Tuesday preview: Financials in focus with Hargreaves and SLAberdeen results
Tuesday should see a fairly bustling day as the summer results season begins to taper slightly, with numbers expected from Domino's Pizza, Hargreaves Lansdown and Standard Life Aberdeen.
Other scheduled results include from FTSE 350 newcomer Contour Global, plus InterContinental Hotels, Intertek, Meggitt, Old Mutual, Rotork and TP ICAP.
Despite the concerns around a regulatory clamp-down on investment platforms, Hargreaves Lansdown shares are up for the year, with a 27% rise since the start of the second quater.
Tuesday will see full-year numbers from the Bristol-based savings, pensions and investment group, where Deutsche Bank expected assets under administration to rise 16% to £92.2bn, with net flows up 9.9% or £7.8bn.
For the fourth quarter to end-June, AUA is expected to have experienced a 2.2% gain from markets and attracted £1.1bn in net flows. "We expect this increase in AUA to result in a 15% YoY uplift in revenues but on a slightly diminished margin of 46.2bps (FY17: 47.3bps). This slight margin compression is due to a reduced margin on cash as a result of lower interest rates in 1H18, a lower margin from Funds due to scale discounts and lower margin from shares due to more subdued markets in FY18 vs FY17."
Even though these results are expected to show a continuation of recent solid trends, DB analysts now see HL as being "fundamentally expensive at current levels", with a p/e ratio of 35 times 2019 earnings on a calendar year basis.
Analysts at Peel Hunt said the recent publication of the FCA platform study "looks relatively benign for HL", see the p/e ratio of 32.7 times, being "full" but "reflecting the longer-term potential and dominant market position".
Elsewhere in the financials sector, eyes will be on Standard Life Aberdeen's dividend and an update on its various restructurings as the merger integration continues. As the merger was completed in August 2017, half-on-half and yearly comparisons are pretty difficult.
SLA's financial statements "will be complex for most of this year", said Berenberg, as the group works through its various plans, with analyst saying investors were likely to focus more on transparent measures of value - the dividend yield, in particular.
UBS expected half-year revenues of £1.6bn, with gross operating profit of £536m and the after-tax adjusted profit to be £491m. "We expect clients to focus on the company's H1 flows, especially as they are the only UK asset manager that did not disclose their Q1 flows. We expect £10.4bn of outflows in H1:18 from the Growth business (which is what investors will focus on) and another £9.4bn of outflows from the Mature insurance business."
Domino's Pizza will arriving late in the season with its interim results, having for the first quarter revealed UK like-for-like sales were up 7%.
Peel Hunt said the second quarter should be positive, aided by poor weather in early April and the World Cup in June, a month in which web-hits rose by 26%. Analysts forecast PBT rising 3.4% to £46.2m and earnings being up 5% to 8.0p aided by share buybacks.
For the full year PBT is forecast by the broker to be held back by £6m, due to one less week compared to the previous year, increased costs from the Warrington's supply chain centre, a £1.5m food pricing investment headwind in the first half, overseas profit disruption from installing the Swedish and Swiss supply chain centres, and the Dolly Dimples integration in Norway.
Meggitt, the aerospace and defence engineer, is due to report half-year results.
DB has increased our earnings forecasts by 4% to reflect the net benefit from two positive and two negative adjustments, including the benefit of a weaker pound and a more ambitious outlook for organic growth in civil aftermarket revenues in 2018.
The two negative changes assume 1% lower organic revenue growth in 2018 for Civil OE revenues and for military, together with a more cautious outlook on profit recovery in MPC where Meggitt is adding resources to help aid with the ramp up in production of new composite parts.
For IHG, UBS forecast group revpar of 3.6% "with the Americas broadly stable while China continues to perform strongly and EMEAA on the whole recovers". EBIT is seen rising to $411m from $395m on revenues of $2.1bn.
Rotork is expected, according to the average City forecast, to deliver revenues of £320m and EBITA of £63m.
Watch out, said UBS, for new CEO Kevin Hostetler's update the markets on the strategic direction of the group as well as potential cost restructuring actions, plus the latest company outlook.
MACRO NEWS
A reading on the China's foreign exchange reserves released overnight, which will reveal how much Beijing has been intervening in the renminbi. Last week, after the currency fell to a new yearly low, the People's Bank of China raised the cost of betting against the currency's depreciation by re-imposing a 20% reserve requirement on banks that sell dollars to clients using currency forwards.
The yuan climbed 1% on Friday but has since given up some of its gains, falling 0.4% against the dollar on Monday.
Overnight the Reserve Bank of Australia is also due to make its latest policy decision, though no change is predicted despite the previous meeting's minutes having more of a dovish slant with new discussion over global downside risks from both tariff tensions and a slide in Chinese activity indicators.
"Given further US/China escalations recently and US/EU rapprochement, we’d anticipate an update in the August statement. We will also again be looking for any new commentary on the housing market," said economists at RBC Capital Markets.
Later on Tuesday, the biggest European data will be German industrial production at 0700 BST, following a day after disappointing factory orders from the continent's economic powerhouse. French trade data is also due.
For the UK, the most significant macroeconomic report will be Halifax's monthly house price index, scheduled for 0830 BST. Year-on-year growth is expected to pick up to 2.6% for July from 1.8% the month before.
Tuesday 07 August
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (GER) (07:00)
Current Account (GER) (07:00)
Industrial Production (GER) (07:00)
Consumer Credit (US) (20:00)
UK ECONOMIC ANNOUNCEMENTS
Halifax House Price Index (08:30)
INTERIMS
Clarke (T.), Contour Global , Domino's Pizza Group, InterContinental Hotels Group, Intertek Group, IWG , Meggitt, Old Mutual Limited NPV (DI), Rotork, Standard Life Aberdeen, TP ICAP, Verona Pharma, Zotefoams
TRADING ANNOUNCEMENTS
Old Mutual Limited, UDG Healthcare Public Limited Company
GMS
HSS Hire Group
FINALS
Hargreaves Lansdown
SPECIAL DIVIDEND PAYMENT DATE
Puma VCT 9
FINAL DIVIDEND PAYMENT DATE
Intermediate Capital Group, Johnson Matthey