Another busy week is on the cards locally:
- Merafe Resources (JO:MRFJ) (Interim Results): Management has guided for headline earnings per share (HEPS) to improve to between 23.1 cents and 23.3 cents from 1.1 cents in 1H20. The increase was driven by higher chrome ore and ferrochrome prices and higher sales volumes, partially offset by a stronger rand. Attributable ferrochrome production from the Glencore (LON:GLEN) Merafe Chrome Venture increased 65.6% y/y as production was less affected by the Covid-19 restrictions.
- Nedbank (JO:NEDJ) (Interim Results): For 1H21 HEPS are expected to increase between 145% and 150%. At the end of May 2021, the group’s credit loss ratio (CLR) remained below the bottom end of the 110bps to 130bps guided range. Management expects this to remain in place for 1H21. Net interest income (NII) momentum continued into May 2021. Net interest margin (NIM) is expected to increase from 336bps in FY20. Non-interest revenue (NIR) declined to the end of May 2021.
- Absa (JO:ABGJ) Group (Interim Results): As per management, normalised HEPS are expected to be between 5 and 6 times the 173.6 cents reported in 1H20 (868 cents to 1 041.6 cents). Deposits increased in the high single digits, with strong growth in SA and ARO (in constant currency). Total revenue was flat y/y.
- Exxaro (JO:EXXJ) Resources (Interim Results): Bloomberg consensus expects FY21 earnings to improve 77.7% y/y. From an operational perspective, total coal production (excluding buy-ins) are expected to 11% higher y/y in 1H21. Thermal coal production from Waterberg was impacted by higher rainfall and Covid-19 disruptions and production at Mpumalanga commercial mines is expected to be 20% y/y lower due to market and logistical constraints. Metallurgical coal production is anticipated to decrease 13% y/y due to increased rainfall and decreased TFR performance. Total sales volumes (excluding buy-ins) are expected to fall 9% y/y in 1H21. Export sales volumes are forecast to contract 31% y/y while domestic thermal coal sales are expected to increase 17% y/y.
- Quilter PLC (JO:QLTJ) (Interim Results): Bloomberg consensus expects 1H21 revenue to contract 14.5% y/y. In1Q21 Assets Under Management and Administration (AUMA) increased 26% y/y (+2% since December 2020) to £117.8 billion, supported by improved net flows, positive investment performance and market movements. Average AUMA grew 12% y/y to £118.2 billion. Gross sales grew 15% y/y to £3.8 billion and net client cash flows (NCCF) came in at £1.2 billion, up 240% y/y. Integrated flows were up 25% to £1.0 billion.
- MTN (JO:MTNJ) Group (Interim Results): Per management, HEPS are expected to decrease by 5% to 15% y/y. HEPS were negatively impacted by several non-operational and once-off items totalling ~118 cents per share (2020: positive impact of 46 cents). These included foreign exchange losses (93 cents), and Covid-19 support (25 cents).
- Karooooo Ltd (JO:KROJ) and Thungela Resources (JO:TGAJ) (JO:TGAJ) will also publish results.
- From a corporate actions perspective, Tuesday marks the last day to trade Anglo American Platinum (JO:AMSJ), Omnia Holdings (JO:OMNJ) and Vivo Energy PLC (JO:VVOJ) to receive their most recently declared distributions.
- The Naspers/Prosus tender offer closes on 11 August.
A less eventful week is on the horizon on the US front, with a few stocks (Tyson Foods (NYSE:TSN), Sysco Corp (NYSE:SYY), eBay (NASDAQ:EBAY), and Walt Disney (NYSE:DIS)) are expected. Almost all stocks (~86%) in the S&P 500 index have now released second-quarter results, reporting sales and earnings growth of 27.7% and 101% respectively, according to Bloomberg. Overall, 2Q21 sales beat expectations by 4.9% and earnings were ahead of consensus by 17%. Within the index, 85.9% of the companies reported better-than-expected earnings numbers.
- Tyson Food's 3Q21 margin may be pressured by elevated grain and transportation costs as well as lingering operational inefficiencies affecting processing plants. Sales growth could outpace volume gains, thanks to proactive price increases, helping offset some of these higher costs. Volume is expected to rise across all segments, led by beef (+16.3%), followed by pork (+8.9%), chicken (+1.7%) and prepared foods (+0.8%).
