US Releases Finally Slow Down

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

  • Raubex(JO: RBXJ ) (JO: RBXJ ) (Interim Results): Management expects headline earnings per share (HEPS) to be between 131.9 cents and 140.6 cents in 1H22 compared with a headline loss per share of 26.6 cents in 1H21 and HEPS of 58.6 cents in the preCovid-19 comparative period (1H20).
  • Telkom (JO: TKGJ ) (JO: TKGJ ) (Interim Results): HEPS are expected to increase between 25% and 35% y/y. Finance charges, fair value movements and forex losses declined 35% to R659 million. For FY22 Telkom expects to sustain its top-line revenue compared to the prior year and grow its profitability slightly ahead of revenue.
  • Redefine Properties (JO: RDFJ ) (Full-Year Results): Distributable income per share (DIPS) is expected to increase 2.8% to 52.96 cents. Importantly, the group’s liquidity position supports the resumption of dividend payments.
  • Sappi (Full-Year Results): For 3Q21 diluted HEPS per share improved to 3 USD cents in 1H21 from a loss of 12 USD cents. Sales advanced 53.6% y/y for the quarter to $1.4 billion (9M21: +9.2%). Group EBITDA (excluding special items) recovered to $145 million (3Q20: $36 million) with EBITDA up 19.9% in 9M21 driven by strong dissolving pulp prices and an excellent performance from the packaging and specialities segment.
  • The Foschini Group (JO: TFGJ ) (Interim Results): According to a recent trading statement, basic HEPS are expected to be between 384.0 cents and 402.20 cents compared to a loss of 91 cents in 1H21. Group turnover grew 51.8% y/y (excluding Jet: +34.3%) and increased 12.2% compared to 1H20 (excluding Jet: -0.9%). The group delivered growth in 2Q22 of 18.0% y/y (excluding Jet: +5.0%). TFG Africa retail turnover growth was 59.5% y/y in 1H22 and increased 24.3% versus 1H20. Retail turnover growth was 28.0% y/y in 2Q22 (excluding Jet: +8.1% y/y). Like-for-like retail turnover growth was 15.4% for 2Q22.
  • Cie Financière Richemont SA (JO: CFRJ ) (Interim Results): Consensus expects 1H22 EBIT to come in at €1.522 billion, implying an EBIT margin of 17.7%, expanding 200bps y/y, driven by favourable mix owing to the outperformance of Jewellery Maisons. European sales are anticipated to sequentially improve and the US is expected to remain strong but decelerate slightly from a very high base.
  • Mediclinic (LON: MDCM ) (Interim Results): Per management, group revenue grew 12% (1H20: +4%), driven by a recovery in patient activity across all three divisions. The EBITDA margin improved to 15.5% from 12.1% in 1H21 (1H20: 16.6%), benefiting from margin improvements in all three divisions. Various initiatives have been established to support the return towards pre-Covid-19 profitability in all divisions.
  • Results from Sirius Real Estate , MultiChoice (JO: MCGJ ), Hospitality Property Fund , Tradehold , and Tsogo Sun(JO: TSGJ ) (JO: TSGJ ) Hotels will also be published.
  • Updates from AngloGold Ashanti (JO: ANGJ ), Gold Fields (JO: GFIJ ) and Harmony(JO: HARJ ) Gold are also scheduled for next week.
  • From a corporate actions perspective, Tuesday marks the last day to trade AfroCentric , Altron (JO: AELJ ), Alviva Holdings and Vunani to receive their most recently declared distributions.
  • Bowler Metcalf, Imperial (JO: IPLJ ) Logistics, Aveng, Trellidor Holdings (JO: TRLJ ), Universal Partners , AfroCentric , Emira Property Fund(JO: EMIJ ) (JO: EMIJ ), York Timber (JO: YRKJ ) Holdings, Advanced Health and Italtile will host AGMs in the upcoming week. Lighthouse Capital will also host a GM in the upcoming week.

