US and European Releases Begin Tapering Off

  • Market Overview

Locally, we expect the following releases next week:

  • AngloGold Ashanti (JO: ANGJ ) (1Q22 Update): In terms of the guidance provided for FY22, management noted that production will be weighted towards the second half of the year with unit costs also expected to decline over the same period. Full year production is set to range between 2.55Moz and 2.80Moz (FY21: 2.472 Moz), with most growth coming from Obuasi. All-in sustaining costs (AISC) are expected to be between $1 295/oz and $1 425/oz (FY21: $1 355/oz). While the guidance previously provided was decent, recent updates from peers have highlighted inflationary concerns, which could adversely affect costs.
  • Sappi (JO: SAPJ ) (1H22 Results): During the first quarter of the year the company reported solid improvements in both headline earnings per share and revenue, while EBITDA, excluding special items, increased over 145% y/y. Management anticipates more growth during 2Q22 amid a favourable demand outlook for all product segments. Estimated capital expenditure of ~$395 million for FY22 will further support revenue throughout the year.
  • Long4Life (JO: L4LJ ) (FY22 Results): Looking at the most recent trading update, management guided for headline earnings per share to climb by between 92% and 105% y/y for FY22. This is reflective of the ongoing improvement in operations following the easing of Covid-19 trading restrictions. The company also provided an update on the cash offer made by Old Mutual (LON: OMU ) Private Equity, advising shareholders that the Namibian Competition Commission has unconditionally approved the offer. Further updates regarding approval from the South African Competition Commission are expected.
  • Energy company Montauk Renewables will release a 1Q22 production and sales update.
  • On the corporate actions front, Tuesday marks the last day to trade in Stadio and AfroCentric (JO: ACTJ ) Investments to receive their most recently declared distributions. Sun International, Ascendis Health (JO: ASCJ ), EOH Holdings (JO: EOHJ ), Quilter and Anglo American (JO: AMSJ ) Platinum are set to host shareholder meetings.

US earnings season will slow down next week. So far, 401 companies in the S&P 500 have reported results for the quarter ended 31 March 2022, with 315 (79%) boasting a positive EPS surprise and 269 (67%) reporting a positive revenue surprise. Aggregate earnings have grown 6.6%, while revenue is up 14% y/y.

  • Electronic Arts (NASDAQ: EA ) is anticipated to report revenue growth of 18.9% to $1.7 billion, with adjusted earnings expected to increase 15.8% to $1.42. The company’s performance in the short term, however, is set to remain hampered by game delays with a few disappointing launches in major franchises (including the likes of Battlefield) likely to drag on performance as well. The company is well positioned though, for longer-term sales, earnings and cash-flow gains amid the continued expansion of key live-service titles as well as a shift to digital game distribution.
  • 2Q22 adjusted earnings per share for Disney (NYSE: DIS ) are anticipated to climb 48.1% to $1.17. Revenue is set to increase 28.6% to $20.1 billion. According to Bloomberg Intelligence, this is likely to be the slowest period of streaming subscriber additions for the year, though the quantity of app downloads suggests further room for upside growth. Upcoming launches in the Europe, Middle East and Africa (EMEA) region and massive content drops should accelerate user gains in the second half of the year. Domestic parks are also well positioned for a solid 2Q22 amid a recovery in demand, as well as several operational and technological improvements that are driving both revenue growth and margin expansion.

Other notable releases in the US include Tyson Foods (NYSE: TSN ) and media giant Fox Corporation.

In Europe, results are expected from Ubisoft Entertainment and Allianz (ETR: ALVG ) among several others.

  • Ubisoft is expected to report mixed FY22 numbers, with Bloomberg consensus calling for a 42% increase in revenue, but a 62.8% y/y decline in EBITDA as a lack of new major game releases continues to hinder near-term growth, with the company likely to rely solely on the strength of its back catalogue. A promising future pipeline, however, will offer some reprieve if quality and execution are aligned.
  • Revenue growth of 5.4% y/y is expected from Allianz over the first quarter of 2022, while adjusted earnings are set to decline 19.6% y/y. Investors will look out for further commentary on the relatively high natural disaster activity (especially when considering the overweight exposures to European storms and Australian floods). Aside from these headwinds, the underlying insurance operations are expected to remain in relatively good shape. Asset Management revenues and earnings may come in ahead of expectations as well.

In the Asia-Pacific region, Sony, Softbank Group (TYO: 9984 ), and a host of Japanese vehicle manufacturers will release results next week.

  • Sony will release results for the full year ended 31 March 2022. Adjusted earnings are expected to decline 26.3% to ¥701.72 while revenue is set to increase 11.3% to ¥10.02 trillion, with the consensus that the company’s strong revenue growth during the year has continued throughout the final quarter, driven largely by new game titles for the PlayStation 5 console and PlayStation Plus subscribers topping 48 million.
  • According to Bloomberg Intelligence, the recent yen depreciation will partially offset Japanese carmaker troubles of ongoing virus outbreaks, part shortages, higher input costs and the impact from the Russia-Ukraine war. A weakening yen against the US dollar may provide a bigger operating profit boost to the likes of Toyota, Mazda and Subaru, who have higher export ratios than their peers.

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