The Weekend Rebel Review, 15th August, 2025

#AEP #WJG #VTY #ZTF

This is just some thoughts, it isn't investment advice or incitement to buy in any way, just my views - please do your own thorough research. I’m not an analyst, I’m just a private investor looking after my own money. Nothing I do or say is meant as advice or should be taken as such. My views of a stock may change quickly, dependent on my research or news. Here I publish my ideas and research that I have done and discuss the way I invest. Anything written here needs to be verified for its accuracy. Assume any stock I write about I likely own, so my views are biased. Inevitably I will get things wrong, everyone is responsible for their own decision making and what they buy and sell. Subscribing and reading this article means you accept the above and you take full responsibility for your own actions and decisions. Small Cap stocks can be illiquid and very hard to sell at times when demand is weak so caution is required.

Expect some spelling mistakes – I’m dyslexic and in a rush to get this out on a Friday so a bit of a task at times.

A week of just sort of unexciting data this week, unemployment, wages, jobs – all about where they were expected to be give or take a fraction of a percent. Perhaps one of the most interesting bits of news this week was from Bellway, regarding the business climate and sentiment:

That was about as positive as I have seen a builder look in recent months. Always interesting to note these things for read across in the sector.

Interestingly, the UK GDP numbers came in better than expected on Thurs although the economy grew less fast in Q2 than Q1. I have been saying that I think the UK market is under-estimating the performance of many UK businesses.

This performance is in spite of Rachael Reeves, not because of her actions, you just wonder where we could be without all the tax and spend.

Prelim Business Investment however, was down 4% for the quarter – if she needs to heed one warning it is that – businesses are not confident to invest. On an individual basis, a number of companies are doing far better than expected and the shares are responding well when ‘beats’ are revealed. It’s amazing that slowing growth almost feels like a win under this incompetent lot.

More interestingly, the S&P hit a new high on Tuesday, as did the FTSE All World index. Meanwhile the UK slouches. I believe it’s a market of two faces. Domestic service industry and restaurants and high end to middle retailers are probably going to find the going a bit tougher than many imo. Meanwhile, exporters and overseas manufacturers with UK bargain retailers are likely to find the going easier in my opinion.

I also think house builders are trading near a bottom. Rate cuts must start to help and the government must realise soon that too many regulations slow building. If they are going to get growth they are going to need to help construction. The motor industry isn’t coming to their rescue soon either imo. Even with incentives, EVs are not selling to people outside of cities. Over the past 10 days I’ve picked up two screamingly cheap stocks in Zotefoams, ZTF, that were trading on a PE of 13 just on their H1 eps. Anglo-Eastern Plantations, AEP on a PE of 10 on just H1 eps. Hill &Smith posted interims that saw the shares rocket 10%+ on the day on Wednesday as another example. I am pretty sure there will be lots more like this for those in the Wide Awake Club, which I’m never always in at 7am in the morning. Time to be doubly on the look out for the ignored bargains. AEP and ZTF are both international businesses. I am favoring these more and more over domestic businesses what with the taxation policy of this government. Overseas workers pay no NI and are not subject to UK minimum wage. Energy prices are lower than in the UIK too.

On to stocks

One stock I bought this week was Anglo Eastern Plantations, AEP. They own palm plantations in the far east for the extraction of palm oil.

I will be totally honest, this is outside my normal scope of investing. I rarely get involved in any oilers, miners or resource co’s and while this falls outside of those it is still a resource of sorts that I know little about. Having always told people to do their research, I have done less than my normal amount on this myself, so far, so what on earth am I doing?

Well sometimes you see something and it just looks way too cheap. Firstly. Like Carclo, these had the same auditors, Forvis Mazars, that foist upon the co a suspension due to them taking too long to complete an audit. Since they came out of suspension in June and posted a trading update the shares have rallied strongly, up over 50% since suspension ended. They posted the interims on Monday.

You can read the full results where you read your RNS.

EPS in H1 of 123 US cents, equates to 91p eps.

All the sales and profit numbers up very high double digits.

They paid a 51c final divi last year = 38p or 3.8% on results day, I’d expect a lot higher this year with the growth. 50p+ eps? - 5% ?

They have net assets of $584m, = £443m

They have $244m cash = £181m and no borrowing.

A market cap of £380m on results day.

With 91p eps in H1, I think they could do well over 200p eps for the year IMO, provided palm oil price behaves reasonably. There are no broker forecast so many people may have ignored the stock for lack of those but the PE looks like it may be 5 perhaps, getting on for half the market cap in cash and trading below net assets.

Sometimes things look so cheap you have to buy, so I did.

They have just started an £8m buyback programme saying “The Board believes that AEP's Shares are undervalued relative to the Group's strong fundamentals and growth potential. By repurchasing shares AEP aims to enhance earnings per share and deliver greater value to remaining shareholders.”