US releases finally trickle down next week. By Thursday evening, with 421 out of 500 S&P 500 companies (or 84.2%) having reported results, 67.2% of companies reported better-than-expected revenue and 81.7% reported better-than-expected earnings. The average revenue surprise was 2.7% and the average earnings surprise was 9.8%. Average revenue growth was 18.7% and average earnings growth was 40.7%.

  • Disney’s streaming business may have hit a rough patch in 4Q21, with management forecasting low-single-digit million gains (compared to 12.4 million in 3Q21). Consensus projects 6 million New Disney+ subscribers in 4Q21 although management forecast “low-single-digit million” additions which implies less than 5 million. The parks business is benefiting from improved demand despite a brief slowdown in the latter part of August due to Delta-variant concerns, with reservations above prior quarters potentially helping the segment’s operating income exceed consensus of $865 million.
  • Sysco’s 1Q22 revenue may have jumped over 30% amid a rebound in US foodservice sales. A recovery in demand, price increases and case growth likely boosted results. The International foodservice-sales recovery has trailed but likely improved compared to 4Q21 as dining restrictions were reduced and temporarily closed units reopened. The 1Q22 gross margin may have come under pressure due to inflation.

A busy week is expected in Europe with releases expected from Bayer (DE: BAYGN ), Porsche (DE: PSHG_p ), Allianz (DE: ALVG ), Adidas (DE: ADSGN ), Merck (NYSE: MRK ), Siemens, Arcelormittal (JO: ACLJ ), Burberry (LON: BRBY ) and AstraZeneca (LON: AZN ).

  • Bayer’s 3Q21 sales could grow 7% in constant exchange rates (CER) to €9.17 billion, due to strong growth across Pharma (+6% at CER) and Crop Science (+9% at CER), with both divisions benefiting from an easy base comparison. EBITDA is anticipated to decrease slightly 1% y/y to €1.77 billion (CER terms: -2%) and core EPS is estimated at €0.81 (flat on a y/y basis).
  • Adidas’ 2H21 sales gains could moderate to just 7% as the retailer may have a harder time replenishing low inventories given factory shutdowns in Vietnam, though consensus expects the return of sports to continue to fuel demand.
  • Merck could deliver double-digit underlying revenue growth in 3Q21, despite tougher y/y comparisons, spurred by the Life Science unit, where Covid-19-related demand persists. The division is driven by Process Solutions, sales for which could grow 26%, with contributions also stemming from the Research and Applied Solutions sub-units.
  • According to Bloomberg, higher life and asset management profits are expected to drive an increase in Allianz’s 3Q21 quarterly pre-tax operating result. The company raised its FY21 operating profit guidance to the upper end of its €11 billion to €13 billion target after the 1H21 profit beat expectations.
  • Siemens’ 4Q21 organic sales growth is anticipated to slow as lead time extended in 4Q21, particularly in its Digital Industries segment, while a resurgence of Covid-19 cases may lead to slower organic growth in Healthineers. Siemens’ backlog 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’s EBITDA to grow 24% y/y to $6.2 billion driven by strong demand and robust steel prices (+11%).
  • Another strong quarter is on the horizon for AstraZeneca, with core EPS (+39%) and sales (+44%) anticipated to grow in 3Q21 following the inclusion of Alexion (NASDAQ: ALXN ). Several products are expected to show strong expansion, driven by a low-base effect in 3Q20, but mostly due to organic growth, the most impressive being Farxiga.

In the Asia-Pacific region a few significant releases are anticipated, including Bridgestone Corp, Tencent Holdings (HK: 0700 ), Mazda Motor (T: 7261 ), Suzuki Motor and Yamaha Motor.

  • Tencent’s 3Q21 revenue and operating profit growth are expected to slow with the company continuing to reinvest, regulatory impacts, and delays in game launches. Some of these factors are regarded as short-term hiccups. Games licensing and the positive impact of investments on future growth could see this pressure subside in upcoming periods.

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