Locally, we expect the following company releases next week:
- The Anglo American (JO:AMSJ) stable will publish 4Q21 production numbers next week. Anglo American updated its FY21 guidance late last year, with an upwardly revised production guidance for FY21 (copper equivalent production: +7%). This was largely supported by strong PGMs and higher rough diamond demand. FY21 unit costs are expected to increase 10%. Anglo American Platinum’s refined production for FY21 was guided to increase to between 5.0 Moz and 5.1 Moz (previous guidance: 4.8 Moz to 5.0 Moz) due to a continued strong performance from ACP Phase A. Kumba Iron Ore (JO:KIOJ) guided for production to come in at the bottom of its last guidance range (40.5 Mt to 41.5 Mt), and cost guidance increased. High export prices should support revenue despite pressure at the ports.
- South 32 (2Q21 Operational Update): Management reiterated FY22 guidance during its 1Q22 production update in October. Management said that production would be broadly in line with FY21, except for Brazil Alumina (reduced by 6%) and Cannington (increased by 10%). Costs are anticipated to increase across the commodity basket except for Cerro Matoso and Cannington, where higher production is expected to be supportive of unit costs in FY22.
- Steinhoff (JO:SNHJ) International (FY21 results): The company’s third quarter results showed a gradual improvement in operations and we expect FY21 performance to be ahead y/y given the Covid-19 impacts in FY20. Steinhoff recently announced Mattress Firm (50.1% owned by Steinhoff) has filed for an IPO in New York. The company has made progress on its litigation settlements, which has been encouraging and hopefully will remove a major overhang on Steinhoff’s balance sheet, and by extension its share price this year.
- From a corporate actions’ point of view, Tuesday marks the last day to trade in Clicks (JO:CLSJ) Group and Netcare (JO:NTCJ) to receive their most recently declared dividends.
- Clicks Group(JO:CLSJ), Life Healthcare (JO:LHCJ) and Sygnia will host AGM’s next week.
- BHP PLC will trade for the last day on the JSE on Friday, 28 January 2021, following the company’s decision to unify its DLC structure. On the following Monday it will be delisted and BHP Limited will list under the share code “BHG”.
US earnings season remains in full swing next week with several well-known stocks releasing results across various sectors. At the time of writing, 61 companies in the S&P 500 have reported results, with 47 boasting a positive EPS surprise (77%) and 43 (70%) reporting a positive revenue surprise for 4Q21. So far, earnings have grown by 20.8% and revenue is up 13.4% y/y. This is slightly lower than what was expected for the index at the start of the reporting period – but with many higher growth companies still to report.
- General Electric (NYSE:GE) expects adjusted earnings per share of between $1.80 and $2.10 for the full year. Industrial organic revenue growth is expected to be flat, with a profit margin expansion of 350 bps. Furthermore, management anticipates revenue growth, margin expansion and higher free cash flow in 2022. The focus will be on management’s recently announced plans to spin off its Healthcare business, and communicated plans to bundle its power, renewable energy and digital segments into single energy focused business, which will be unbundled in 2024. This will leave the company with exposure to Aviation only.
- Bloomberg consensus expects earnings for Johnson & Johnson(NYSE:JNJ) (NYSE:JNJ) to increase 13.9% for 4Q21 (FY21: +22.0%). Management upwardly revised its FY21 guidance for adjusted operational sales to 12.9% to 13.5% (previously: 12.5% to 13.5%) and adjusted operational EPS to between 20.2% and 20.8% (previously: 18.4% to 19.6%) for FY21. The company last maintained its Covid vaccine sales outlook for the year at $2.5 billion. According to Bloomberg Intelligence, Covid-19 vaccine sales are expected to drive a 17% top line growth within the Pharma division.
- Management guided for Microsoft’s revenue to come in between $50.15 billion and $51.05 billion (midpoint: $50.6 billion) for 2Q21 (Bloomberg: $50.7 billion, +17.3%). The first quarter’s results were strong, reflecting a strong start to the financial year as demand for cloud continued to accelerate favourably amid ongoing digital transitions by large and small businesses, as well as household consumers. The company recently announced that it is planning to buy Activision Blizzard (NASDAQ:ATVI) for $68.7 billion in cash. This is expected to be the company’s biggest ever acquisition, surpassing its $26 billion takeover of LinkedIn announced in 2016.
