1st Jul 2026. 9.01am
Regency View:
Update
Regency View:
Update
Over the past fortnight, the headlines have been relatively quiet, but there has still been plenty for investors to digest beneath the surface. Several companies delivered solid trading updates that reinforced long-term investment cases, while corporate activity once again reminded us that quality businesses continue to attract strategic interest. Against a backdrop of easing tensions in the Middle East and improving market sentiment, investors have been rewarding companies that continue to execute well, generate cash and strengthen their competitive positions.
Babcock’s One-Off Charge Masks Another Excellent Year
Babcock’s shares briefly came under pressure after the defence contractor reported a £140 million charge relating to its Type 31 frigate programme. On the surface, the headline looked disappointing, but digging beneath the numbers tells a very different story.
Revenue increased 8% to £5.18 billion, while underlying operating profit rose 19%, pushing margins above the company’s long-standing 8% target. Free cash flow jumped 71%, net debt continued to fall and management announced a further £200 million share buyback after successfully completing its previous programme.
Importantly, the Type 31 provision appears to be an isolated programme-specific issue rather than evidence of wider operational weakness. Demand across defence markets remains exceptionally strong, supported by increased European military spending, submarine programmes and export opportunities. Management reaffirmed its medium-term guidance, suggesting confidence in the underlying trajectory of the business remains unchanged.
What we are watching next: Order intake, margin progression and cash generation as defence spending continues to accelerate.
Themes: Full Year Results | Defence | Cash Generation
BAB Daily Candle Chart
easyJet’s Takeover Saga Rolls On
Takeover speculation continued to dominate easyJet’s share price after Castlelake secured a nine-day extension to the UK’s Takeover Panel deadline, giving the private investment firm until 5 July to decide whether to make a formal offer.
While Castlelake has yet to submit a binding bid, the extension suggests discussions with management remain constructive. Investors clearly believe there remains a realistic possibility of a transaction, helping support the share price following months of weakness caused by higher fuel prices and disruption stemming from the Middle East conflict.
Even if a takeover ultimately fails to materialise, the episode has highlighted what many investors have argued for some time, that easyJet’s fleet, airport slots and profitable holiday business may be worth considerably more than the market had been recognising.
What we are watching next: Whether Castlelake submits a formal offer before the revised 5 July deadline.
Themes: Takeover Interest | Airlines | Valuation
EZJ Daily Candle Chart
Intertek Finally Accepts A Premium Offer
After years of quietly compounding earnings, Intertek agreed to a recommended £9.3 billion takeover by private equity group EQT, sending the shares sharply higher.
The agreed offer values Intertek at £60.00 per share in cash, plus the previously declared final dividend, representing a premium of around 60% to the share price before takeover discussions became public. The board unanimously recommended the offer, describing it as fair and attractive for shareholders.
The transaction is another reminder that high-quality testing, inspection and certification businesses continue to command premium valuations. Intertek has built a highly defensive business with recurring revenues, strong cash generation and global scale, characteristics that private equity firms continue to value highly.
What we are watching next: Shareholder approval and regulatory clearance as the transaction progresses.
Themes: Recommended Acquisition | Quality Compounder | Private Equity
ITRK Daily Candle Chart
Action Continues To Drive 3i Higher
3i Group enjoyed a strong fortnight after providing another encouraging trading update from Action, its highly successful European discount retailer that now accounts for the majority of the investment group’s value.
Action reported like-for-like sales growth of 3.3% year-to-date while remaining firmly on track to open 105 new stores during 2026. Despite softer consumer spending across parts of Europe, the business continues to combine steady comparable sales growth with rapid store expansion, a combination that has underpinned exceptional long-term returns for 3i shareholders.
The update also serves as a useful reminder that 3i remains far more than a diversified private equity company. For most investors today, buying 3i is largely a way of gaining exposure to one of Europe’s highest-quality retail growth stories.
What we are watching next: Continued store rollout and Action’s sales momentum through the remainder of 2026.
Themes: Portfolio Update | Retail | Private Equity
III Daily Candle Chart
Tesco Keeps Quietly Taking Market Share
Tesco’s first-quarter trading update demonstrated exactly why the supermarket continues to outperform many of its peers despite an intensely competitive grocery market.
Like-for-like UK sales increased 1.8%, online sales rose almost 9% and customer satisfaction improved significantly as management continued investing in pricing, product quality and convenience. The group also reaffirmed full-year profit guidance while continuing its £750 million share buyback programme, having already completed almost half of it.
Rather than chasing short-term margin expansion, Tesco continues to focus on strengthening its competitive position through initiatives such as Aldi Price Match, personalised Clubcard offers and continued investment in fresh food. It may not generate spectacular growth, but it continues to execute consistently in an industry where consistency is often the greatest competitive advantage.
What we are watching next: Market share trends and profit delivery as competition across UK grocery remains intense.
Themes: Trading Update | Consumer Staples | Share Buybacks
TSCO Daily Candle Chart
Whitbread’s Hotel Strategy Continues To Deliver
Whitbread delivered another reassuring trading update as Premier Inn continued outperforming the wider hotel market across both the UK and Germany.
UK accommodation sales increased 3%, with revenue per available room once again growing ahead of competitors, while Germany delivered 16% accommodation sales growth as new hotel openings and improving occupancy continued to build momentum. Management also highlighted stronger forward bookings, particularly from leisure customers, providing encouraging visibility into the important summer trading period.
Perhaps more importantly, Whitbread continues making good progress on its longer-term strategy. The planned exit from its remaining branded restaurant estate will simplify the business into a pure-play hotel operator, while ongoing investment in Germany offers a sizeable long-term growth opportunity beyond the more mature UK market.
What we are watching next: Summer occupancy levels and continued progress towards becoming a simpler, higher-return hotel business.
Themes: Trading Update | Hotels | Strategic Transformation
WTB Daily Candle Chart
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