Richest Man in The World All Eyes on US Retailers Releases Next Week

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Locally, several results and updates are expected across the bourse:

  • Astral Foods (JO: ARLJ ) (Full-Year Results): Management guided for headline earnings per share (HEPS) to decrease between 12% and 20% y/y (initial guidance: HEPS decline of no more than 25%).
  • Vodacom Group (JO: VODJ ) (Interim Results): While Bloomberg expects 1H22 earnings to contract 8.6% y/y, Vodacom is well positioned to gain from data-traffic expansion, which may sustain revenue growth into the mid- to high-single digits, in line with recent trends. Financial services may also contribute, with new product launches including the VodaPay super app.
  • Stor-Age (Interim Results): During 5M21 the average rental rate in SA grew 7.1% y/y with total occupancies up 3%, both on a like-for-like basis. UK average rentals increased 5.7% y/y and occupancies rose 10.4%. The group boasts a significant and attractive development pipeline, consisting of eight properties with an estimated 46 500 m² gross lettable area (GLA) at a total development cost of ~R685 million (including the Nedbank JV).
  • Transaction Capital(JO: TCPJ ) (Full-Year Results): Core HEPS from total operations are expected to increase between 313% and 318% y/y. Core HEPS from continuing operations are guided to increase by between 232% and 237% y/y. Strong organic growth from SA Taxi and Transaction Capital Risk Services, and high-growth earnings from WeBuyCars, underpinned a robust and resilient performance.
  • Investec Property Fund (Interim Results): Distributable income per share (DIPS) is expected to be between 51.70 cents to 52.50 cents, representing growth of 10% to 12%. The SA portfolio continued to stabilise with anticipated like-for-like net property income (NPI) growth between 9% to 11%. This was supported by strong letting activity with vacancies falling to 9.2% (March 2021: 11.4%).
  • RFG Holdings (Full-Year Results): For 11M21 group turnover increased 1.2% to R5.3 billion as solid sales growth in the regional segment was offset by slower international sales. The performance improved in the second half with turnover up 6.9% for the five months to August 2021, on a pleasing recovery in fruit juice volumes as well as international canned fruit volumes. Regional turnover rose 4% following growth of 12.1% in the five months to August 2021. Bloomberg anticipates FY21 earnings to grow 9.9% y/y.
  • SPAR (JO: SPPJ ) Group (Full-Year Results): For the 38 weeks to 27 August, group sales rose 3.9% to R116.1 billion and sales in SA increased 4.5%, which reflected the impact of the pandemic on the business. Turnover for the half-year period grew 3.1% y/y, while the subsequent five months, which almost exactly mirrored the initial lockdown in the prior comparative period, saw sales increase by 5.8%. BWG Foods (Ireland and South West England) increased turnover by 3.3% (EUR-denominated), against the ongoing impact of the pandemic. SPAR Switzerland continued to report strong turnover growth with an increase of 7.3% (CHF-denominated) as both the neighbourhood stores and the cash and carry business reported growth. SPAR Poland increased turnover by 17.5% (PLN-denominated), however, pandemic-related challenges have continued to hamper the progress of this business.
  • Investec PLC(JO: INPRp ) (Interim Results): Per management, adjusted earnings per share are expected to be between 132% and 137% higher y/y. For the five months to 31 August, revenue was positively impacted by increased client activity and lower funding costs. Expected credit losses were lower and cost growth was below revenue growth.
  • Life Healthcare(JO: LHCJ ) (JO: LHCJ ) (Full-Year Results): HEPS are expected to increase between 121% and 130%. Revenue will grow between 11% to 13% with the normalised EBITDA margin coming in at ~19% (FY20: 17.1%) on a strong recovery in the overall performance across the group. Cash generation remains strong and net debt to normalised EBITDA fell to ~1.9 times (FY20: 2.96 times).
  • Pepkor (Full-Year Results): According to its recent trading statement, HEPS are expected to increase by 94.7% to 114.7%. Growth was driven by an improved trading performance with the base impacted by Covid-19 trading restrictions, as well as lower finance costs on the back of much lower debt levels and interest rates.
  • Tiger Brands (JO: TBSJ ) (Full-Year Results): HEPS from total operations are expected to increase between 15% and 25% y/y. HEPS from continuing operations are expected to be between 5% and 15% lower y/y. The increase in HEPS from total operations was primarily due to the losses recorded in Value-Added Meat Products (VAMP) in FY20 compared to a small profit in FY21. FY21 earnings were also impacted by once-off costs related to the civil unrest (~R100 million) and the canned vegetable recall (~R647 million), collectively having a ~318 cents per share impact on HEPS.
  • Shoprite is expected to release an operational update for the 1Q22. Despite a difficult start to FY22, management remains positive about the recovery process with several opportunities ahead as the group continues to build upon and leverage its vast retail ecosystem (both physical and digital).
  • NEPI Rockcastle PLC (JO: NRPJ ) is scheduled to release a business update next week.
  • From a corporate actions perspective, Tuesday marks the last day to trade Bytes Technology Group (JO: BYIJ ), Irongate Group, MiX Telematics (JO: MIXJ ), NVest Financial Holdings, Octodec Investments, Remgro (JO: REMJ ), and Spear REIT (JO: SEAJ ) to receive their most recently declared distributions.
  • African Rainbow Capital Investments, ARB Holdings (JO: ARHJ ), Shoprite Holdings, EPE Capital Partners, Growthpoint Properties (JO: GRTJ ), RCL Foods, Resilient REIT, Net 1 UEPS Technologies, CSG Holdings, Attacq (JO: ATTJ ), Kap Industrial Holdings Ltd (JO: KAPJ ), Alviva Holdings Ltd (JO: AVVJ ) and Sasol (JO: SOLJ ) will host AGMs in the upcoming week.
  • The Nedbank Group Ltd (JO: NEDJ ) Preference Share general meeting takes place this week. Nedbank is planning to repurchase all its perpetual preference shares. We view the scheme consideration as fair.

