Today’s AGM Trading Update from the Christie Group (LON:CTG) was really quite positive.

On 9^th April I featured the company suggesting that the group’s shares were ready to reflect the recovery that was underway.

The shares were then 92.5p and I reckoned that they could be a very interesting Recovery Stock, with aims of trading well in the 90p to 130p range.

The AGM Update

The company, which is a leading provider of Professional & Financial Services and Stock & Inventory Systems & Services to the hospitality, leisure, healthcare, medical, childcare & education and retail sectors, updated on its the current year trading in its first five months to end May.

The business continued to see a more positive trading environment for its transactional brokerage business compared to that experienced in the first half of 2023, and that was reflected in an improved year-on-year performance for the period.

Management Comment

CEO Dan Prickett stated that:

“The Board maintains its expectation for the Group’s improved performance in 2024, with PFS revenues once again expected to be weighted toward the second-half.”

Analyst View

Research analyst Rob Sanders at the House Broker, Shore Capital Markets, now has estimates out for the current year to end December to lift revenues to £75.8m (£65.9m) while the company stages a total recovery from last year’s adjusted pre-tax loss of £1.6m to a profit of £1.6m.

That should generate earnings of 4.6p (4.2p loss), while helping to increase its dividend from a totally uncovered 1.0p in 2023 to 1.5p this year.

He sees £81.4m revenues in 2025, with almost double profits of £3.1m, earnings of 9.2p and a double dividend to 3.0p per share.

My View

The shares today have reflected the good news with a near 6% rise to 121.68p.

So that has shown a healthy 31.5% uplift since 9^th April.

It would be sensible to anticipate some profit-taking on the positive news.

However, I do note that Sanders is estimating £5.6m profits and 16.4p earnings, with a 5.5p dividend per share for the 2026 year – which infers that the shares have even further to climb, so it may prove wise for medium-term investors to buy on any dips.

Tekcapital shares were ticking steadily higher on Thursday after two of the intellectual property group’s portfolio companies, MicroSalt and Innovative Eyewear, announced strategic developments.

Innovative Eyewear has ensured Samsung users now have the same seamless experience as Apple users when using its ChatGPT-enabled smart eyewear with the launch of a Bixby app. The new app will provide Samsung users with full handsfree voice functionality and interactivity.

Samsung users will no longer have to take their phones out of their pockets to access ChatGPT and other tools —a feature Innovative Eyewear’s Apple users have enjoyed since the service’s launch.

“After a year of rigorous development from our launch of handsfree ChatGPT access on iOS devices, we are extremely pleased to now offer this feature for one of the largest groups of smartphone users, those with Samsung phones,” said Harrison Gross, CEO of Innovative Eyewear.

“This is an important milestone in our mission to make smart eyewear accessible, enjoyable and useful for all. With our new Bixby app, Samsung users can enjoy more convenient access to numerous types of information, and experience the world’s most powerful AI simply and quickly on Lucyd eyewear.

“We are also excited about the potential of using our glasses in tandem with Samsung’s forthcoming smart ring to deliver health and exercise data through our eyewear. This could allow customers to learn about their health status and exercise metrics without having to look at a phone or smartwatch.”

The smart eyewear market is forecast to grow to $33bn by 2030 representing a substantial growth opportunity for Innovative Eyewear who can now provide hands free functionality for users of the world’s top-two mobile phone brands.

MicroSalt

After a storming start to life as a London-listed company, MicroSalt has released a series of commercial updates and has today announced a fresh partnership with e-commerce platform, Thrive Market.

Thrive Market, a membership-based natural and organic food retailer, provides its 1.2m members access to more than 6,900 products from over 800 brands.

Rick Guiney, CEO of MicroSalt, said: “We are extremely excited about the placement of our SaltMe! low sodium crisps on Thrive Market.  Thrive Market is an extremely well-regarded and national e-commerce platform offering natural and organic food products to their members. With over 1.2 million members, they speak directly to consumer looking for healthier snack options. This new placement across three new United Natural Food Distribution Centres allows us the opportunity for additional retail distribution and new account placements.”

