Login/Register

Thursday preview: Updates eyed at Imperial Brands, TUI and RPC

Market Buzz

Thursday preview: Updates eyed at Imperial Brands, TUI and RPC

Wed, 27 September 2017
Article viewed 314 times
http://stmedia.digitallook.com/web/img/dl/
bool(false)
Thursday preview: Updates eyed at Imperial Brands, TUI and RPC

(ShareCast News) - Thursday has little to offer those with a thirst for UK macro, but there is a healthy sprinkling of international economic data and Imperial Brands, TUI, RPC and CMC Markets are among the companies delivering trading updates.
An updated reading US economic growth is one of the main features on the roster, along with two more central bank speakers in a busy week for Fedspeak, with the consensus forecast that the initial estimate will remain at 3.0%.

HSBC was, however, one of those expecting second quarter gross domestic product growth will be revised up slightly to 3.1%.

"We look for small upward revisions to inventory accumulation and business fixed investment, offset by a small downward revision to consumer spending."

US personal consumption expenditures are seen remaining at 0.3%, according to the consensus forecast, and at 0.9% for the 'core' figure.

German consumer prices are expected to increase slightly, month-on-month, while consumer confidence in the European growth engine is seen edging higher.

Euro area economic confidence is predicted to also inch up to 112.0 from 111.9.

HSBC again was going against the grain, foreseeing a slight easing in September to 111.5, down from the post-crisis high of 111.9 registered in August.

The Bank of England is holding a conference to celebrate the 20 years since it was granted operational independence over monetary policy, back in May 1997, with financial stability and the regulation of financial firms, since added to its responsibilities.

"The 20th anniversary is an appropriate time for us to reflect on the theory of central bank independence, its practical application and its future," the Bank said, resulting in a conference on Thursday and Friday discussing these topics.

"The conference is an opportunity for us to talk to other central bank practitioners, observers and, indeed, critics to take stock of our experiences of operational independence and think about the challenges, questions and opportunities that lie ahead."

COMPANY NEWS

Tobacco giant Imperial Brands has seen its shares fall this summer over fears of increased US regulation, which could hit its bands such as Winston and Kool that give it a sizeable presence across the pond.

Barclays this week selected Imperial as one of its European 'top picks', with analysts saying the company is "executing well against its four core strategic objectives and is creating a business capable of delivering sustainable sales and profit growth", with an inflection at the top line expected in the next financial year, with growth reinforced by a £300m re-investment programme and shareholder returns bolstered by management's commitment to 10% annual dividend growth and M&A optionality in a consolidating tobacco sector.

"That said, given Imperial's lack of exposure to heat-not-burn, we accept that questions around its medium-term reduced-harm strategy are likely to remain, but these are encapsulated in the shares' circa 25% discount to BAT.

Full year results in November are seen as a positive catalyst, where a confident tone on top-line growth for 2018 and details on a significant step-up in investment behind e-vapour are expected.

Analysts at Hargreaves Lansdown said they will be looking to see what management say in response to the regulator's plans to reduce the level of nicotine to 'non-addictive levels'.

"Earlier this month, Imperial announced plans to sell down a 10% stake in Spanish distributor Logista, with the proceeds set to be used to pay down debt and launch a share buyback of up to £160m. Nonetheless, the main avenue of shareholder returns remains the dividend, which Imperial aims to increase by at least 10% per annum over the medium term."

TUI will report its pre-close trading update, following third quarter results in August that were broadly in-line with expectations, with management sounding a confident outlook for the rest of the year.

At that time revenue guidance was increased, above the earlier guided 3%, with underlying EBITA growth guidance maintained for at "at least 10%".

Morgan Stanley said they felt "this is a little conservative as it implies 5% growth" for the quarter, with analysts assuming 12% constant-currency growth in EBIT for the year thanks to 7% growth in the fourth quarter.

Barclays saw "upside risk" to full year estimates of €1.1bn EBITA "as we think that the late markets in the UK was a little better than expected".

Morgan Stanley also noted that the collapse of Air Berlin in mid-August has resulted in some uncertainty over Tui's German Airlines operations as Tui leases 14 of its aircraft to Air Berlin under a wet-lease contract.

"We would look out for commentary on the impact of the contract termination on TUI. Management has confirmed (here) that it is not involved in the restructuring of Air Berlin other than with the fate of the TUI employees tied to the wet lease."

