- Sasol (JO:SOLJ) (Full Year Results): In a July trading statement, management guided for HEPS to decrease by between 1% and 11% y/y (consensus: -0.28% y/y). Ahead of expectations (+2.2%), EBITDA is expected to increase by between 6% and 16% y/y, supported by higher sales, production volumes and product margins in 2H18. Earnings were negatively impacted by lower production volumes, a stronger ZAR exchange rate, and several one-offs. A weaker ZAR exchange rate negatively impacted gearing and the valuation of derivatives and foreign debtors and loans.
- BHP Billiton (LON:BLT) (Full Year Results): In the company’s operational update for the full year, the group reported solid results with key commodities performing ahead of or in-line with expectations. Management expects to achieve FY18 cost guidance at all major assets, which was an encouraging outcome given inflationary pressures.
- South32 (Full Year Results): The company released a positive production report for FY18 in July, with decent output across most commodities except alumina. Both manganese operations in South Africa and Australia delivered record production. Furthermore, S32 entered conditional agreements to acquire Arizona Mining and a 50% interest in the Eagle Downs metallurgical coal project, with both transactions expected to close in the December 2018 half year.
- Imperial (JO:IPLJ) (Full Year Results): The company guided for HEPS to increase by between 9% and 16% with the midpoint (12.5%) being ahead of expectations (Bloomberg: +8.7%). HEPS, excluding Regent, will be 23% to 30% higher y/y. This was mainly driven by lower forex losses and financing costs which implies that operational growth was relatively lackluster.
- BidCorp (Full Year Results): In its latest management update, the company said that third quarter results were positive with earnings growth in-line with 1H18. Currency volatility had a negative constant currency impact of ~0.4%. Management reported an increase of 8.6% in HEPS for the interim period, which was slightly behind expectations.
- Woolworths (AX:WOW) (Full Year Results): In a 52-weeks trading update, management guided for HEPS (adjusted) to decline by between 10% and 15% y/y, behind market expectations (Bloomberg: -8.2%). EPS is expected to be between 160% and 170% lower, and as previously stated, the result was impacted by the AU$712.5 million impairment charge on the carrying value of David Jones recognised in the 26 week period. The top-line figure (+1.6%) was ahead of expectations but reflected a slowdown in the second half, with the Woolworths Fashion, Beauty and Home division in SA remaining under pressure and becoming a real concern. Woolworths Food continued to report robust results, remaining resilient in difficult trading conditions.
- Shoprite (JO:SHPJ) (Full Year Results): The company released a disappointing operational update in July, with top-line growth falling behind expectations and slowing compared to both the first half and prior year. This was exacerbated by adverse translation movements from the non-RSA business as well as a loss of momentum in the RSA business which overshadowed a resilient performance within the furniture division.
- Grindrod (JO:GNDPp) (Interim Results): In a recent trading statement, the company said that headline earnings per share are expected to be between 2.5 cents and 5.2 cents per share (1H17: loss of 17.2 cents. Management stated that the rebound was due to an improved performance within the remaining businesses following the Shipping business spin-off.
- Sibanye Stillwater (JO:SGLJ) (Interim Results): HEPS are expected to come in at 4 cents, tracking well behind full year market expectations (58.4 cents). Attributable profit totalled R77 million compared with an attributable loss of R4.8 billion in 1H17, supported by a strong operational performance from PGM operations, the inclusion of the full six months from the US operations and no material non-recurring items. SA gold production declined 12.9% y/y to 600 000 oz. amid significant safety related disruptions at operations. SA PGM production fell 4% y/y to 569 000 oz. which came in at the top of guidance.
- Harmony Gold, Massmart (JO:MSMJ), Italtile (JO:ITEJ) and Blue Label (JO:BLUJ) are also expected to release results over the week.
- Looking at local corporate actions, Tuesday marks the last day to trade in Liberty Two Degrees, Mond (JO:MNDJ), Mondi (LON:MNDI) PLC and Quilter to receive their recently declared distributions. These counters will trade ex-dividend on Wednesday. Investec Property Fund, Nepi-Rockcastle, Redefine Properties (JO:RDFJ), Telkom and Naspers (JO:NPNJn) will host AGM’s over the week.
Another quiet week is expected in the US, but a few popular retailers including Target, The Gap and Foot Locker (NYSE:FL) could generate some news flow. Bloomberg is guiding for double digit growth from all three companies with the strongest earnings performance expected from The GAP (+20.4% y/y). Based on research from Bloomberg Intelligence, The GAP’s quarterly numbers are likely to be ahead of full year expectations for flat-to-slightly positive sales growth as a result of solid growth from Old Navy and Athleta. Banana Republic’s focus on product improvement could also to boost traffic on a y/y basis. In addition, less drag is expected from marketing expenses, wages and digital platform investments. Multinational skincare, makeup, fragrance and hair care products producer Estee Lauder and food producer J.M. Smucker are also scheduled to release quarterly results next week.
According to Factset, 91% of the companies in the S&P 500 have reported earnings thus far with 79% reporting earnings above the mean estimate and 72% having reported sales above the overall expected average. So far, for 2Q18, the blended earnings growth rate for the S&P 500 is 24.6% which will likely be the highest earnings growth rate since 3Q10 (34.1%).
In the Asia-pacific region, investors will shift their attention towards the Hong Kong insurance sector with results expected from Ping An Insurance (HK:2318), China Life Insurance and People’s Insurance. Whilst decent earnings growth is expected from Ping An Insurance (+7.9%) and People’s Insurance (HK:1339) (+10.2%), China Life Insurance (+30.7%) is anticipated to report strong double digit earnings growth for the full year. That being said, Bloomberg Intelligence has highlighted that China Life Insurance likely fell short of analyst expectations for the first half following its recent announcement which guided for 2Q18 profit growth between 25% and 35%. The pullback was likely due to stock losses amid choppy markets, offsetting benefits from reserve releases on a recovery in bond yields.
Analysts by Thabiso Mamathuba, Pritu Makan