The week ahead (08/08 - 12/08/11)

The week ahead (08/08 - 12/08/11)

After a disastrous time on the markets last week, investors will be looking for some good news from company results this week.

They will also be keeping a keen eye open for bargains, as falling share prices last week could well have been oversold.

But they will have to look hard for their pickings, as it's set to be a quiet few days - at least in the corporate sense.

Miner First Quantum Minerals will be first to take to the stage on Monday, with its second-quarter results.

Last month it reported production numbers short of the mark, so Andy Davidson, analyst at Numis, said he would be looking for assurances the full year targets of 300,000 tonne of copper and 200,000 ounces of gold are still achievable. An update on the development of Ravensthorpe and Kevitsa nickel projects will also be eagerly awaited, with investors hoping for further notification of when commercial production is likely to start.

Steel supplier Hill and Smith is next into the fray and is likely to highlight a tough trading period in its interim results.

Scott Cagehin, analyst at Numis, said the timing of major road projects remains uncertain and the building and construction division should continue to struggle. But he pointed to the acquisition of The Paterson Group for £28 million and the ATA for £10 million as positive for prospects and said they should help to give a stronger weighting to the second half of the year.

Finally, network supplier Telecity is expected to report continued solid progress for the first half, consistent with expectations for the week as a whole. Numis lists the stock as a "hold", with a target price of 510p and said it expected good EBITDA margin progress. Will Wallis, analyst for Numis, added that similar US-listed companies were less highly valued, which is why he does not list the stock as a "buy".

Moving onto Tuesday and some better-known names come forward.

First up, hotel group InterContinental Hotels is expected to issue a reasonably positive trading update, according to Nick Raynor, investment adviser at The Share Centre.

Numis said the recovery in the US hotel industry should have helped InterContinental to trade well. The corporate hotel market saw global bookings increase 8.8 per cent in June, according to data from Pegasus Solutions, and this too should filter through to help InterContinental's results. Both The Share Centre and Numis list InterContinental as a "buy" and Numis has a share price target of 1650p.

Builders' favourite lunchtime staple Greggs has less of a positive forecast.

The Share Centre said warm weather doesn't usually bode well for the hot pie and pasty maker and although the range of products is improving, margins are starting to be stretched.

Andrew Wade, analyst at Numis, agreed with this and added the key risk comes from commodity prices rising.

He said: 'The forward contracts the company has in place at the moment expire in June when they revert to spot prices well ahead of what they have been paying so far this year. This will provide pressure on earnings to the downside despite a strong performance to date.' For this reason he has a neutral "hold" stance on Greggs and a target price of 460p.

Midweek sees financial services provider Standard Life report on the six months to the end of June. Nic Clarke, analyst at Charles Stanley, noted the company issued an interim management statement on 12 May, which covered the first three months of 2011. At the time, total long-term savings new business sales increased by 25 per cent to £5.8 billion. He currently has the company as a "hold" recommendation and predicted Wednesday's announcement should discuss more of the same.

Also on the cards is travel operator TUI Travel. The holiday industry has been hit hard by the squeeze in consumer's real incomes, as identified in sector rival Thomas Cook, but back in May TUI said its underlying trading was satisfactory and its margins in line with expectations. After a profit warning from Thomas Cook, TUI will be closely studied for similar signs of weakness, but Numis said a higher proportion of differentiated products and a stronger relative position in the Spanish destination market should lead to a relatively reassuring update from the firm.

Skipping straight onto Friday, oil and gas producer EnQuest should shed some light on the effect of the North Sea oil tax, when it announces its interims. Raynor said margins will be hit and profit will suffer, but it isn't known by how much, or when it will start to really hurt. Numis said that despite oil prices remaining robust over the second quarter, the dislocation between oil and gas prices and sector valuation is evident within the FTSE 350 oil producer index – which has fallen 16 per cent since the start of the year, compared to a 25 per cent rise in Brent values.

Operationally though, Numis said EnQuest is well placed to exceed production guidance and its annual reserve replacement target. It lists the stock as a "buy" with a target price of 166p.

Finally, Trinity Mirror will give an indication of how advertising revenue has been spread following the closure of the News of the World, with competitors, the Sunday Mirror and People hoping to benefit. A further upate on cost savings will also be par for the course, due to the more challenging macro environment, coupled with the issues of decline facing newspaper publishers. Numis forecasted full year pre-tax profit of £85 million, with earnings per share of 24p.

On the economic front, the first event of note will be retail sales figures from July.

Released overnight on Monday by the British Retail Consortium, investors will be interested in the impact of the summer clearance sales on consumers' spending habits. Howard Archer, chief UK and European economist at IHS Global Insight, said: 'The fact that many clearance sales started earlier this year than in 2010 could actually have brought forward consumer spending to June from July.'

What's more, the Confederation of British Industry has already released a weak reading for trade activity in July.

The state of the housing market will come under scrutiny on Tuesday, with the RICS Survey, and Archer doubts it will show a marked pick up in housing market activity during July. Also on the radar on Tuesday will be the trade deficit for June. It is expected to have narrowed to £3.5 billion in the month after jumping to a 2011 high of £4.1 billion in May.

Of particular note on Wednesday will be the Bank of England's quarterly inflation report. After the Monetary Policy Committee voted to keep interest rates at their record low of 0.5 per cent on Thursday of last week, members of the committee will be hoping to see no further increase in the rate of inflation or of inflationary pressures.

Thursday sees manufacturing output and industrial production figures for June, which Archer expects to have seen a modest increase of 0.2 per cent month-on-month. This would equate to a year-on-year increase of 2.9 per cent.

Despite the positive prediction, Archer said it is evident manufacturers are finding life really challenging, as domestic demand is held back by serious headwinds and slower global growth has limited export orders.

Monday 8 August

Results

Antofagasta, First Quantum Minerals, Hill & Smith Holdings, Morgan Sindall, Telecity Group

AGM/EGMs

eServGlobal, Messaging International

Tuesday 9 August

Results

Greggs, InterContinental Hotels Group, International Power, Dawson International, NWF Group

Wednesday 10 August

Results

Dragon Oil, Interserve, Smurfit Kappa Group, Standard Life, TUI Travel, Velti, Stagecoach Theatre Arts

Trading updates

Quintain Estates & Development

AGM/EGMs

Equity Partnership Investment Company, Epic Securities, Green Compliance, Mountview Estates, Pan Pacific Aggregates

Ex-dividend date

Access Intelligence, Avon Rubber, BT Group, Cyril Sweett Group, Dialight, Downing Protected VCT IV, Downing Protected VCT V, eServGlobal, Evolution Group, Foreign & Colonial Investment Trust, Greene King, Ingenious Entertainment VCT 2, JPMorgan Fleming Claverhouse Investment Trust, Jarvis Securities, Northumbrian Water Group, Newmark Security, Pennon Group, Smith, St Modwen Properties, Synergy Health

Thursday 11 August

Results

Corac Group, Cryptologic, Collins Stewart Hawkpoint, New Europe Property Investments, Psion, Aquarius Platinum, MBL Group

Trading updates

BAA, Grainger, Trifast, United Drug

AGM/EGMs

Bloomsbury Publishing, International Mining & Infrastructure Corp, Pan Pacific Aggregates, Reliance Infrastructure

Friday 12 August

Results

European Goldfields, EnQuest, SVG Capital, Trinity Mirror, Zenergy Power

Trading updates

Accsys Technologies

AGM/EGMs

Heath (Samuel) & Sons, Oryx International Growth Fund, Sirius Real Estate

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