We give our thoughts on what to expect from companies announcing results week commencing 5 August 2019.
Companies reporting w/c 5 August
HSBC (Q2 2019 Earnings Release)
By a recent measure, the group generates just over 40% of its revenues in Hong Kong so there will no doubt be questions amongst investors as to what extent the recent protests have affected business and confidence on the island. In the UK we have seen rival banks increase the charges related to a surge in last minute PPI claims which will hit HSBC too. Investors though will be very happy if it can repeat the consensus beating forecast as in the first quarter, despite concerns over a slowing global economy. However, with interest rates being cut in the US and other central banks taking a dovish stance, it may not be so good news for banks net interest margins.
We currently list HSBC as a BUY
Rolls-Royce (Q2 2019 Earnings Release)
Restructuring for the group is still the key theme and investors will expect updates on the headcount reductions that were announced a little while ago. The business is now running as three distinct operations, so updates on how it is now doing will be sought after. In the macro-environment there are concerns over the slowing global economy and the particularly tough conditions in the European travel and tourism sector and how this will impact its engines order book.
We currently list Rolls-Royce as a BUY
Other companies reporting this day include: InterContinental Hotels Group (Q2 2019 Sales and Revenue Release) - HOLD
Morgan Sindall Group (Q2 2019 Earnings Release)
Investors in construction and property services group Morgan Sindall will be hoping for some good news in these interim figures given the shares have eased down over the past month. In May, the company said it had made a strong start to the new financial year with all of its divisions making progress. The performance of the office fit-out and construction businesses will be of particular interest thanks to their strong trading in recent times. The strength of the order book and any update on full-year guidance will also be of interest to the market.
We currently list Morgan Sindall as a BUY
Glencore (Q2 2019 Earnings Release)
Unlike some of its peers like Rio and BHP Glencore has found the recent trading environment a lot tougher and the commodities it focusses on have not rallied along with the likes of iron ore. It has faced operation issues at some mines including its copper mine, Katanga in the DRC, while cobalt prices have seen a decline as "artisanal mines" increase supply and major players such as Tesla aim to reduce the cobalt content in their batteries. The markets are expecting a turnaround plan for some of its operations and hope the group managed to reduce its leverage ratios.
We currently list Glencore as a HOLD
Other companies reporting this day include: Hill & Smith Holdings (Q2 2019 Earnings Release) - BUY, Legal & General (Q2 2019 Earnings Release) – BUY, Spirax-Sarco Engineering (Q2 2019 Earnings Release) – HOLD
Aviva (Q2 2019 Earnings Release)
Given the recent management changes and plans to slim down the business, these interim figures will attract a fair amount of interest from the market. The new CEO wants to accelerate the pace of change and anyone who’s owned the shares over the past couple of years, when they have underperformed the market, will probably understand his sense of urgency. The company has long been attractive for its dividends but the recent change in policy has raised some concerns about the size of future increases so that will be another area of focus for investors.
We currently list Aviva as a BUY
Coca-Cola HBC AG (Q2 2019 Earnings Release)
This soft drinks bottler and distributor, which is a member of the FTSE 100 index, has had a good year so far with an upbeat first quarter statement in May leading to a decent rise in the shares. At that stage the company said it expected profit margins to improve this year and announced a special dividend of Eur2.00 which was paid recently. The performance of emerging markets will be of particular interest to the market, especially Nigeria where there have been signs of improvement.
We currently list Coca-Cola as a HOLD
Other companies reporting this day include: Cineworld Group (Q2 2019 Earnings Release) – BUY
WPP (Q2 2019 Earnings Release)
A combination of the slowing global economy, Brexit, and the transition of viewership to online streaming services rivals, such as Facebook and Google, has almost been the perfect storm for the more traditional advertising and PR agencies. Things haven't improved much as French rival Publicis recently warned on profits too. WPP announced a raft of new strategies in December to turn things around and investors will hope there haven’t been any further major client losses, although it could do with improving their own PR as one of their divisions has come under criticism for work carried out of the US Customs and Border Patrol agency. At the last update it indicated first half organic revenues would fall by 2% and the full year should be a little less bad, investors will be happy enough if at least this can be met for the time being.
We currently list WPP as a HOLD
Hikma Pharma (Q2 2019 Earnings Release)
There has been some good news lately for Hikma investors as the generic drugs maker signed licensing and supply agreements with Gedeon Richter Plc and Civica Inc. Under the new CEO the group has announced good trading in its three divisions and maintained expectations for full year results at the last update. Investors will want updates on the progress on new drugs in the pipeline including the generic version of GSK's Advair.
We currently list Hikma as a BUY
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