The week ahead: HSBC, Sainsbury's
5th June 2015 16:19
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Monday 8 June
Trading statements
Magnitogorsk Iron & Steel Works, TCS Group Holding, Abzena, Drax Group.
AGM/EGM
European Islamic Investment Bank, Forbidden Technologies, Hansteen Holdings.
Tuesday 9 June
Analysts at JP Morgan Cazenove expect more news on restructuring, but the issue of re-domicile to remain open when boss Stuart Gulliver hosts an investor update on Tuesday.
"We expect further cost cuts ($6 billion), shrinkage of GBM and disposal of sub-scale Retail operations but all together, these changes are unlikely to be transformational in our view," says JPM.
HSBC shares trade on 1.1 times price/tangible net asset value (TNAV) and 10.4 times 2017e P/E, and the broker believes that the market already discounts the low end of HSBC's new return on equity (ROE) target of 10%-plus. So any further upside relies on the market's conviction around whether the group can meet or exceed its targets.
With 3% upside to its price target of 640p, JPM remain 'neutral' and prefers .
Economic news
The British Retail Consortium (BRC) sales monitor reading for May will be revealed on Tuesday. Buoyed by rises in real incomes and high levels of consumer confidence, Investec expects the underlying picture in the retail sector to remain firm - it pencils in sales growth of 2% (year-on-year) and like-for-like growth of 0.5%.
UK trade in goods and services data will also be published on this day.
After falling from a seven-month high in March, the UK trade deficit could weaken in April, according to Investec's Chris Hare.
"We expect the trade balance to deteriorate somewhat in April. Our view reflects an anticipated drag from past rises in sterling which in trade weighted terms has appreciated in excess of 5% over the past year," says Hare, forecasting a trade deficit reading of -£3.4 billion and a goods trade deficit of -£10.5 billion.
Trading statements
OMG, Iomart Group, Oxford Instruments, Custodian Reit, CML Microsystems, Picton Property Income.
AGM/EGM
Bank Audi SAL, Rapidcloud International, RusPetro, International Public Partnership, China Africa Resources, Blackstar Group, Hydrodec Group.
Wednesday 10 June
Expect supermarket chain to confirm a "pressured start" to its calendar year halfway through the week.
"We expect Sainsbury's start to 15/16 to be very much in the same vein of the closing stages of 14/15," says broker Jefferies. Deflation is likely to have remained a major challenge to the topline, so expect the pricing headwinds seen in the fourth quarter to have spilled over.
"Whilst we expect Sainsbury's LFL performance to be broadly in line with that of the other UK majors, there are a few factors that may result in greater margin risks at the group relative to peers in the coming months.
"Firstly, Sainsbury's guidance suggests a step up from an annualised £100m gross pricing investment in H214/15 to £200m in H1 15/16 (other UK majors have not detailed their gross cost of price investment). Secondly, Sainsbury's neither benefits from the more limited operational leverage of or the deeply rebased nature of UK margins."
Jefferies says 'hold' with a 260p price target.
Economic news
Wednesday's UK manufacturing output and industrial production figures for April will yield some clues on the economy's overall performance, says Investec's Philip Shaw.
"Surveys are signalling that externally facing sectors are undergoing a squeeze from the strength of sterling over the past year. Even so, these survey results are indicating some expansion, albeit modest, in manufacturing," suggests Shaw.
Investec's forecast is for an increase in manufacturing output of 0.2% and a marginal rise in industrial production of 0.1%.
Trading statements
Zambeef Products, Ensor Holdings, Sainsbury's.
AGM/EGM
Bisichi Mining, Sopheon, Falkland Oil & Gas, O'key Group, Densitron Technologies, Aluminium Bahrain.
Thursday 11 June
Economic news
April's RICS housing market report showed the headline prices balance increased to 33% from 22%, driven by a tightening in supply conditions. Investec predicts another increase in May.
"Our suspicion is that we will see buyer demand build over the months ahead as the economic backdrop and low mortgage rates continue to lift interest. Indeed, early signs of this look to have been evident in the Bank of England's April mortgage approval numbers which leapt from 61.9k to 68.1k," says analyst Victoria Clarke.
"However in terms of the upcoming RICS numbers, we suspect prices are likely to be led, primarily, by shortage of supply. Our upcoming forecast is for another increase in the prices balance to +40%."
Trading statements
Redhall Group, Real Estate Credit Investments, Halma, CareTech Holdings, First Property Group, Home Retail Group.
AGM/EGM
Mx Oil, Source BioScience, e-Therapeutics, Camkids Group, Ascent Resources, Verona Pharma, Serabi Mining, Black Sea Property Fund, Wildhorse Energy.
Friday 12 June
Economic news
Construction output surged by 3.9% in March, although this increase took place within a weak period, explains Shaw.
While, Investec does not formally forecast the monthly construction series, its inclination is to expect a buoyant increase on the month, marking a decent start to Q2.
Trading statements
Origo Partners.
AGM/EGM
Schroder Global Real Estate Securities Limited, Sunplus Technology Co, Baker Steel Resources Trust, Shin Kong Financial Holdings, Trader Media East, Bacanora Minerals.
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.