- AT&T (NYSE:T) said it expects FY21 adjusted EPS to be at the high end of its low to mid single digit targeted growth range (Bloomberg FY21: 5.7%) and highlighted that it is on track with its free cash flow target of the $26 billion range. The company recently announced that its HBO Max and HBO subscribers reached 73.8 million in the fourth quarter, above the top end of its 70 million to 73 million guidance. This, together with Fibre broadband additions of 270 000, should further support top-line growth into FY22.
- Tesla (NASDAQ:TSLA) reiterated its expectation to achieve 50% average annual growth in vehicle deliveries over a multi-year horizon. According to Bloomberg consensus, the top line is expected to increase 54% in 4Q21 while growth of 66% is anticipated for the full year. The looming production of the first Model Y vehicles in Berlin and Austin should provide further growth vectors, particularly as public sentiment and support for electric vehicles (EVs) continues to track higher.
- Lookout for Comcast’s 4Q21 figures, with earnings expected to increase 31% in the quarter. 3Q21 results were strong, showcasing a strong NBC recovery supported by a rebound in US parks and less of a drag from the opening of its Beijing resort. The Tokyo Olympics also made a positive contribution to results. Wireless was a standout in cable, with record quarterly additions, and is now profitable on a standalone basis. However, management’s outlook for broadband net additions in 4Q21 was lower than expected.
- Visa’s 1Q22 earnings are expected to be positive (+19.8% y/y) aided by a continued shift to electronic payments from cash. The company reported decent 4Q21 results, reflective of an ongoing recovery from the impacts of Covid-19. Transaction volumes continued to improve in line with a rebound in credit and debit card spending as economies reopened, although the recovery remains at an uneven pace across markets.
- • Apple (NASDAQ:AAPL) saw a revenue miss for iPhone sales in 4Q21, driven mainly by supply chain constraints amid chip and part shortages. This could be a warning sign that disruptions will be worse than expected with 1H22 top line potentially at risk. Despite this, iPhone sales, which account for ~52% of total sales, are expected to grow around 7% in 1Q22. During the same period, earnings are projected to improve 13.2% y/y. (Bloomberg FY22: 1.9% y/y).
Other releases ahead include 3M (NYSE:MMM), Mastercard (NYSE:MA), American Express (NYSE:AXP), Boeing (NYSE:BA) Co, Kimberly-Clark (NYSE:KMB), McDonald’s (NYSE:MCD) Corp, Caterpillar (NYSE:CAT), Morderna Inc. and Colgate-Palmolive (NYSE:CL).
European releases gain momentum next week with results expected from LVMH (PA:LVMH) Moët Hennessy Louis Vuitton, Diageo (LON:DGE), Swatch Group (SIX:UHR), SAP SE (DE:SAPG) and Hennes & Mauritz AB (ST:HMb), St James’s Place PLC and Volvo AB.
- Luxury fashion conglomerate LVMH Moët Hennessy Louis Vuitton is expected to report revenue growth of 24.8% in the fourth quarter, on the back of an improvement across all divisions. Ongoing cost control is likely to filter through to the bottomline performance, leading to positive operating leverage. This is despite the majority of stores reopening only by 2H21 with restrictions on global travel remaining a prevalent theme.
- Diageo expects 1H22 organic net sales to increase by at least 16%, benefiting from the key holiday season. However, the impact of the Omicron variant could have a negative effect in key markets in Europe and North America. While home consumption remains key for Diageo’s now well-adjusted at-home-drinking consumers, the resumption of social gatherings is critical to the full recovery.
- In a previous update, Hennes & Mauritz AB (H&M) warned that the overall market situation for purchasing costs in 4Q21 will gradually deteriorate as the positive US dollar effect subsides and high shipping and raw materials prices persist. The company’s major channel shift to online (~25% of sales) remains the key issue as it adapts the established cost base. However, improved functionality in the H&M mobile app has created room for increased engagement with online customers. Management said it expects 4Q21 revenue to increase 8% y/y (Bloomberg FY21: 6.4% y/y).
In the Asia Pacific region, Samsung Electronics (KS:005930) will publish results next week.