Week ahead: Results from Standard Life PLC, Prudential PLC, Legal & General Group PLC, Paddy Power Betfair PLC, Intercontinental Hotels PLC , G4S PLC, Glencore PLC ..
With the banking season results having drawn to a close now, insurers and fund managers will step up to the plate in the coming week.
Standard Life PLC’s (LON:SL.) £11bn merger with Aberdeen Asset Management PLC (LON:AND) is likely to steal the attention away from the investment firm’s first half figures on Tuesday.
It could be the last time Standard Life reports results as a standalone business and investors will be keen to hear an update on its deal with Aberdeen, which is expected to be completed on 14 August.
Last month the Competition and Market Authority approved the merger to create the UK’s largest asset management group and the second biggest in Europe, with £660bn of assets under management.
The Financial Conduct Authority and the Prudential Regulation Authority have also approved the deal, leaving the asset managers waiting to hear from just two more regulators in France and Hong Kong.
HSBC expects the enlarged group will offer a pro-forma dividend yield of 5.4% in 2017 that can grow at 10% per year until 2019.
Savings of about £200mln will boost operating profit margins with the cost:income ratio set to reduce to 56% in 2019 versus 63% in 2016, though this forecast may be conservative, the bank said.
In February, Standard Life reported a 16% increase in AUM in 2016 to £357.1bn, despite net outflows of £2.6bn. Fee-based revenue rose 5% to £1.65bn and operating profit before tax climbed 9% to £723mln.
Pru and L&G to report
Prudential PLC (LON:PRU) reports its half-year results on Thursday with analysts expecting another strong performance from its Asia businesses and UK fund management arm M&G.
“Shares in Prudential have staged a solid recovery on the back of a stronger economic backdrop in Asian economies,” said Graham Spooner, investment research analyst at The Share Centre.
“This is anticipated to show through in the group’s latest half year results and follow through from last year’s double digit growth levels.”
In the first quarter, the company reported a 25% increase in new business profit to £856mln at constant currencies. Results were boosted by a surge in new business in Asia and strong inflows into M&G.
Legal & General Group PLC (LON:LGEN) investors are likely to turn their focus on the outlook for the pension de-risking business when the financial services firm reports its first half earnings on Wednesday.
At the group’s capital markets event last month, it said its investment management arm generated £16.8bn of net inflows and had assets under management of £950bn. The bulk annuity business had completed deals worth £1bn, with a UK pipeline of over £12bn.
“That reduces the chances of an unpleasant surprise waiting in next week’s numbers,” said Hargreaves Lansdown. “However, with no major bulk annuity deals announced in the quarter, commentary around the outlook for the lumpier pension risk transfer business will be a key focus.”
Shareholders are also likely to look out for any Brexit contingency plans given its predominant UK exposure.
Betting on Paddy Power Betfair
Away from the insurers, bookies will also be a focus and, having already had updates from William Hill PLC (LON:WMH) and Ladbrokes Coral PLC (LON:LCL), we can guess that Paddy Power Betfair PLC (LON:PPB) will grumble in its interims about unhelpful sporting results.
It also has the excuse of there being no major football tournament this summer to part punters from their money.
Nevertheless, investors will have been perturbed by its report in May that overall gross win margins had been weak in April, and will be hopeful this trend was reversed in May and June.
The City will also be looking for further progress on the integration of the Paddy Power and Betfair technology platforms, which has been a key focus since the merger of the two.
Room service wanted at Intercontinental Hotels
Half-year results from Intercontinental Hotels PLC (LON:IHG) will be the first set of figures for new chief executive officer Keith Barr, though he won’t be able to take much credit as the previous guy, Richard Solomons, who only quit at the end of June.
As always in the hotel trade, the key metric will be revenue per available room (RevPAR).
This was up 2.7% in the first quarter, which was slightly below Barclays Capital’s forecast of 2.9%. The second quarter RevPAR may compare unfavourably to the growth rate from a year ago because of the timing of Easter.
Deutsche Bank is forecasting half-year revenue growth of 3.7% to US$869mln, and revPAR growth of 2.1%, representing a slow-down from the first quarter, partly because of the earlier Easter this year but also because of lower growth in Germany and France.
It is tipping earnings before interest and tax of US$362mln.
Good for G4S
There has been a significant recovery in the G4S PLC (LON:G4S) share price since this time last year; in fact, the stock has almost doubled in the past 12 months.
That rise has come on the back of reassuring results and the market warming to the restructuring implemented at the start of 2016.