In April, MicroSalt announced placement of its low-sodium salt into the food service sector through a partnership with Carma Hospitality Group.

Tekcapital shares were 1.2% higher at the time of writing.

Crest Nicholson shares crumbled on Thursday after the group warned on profits and cut its dividend following a poor period of trading.

Crest Nicholson delivered a gloomy set of interim results, slashing its profit outlook for fiscal 2024 and taking a hefty one-off charge related to completed site costs. Digging into the number, it’s clear why investors are disappointed.

The homebuilder saw revenue slump 9% to £257.5 million in the six months ended April 30, as home completions fell 12% to 788 units. The average private selling price remained stable year-over-year.

Crest Nicholson shares were down 11% at the time of writing.

A review of completed site costs prompted a one-off £31.4m charge, higher than the £15m previously estimated. This exceptional charge, along with lower volumes and a higher mix of low-margin properties, caused adjusted operating profit to plunge 72% to £6.2m.

As a result, Crest Nicholson now expects full-year adjusted pre-tax profit of just £22-£29m, down from previous expectations. The company cited mortgage rate volatility and uncertainty ahead of the imminent general election as headwinds.

The disappointing results translated to a statutory loss after tax of £23.4m, compared to a £21.1m profit a year ago. The interim dividend was slashed to 1p from 5.5p

“Investors may no longer be riding the crest of a wave this morning after the housebuilder issued a profit warning and slashed its forecast by a third,” said Adam Vettese, analyst at investment platform eToro.

“The shares had been up over 30% since the end of April but with this morning’s update also including a dividend cut, the outlook will have notably differed.”

“Inflation has been the bane of the housebuilding sector for sometime and although easing up, there is still significant pressure on the firm to keep costs under control. There is also the added uncertainty of the upcoming general election next month and what implications this could have for the firm and builders in general. Homebuyers may also be seeing the mortgage market and holding off for a rate cut before making a commitment. Crest Nicholson will hope that these factors are alleviated and the firm can get back on track in H2.”

Halma shares soared on Thursday after the group, focused on life-saving technology, announced record-breaking full-year results for 2024.

Revenues surpassed £2 billion for the first time, up 10% overall and 8% on an organic constant currency basis. Adjusted EBIT also hit a new high above £400 million, increasing 12% and 7% on an organic constant currency basis.

Halma shares were over 5% higher at the time of writing.

“2024 was another successful year for Halma. We delivered record revenue and profit, with continued high returns. Strong cash generation enabled us to make substantial investments in opportunities for future growth, while maintaining a strong balance sheet,” said Marc Ronchetti, Group Chief Executive.

For the 21st consecutive year, Halma delivered record adjusted profit before taxation, up 10% overall and 8% organically. Statutory profit before taxation jumped 17%. Recent acquisitions contributed 5% to revenue growth and 7.6% to adjusted EBIT growth.

The jump in shares on Thursday will be partially driven by the expansion of margins, potentially signalling an end of margin eroding cost inflation.

Margins expanded 40 basis points to 20.8% as Halma maintained high returns with a stable 19.5% return on sales despite higher net finance expense.

“Halma’s attraction is simple,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“It’s a mash-up of businesses working to provide technology solutions in the safety, health, and environmental markets. These may not be the most exciting businesses, but Halma’s clear purpose and quality of execution mean performance is impressive. Revenue passed the £2bn mark for the first time in Halma’s history, and improving margins meant profits had an even bigger uplift, coming in ahead of expectations too.”

After the recent market fallback due to the forthcoming General Election a number of short-term investment situations are beginning to show up.

Perhaps, none more so than Ultimate Products (LON:ULTP).

We did it before – now let us do it again – just aim at the 180 !

The Business

In early April I noted that ‘surely 80% of the UK households cannot be wrong’ in my feature on the Oldham-based group that supplies branded homeware products in the UK, Germany, the Rest of Europe, and internationally. 

