Daily Stock Market Report (Tue 22 April 2025) - DCC, AGFX, ITM, CLIG, CLBS, RCDO, AOTI, VID, AREC

Tue 6:02am by Graham Neary

24 comments 4994 reads

Good morning and welcome back! I hope everyone is feeling refreshed after the break.

The FTSE continues its post-tariff recovery, scheduled to open up 0.7% this morning around 8250.

12:30pm: that will do it for today, a pleasant start to the week if not for the Argentex fiasco!

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
DCC (LON:DCC) (£4.9bn)	Disposal of DCC Healthcare	Sold for £1,050m, 12x adj op profit. Expect net cash proceeds of £945m, inc defcon. “Significant return of capital” to shareholders planned post completion (Q3).	GREEN (Roland - I hold) Today’s disposal looks reasonably priced to me, even if it’s not a blockbuster valuation. Personally, I’m happy to see DCC focusing on its much larger and more profitable Energy division. With the stock trading on c.10x earnings, I remain positive.
ITM Power (LON:ITM) (£178m)	FY25 guidance raised	Revenue now expected to be £25.6-26.5m, 30% ahead of previous guidance of £18-22m. Net cash £204-205m (£185-195m previously). FY25 EBITDA loss exp unchanged at £32-36m.	AMBER/RED (Roland) [no section below] This hydrogen electrolyser company went through a spectacular hype cycle during the pandemic, before crashing back to earth when investors remembered that revenue was minimal and profits were negative. The potential appeal here is that the shares are trading below net cash. However, I think the risk is that ITM has massively overinvested in capacity and could still run short of cash again – recent broker coverage projects losses out to at least FY27 and predicts expected FY27 factory utilisation of just 6%. My impression is that ITM has some decent technology and that CEO Dennis Schulz is doing a decent job of developing the business. An investor with sector expertise might find ITM worthy of further research, but from my perspective it remains speculative
City of London Investment (LON:CLIG) (£176m)	FUM update 31 Mar 25	FUM unchanged at $9.9bn as net outflows of $212m were offset by market gains of $218m. FUM $9.95bn at the end of March. Emerging markets strategies represent ⅓ of FUM with presumably high tariff exposure, e.g. CLIG’s funds are the largest shareholder in Templeton Emerging Markets Investment Trust (LON:TEM). FUM as of 15 April is c. $9.7bn, where the fall is presumably a combination of further outflows and market falls.	AMBER/GREEN (Graham) [no section below] This one was covered by Roland…

Name (Mkt Cap)

RNS

Summary

Our view (Author)

DCC (LON:DCC) (£4.9bn)

Disposal of DCC Healthcare

Sold for £1,050m, 12x adj op profit. Expect net cash proceeds of £945m, inc defcon. “Significant return of capital” to shareholders planned post completion (Q3).

GREEN (Roland - I hold)
Today’s disposal looks reasonably priced to me, even if it’s not a blockbuster valuation. Personally, I’m happy to see DCC focusing on its much larger and more profitable Energy division. With the stock trading on c.10x earnings, I remain positive.

ITM Power (LON:ITM) (£178m)

FY25 guidance raised

Revenue now expected to be £25.6-26.5m, 30% ahead of previous guidance of £18-22m. Net cash £204-205m (£185-195m previously). FY25 EBITDA loss exp unchanged at £32-36m.

AMBER/RED (Roland) [no section below]

This hydrogen electrolyser company went through a spectacular hype cycle during the pandemic, before crashing back to earth when investors remembered that revenue was minimal and profits were negative. The potential appeal here is that the shares are trading below net cash. However, I think the risk is that ITM has massively overinvested in capacity and could still run short of cash again – recent broker coverage projects losses out to at least FY27 and predicts expected FY27 factory utilisation of just 6%.
My impression is that ITM has some decent technology and that CEO Dennis Schulz is doing a decent job of developing the business. An investor with sector expertise might find ITM worthy of further research, but from my perspective it remains speculative

City of London Investment (LON:CLIG) (£176m)

FUM update 31 Mar 25

FUM unchanged at $9.9bn as net outflows of $212m were offset by market gains of $218m. FUM $9.95bn at the end of March. Emerging markets strategies represent ⅓ of FUM with presumably high tariff exposure, e.g. CLIG’s funds are the largest shareholder in Templeton Emerging Markets Investment Trust (LON:TEM). FUM as of 15 April is c. $9.7bn, where the fall is presumably a combination of further outflows and market falls.

AMBER/GREEN (Graham) [no section below]
This one was covered by Roland…

Unlock with Email

Unlock with Google

Already have an account?
Login here

gmtrader

Tue 6:26am

Argentex (LON:AGFX) Not looking good, suspending shares this morning. Considering it has a fair amount of cash it's a surprise to see the company say it has liquidity issues. Good luck to all that hold it.

Paul Walton

It's ok, Trump has called Powell a "major loser" so the new normal re, chaos, has resumed

Trident

Tue 6:31am

God, we got another 4 years of childish name calling to get through!? It really is the stuff of the playground. Can we bear it. Wonder when the Republican grown-ups will assert themselves.

LeicesterPete

Tue 6:43am

On a positive, good to see how well FTSE100 futures held up in the face of yesterday's US sell off

Tue 6:54am

We're only 100 days in!