RPC Group is due to post a trading statement covering the six months to end-September, arriving coolly on the heels of July's statement that confirmed margins and profitability were ahead of management's expectations, driven by organic growth, acquisitions and an FX tailwind.

Broker Numis said the update offered the potential to prompt upgrades to earnings expectations for the full year and act as a near-term catalyst for the share price.

"Historically, the interim pre-close statement has been qualitative, rather than quantitative. However, at the time of both the full year results in June and the AGM statement in July, management has addressed market concerns through improved disclosure and by providing clarity on its near-term capital allocation intentions. The resulting share price performance demonstrates that this has been well-received. We believe there is clear scope for management to take a similar approach in the upcoming pre-close statement. "

Hargreaves agreed that it has been "a pretty interesting year" for the company, with a short-selling attack from Northern Trust that focused on the group's strategy of acquisition-led growth, and placed its attribution of exceptional costs under the microscope.

"RPC's response was to put further deals on the back burner, and instead knuckle down to prove it can deliver a seamless integration of the Letica business, its first foray into the US market. The focus of the group's half year update will therefore be on progress here, while we'll also be hoping for further positive news on margin growth," the broker said.

CMC Markets is expected to report trading activity during the second quarter.

Numis analysts anticipate trading being "subdued as the benign levels of volatility provided fewer trading opportunities for clients", taking a gloomy view of prospects for the shares due to concerns about "the rapidly changing regulatory environment and its notably higher revenue volatility".

Euromoney is also expected to provide a year-end update.

In July it released a reassuring third-quarter update that confirmed management's confidence for the full year, with the 1% underlying revenue growth seen in the second quarter having improved to 2%.

Numis does not expect to have seen any major change to the underlying trend of revenue by type.

"Typically in their pre-close update management will confirm a 'minimum' adjusted PBT that is expected to be achieved. Based on 2016 may elect to confirm confidence that will generate at least £100m."

Thursday September 28

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Business Climate Indicator (EU) (11:00)
Consumer Confidence (EU) (10:00)
Continuing Claims (US) (13:30)
Economic Sentiment Indicator (EU) (11:00)
GFK Consumer Confidence (GER) (07:00)
Gross Domestic Product (US) (15:30)
Industrial Confidence (EU) (11:00)
Initial Jobless Claims (US) (13:30)
Personal Consumption Expenditures (US) (13:30)
Services Confidence (EU) (11:00)

FINALS
Allergy Therapeutics, Clinigen Group, Hansard Global, Inland Homes, Produce Investments

INTERIMS
Air Partner, ECSC Group, Frontier Smart Technologies Group Limited, Harvey Nash Group, Microsaic Systems, Midatech Pharma, NetScientific, Tissue Regenix Group



TRADING ANNOUNCEMENTS
3i Infrastructure, CMC Markets, Imperial Brands, RPC Group, TUI AG

AGMS
Byotrol, Filtronic, Foresight 4 VCT, Ilika, Kainos Group , MBL Group, NWF Group, Tavistock Investments

FINAL DIVIDEND PAYMENT DATE
Xafinity

FINAL EX-DIVIDEND DATE
Brooks Macdonald Group, Diverse Income Trust (The), Eckoh, Fulcrum Utility Services Ltd. (DI), Green Reit, Hargreaves Lansdown, IG Group Holdings, Kier Group, Norish Units, Standard Life UK Smaller Companies Trust, United Carpets Group

INTERIM EX-DIVIDEND DATE
Advanced Medical Solutions Group, BioPharma Credit , Christie Group, Duke Royalty Limited, Essentra, Flowtech Fluidpower, Hansteen Holdings, Huntsworth, International Public Partnerships Ltd., Intertek Group, John Laing Group , JPMorgan Russian Securities, Medica Group , Morrison (Wm) Supermarkets, NAHL Group, SafeCharge International Group Limited (DI), Safestyle UK , Smurfit Kappa Group, Somero Enterprises Inc. (DI), STV Group, Travis Perkins, Worldpay Group, Wynnstay Group

INTERIM DIVIDEND PAYMENT DATE
British American Tobacco, Prudential, Reckitt Benckiser Group, Wood Group (John)

SPECIAL EX-DIVIDEND DATE
Diverse Income Trust (The)

QUARTERLY PAYMENT DATE
MedicX Fund Ltd., Volta Finance Limited

QUARTERLY EX-DIVIDEND DATE
Mercantile Investment Trust (The), Real Estate Investors, Value and Income Trust