I bought at just below £10 a share on Monday. I did highlight then on Twitter for those who enjoy the early alerts.

50c eps H1 2024, 78c eps H2 2024, 123c eps H1 2025. I am not saying it will but If this momentum continued you could be looking at near 300c eps or 220p eps.

No share dilution in at least the last 10 years.

So I have bought and the bowl on the chart looks even more enticing and it is hitting all time highs:

I’m not suggesting anyone buys them as they are out of my research league. The risks are the weather, disease, political unrest, palm oil prices. It is on the main market, not Aim.

Palm oil has made a low around May in the past two years and has been rising since May this year.

The shares have risen 25 fold since the start of the millennium. There must be a bit of class here to do that through the financial crisis, Brexit, Covid and Ukraine imo.

If you decide you like them, do more research than I have done, mine is still a work in progress before increasing my position. Know the risks/rewards and all the other caveats.

Watkin Jones. WJG announce a property deal on Tuesday:

The recent rate cuts are beneficial to WJG and the shares have been firming recently, up 15% over the past week, probably due to the rate cut and news of this deal leaking into the market.

I reduced a month or two ago as there were lots of talk regarding increased gov regulation slowing the sector. Still looks good value to me and hopefully more deal news soon, deals can be a bit lumpy.

I mentioned last week that I had bought a meaningful amount of Vistry Group, VTY. The CEO has been buying shares heavily and the co has started buybacks.

On Thursday they announced the acquisition of a large site acquisition :

A lot of positives actions recently, Interims are on Sep 10^th

Zotefoams, ZTF – 104 years of class.

Zotefoams, ZTF has become a major holding for me over the past 10 days so I thought it is summer and the market is quieter, I’d post a longer, more detailed note of what makes me so keen as and investor.

Shareprice £4.00

Mkt cap at £4.00 = £197m

Number of shares in issue: 48,846,234. No dilution in the past 10 years.

There is a forecast 7.88p divi per share.

Record sales of £77.4m in H1

Record eps of 19.5p in H1

EPS Forecasts 2025 = 30.8p. 2026 = 34.4p

Zotefoams make foam, but they make foam better than anyone else. The company make advanced materials that deliver enhanced performance and safely while using less foam. Zotefoams started over 100 years ago and work with customers to develop innovative and unique products. They have manufacturing facilities in UK, Europe, North America and Asia.

The products they make go into the sectors below.

Foam may sound boring, but there is foam and foam, and besides, buying shares in co’s where investors ‘perceive’ the product as boring is never a bad thing in my book. Generally, foam will be made using air or carbon dioxide. Zotefoams uses nitrogen so a lower carbon footprint method. More importantly they use nitrogen with heat and pressure to create various types of foam with different performance for different applications. This also helps co’s that produce cars, planes and transport systems maker lighter products that use less energy to propel, and stronger. Zotefoams are world leaders with proprietary technology for use in product from the sectors above. 100 years of experience in innovation and creating foams tailored exactly to the customer needs is pretty unique and hard to emulate.

One thing nobody can fail to see is the amount of foam that gets used today. Nearly everything I get from online has foam in the product or packed around it. Foams can be very soft, soft enough to protect babies in car seats. But foam can be made very tough too. I bought huge metre square sheets made by Zotefoams that I stuck to my garage walls to prevent the car door being opened onto the brick walls and at the end of the garage so you could literally drive in right up to the wall and touch the foam without damaging the front. Throughout industry, precut packaging foam is used everywhere to encase products securely. It is used in clothing for shoes, knee pads and helmet liners. Packaging with loose chips of foam up to huge pieces to wrap around expensive machinery in transit. A huge market across many sectors and many applications.

Aerospace and Premium & Performance Footwear.

Aerospace and Premium & Performance Footwear are two of the most exciting growth sectors. If I was investing in a company supplying these sectors, I’d like them to be supplying the leaders like SpaceX and Nike. As it happens, Zotefoams supply both along with Airbus and Boing. While I am not privy to what the exact foams are that Zotefoams make for SpaceX, Airbus and Boing, it is likely foams are used in places to protect mission critical components for satellites along with comfort seating foams for the airlines and protective foams in the walls of planes. Nike use Zoatfoams to create lightweight training shoes and have been using Zotefoams since the Rio de Janeiro Olympics in 2016. 51% of Zotefoams production goes to Nike, which is an endorsement but also a risk to take into account. The current exclusive supply agreement with Nike for footwear foam materials expires on December 31, 2029 so any change in contract agreements are a long way off.

A bit of history:

David Stirling had been CEO for 21 years up to May 2024. Prior to this, the company had gone on a journey developing a new product, ReZorce, a plastic recyclable material which could transform the recycling on milk cartons and the like. Unfortunately after several years of development and a lot of over excited investors, the company put this product on the back burner for lack of a partner that could take on the manufacture. Perhaps Stirling’s baby? In May 2024 he retired.

