The week ahead...
22nd August 2014 17:01
Markets are closed on Monday, due to a Bank Holiday. In the rest of the four-day week, Petrofac will report, along with Melrose Industries.
Monday 25 August
Markets are closed for Bank Holiday
Tuesday 26 August
Kicking off the shorter week, London-based distribution and outsourcing company will publish its first-half results.
Analysts' expectations: Ahead of the release, Brewin Dolphin's equity analyst Iain Armstrong says: "Bunzl has become a darling of the Support Services sector in the past few years with the company rating moving from a discount to the sector to a significant premium. We appreciate the strong cash flow, consolidation opportunities and growth in emerging markets through scaling up."
Valuation: However, he reckons that the strengths of the outsourcer are reflected in its price/earnings ratio of 19 times, especially given that growth in developed markets is barely higher than GDP growth.
At Thursday's close, Bunzl's share price settled at 1,639p, 20% higher than 12 months ago.
Also to report its first half results on Tuesday will be the provider of oil field services company Petrofac.
Analysts' expectations: After a profit warning earlier in the year, shareholders will hoping that performance will mirror .
"However, unlike its rival, which did not issue further profit warnings in the first six months of 2014, Petrofac issued a further two downgrades to guidance," says Brein Dolphins Armstrong.
"Last year the profit warning was due to delay in orders at the Engineering Construction Operations and Maintenance (ECOM) division in part due to factors beyond its control. This year has also been a roller-coaster for investors with much stronger order books at ECOM but a disappointing performance at Integrated Energy Services due to delays in commissioning the Greater Stella field in the North Sea, which has resulted in questions over the synergies of the division with the main ECOM operation."
Valuation: Armstrong does not believe the shares are expensive, but warns that management need to stop "slipping up", in regards to its guidance.
The final company featured to release its results for the first six months of the year will be , an advertising and marketing company.
Analysts' expectations: "We do not expect major surprises from WPP, as it has already reported sales for the first five months of the year (up 4%)," says Nicla Di Palma, an equity analyst at Bewin Dolphin, expecting the trend in the previous five months to have continued.
"As highlighted by management, the operating margin should be ahead of last year, despite the significant currency drag. Global peers have already reported strong numbers for the first half (both Omnicom and Interpublicis performed well in the first half of the year). Despite the likely good news, the shares have underperformed the market so far this year, held back by macroeconomic uncertainty, in our view," the analyst concluded.
JPMorgan reckons when the foreign exchange hit has been priced in, investors will be presented with a buying opportunity.
"We expect first half results to be heavily penalised by unfavorable currency movements...Post first half, foreign exchange headwinds begin to ease into the third quarter but especially in the fourth quarter and WPP’s strong underlying performance should start to be reflected in the reported numbers. On a full-year basis, we look for organic revenue growth of +4.1% year-on-year and forecast reported margin expansion of +20bps year-on-year to 16.7%."
Valuation: The company is trading on a forward adjusted price/earnings multiple of 15 times.
Trading Statement
Concurrent Technologies, Kentz Corporation, UTV Media, FBD Holdings, FBD Holdings, UTV Media, Kingspan Group, Audioboom Group, Conygar Investment Company, Petrofac, Capital Drilling, Magnit Ojsc, WPP Group, Randall & Quilter Investment Holdings, Regus.
AGM/EGM
Livermore Investments Group, Providence Resources, Casdon, Palace Capital, Oryx International Growth Fund, Northacre, Jubilant Energy, Air China, Bank Audi Sal, Tri-Star Resources, Fidelity Japanese Values, Sirius Real Estate.
Wednesday 27 August
Economic news
This week will be quite quiet, especially after the recently packed period. August's Nationwide house price index will be updated at some point and Investec's Victoria Clarke expects the annual pace of price growth to slow to 9.9%, after a minor 0.1% monthly increase.
"Beyond the recent moderation in the RICS housing market survey’s 'prices balance', we have not witnessed a notable easing in the pace of house price growth following the spring/early summer decline in activity metrics," says Clarke.