All eyes are on US retailers next week. According to Bloomberg, Costco (NASDAQ: COST ), Walmart (NYSE: WMT ), and Target (NYSE: TGT ) may be better prepared than other food and staples retailers for the upcoming holiday season, with inventory per store 23% to 24% higher in their latest reports than for the same period over the past five years. By Thursday evening, with 460 out of 500 S&P 500 companies (or 92%) having reported 3Q21 results, 68% of companies reported better-than-expected revenue and 81.3% reported better-than-expected earnings. The average revenue surprise was 2.6% and the average earnings surprise was 9.4%. Average revenue growth was 18.7% and average earnings growth was 42.3%.

  • Home Depot’s same-store sales growth may have slowed in 3Q21 after rising 24% in 3Q20 as consumers begin to redirect a portion of discretionary budgets away from the home. Still, industry demand remains solid supporting expectations for comparable sales to be modestly higher. Home Depot’s scale should allow it to navigate supply-chain headwinds more aptly than its peers.
  • Robust demand for back-to-school items, summer celebrations and sustained eat-at-home trends could enable same-store sales at Walmart’s US locations to growth strongly in the quarter (consensus: 6.8%). The gross margin will likely narrow slightly on higher supply-chain costs, as well as category and channel-mix shifts. Inventory was elevated heading into the quarter to help ensure sufficient goods for back-to-school and the holiday season.
  • Lowe’s (NYSE: LOW ) comparable sales are projected to decline 3.5% in 3Q21 and 4.6% in 4Q21. Demand among do-it-yourself customers has been resilient in 2021, though Lowe’s same-store sales still appear poised to fall in 2H21 after last year’s 30% growth.
  • While Target’s 3Q21 adjusted EPS may be flat y/y, revenue is projected to grow 7% y/y. Same-store sales could reach 7.5% (3Q20: 20.7%) supported by a strong “Back-to-School” season. The gross margin may contract to 29.8% (3Q20: 31.5%) as product mix normalises. Online sales could slow down compared to a robust 3Q20 (+155%), even with sustained strong demand.
  • TJX Companies (NYSE: TJX ) earnings and revenue are projected to grow 14.2% y/y and 21.2% y/y respectively. TJX’s sales could keep gaining momentum as shoppers are returning to stores and going out more. Revenue growth may be driven by a pickup in demand for apparel. HomeGoods might also see robust gains, given persistent demand for home products as shoppers keep renovating their homes.
  • Strong inventory management and supplier agreements better position Cisco Systems (NASDAQ: CSCO ) to navigate supply bottlenecks, as robust networking demand may help the company deliver 1Q22 sales toward the upper end of its $12.8 billion to $13.1 billion target.

European releases lose steam next week, with results expected from Vodafone Group PLC (LON: VOD ), Sage Group (LON: SGE ) PLC and National Grid (LON: NG ) PLC.

  • Vodafone may see slower growth in 2Q22 as the base become less favourable. A further recovery in retail-store footfall, about 40% below pre-pandemic levels in 1Q22, will be key to revitalising weak consumer net-add performance. Vodafone is betting on resumed marketing spending to boost its commercial performance, particularly in the “back-to-school” period.
  • Bloomberg expects National Grid’s 1H22 earnings to grow 38.1% y/y. National Grid is well positioned to deliver its 5% to 7% annual EPS growth targets in FY21 to FY26, despite reduced allowed returns for UK networks from 2021 to 2023. Exceeding network-performance goals and cost efficiencies may boost earnings, along with higher inflation. Significant investment should fuel 6% to 8% annual asset growth.
  • supports further sequential sales and adjusted EBITDA growth in 4Q21, yet the latter may be dragged down by a weaker sales mix and higher input costs.
  • Bloomberg expects ArcelorMittal SA’s EBITDA to grow 24% y/y to $6.2 billion driven by a strong demand and robust steel prices (+11%).

A quieter week is anticipated in the Asia-Pacific region but with a few significant releases, including Alibaba (NYSE: BABA ) Group Holding.

  • Consensus expects Alibaba’s active users in mainland China to have increased by 14 million q/q in 2Q22. This could have come amid renewed restrictions on residents’ mobility under China’s zero-Covid policy, following upticks in local infections in August and September, prompting a shift to spending online.

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  • Stuart Laubscher @Stuart Laubscher
    Also wondering?
    Like 0
  • Gail Emmerick @Gail Emmerick
    Great thank you. What's Elon Musk doing in your headline with nothing in the content about him or Tesla or SpaceX please?
    Like 2
    • Muneiwa Phumudzo @Muneiwa Phumudzo
      was wondering too
      Like 0
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  • Thilivhali Romeo @Thilivhali Romeo
    we cant wait
    Like 1
    • Sanele Bob @Sanele Bob
      yeah we can't
      Like 0
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