Daily Stock Market Report (Wed 8 Jan 2025) - NVDA, TIG, IGP, LIKE, TPT, SHEL, VCP

8th Jan by Graham Neary

66 comments 5905 reads

Good morning!

Upcoming event: Ed, Megan and I will present a live webinar tonight at 5pm to discuss our current views on the markets. See you there!

12.30pm: This report is finished for today, thanks for dropping by!

Spreadsheet accompanying this report (updated to 3/1/2025).

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Shell (LON:SHEL) (£159bn)	Q4 update	Gas production significantly lower than Q3	AMBER/GREEN (Roland)
Flutter Entertainment (LON:FLTR) (£36bn)	Update on US sports market	Revenue warning: Too many ‘favourites’ winning sports events in Q3.
Team Internet (LON:TIG) (£297m)	Possible Offer (published after mkt close yesterday).	Two possible buyers, both at 125p. The board is considering both of them.	PINK (Graham)
Victoria (LON:VCP) (£128m)	Trading Statement	H2 trading stronger than H1. Full year earnings in line with expectations.	RED (Graham)
Intercede (LON:IGP) (£107m)	Trading Statement	New orders added to existing pipeline for Q4. Full year performance ahead of consensus.	AMBER (Roland)
Kistos Holdings (LON:KIST) (£95m)	Trading Statement	Production in line with guidance
Topps Tiles (LON:TPT) (£75m)	Q1 TU & CEO Succession	LfL sales +3.5% Q1 (to Dec), +12.5% last 5 weeks. CEO intends to retire after 18 years with TPT.	AMBER (Roland)
Likewise (LON:LIKE) (£47m)	TU	On track to deliver profit exps for FY Dec 2024. Rev +7.5%. Buying logistics centre near Plymouth.	AMBER (Graham)
Hornby (LON:HRN) (£43m)	TU	Q3 sales +7%. FY March 2025 forecast “remains on track for YoY growth”. No formal market exps.
PROCOOK (LON:PROC) (£42m)	Q3 TU	In line with exps. Q3 rev +11%, LfL rev +3.4% outperforming UK kitchenware market.
Ground Rents Income Fund (LON:GRIO) (£22m)	Possible Cash Offer	GRIO Board has not engaged with the potential buyer. Three bids, highest at 34p (48.5% premium).	PINK

Summaries

Intercede (LON:IGP) - up 10% to 201p (£117m) - Contract orders and renewals - Roland - AMBER

This digital ID software firm has announced $5m of new contract wins, but the modest size of today’s earnings upgrade suggests to me that some of this may be business as usual. I admire Intercede’s high quality metrics, but visibility on earnings seems limited and I think the price is up with events, so I’m staying neutral.

Topps Tiles (LON:TPT) - up 6.7% to 40p (£78m) - Q1 Trading Update and CEO Succession -…

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The Phoenix

8th Jan

Others on here will answer this better than me but as an example if you can currently get say 4.8% on a ten year gilt this is seen as the risk free rate (assuming bond held to maturity).

As equities are viewed as a riskier asset they should yield more than a bond (they don't at the moment) so market has repriced downwards today to increase the overall market yield to compete with gilts.

Although the interest is fixed the privce of bonds can move up or down until repayment yields going up bonds drop in price and vice versa.

Mid cap companies in general have to payer higher interest rates on borrowings than blue chips so rising yields means any company is going to have to pay a higher refinancing rate than say 5-6 months back.

Higher yields/interest rates then means more of profit is eaten up to fund debt so profit warnings expected in the future.

Lochinver

Thank you so much Phoenix

rogerh

It's on their website DD. I had to search for it too..No idea why no RNS. Strange for that amount!

No probs if he's about RD Howarth might chip in he's mustard on bond markets and yield curves.

Lincs

Ask chatgpt 'what are the consequences of rising bond yields'. Looks to be an accurate succinct answer

Tommy H

I would add that bond yields changing for investors, is not the yield, that is fixed, it is the price of the bond.

So the government borrows £10 @ 5% for 100 years in a low interest environment that bond might rise in price to £12 which would mean if you bought in the market you would only get 4.17% yield. But if you held to maturity you would lose £2 (20%) on maturity redemption.

But if people lost confidence the bond might drop in price to £8 in which case you get a yield of 6.25%, and if you held to maturity you would also gain £2 (20%).

Yields like dividends are typically paid at fixed points (annually) so if you buy in and out, you might not get the interest payment.

There are things obviously about tax implications, some people want income some want capital gain (or loss).

Obviously you can then buy into things like Invesco Bond Income Plus (LON:BIPS) or Vanguard USD Em Mkts Govt Bd UCITS ETF USD Dis (LON:VEMT) where you are buying a whole basket of bonds, and the company manages it all for you, with a declared dividend instead.

I hope that helps

Tommy

doctor dave

Hi all, I know you have done loads but any chance of a comment on the PROCOOK (LON:PROC) trading update today? Cheers

yiannos1

You will not get this answer from anyone or any book.

It’s very simple-the higher the yield the higher the risk of not getting paid on maturity. Therefore this affects all assets especially equities.

I have mentioned many times on this forum that bonds that trade below 60 are basically worthless and I have given many examples of plc’s that their bonds were trading at these levels. Same with government bonds-the higher the yield the higher the risk.

