Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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June 11, 2024

Investors like Raspberry Pi and cream cakes

Macro

UK unemployment rate has increased to 4.4% from 4.3%. But, wage growth remains ahead of inflation, raising concerns that the BoE may pause its rate-cutting stance.

US consumer price data and the Fed rate decision are both due tomorrow.

UK Companies

In the UK’s most high-profile IPO for some time, Raspberry Pi began trading at a 35% premium to the 280p issue price, valuing the company at £730m.

Indications are that this offer was 10x oversubscribed, with many investors left with no allocation. The sponsors have left little to chance in ensuring they got a successful deal. This is a good outcome for the UK capital markets, albeit disappointing for smaller investors. 

Cake Box has delivered a strong financial performance for the fiscal year. The company’s revenue grew 8.7% to £37.8m, with a significant margin increase of 52.7% (2023: 49.4%). It’s also worth noting that the company has seen a 19.5% rise in net cash to £7.3m, grown its dividend by 10.8% to 9.0p, and added 20 new franchise stores. In addition, Cake Box has undertaken a brand refresh, launched a new website and customer relationship management system, and co-funded an annual marketing fund. The company’s performance in FY25 is in line with management expectations.

Cake Box has responded positively to the growing pains it encountered two years ago. With a rebuilt operating board and new NEDs, it has introduced redesigned stores, improved operating procedures and continued to grow its franchised store base. This delivers an attractive asset-light model with strong returns on capital metrics.  

Oil explorer Deltic’s decision to withdraw from its Pensacola North Sea license has had a significant impact. The move has led to a sharp fall in the company’s share price, highlighting the increasing financing risks that smaller UK E&P companies are currently grappling with.  

Idox, the document handling software provider, reported a 21% H1 revenue increase to £43.1m and a 29% increase in its recurring revenues to £27.4m. Per the board’s expectations, it is on track to deliver for the remainder of 2024. (Report here).

Oxford Instruments reported FY revenue growth of 9.8%. Its order book stands at £302m. It reported operating profit of £80.3m and cash conversion of 64%.

Oxford Metrics, the smart sensing and software company, is on track in H1 with >90% FY revenue visibility. (Report here). 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.