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

  • Vodacom Group (quarterly update): In the company’s full year results release, management announced that they secured SA’s national and provincial government department’s mobile voice and data communications contract, with customer migration expected to commence during 1Q18. This should be supportive of revenue in the first quarter, with Bloomberg consensus looking for a 18% increase in total revenue (q/q). Our focus will be on the growth in the total number of active subscribers, service and data revenues for both international and local markets.
  • Capital & Counties Properties (Interim Earnings): With the company’s two prime estates located in central London, we expect rental income and property values to come under pressure due to negative sentiment surrounding “Brexit” as well as the outcome of the recent general elections in the UK.
  • On a local corporate actions front, Tuesday marks the last day to trade in TFG Retailers and Lewis Group to receive their most recently declared distributions, and also marks the last pay to participate in the rights offer for Hospitality Property Fund and Advanced Health. These counters will trade ex-dividend on Wednesday. Altron, Vodacom Group, African Phoenix, Master Drilling and Accelerate Property Fund will host AGMs next week.

Second quarter earnings season in the US intensifies this week with approximately 70 companies set to release results. Bank of America, Goldman Sachs and Morgan Stanley will be among some of the large banking counters scheduled to release quarterly numbers this week. Other financial services companies that will be in the spotlight include American Express and Visa. Despite higher interest rates and the recent success of the Fed¹s stress tests, analyst are expecting a mixed batch of results from the banking sector with most forecast pointing to a slowdown in growth amid on-going concerns about lacklustre trade in markets. While Bloomberg estimates are guiding for positive growth from Bank of America (+17% y/y), Goldman Sachs (-7.5% y/y) and Morgan Stanley (-2.4% y/y) are expected to report bottom-line declines. In addition, Netflix and Microsoft will generate some buzz within the tech sector followed by consumer products company Colgate-Palmolive, pharmaceutical company Johnson & Johnson, global cigarette and tobacco company Philip Morris International and eCommerce player eBay. According to Factset, 5% of the companies in the S&P 500 had reported earnings to the end pf last week with 78% having reported earnings above the mean estimate and 87% having reported sales above the overall expected average. So far, for 2Q17, the blended earnings growth rate for the S&P 500 is 6.5% – this was in line with the growth expectation as at 30 June.

In Europe, Swiss multinational pharmaceutical company Novartis and Swedish car producer Volvo are likely to draw some attention at the beginning of the week as they prepare to release second quarter results. Unilever is scheduled to publish half year numbers on Wednesday. The company recently announced that its West Africa business had concluded plans to increase its portfolio in the region and to boost local manufacturing. According to Bloomberg, earnings and revenue are expected to grow by 10.9% y/y and 6.1% y/y, respectively.

In the Asia Pacific region, the focus will likely be on Yaskawa Electric Corporation a Japanese manufacturer of servos, motion controllers, AC motor drives, switches and industrial robots. The group aims to increase its global monthly output of industrial robots to ~5 000 units from current levels of 3 000 in order to service growing global demand. The robotics manufacturer also plans to set up an additional plant at an existing production site in Changzhou which is expected to double its Chinese output to more than 1 200 a month by 2019. Bloomberg consensus is guiding for solid earnings growth of 33.8% y/y for FY18.


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