Cuddlesticks

Immediate thoughts on the Argentex (LON:AGFX) announcement is that they have either not been effectively squaring off 'matching' their clients' positions against their own position and/or selling inappropriate products to clients i.e. when Argentex (LON:AGFX) gets margin called from their counterparties they, in turn, ask the 'matching' client for the margin and the client either refuses or is unable to pay up.

A risk arising from providing a tailored white glove service is that individual client FX contracts become complex, difficult to understand and hard to manage. Especially tricky if you're trying to collect margins from a high number of small value clients quickly.

A key risk at the moment could be that the 'liquidity provider' is only able to commit additional liquidity to the extent it is able to calculate the gross and net exposure and so, in turn, its own credit exposure Argentex (LON:AGFX.

I'm sure the FCA will be taking a look here.

Revs8

Tue 7:08am

Intrigued to see Shield Therapeutics (LON:STX) on the list (I hold). They have had trouble getting from clinical approval of the drug Accrufer (Feraccru in Europe) to full scale supply.

Their drug Accrufer is gaining momentum in US such that they aim to reach cash flow positivity this year. They have many international partners who are picking up the licence for Accrufer around the world and will owe royalties.
There is no doubt iron deficiency is a huge market. The drug has a niche for people who can’t tolerate cheaper iron tablets that make them sick. Clinical results show that Accrufer can be an alternative to blood transfusions. They are hoping to get paediatric approval in EU this year (through partner Novartis).
If they can avoid another fund raise it could multibag. Valuations range from 3 to 30p.
High risk. If anyone in the team has time I’d appreciate someone looking at the numbers.

jamesalastair

Tue 7:52am

Thoughts? ... Run

yiannos1

Tue 7:54am

Argentex (LON:AGFX)

So obvious and have warned many times here that this will probably fail.

The FCA has to take as well a closer look the pump on Argentex (LON:AGFX) by a newsletter. There are just too many pumps on future failed companies lately that need to be scrutinised (by the same newsletter).

All the best

sparkler

Tue 8:29am

I don't hold, but I would be interested in the thoughts of Graham et al on the accounting changes at Celebrus Technologies (LON:CLBS) today. The market doesn't appear to be too enamoured with them.

prophetwarning

Tue 8:48am

Which newsletter are you referring to?

topvest

Argentex (LON:AGFX) - with the US$ rate at 1.34 its not looking good. I supect this has ruined the Deloitte audit partner, Christopher Brough's, Easter. A clean audit opinion on 2 April 2025 with no subsequent events or concerning going concern disclosures - an absolute disaster for Deloitte. This is going to lead to an investigation, that's for sure! Rather unfortunate and unlucky for anyone still holding. Pacific Investments, Gresham House and Harwood will take a big hit.

descartes244238

Tue 9:18am

Bunzl directors have bought £1.4 million of shares. Worth a punt? Stock report doesn't look that good?

Saxonboy57

Tue 9:40am

A great Easter present for me

cpmal1

Tue 9:46am

Deemed a Superstock with a 95 StockRank .

Monty Carlo

Tue 11:10am

Margin/collateral can become quite complicated - you have cleared derivatives and non-cleared derivatives, and then you have initial margin and variation margin. The rules & framework can differ between listed & OTC products.

It is quite possible for a counterparty to be "matched" or "hedged" such that they are largely immune to swings in variation margin - this is in effect the continuous P&L of their open positions.

What is much more difficult to anticipate and plan ahead for is changes in initial margin. If you have ever maintained a spreadbetting or CFD account you may recall getting warnings that volatility in a certain product area (e.g. certain FX pairs, or interest rate swaps in certain currencies) had increased and that your counterparty (or the clearing house behind them) was upping the intial margin rate - in effect making you deposit more cash upfront to maintain a given level of exposure to the underlying. In effect you are being forced to deleverage slightly.

If you are faced with steep and unexpected hike in initial margin rates across a large chunk of your book (I suspect GBP-USD volatility may have triggered that for Argentex (LON:AGFX) ) you find yourself with an invidious choice - post more cash as initial margin, or wind back the scale of your exposures (i.e. close out some trades).

If you don't have the cash to hand (or can't collect more from your clients quickly enough, as some LDI funds were discovering during the national embarrassment known as the Liz Truss debacle), and closing out positions would leave your client liabilities unhedged...ouch, then you find yourself between a rock and a hard place.

Simple conclusion is that IF the business wasn't maintaining a large enough liquidity reserve to cope with higher volatility levels (and we don't know this for certain) across the existing book, even if they were perfectly hedged from a P&L perspective, then the historic business was generating an unsustainably high return on capital.

Having said that, FX was always a bit of a Wild West in the derivatives world. FX Forwards were not collateralised until way after other derivative markets (and still may not be in some areas). Developments like Continuous Linked Settlement will have improved matters, but it would not surprise me at all for something FX related to be the weakest link when orange proverbial stuff hits rotating machinery.....

snowdrop

Tue 12:29pm

This has been a repeated pump and dump.I lost a packet. Good luck!

MartyMcSpy

Tue 12:38pm

The same one that pumped Plexus?

Toweller

Tue 12:45pm

Argentex (LON:AGFX) was a main write up in the Small Cap Share Watch in February. Has been written about there a few times.

Tue 10:27pm

Sale announced in the morning at a discount.

Hopefully shareholders will not be ruined.

Daily Stock Market Report (Tue 22 April 2025) - DCC, AGFX, ITM, CLIG, CLBS, RCDO, AOTI, VID, AREC

Companies Reporting

Unlock the rest of this article with a 14 day trial

About the Author

Graham Neary

24 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...