Ronan Cox. replaced Stirling in May 2024, he arrived with 30 years of experience at the top of Coats plc. Cox had 3 years as Regional CEO for EMEA and Americas, 2 years as Transformation Officer and 4 years as President of Performance Materials in his latter years at Coats. They all seem very relevant areas for Zotefoams. In April this year, the company announced Gary McGrath is retiring as CFO and was replaced by Nick Wright as Group CFO. Wright joins the company in October. I think it is fair to say that in recent years, so much focus on ReZorce meant the co had taken their eye off the ball. With the new leadership there seems to be a new hunger and impatience, which is a good thing in my opinion. At the results presentation, Ronan Cox, CEO said the company was changing from product led to industry led, in other words, making stuff they have industry demand for, not making so much on the shelf products and waiting for buyers, as I understand it. This makes the company sound more exciting, but there is more. With the interim results the company announced a joint investment with Seoheung Co. Ltd in South Korea, a footwear supply chain specialist manufacturing footwear in Korea, Vietnam, Indonesia, and China.

Zotefoams:“Under the terms of the Joint Venture, Seoheung will invest USD10m for an initial equity stake of 17.5% in a newly established holding company for the Vietnamese facility, with the Group retaining the remaining 82.5%. Subject to the agreement of both parties, Seoheung can increase its equity ownership to 35%, for a further $14m investment. The proceeds of Seoheung's investment will be applied to the commissioning of the facility, expected in Q4 2026, with the project expected to cost a total of approximately $32m. The remaining $22m will be funded by the Company from existing debt facilities.

Seoheung is a footwear supply chain specialist manufacturing footwear in Korea, Vietnam, Indonesia, and China. The company plays a key sourcing role for major footwear producers, including Changshin Inc., and continues to grow steadily through ongoing innovation, with annual revenues of approximately $260m.

As previously announced, in addition to existing production in the UK, manufacturing in Vietnam brings a number of benefits to the Group, including strengthened customer relationships, lower production and transport costs, and significantly improved sustainability metrics.

The collaboration between Zotefoams and Seoheung de-risks the Group's Asian investment from both financial and technical perspectives. By partnering with an experienced local manufacturer, Zotefoams gains immediate access to proven Asian manufacturing expertise, while sharing project costs and operational risks. Seoheung brings decades of experience in the Asian footwear industry, including deep knowledge of Vietnam's manufacturing landscape. The partnership supports Zotefoams' strategic evolution from supplying traditional foam sheets to producing advanced 3D preforms for the athletic footwear market. This technological transition requires both Zotefoams' expertise in supercritical foams and Seoheung's manufacturing process expertise to ensure successful implementation and rapid market adoption. The Joint Venture allows Zotefoams to continue to serve and work in collaboration with all its customers in the footwear business.

The Joint Venture will also leverage over 30 years of local knowledge. It will explore best practice for injection moulding and footwear manufacturing systems and processes, while assisting in providing greater longer term market access.”

This will help the company expand in the far east and as a joint venture it is de-risked. Asia is currently small market for Zoatfoams but the CEO said in the co results presentation that he expects this to grow their Asian business at pace.

Additional to this, in the US they are just commissioning their second autoclave which will be producing in H2 and should add to H2 sales.

So there is a refreshed board and a lot of positive director-speak – but the numbers get even more exciting.

Interim results

There is more to read but just going on the headlines:

Record sales of £77.4m in H1

Record eps of 19.5p in H1

To put this into context, they have done eps in H1, higher than they have ever done in a whole year as far as I can see. They are forecast to do £154m sales this year, they have already done £154m sales on a trailing 12 months.

Sales of £77.4m is over half the full year forecasts. Considering “Construction & Other Industrial” was down 14% in H1 and that has been addressed, and the US has the second autoclave coming on stream in H2, and reduced debt will mean lower interest charges in H2, and margins rising, it is a bit hard to see why H2 eps will not beat H1. Yet broker forecasts for the year are eps of 30.8p. They need only do 11.3p eps in H2 to meet forecasts. After 19.5p eps in H1. The co had a currency headwind in H1 too, which they say is easing recently.

34.3p eps is forecast for the year ahead, @£4 a share, that’s a fwd PE of 13 without beating by a penny. At the all time high in 2019, the shares managed around 17p eps for the year. These have de-rated a long way from where they were but perhaps it’s now time for a re-rating.

From the low in 2009, after the financial crisis, the shares rose 14 fold in 10 years:

So this is what I think.

Why are these trading so cheaply? I think the answer lies with ReZorce.