Its own brand names include Salter, Beldray, Intempo, ZFrame, Portobello, Dreamtime, PROlectrix, George Wilkinson, Giles & Posner, American Orginals and Kleeneze.

Analyst’s View

Analysts Nigel Parson and Michael Clifton at Cavendish Capital Markets have a Price Objective of 185p on the group’s shares.

Their estimates for the current year to the end of next month are for an easing off of sales to £157.5m (£166.3m), with adjusted pre-tax profits of £14.5m (£16.8m), generating 12.5p (15.1p) of earnings but still amply covering a dividend of 6.2p (7.4p) per share.

Those lower estimates reflect short-term trading trends in the group’s final quarter.

However, those trends are now turning positive, especially as larger orders are expected from its bigger customers as destocking eases into more normal business patterns.

The analysts are now looking for the next year, starting in August, to show a recovery bounce to £168.5m sales, £17.1m profits, 14.8p earnings with a 7.4p dividend per share.

Further out they have pencilled in the 2026 year for £176.6m turnover, £18.9m profits, 16.6p earnings and a very healthy 8.3p per share dividend.

My View

Ahead of the Pre-Close Trading Update in late August I see this group’s shares staging a smart price recovery.

My feature on 2nd April, when the shares were just 145p and I predicted a rise to 180p within six months, they scooted up to 185.50p before the end of that month.

They are now back to 142p, at which level the group is only valued at £123m.

I now suggest that they are ready for another run upwards ahead of the August Trading Update – giving risk tolerant investors another chance of scoring 180!

The FTSE 100 was in a buoyant mood on Wednesday after US CPI cooled faster than expected in May, confirming a downward trend in US inflation, albeit minimal.

US CPI came in at 3.4% while Core CPI – widely considered to be the indicator watched by the Federal Reserve – fell to 3.4%, lower than expectations of 3.5%.

Although the moves are marginal and the beat minimal, they do signify one thing—US inflation is falling. This provides the Federal Reserve with the evidence it needs to cut interest rates. That said, today’s data is unlikely to spur the Federal Reserve into action in the near term.

However, a slightly cooler inflation read is materially better than a slightly hotter one for equity markets.

The FTSE 100 was trading firmly higher before the release of US CPI at 1.30pm and the reading propelled UK stocks higher to trade at 8,225, up 0.95%, at the time of writing.

US CPI data was released before the Federal Reserve’s interest rate decision later today. No change is expected this month but the accompanying commentary will be poured over for hints of the timing of potential rate cuts.

“The May US CPI report is one that should provide the FOMC with some degree of further confidence in the disinflationary process back towards the 2% target, with headline CPI remaining unchanged on an MoM basis, for the first time since last June,” said Michael Brown Senior Research Strategist at Pepperstone.

“While such data will support the view that April’s cooler price data was not a one-off, it is unlikely, on its own, to provide the FOMC with enough confidence to deliver a rate cut just yet, with the next FOMC decision due later today.

“Nevertheless, the data does lessen the chances of a hawkish shift in Chair Powell’s rhetoric at the post meeting press conference, even if the dot plot is likely to show a median expectation of 50bp, from 75bp, of cuts this year.”

Movers

Rentokil Initial was the top riser on Wednesday after Bloomberg reported activist investor Nelson Peltz’s has built a stake in the company through Trian Fund Management. Rentokil Initial shares were 14% higher at the time of writing.

Legal & General was the top faller as investors reacted to a lacklustre strategy update that revealed a slowing rates of dividend increases in the coming years. L&G shares were down 5% at the time of writing.

“The new chief executive of Legal & General will likely be stung by the market reaction to his new strategic plan,” said AJ Bell investment director Russ Mould.

Legal & General Group shares sank on Wednesday after unveiling a plan to streamline its business and return more capital to shareholders.

A 5% drop in shares would not usually be the response to a £200m share buyback and a promise to increase dividends, but this is Legal & General we’re talking about.

The company has rightly become a dividend hero for many investors who will be left disappointed at a ‘refreshed strategy’ that includes only included a 5% dividend increase in 5% for the 2024 fiscal year, followed by 2% annual dividend per share growth through 2027.