Take this from someone that have seen his country’s bonds trading at over 25% yield! The GREEK problem started with the continuous downgrades when the DEBT/GDP passed 120%. The US ratio now is 124%!

All the best

I have always respected your comments.

Friendly advice is to stay away. I can see that there are several posts on PROCOOK (LON:PROC) and the technical analysis on it .

On fundamentals and multiples this is another meaningless UK listing that will end badly for its shareholders.

Have you ever seen the film Margin Call, Yiannos ?

At the absolute critical point, at the dead of night, the big beast ( Jeremy Irons) asks the clever young analyst to explain the problem.

He asks him to explain the problem as if he was addressing a small child, or possibly a dog.

Do you think, and I ask respectfully, that you could try again to answer my queries in the same light ? As if you were talking to a very young individual, or even a mentally challenged adult.

Do you think you could do that Yiannos ?n

Thanks Yiannos yes I noted your warning and I haven't understood why the stock ranking is high and the stock has climbed 50% or more over the last month?? I'd be really interested in Roland or Megan or Graham giving it the once over. DD

This comment has been moderated

Monty Carlo

And debt/GDP in Japan is now 217%.

If you control your own currency it can be argued that a different set of rules apply.

Honestly!

You moved on this thread now. You really have to do some digging about the zero rates in Japan over the years and the implications of that.

Bank of Japan owned half of those bonds. There was no efficient market for years-Japan’s Lost Decades was the name given by the US!

This must be now over 30 times you feel you have to tag me. No need to answer again to you. The problem I have is that you are misleading others here.

9th Jan

Sigh.

Nobody is "tagging" anybody. I don't feel the need to tag you I'm afraid. That isn't how stocko works.

If you reply in a thread so that the comment is grouped with others on the same subject it automatically notifies the original poster. You can disable it in your settings.

And you can argue that the Bank of England owning £895bn of gilts at peak QE was completely different?

And that our gilt market during the Truss debacle was efficient when you couldn't get a bid on a long gilt, or the long end distortion in the sterling curve that has persisted for ever?

I lived in Japan for 20 years. Funnily enough I might actually be fully aware of it all.

Logical David

Hi Lockinver,

Several years ago The governor of the Bank of England, Mark Carney, talked about the 'Kindness of Strangers' whereby foreign investors leant money to the UK so that the country could keep functioning despite its debt levels.

Bank of England says UK's reliance on 'kindness of strangers for finance is rising

My understanding is that foreign investors (aka 'Strangers') are under no obligation to lend money to the UK government. However, what the 'Strangers' perceive as higher risk lending means they want a higher return on their lending in case the UK defaults on its Bond repayments. At the moment the UK Debt/GDP is around 98%, hence, the 4.8% rate. If the Debt/GDP Ratio increases then the 'Strangers' could well ask for a higher Bond price because of the higher perceived risk. Should the 'Strangers' decide not to lend anymore money to the Labour government because they believe the risk of not getting paid is too high or if Rachel Reeves cannot raise enough money through the markets, then Rachel Reeves may have to raise taxes again in her spring budget in order to make up the shortfall between tax receipts and spending. Alternatively, the government could rein in its spending plans.

Bank of England says UK's reliance on 'kindness of strangers' for finance is rising | Reuters

David.

That's a pretty good explanation David.

An overseas buyer of gilts will want to know:
1. Will he get his coupons on time and repayment at maturity?
2. What will £ be worth against his home currency when the bond repays?
3. Will the bond pay a return that is higher than projected inflation over its lifetime?
4. What will the Bank of England do with interest rates while he holds the bond? He looks silly if the BofE hikes rates after he buys such that he could have earned more over the bond's lifetime leaving his money on deposit.
5. Are there other sovereign bonds which appear to be better value on a risk adjusted basis?
6. Is the UK govt likely to flood the gilt market with new issuance after he buys his gilt and depress the value of all gilts trading in the 2nd hand market by permanently altering the balance of supply & demand?
7. Is the maturity of the bond (its lifespan) a good match for his portfolio - are they issuing a 10 year bond when he would really prefer a 20 year bond to match his pension scheme payout profile more precisely?
8. What is the Bank of England planning to do with those gilts it hoovered up during QE (Quanititative Easing) and is sitting on? Will they sell after he buys?

Once he has taken those into account he will decide what yield he needs to earn to persuade him to buy the bond. Bonds are usually issued close to par (i.e. a price of 100) and they vary the attraction of the bond by tinkering with the coupon.

So an overseas buyer may see that 10 year US treasuries are trading at 5% and decide he needs to earn a coupon of of at least 5.5% to persuade him to buy a UK gilt instead. That 0.5% would be referred to as a "50 basis point spread" in bond dealing jargon.

Thomas Whitehead

10th Jan

Thank you.

murrb

This link should take you to a Neil Woodford blog posted today about bond yields and what affects them. I don't know if it would be of any value to you.

https://www.woodfordviews.com/...

11th Jan

Great explanation re point 6 which could happen as I believe uk (and US) have an avalanche of bonds they need to sell in 2025.

I'm assuming point 6 means to get the avalanche away they would need to offer even higher coupons to attract buyers , which would depress the price of the bonds the person in your example held as he would have bought at a lower coupon rate ?

Daily Stock Market Report (Wed 8 Jan 2025) - NVDA, TIG, IGP, LIKE, TPT, SHEL, VCP

Companies Reporting

Summaries

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Graham Neary

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