Zotefoams introduces new technology for recyclable barrier packaging

Zotefoams introduced the product in 2019

When ReZorce was announced, it was thought this would be huge for the company, it still may be but for now it is shelved and awaits a manufacturing partner. ReZorce is a fully recyclable mono-material barrier packaging solution. Basically, where milk cartons and juice cartons are made of a plastic inside and card outer, it make separating the two near impossible for recycling. It is useable in many packaging product. Rezorce means one recyclable material for the whole product. In November 2023 it won “'best recycled plastic product of the year' at the 2023 Plastic Industry Awards. In 2024 it won The Grocer’s “Innovative Pack of the Year”. By November 2023, CEO David Stirling had already announced he would be resigning so it seemed strange to me and others I suspect. In May 2024 the shares topped out at 575p the day Zotefoams clarified the date David Stirling was leaving.

I believe this was the point it dawned on lots of investors that Rezorce was going to take longer to commercialise than hoped, a steady hand at the helm was leaving after a long time and investors reassessed. A lot of investors were long term holders that felt confident under Stirling. A lot more had bought in recently, purely for the excitement of ReZorce. The shares fell from 575p to 225p over the following year. Zotefoms shares are quite illiquid, if you have a few large sellers the shares can move down sharply, the same as they can rise fast on modest demand.

In recent months, Ronan Cox has stamped his mark. Delivering record sales and record profits and putting ReZorce on the back burner has had a great effect on the numbers. Ronan Cox has been in place a year and that’s a very swift move to record sales and profits. This has gone on while sentiment in small caps has been poor but that is starting to change.

For these reasons, and perhaps a few others, sentiment towards the co had meant it has become oversold in my opinion. At 225p in April, the stock, unbeknownst to many, including me, Zotefoams was trading on a PE for the current year of just 12, based on the earnings of H1 alone with a 3% yield. To me this was clearly oversold because many who had bought into the ReZorce story were disappointed and just wanted out.

Pre-Covid, in the lead up to it, Zotefoams was growing sales at up to 20% p.a. but as Covid hit sales were flat. Pre-Covid Zotefoams were trading at £7 a share while doing 17p eps, a much higher rating than today’s PE of 13 @ £4 a share.

For the above reasons, I think historically I am buying these on a rating rarely seen so low in this company. Stirling leaving, Cox being an unknown quantity to a degree and the Rezorce on backburner have all contributed to the poor sentiment.

So far, in 12 months, Cox has achieved record sales and profits, shown vision by targeting the far east with the Seoheung joint venture and is building confidence in investors. I doubt they will get back to the PE’s of 40 they were trading on around 2019, however a PE of 13, and possibly a lot lower, Zotefoams looks way to cheap in my opinion.

I have been buying a very decent stake when sentiment has been low. Investors that sell out on disappointment can drive sentiment down so much so that when good news comes along they are not interested, initially. Eventually sentiment changes. Investors get sellers remorse and regret selling, often buying back in higher. Momentum is a creature that attracts behaviour, sellers on the way down, buyers on the way up. I try to understand the business but also get into the investors mind, or where that mind will be, going forward. When great long term companies get over a rough spell and the numbers improve, the newspapers and tip-sheets show interest. I like buying before the sizzle begins.

Brokers Singer have a 590p target and a Conviction BUY.

On recovery plays or bounce-back plays, I think you have to speculate. If you are going to take broker forecasts as set in stone you are never gong to beat the crowds to the bargains. I speculate that if these have done 19.5p eps in H1 they could quite easily do 40p eps for the year, which would be 150% up on last year. In 2019 when they hit a record high, their operating margins were 12.9%. In H1 2025 they were 15.8%. I’m pretty sure. at £4 a shasre, the fwd PE here is 10 or lower based on what they will do going fwd.

None of that is a forecast, it is speculation. But if you think about it you’ll see where I’m coming from and why I think speculating helps me focus.

Don’t just follow me though, do your research, kick the tyres, dig around, watch the presentation on investormeetcompany in particular.

https://www.investormeetcompany.com/companies/zotefoams-plc

There is actually a really funny bit on the presentation above. A caller asks ‘How is the search for a new CEO going?’

Ronan replies ‘Not very well I hope, cos I wasn’t aware of it’ :-)

Read the company website and RNS news:

https://www.zotefoams.com/investors/financial-updates/

Only you know your own risk v reward, you decide to hit the buy and sell buttons. We all wear big boys pants in this game. I am just laying out here why I have bought this company as part of my diary.

So that’s my reasoning for being enthusiastic about and buying Zotefoams.

And that’s a wrap for this week which has been quieter than many weeks but more exciting in many ways, on an individual stock basis. September is two weeks away, things hot up then - it will be like a heatwave of news - so I’m issuing an amber alert. :-)

Have a good weekend

Rebel

Twitter: @rebelHQ