A key part of the group’s sharpened focus is the creation of a single, unified Asset Management division. This will bring together Legal & General Investment Management (LGIM) and Legal & General Capital (LGC) into a global asset manager spanning public and private markets.

Legal & General also announced growth plans across its core Institutional Retirement, Asset Management, and Retail divisions, which may have left investors wanting the company to be a little more bullish.

“Investors are blowing raspberries at the proposals for a sweeping overhaul of the business as Legal & General confirmed it would combine some divisions and sell off the Cala housebuilder division which many casual followers may not have realised formed part of the business,” said AJ Bell investment director Russ Mould.

“Even the addition of a £200 million buyback isn’t enough to get shareholders on side. Targets to grow earnings at between 6% and 9% out to 2027 seem reasonably ambitious but there is perhaps some scepticism around its ability to achieve this goal.

“A key driver for growth is expected to be aggressive expansion into the market for corporate pensions deals – where companies pay Legal & General to take on the liabilities associated with their schemes.

“Globally, the company did £13.7 billion of these deals in 2023 so aiming to complete £65 billion worth just in the UK by the end of 2028 seems a stretch. The company also hopes to do more business in the US – though this can be a tough market to crack.

In an event something like the one said to have taken place between David and Goliath, the AGM of THG (LON:THG), due to be held on Monday 24^th June, could well turn out be an interesting meeting.

Activist investor Kelso Group Holdings (LON:KGHP) has declared its objections to the way that Charles Allen, Chairman of the THG online beauty and nutritions group, has been somewhat ineffective in his role.

THG – Democratising Online Retail

The Altrincham, Cheshire-based, loss-making THG declares itself as a global digital innovator involved in revolutionising how brands connect to a worldwide consumer base, transforming how consumer brands go to market in the digital age.

The company operates three distinct businesses in Beauty, Nutrition and Ingenuity, each scaled from the UK to hold global leading positions in their respective sectors.

With its shares trading at 69p, the group is capitalised at £920m.

Kelso Group – Activist Investor

Kelso looks to identify, engage and unlock trapped value in UK listed companies.

Through active engagement and alignment with other stakeholders, taking stakes directly, Kelso aims to effect change where existing shareholders are often unable or unwilling to do so themselves.

That is just what it is planning to do at the forthcoming AGM.

With its shares trading at 3.25p, the company is valued at only £12.2m.

The company’s largest holding is THG, which it believes trades at a significant discount to its ‘sum of parts’ value, emphasising its Nutrition and its Beauty sides as being undervalued.

The Kelso Gripe

The company intends to vote against THG’s AGM Resolution 5, which concerns the re-election of its Chairman Charles Allen, former Chair of Granada Media, ITV, Endemol, EMI Music, Tesco, Virgin Media and The British Red Cross.

Kelso believes that value for THG’s shareholders would be significantly enhanced if THG were to fulfil its commitment to move to the Premium List from its current standing on the Standard List, which was promised by the company way back in October 2021, as well as providing clarification of the THG future structure.

Kelso, which has a 0.55% stake in THG, has been seeking support in its actions from other THG shareholders.

Already one of the THG holders, the Dutch investment firm with a 1.89% holding, Ophorst Van Marwijk Kooy Vermogensbeheer, has sided with Kelso in its attempt to help create better value.

OVMKV also happens to be a shareholder in Kelso.

Oliver Cookson, who was the founder of the THG Myprotein business, has followed suit for his 1.60% holding.

Biter Bit?

The boss of THG, Matt Moulding, has been using something of a ‘PacMan’ manoeuvre, by gradually buying into the Kelso equity in a personal investment move and now holds 10.01% of the activist company’s equity.

A Lively AGM?

Kicking off at 2pm on Monday 24^th June the THG AGM being held in Altrincham could prove to be a somewhat lively affair, especially if Kelso Group gets its way in trying to be heard and then helping to shake up the value of THG’s shares.