Some of the local earnings releases to take note of this week include:

  • Advtech (Full Year Results): Management expects headline earnings per share (HEPS) to rise by between 37% and 42% y/y. This implies that growth will be behind 1H16 (+49%). While the slowdown in bottom-line earnings was disappointing, these numbers still point to a robust performance.
  • Master Drilling (Full Year Results): The company guided for HEPS to be between 14.3% and 24.3% higher y/y in ZAR terms,  which was tracking significantly ahead of expectations (consensus: +8.3%). In USD terms, HEPS are expected to be between 1.5% and 8.5% lower y/y.
  • Metair Investments (Full Year Results): In a February trading statement, management said that HEPS would fall by between 9.68% and 7.26%. This was a better-than-expected result (Bloomberg: -30.7%) and represented a marked improvement in 2H16 (1H16 HEPS -51.4%). The absence of labour unrest anticipated for the period had a positive impact as model mix impacts in 1H16 dissipated.

On the local corporate actions front, Monday marks the last day in trade in AngloGold Ashanti, Bid Corp, Cashbuild, Growthpoint Properties, Imperial Holdings, JSE, MTN and SA Corporate Real Estate to receive their recently declared distributions. These counters will trade ex-dividend on Wednesday.

The US fourth quarter earnings season is all but over but there could still be some interest generated by a handful of companies including footwear manufacturer NIKE and multinational courier delivery services group FedEx. Whilst the group boasting the iconic swoosh is expected to report a fall in earnings during the third quarter (-4.11% y/y), a recovery in expected in the fourth quarter with Bloomberg estimates guiding for earnings growth of 17.5% y/y. FedEx has also experienced some pressure recently and is expected to report bottom-line growth of 4.5% for the third quarter compared to 8.5% achieved in the previous quarter. Looking towards 1Q17, the estimated earnings growth for the S&P 500 is expected to be 9% and will mark the highest earnings growth that the index has recorded year-on-year since 4Q11 (11.6%). For the quarter, 78 companies on the S&P 500 issued negative EPS guidance whilst 32 companies issued positive EPS guidance.

In Europe, sports car manufacturer Porsche Automobil is likely grab investor’s attention at the beginning of the week with the group scheduled to release full year results on Tuesday. The vehicle producer has recently been in the spotlight following news that the group is planning to invest heavily in digital services in order to offset an expected slow-down in future car sales. According to Bloomberg estimates, operating profit is expected to more than halve for FY16. Important ‘read across’ results from an SA perspective include Next Plc (for SA retailers Truworths, Foschini, and Brait) and Hermes (for Richemont).

In the Asia Pacific region, a number of large-cap Chinese companies are set to release results this week including the third largest mobile telecommunication provider in the People’s Republic of China China Telecom, Chinese state-owned telecommunication company China Mobile as well as internet and mobile phone value-added services company Tencent. Whilst weak bottom-line numbers are expected from China Telecom and China Mobile, guidance for Tencent is relatively solid with Bloomberg guiding for double digit growth of 36.9% (FY15: 53.1%). Tencent is a very important read across for Naspers. Naspers owns 35% of Tencent and its stake in the business accounts for over 100% of its market cap.

 

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