costs.

Operating expenses were €40m in 2025, up from €37m in 2024. Compared to revenues of €945m, this appears to be a very well-managed organisation (note to self: I should compare this against other housebuilders).

Overall then, it makes sense for me to stay positive on this. It’s a rare case when I’m happy to take a positive view on a housebuilder primarily for its earnings outlook, combined with a positive impression of management, and without much regard to its balance sheet support.