Some of the local earnings releases to take note of this week include:
- Tiger Brands (Full Year Results): In the half year result, several brands showed good resilience, particularly within the domestic market, evident from strong growth within the group’s sub-divisions. A fall in domestic volumes over the second quarter did raise some concerns, however an improvement in margins in 2H17 was expected on the back of an improvement in input prices particularly grains. Bloomberg is guiding for bottom-line growth of 3% with top-line expected to expand by 2.1%.
- Nampak (Full Year Results): Management guided for headline earnings per share (HEPS) to increase by between 11% and 17% with trading profit being between 1% and 4% higher. Following routine year-end procedures (impairment testing), total impairments and an onerous contract provision and related costs are likely to be between R720 million and R760 million compared to the prior year of R360 million (excluded from HEPS).
- Omnia (Half Year Results): In a recent trading statement, the group guided for HEPS to increase by between 28.8% and 33.8% which at the time was ahead of consensus. This points towards a strong recovery in the first half following the weak performance during FY17. The recovery was most likely due to a rebound in the mining sector on the back of generally higher commodity prices.
- Lonmin (Full Year Results): The group reported a fall of 1.5% in total tonnes mined during the full year production report. The Generation 1 shafts reduced production by 15.6%, in line with the group’s strategy to remove high cost production in a low-price environment. That being said, platinum sales came in ahead of expectations with units costs being in line with earlier guidance. Bloomberg estimates are guiding for an increase of 44.8% in earnings.
- Naspers (Half Year Results): Core HEPS are expected to increase by between 62% and 67% y/y (1H17: 212 US cents) which were ahead of expectations. Following the solid performance out of Tencent over the last quarter, it is fair to assume that this drove the acceleration in earnings, but the positive surprise may have come from the ‘rump’ be that the Internet or Video Entertainment business.
- Kaap Agri (Full Year Results): In a recent trading update, management stated that recurring headline earnings is expected to increase by 16% and 18% (between R244 million and R248.2 million). The improved performance during 2H17 (1H17: +12.3%) was driven by a stronger operational performance as well as the annualisation of certain costs. In addition, the group continues to benefit from on-going investments in improvements, upgrades and acquisitions.
- Vukile Property Fund (Half Year Results): According the guidance provided in the FY17 result, distribution growth for FY18 is expected to be between 7% and 8%. Post full-year results, Vukile acquired a 98.3% stake in Spanish REIT Castellana Properties for €193 million (~R2.9 billion). This was in line with the group’s international expansion strategy and offers further diversification for the portfolio and income stream.
- Lonmin, Keaton Energy Holdings, Bushveld Minerals, Crookes Brothers, Hulisani, and Sygnia are also due to release results next week.
- From a local corporate actions perspective, Tuesday marks the last day to trade in Redefine International PLC, Telkom SA, Rebosis Property Fund and Vodacom Group to receive its latest distribution, and will trade ex-dividend on Wednesday.
- Discovery, Woolworths, Remgro, Choppies, FirstRand, Hyprop Investments, Spur Corporation, Transpaco, and Sibanye Gold will host AGMs next week.
American luxury jewellery and specialty retailer Tiffany & Co is likely to generate some buzz in the US next week as the group prepares to release third quarter results. Bloomberg estimates are guiding for marginal earnings growth of 0.3% y/y for the quarter, a slowdown from the previous period (2Q18: +9.4%). According to Bloomberg Intelligence, the fall in tourism to the US and larger marketing investment are to have weighed on earnings. These factors, coupled with secular category weakness and rising competition from mid-tier jewellers, likely offset margins gains which were derived from lower commodity prices.
The UK’s largest pub retailer and brewer Greene King is likely to spark some news flows in the European region as the brewer prepares to report on first half results. Bloomberg estimates are pointing to a soft performance over the full year with negative bottom and top-line growth of 5.4% and 1.7%, respectively. Recent data released at the AGM showed that summer trading was relatively weak, a general trend in the industry during the respective period.
In the Asia-pacific region, investors will likely shift their attention towards Hong Kong as natural gas distribution company China Gas is scheduled to release interim results at the beginning of the week. Full year estimates from Bloomberg are guiding for solid earnings growth of 36.7% and revenue growth of 27.9%. The group provided an upbeat profit alert recently, stating that net profit is expected to increase by over 90% for 1H18 as a result of a strong demand from the coal-to-gas market in northern China.
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