Speaking of which, investors will be looking out for further improvements to efficiency and cost-cutting when the security services company publishes its first half update on Wednesday.
Given the recent terror attacks both at home and around the world, demand for its services is likely to have been strong during the opening six months of 2017.
Analysts at Deutsche Bank are looking for a pre-tax profit of £235mln in the first half with 8% organic growth and a margin of 6.3%.
Weatherwatch for Glencore
Investors will want to know whether bad weather will mean Glencore PLC’s (LON:GLEN) interim results, out on Thursday, will be a wash-out.
RBC Canada analyst Tyler Broda, in a recent note, highlighted that several events – including wet weather at Mutanda, an extended furnace rebuild at Murrin Murrin, a pit wall issue at Alumbrera, rain in Columbia – will have impacted upon the miner’s second quarter performance.
He reckons copper production numbers will be down around 8%, nickel would be 18% lower while coal and zinc output will be off by 7% and 2% respectively. “Production is expected to recover in H2, however not all of the delays will be caught up,” the analyst said.
Commodity marketing is, however, expected to be a strength for Glencore. “Positively offsetting the production guidance is a second consecutive quarterly upgrade in EBIT guidance for the marketing business.”
He added: “We see the potential for Glencore to continue to gain market share, especially into a rising rate environment.
“The tighter commodity markets should also be assisting trading margins in H2 with ample balance sheet strength to commit incremental capital when further opportunities do arise.”
Significant events expected:
Monday August 7
Interims: Plus 500 Ltd. (LON:PLUS), Synthomer PLC (LON:SYNT), Telit Communications PLC (LON:TCM), Ultra Electronics PLC (LON:ULE)
AGMs: Aker Biosciences Inc. (LON:AKR), Tanfield Group PLC (LON:TAN)
Economic data: Halifax UK house prices
Tuesday August 8
Trading updates: Bellway PLC (LON:BWY), Pets at Home Group PLC (LON:PETS)
Interims: Henderson Group PLC (Q2) (LON:HGG), Intercontinental Hotels Group PLC (LON:IHG), IWG PLC (Q2) (LON:IWG), Morgan Sindall Group PLC (LON:MGNS), Mereo BioPharma Group PLC (LON:MPH), Mporium Group PLC (LON:MPM), Paysafe PLC (LON:PAYS), Polypipe Group PLC (LON:PLP), Paddy Power Betfair plc (LON:PPB), Quarto Group PLC (LON:QRT), Rotork PLC (LON:ROR), SIG PLC (LON:SHI), Standard Life PLC (LON:SL.), TP ICAP PLC (LON:TCAP), T Clarke PLC (LOON:CTO), Verona Pharma PLC (LON:VRP), Worldpay PLC (LON:WPG), Zotefoams PLC (LON:ZTF)
Finals: Hargreaves Services PLC (LON:HSP)
Wednesday August 9
Interims: G4S PLC (LON:GFS), Hastings Group PLC (LON:HSTG), Interserve PLC (LON:IRV), Legal & General Group PLC (LON:LGEN), Riverstone Energy Limited (LON:PSE), Shares PLC (LON:SHRE), Spirax-Sarco Engineering PLC (LON:SPX), Stock Spirits Group PLC (LON:STCK)
Trading updates: Quantum Pharma PLC (LON:QP.)
Thursday August 10
Trading update: TUI Group PLC (Q3) (LON:TUI)
Interims: Aldermore Group PLC (LON:ALD), Amec Foster Wheeler PLC (LON:AMFW),Tritax Big Box Reit PLC (LON:BBOX), Capital & Regional PLC (LON:CAL), Coca-Cola HBC PLC (LON:CCH), Cineworld Group PLC (LON:CINE), Derwent London PLC (LON:DLN), Evraz plc (LON:EVR), Glencore PLC (LON:GLEN), Hill & Smith Holdings PLC (LON:HILS), Ibstock Plc (LON:IBST), North Midland Construction PLC (LON:NMD), Prudential PLC (LON:PRU), Vitec Group PLC (LON:VTC), Wentworth Resources PLC (LON:WRL)
Finals: DFS Furniture Plc (LON:DFS)
Economic data: UK industrial, manufacturing production
Friday August 11
Trading update: Volution Group PLC (LON:FAN)
AGMs: Samuel Heath & Sons (LON:HSM), Tower Resources PLC (LON:TRP)
Economic data: RICS UK housing market survey; US consumer price index