- According to consensus, Sysco's 4Q21 revenue may jump 62.9% due to a 74.2% increase in US Foodservice sales as results lapped last year's stay-at-home orders and restaurants benefited from pent-up demand and stimulus-cheque spending. Total revenue surged 102.1% in April and may have improved further in May and June as dining-room restrictions eased. SYGMA should contribute to revenue gains via contract wins with large quick-service chains; segment sales rose 15.9% y/y in 3Q21.
- Look out for 3Q21 results from Walt Disney. Consensus anticipates 8.7 million new Disney+ subscribers in the 3Q21, in line with 2Q21 but a dramatic slowdown from 21 million in 1Q21. Growth may have been dented by the suspension of the Indian Premier League and a delay in the launch of STAR in Latin America. Film is also rebounding with more theatrical releases, and the digital success of Black Widow is a key positive.
- Growth in eBay's gross merchandise volume may persist into 2Q21, driven by tailwinds from Covid-19 and new initiatives to rebuild lost lead, including authenticity guarantee and certification of purchases. This, the integration of payments and the addition of promoted listings are catalysts. Still, tougher comparisons may limit gains starting in 2Q21.
In Europe results are expected from Porsche Automobil (DE:PSHG_p), Prudential PLC (LON:PRU), Coca-Cola (NYSE:KO) HBC AG, Zurich Insurance, Prudential, and Deutsche Telekom AG (DE:DTEGn). With 73% of Stoxx 600 companies having reported 1H21 results, sales have on average surprised 3.6% to the upside and earnings have been 10.2% ahead of expectations. Revenue has grown by 10.7% y/y on 1H20 and earnings have rebounded almost three-fold.
- Look for 2Q21 results from Porsche SE. The company is still awaiting a decision on market-manipulation allegations, which are due to go before the court in Celle (Germany) but have been delayed by a backlog of cases amid the pandemic. A positive outcome could be a key catalyst to help reduce Porsche SE's discount to NAV, which has widened as VW's ordinary shares have outperformed since 2020.
- Coca-Cola HBC's's volume performance may benefit from hotels, restaurants and cafes restocking as economies reopen after the pandemic. Bloomberg anticipates 1H21 earnings to improve 53.3% y/y.
- Zurich Insurance’s earnings could grow by 90.7% y/y in 1H21. Overall good underlying results are anticipated but earnings could be impacted by higher natural catastrophes and Covid-19-related mortality in the 1H21. In the Property & Casualty business, frequency benefit is expected to continue in the 1H21, although likely at lower levels than the prior year and improved margin expansion driven mainly by the Commercial side.
- While Bloomberg expects Prudential 1H21 earnings to contract 13.3% y/y, EBIT is anticipated to grow 12% y/y. Asia IFRS earnings are expect to grow 9.6% y/y supported by continuing earnings growth in markets like Singapore/China and group operating earnings are expected to grow at 18% with benefits coming from lower corporate centre costs.
A quiet week is ahead in the Asia-Pacific region, with few significant releases anticipated. The focus will likely remain on China’s regulatory stance with technology shares to be closely observed again this week.
- Lenovo Group's (HK:0992) strong PC market share gains and continued growth of services and data centre infrastructure can keep sales elevated, even as year-ago comparables get tougher and component shortages continue to weigh on the PC industry. Lenovo's PC market share climbed to 23.9% in 1Q22 (1Q21: 23.6%) with shipments climbing 14.9% y/y. Lenovo may sustain PC sales at high levels fuelled by low channel inventory, unfilled orders in its backlog, a pickup in corporate demand and continued spending by education customers.
- China Mobile Ltd (HK:0941) (HK:0941)could struggle to catch up with smaller rival China Telecom in cloud services, even as it seeks to build new cloud infrastructure. China Telecom plans to deploy ¥27 billion from its share listing proceeds to construct a digitalised cloud network platform, which is 2.4 times more than China Mobile's intended ¥8 billion investment for new cloud resources after its IPO.
- Another strong quarter is on the cards for LG Corp (KS:003550) with 2Q21 earnings projected to rally 357.6%, from a strong 1Q21 (+76% y/y). First-quarter results delivered strong margin improvement alongside accelerating top-line growth momentum (+18% y/y), somewhat proving its business synergy plan via strategic partnership with financial investors.