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Week Ahead - US And European Releases in Full Swing Next Week

Published 2021/05/03, 07:51
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US and European results continue to gain momentum next week and local releases are also picking up.

  • MTN (JO:MTNJ) Group (1Q21 Results): According to Bloomberg, service revenue growth may be almost 10% higher y/y. MTN’s biggest operation, Nigeria, may have continued expanding revenue at a double-digit pace in 1Q21 despite the ban on the industry issuing new SIM cards.
  • Anheuser Busch Inbev SA NV (JO:ANHJ) SA (1Q21 Results): The international brewery is poised for some volume recovery in 1Q21 after Covid-19 hampered results in 2020, yet continued lockdowns and currency volatility could stymie reported results. EBITDA margin is forecast to be marginally down at 35% for 1Q21 due to lower contribution in all regions, except Asia where recovery is underway.
  • Kaap Agri (JO:KALJ) (Interim Results): Headline earnings per share (HEPS) are expected to increase by between 21.6% and 26.5%. Recurring HEPS will be between 20.7% and 26.0% higher y/y.
  • Sappi (JO:SAPJ) (Interim Results): During 1Q21, diluted HEPS of 4 US cents in 1Q20 deteriorated to a loss of 3 US cents. Sales slipped 10.7% y/y and operating profit before special items contracted 74.2% y/y. Management expects 2Q21 EBITDA to improve compared to 1Q21. Earnings in 2Q21 will be tempered by production curtailments related to oxygen availability at Ngodwana Mill, global logistical challenges, and the negative impact of Covid-19 on the European graphics segment.
  • Sibanye Stillwater (JO:SSWJ) (1Q21 production numbers): FY21 gold production from the SA operation is forecast to between 884 000 oz. and 948 000 oz. FY21 SA PGM production is anticipated to be between 1.75 Moz. and 1.85 Moz. PGM production from the US is anticipated to be between 660 000 oz. and 680 000 oz.
  • Mondi (LON:MNDI) PLC (1Q21 trading update): According to consensus, the European unbleached sack kraft paper market now looks even tighter than company commentary suggested in February/March, and US box shipment growth in 1Q21 looks to be ahead of expectations.
  • Property companies including Redefine Properties (JO:RDFJ), Equites Property Fund and RDI Reit PLC (JO:RPLJ) will also release results.
  • From a corporate actions perspective, Tuesday marks the last day to trade Capitec Bank (JO:CPIJ), PSG Konsult, RMB Holdings (JO:RMHJ) and Zeder Investments (JO:ZEDJ) to receive their most recently declared distributions. Hammerson PLC (JO:HMNJ), AngloGold Ashanti (JO:ANGJ), Anglo American (JO:AMSJ) PLC, Aveng, Metair Investments (JO:MTAJ), Mondi PLC, Gold Fields (JO:GFIJ), Wesizwe Platinum, EPP NV and Liberty Two Degrees will host AGMs in the upcoming week. Anglo American PLC will host an GM this week.

All eyes will be on US travel and hospitality stocks next week with a focus on Booking (NASDAQ:BKNG) Holdings, Host Hotels & Resorts (NASDAQ:HST), Hilton Worldwide Holdings and Wynn Resorts (NASDAQ:WYNN). While availability of a Covid-19 vaccine could buoy 2H21 travel, hotels operated by Marriott and Hyatt that rely on conventions or urban locations may trail a recovery by limited-service properties run by Wyndham and InterContinental. Sales appear poised to improve faster in Asia than in Europe and the US, where weak performance and high valuations of lodging stocks underscore a tenuous profit recovery.

  • While Pzifer’s 1Q21 earnings are guided to decrease, partly pressured by the spinoff of high-margin Upjohn, revenue is anticipated to grow driven by a strong performance from key drugs Ibrance, Xeljanz and, especially, Vyndaqel. Vaccine sales depressed margins as the company share its gross profit with BioNTech, while spending on R&D is expected to be modestly higher due to related development costs.
  • Berkshire Hathaway (NYSE:BRKa) will still see Covid-19 pressure, but the top-line rebound in 2H21 should extend in 2021. Geico’s loss ratio could improve from the prior year due to less driving. Burlington Northern’s revenue should rebound thanks to improving volumes. While the industrials unit could be tempered given end-market disruption in aerospace (Precision Castparts) and chemicals (Lubrizol), demand should be picking up.
  • T-Mobile expects post-paid net additions of 987 500 in 1Q21. Revenue during 1Q21 could, however, decrease 7% q/q in a seasonally weak quarter amid stable pricing and low churn. The company may lead the telecom industry in post-paid net additions this year as it outpaces peers on network capacity thanks to its nationwide mid-band spectrum holdings for 5G.
  • According to Bloomberg consensus, ViacomCBS may report a solid 10% gain in 1Q21 sales fuelled by a strong comeback in advertising with an additional boost from the Super Bowl and the NCAA men’s basketball tournament, which may have helped fuel a 20% jump in 1Q21 ads.
  • Estée Lauder’s sales should build on 2Q21’s return to growth, with accelerating demand in China and increased Asia-Pacific investment to leverage opportunities while facing the first soft comparisons in the Americas. By category, the 3Q21 focus for gains and profit is on premium skincare, a robust innovation pipeline and e-commerce progress.
  • Other major companies expected to release results include CVS Health (NYSE:CVS), Kellogg Co, Motorola (NYSE:MSI) Solutions, News Corp (NASDAQ:NWSA), DISH Network (NASDAQ:DISH), Sysco (NYSE:SYY), PayPal Holdings, Under Armour, and Fox Corp.

Along with other notable stocks, European banks including automakers including Ferrari NV (NYSE:RACE), Bayerische Motoren Werke AG (DE:BMWG) (BMW) and Volkswagen  AG (DE:VOWG_p) will take centre stage next week.

  • Look out for 1Q21 results for Rio Tinto (LON:RIO) next week. Operationally, iron ore shipments decreased 12% q/q in the 1Q21 as the wet season was exacerbated by labour shortages and maintenance. Copper production was down 9% q/q after lower grades throughout Escondida.
  • Siemens (DE:SIEGn)1Q21 may have marked a high for 2021 sales growth and EBITA margin of 16%, as China’s strong demand cools. Digital Industries was key to 1Q21, but the company estimates that about a third of the 27% increase in sales from China came from customer restocking. A similar regional bias to China was evident at Smart Infrastructure. Healthineers recorded a surge in pandemic-related sales, especially in diagnostics, which the company expects to dissipate in 2H21.
  • Consensus expects Adidas (DE:ADSGN)’ 1Q21 sales to grow 21% y/y (ex-forex) and increase 14% reported to €5.005 billion, with some drags still from lockdowns in Europe and ports congestion in the US. This will be the first quarter of deconsolidation of Reebok from continuing operations.
  • Bloomberg expects Societe Generale (PA:SOGN) SA’s 1Q21 earnings to improve 118.7% y/y. With the Lyxor sale agreed, and the three-year asset-disposal programme now complete, Societe Generale’s focus will be on recovery prospects for both domestic and international retail revenue, cost-savings delivery in CIB and capital-return plans.
  • ArcelorMittal’s EBITDA momentum may continue in 1Q21, with consensus calling for a $1 billion increase given the 38% q/q increase in European hot-rolled coil prices and the 57% increase in the US. Appreciating steel prices may lead to an increase in working capital requirements with expectations pointing to a similar cash outflow to 1Q18 of $1.8 billion.

In the Asian-Pacific region, Kia Corp, LG Electronics (KS:066570), Nippon Steel and Ricoh will publish results this week.

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