"We expect some of the softer tone in recent RICS reports to trace through modestly to the Nationwide and Halifax metrics over the months ahead, although we suspect a sharp slowing in the pace of price growth is off the cards for the immediate period," she adds.
Trading Statement
Evraz, Cape, Evraz, Chime Communications, Industrial Multi Property Trust, London Capital Group Holdings, Onesavings Bank, Polymetal International, Kenmare Resources, John Laing Infrastructure Fund, Hansteen Holdings, Churchill China, Grafton Group, Foxtons Group, Candover Investments, 888 Holdings,APR Energy, Antofagasta.
AGM/EGM
Iona Environmental Vct, Coral Products, New Century AIM VCT 2, Datang Intl Power Generation Co, Iona Environmental Vct, Oxford Technology 2 Venture Capital Trust, Oxford Technology 3 Venture Capital Trust, Indian Hotels Co, Oxford Technology Venture Capital Trust, Prospect Japan, Iomart Group, Oxford Technology 4 Venture Capital Trust.
Thursday 28 August
Investment company will release its first-half results on Thursday.
Analysts' expectations: Di Palma forecasts soft numbers following the first-quarter trading statement, but is bullish on the prospects of the second half.
"Investors’ attention is again focused on the next acquisition, which might be announced with the results. Melrose might also announce the sale of Elster Water (Elster’s lowest margin business), which would be taken positively."
Trading Statement
Playtech, IFG Group, Plaza Centers, Hunting, Alpha Bank, Eurasia Drilling Co, Tritax Big Box Reit, International Public Partnership, PPHE Hotel Group, Lamprell, Xaar, Anglo Pacific Group, Arrow Global Group, Molins, Inspired Energy, IP Group, Bluecrest Allblue Fund, Gulf Marine, Paddy Power, Oxford BioMedica, DP World Limited, Petropavlovsk, Unite Group, Mhp Sa, Signet Jewelers, SOCO International, Macfarlane Group, DRS Data & Research Services, Marshalls, Salamander Energy, Servelec Group, Melrose , Stock Spirits Group, office2office, STV Group, Hays.
AGM/EGM
Tavistock Investments.
Friday 29 August
Rounding off the week, industrial laundry services company Berendsen will release its half year results.
Analysts' expectations: Although admiting that activities are not "terribly exciting", Armstrong notes that when done will, they bring in impressive earings.
"Chief executive, Peter Ventriss' self-help measures to improve productivity in the UK and Germany have helped offset sluggish underlying growth in those countries in the past three years. With the economic outlook now brighter there are significant opportunities for further operational gearing helped by an improvement in top-line growth," he adds.
Economic news
Closing the British Bankers Association's (BBA) mortgage approvals and August's GfK consumer confidence figures.
The BBA is usually a good indicator for the Bank of England's view on mortgage approvals says Investec's Philip Shaw. After four consecutive declines June's figures rose to 43,400, up 1,400.
He adds: "We hope for another increase this month and suspect that the previous weakness was temporary. Indeed August's Monetary Policy Committee minutes suggested that lenders expected that any negative impact from the Mortgage Market Review would subside again in July."
In July, consumer confidence faltered for the first time in six months, falling to -2, with Clarks suggesting rumours of an increase in the Bank Rate in late 2014/early 2015 were to blame.
"With that news now older, a slight retracement looks possible in the Augu st number; we look for a single point increase to -1," she predicts.
Trading Statement
Perform Group, Nord Gold, Bilfinger Berger Global Infrastructure, Charles Taylor Consulting, Berendsen, Cathay International Holdings, Tcs Group Holding, Computacenter, Chesnara, bwin.party digital entertainment, British Polythene Industries, Lavendon Group, Headlam Group, Restaurant Group, Avation, Telecity Group.
AGM/EGM
Yujin International, Stagecoach Group, Sweett Group, Petroneft Resources, Essar Energy.
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