Interactive Investor

The week ahead: Next, Antofagasta, Lamprell, EnQuest

13th March 2015 17:15

Matthew Sanderson from interactive investor

Monday 16 March

Trading statements

PureCircle, Frutarom Industries, Petards Group, Smart Metering Systems, Brady, Global Ports Investments, Tribal Group.

AGM/EGM

CVC Credit Partners European Opportunities.

Tuesday 17 March

Antofagasta will publish full-year results after a bad couple weeks for the Chile-focused miner.

A civil court in the country ordered the miner to demolish part or all of a dam at its flagship Los Pelambres mine after locals (who blocked access to the mine) complained that the the dam altered the course of the area's river, causing water shortages.

The miner will appeal the court's decision, which could take up to two years, and is entitled to continue operating the dam in the meantime.

An RNS on Thursday said the company expects that the final impact of the protesters' action would "reduce production at the mine by approximately 8,000 tonnes of copper for 2015".

However, analysts at Barclays weren't too worried in a recent note, but did adjust their forecasts.

"The company has a reasonable track record in dealing with these sorts of issues so we would expect it to come out relatively unscathed. Both are actually a result of the extended drought in Chile which is getting worse and is already starting to threaten total country copper production," said Barclays.

"We are downgrading EPS [earnings per share] forecasts for 2015 and 2016 by 11% and 7% respectively (we increase our PT to 735p based on 12x 2016 earnings)".

Barclays still sees the stock as one of the higher quality names in the sub-sector and retains its 'equal weight' rating.

Gem Diamonds also reveals full-year numbers. JP Morgan Cazenove maintain a positive outlook on diamonds and remain 'overweight' on the stock with a revised 250p price target.

Look for revenue of $265 million, EBITDA of $97 million and EPS of 20.6 cents per share, says the broker.

The group will also announce its much-anticipated maiden dividend. JPM believe 4 cents per share is affordable given the firm's desire to implement a sustainable payout.

"We expect GEMD's future dividend policy to be linked to profitability or cash flow (a progressive policy is unlikely, in our view)" adds the broker.

Trading statements

Regenersis, Gfinity, KBC Advanced Technologies, Good Energy Group, Mears Group, Safecharge International Group, WANdisco, Gem Diamonds, Pennant International Group, Just Eat, Zotefoams, French Connection Group, Antofagasta, IG Group Holdings, Sainsbury's.

AGM/EGM

Actual Experience.

Wednesday 18 March

Don't expect any surprises when engineering conglomerate Smiths Group publishes half-year results, says JPM.

"We expect management to confirm that the group's cost-cutting programme remains firmly on track. While the outlook for the oil & gas industry end-market remains uncertain, we estimate it accounts for <15% of group sales and the bulk of this exposure is to the aftermarket," says the broker.

They expect first-half 2015 group revenue to slip by 3% year-on-year to £1.29 billion and operating profit of £231 million, down 6% year-on-year.

JPM also reduce their revenue forecast for 2016 to £2.97 million from £3.04 billion due to the prospect of lower growth at John Crane (a subsidiary) as a result of its exposure to the oil & gas industry.

They remain 'overweight' but lower their price target from 1,430p to 1,323p.

Economic news

Chancellor George Osborne is set to deliver his final budget of the Parliament on Wednesday.

Investec say his most likely strategy ahead of the General Election will be to use recent "fiscal room discovered at the end of the forecast period to counter pre-election accusations that fiscal austerity is the Chancellor's religion".

"He will do this, we suspect, by adjusting his plans to show a slightly less arduous path of consolidation", adds Investec.

Unemployment data for February, average earnings details for the month of January and March's MPC minutes will also be released on this day.

Investec's Victoria Clarke expects to see UK unemployment remaining firmly on a downward track over the months ahead, with the upcoming "single month" measure falling to 5.5% in January (from 5.6%), bringing the "3 month" rate down from 5.7% to 5.6% - the lowest rate since June 2008.

Investec also expect to see pay growth pick up over the months ahead, due the continued reduction in economic slack in the labour market.

"On a single month year-over-year basis we expect to see pay growth edge up to 2.5% (or 2.3% 3m yoy)," says Clarke.

Investec suspect the MPC meeting, heralding the sixth anniversary of the introduction of quantitative easing and near zero interest rates, was a relative "non-event" following last month's Inflation Report (IR) and forecast reassessment.

"We would be surprised to see anything other than unanimous 9-0 votes to keep the Bank rate steady at 0.5% and the asset purchase target at £375 billion, with developments since that IR having been more of an evolutionary nature," Clarke adds.

Trading statements

Imagination Technologies Group, Smiths Group, Burford Capital, Stilo International, UTV Media, Cape, Accesso Technology Group, Hochschild Mining.

AGM/EGM

Domino Printing Sciences, Commercial Bank Of Qatar.

Thursday 19 March

Retailer Next will publish year-end numbers on this day, which Investec says should highlight a "record" year.

The broker expects revenue to come in at £4.05 billion (+8.2%), profit before tax (PBT) of £780 million (+ 11.5%) and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of £945.4 million (+10%).

"Given the clarity of information to date, the focus will be on what lies ahead in 2015/16. Retail space growth and execution on service/multi-channel remain at the heart of Next’s evolution," says Investec.

"With special dividends likely to be retained over buybacks, the shares yield 5% (2% ordinary/3% special), leaving the shares a core holding," adds the broker, which has a 'hold' recommendation and a 7,000p target price on the stock.

Oil-rig maker Lamprell should publish a strong set of full-year results, according to JP Morgan Cazenove.

They forecast second-half 2014 revenue of $413 million, down 35% sequentially and 28% year-on-year due to project phasing.

Second-half 2014 gross profit should come in at $66 million, adjusted operating income at $43 million and adjusted net profit at $39.5 million, up 68% year-on-year from a profit of $23.5m but 14% below first-half profit of $46.1 million.

The broker suggests focus has shifted to the outlook for 2015 and 2016, particularly given the backdrop of low oil prices.

"Lamprell has secured healthy revenue coverage for 2015/16, which offers protection, and we see low risk of delays on active project work," says JPM, with an 'overweight' rating and 131p target price.

Annual results from exploration and production firm EnQuest are also expected on this day.

EnQuest, the largest UK independent oil producer in the North Sea, has already announced 2014 production of 28,300boe/d - within the 25,000-30,000boe/d guidance.

Production for 2015 is expected to be an average of between 33,000boe/d and 36,000boe/d. Broker Westhouse Securities forecasts sales of $1.03 billion (up 7.8% year-on-year).

"Balance sheet risk has been reduced now as lending banks have agreed to raise the net debt/EBITDA covenant on the credit facility to 5x, and the ratio of financial charges to EBITDA is reduced to 3x, both until mid-2017," says Jamal Orazbayeva at Westhouse.

The broker says 'buy' with a 65p target price.

Healthcare software provider Emis Group will report full-year numbers.

Panmure Gordon says: "A full year trading update released on 22 January indicated that the outturn for 2014 was in line with management's - and we assume our - expectations.

"Indicative revenue growth is 30% (double-digit organic), which ties in with our £137.1 million forecast. All three core divisions had a good year: Primary care market share was maintained, there were gains in CCMH; and contract wins in Secondary & Specialist Care."

Look also for PBTA of £34.1 million (+13%), EPS of 40.9p (+3%) and DPS of 18.4p (+15%).

Panmure says there is plenty on the horizon to generate optimism, maintaining its 'buy' recommendation and 980p target price.

Trading statements

Ted Baker, Savills, EnQuest, Lamprell, Alpha Bank, Xaar, French Connection Group, Next, EMIS Group, Ophir Energy, Premier Farnell.

AGM/EGM

Arden Partners.

Friday 20 March

Trading statements

Berkeley Group Holdings, Investec, CVS Group, JKX Oil & Gas, Gamma Communications.

AGM/EGM

React Energy, Daishin Securities.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.