Friday preview: Vodafone, Acacia, AO World updates eagerly awaited
Several companies about which investors have many questions are due for updates on Friday, including quarterly numbers from Vodafone and AO World plus interim results from Acacia Mining, providing equity investors plenty to chew on ahead of next week's results season feasting.
Vodafone's update should give investors news on the performance of key overseas markets, such as the Indian mobile telecoms market, maybe covering recent City speculation about job cuts in Germany, recent price moves in Spain/Italy, and an update on EU roaming impact.
Barclays forecast service revenues growth of 1.6% in the quarter versus 1.5% in the fourth quarter of last year, as the leap year effect and roaming/accounting changes impact the report result.
"Within the mix we see German momentum remaining steady with a modest acceleration in service revenues. Italy remains solidly positive, although with slightly lower growth QoQ as the market remains competitive," analysts said, with UK growth challenging and deteriorating to 5.1% though Spain "should remain broadly stable".
In the Africa, Middle East and Asia Pacific Barclays expects growth to remain in the 7-9% range, with particular strength in Turkey/Egypt.
UBS, which forecasts 1.5% organic service revenue growth, expects Vodafone to flag a drag effect from EU roaming cuts for the coming quarter but for it to re-iterate full year guidance of 4-8% EBITDA growth and for equity free cash flow of >€5bn.
"With the stock offering a 5.9% dividend yield that is covered by EFCF even post spectrum costs, we think a reassuring trading update and re-iteration of FY-18 guidance should drive a further re-rating of the shares and lead to the dividend yield compressing towards the sector average of 4.5%," UBS said.
The Swiss bank also previewed embattled Tanzanian miner Acacia Mining, which is due to report interim results, predicting gold production of 438koz up 5% half-on-half and all-in sustaining costs of $1,048/oz to be up 8% h/h.
With the FTSE 250 miner struggling amid an export ban and now facing a host of new laws as the Tanzanian government gets tough, UBS expects revenue to fall 22% to $1,240m after an 18% decrease in gold sales, with operational cash flow expected to go down drastically too.
Online white goods retailer AO World will give an update on the first few months of its financial year, following the cautious tone put forward by management around current trading during final results announcement in early June.
With this in mind, broker Shore Capital, which issued a 'sell' rating on the shares, believes the first quarter is likely to have been challenging for AO World.
"With management indicating that the major domestic appliance (MDA) market has been in double digit decline year-on-year, following a period of cost inflation; we believe sales growth may have slowed in Q1," analysts said.
"We have a 4% sales growth assumption pencilled in for AO.com sales during the first quarter, with a 1% growth rate estimate in UK sales overall."
Insurer Beazley is also due to release interim results, with first-quarter gross premiums written reduced by 2% to $573m, premium rates on renewal business decreased by 1% and a year-to-date investment return of 0.9%
UBS expects a good set of interim results boosted by benign losses and good investment markets.
Close Brothers will supply an 11-month pre-close statement. Barclays said the statement was likely to be short, containing an update on loan book growth, trading activity and AUM.
"We forecast the loan book to have grown ~2% since Apr to £6.82bn. We expect trading activity and average bargains per day to be up given macro events in the period such the French and UK elections. In the Asset management division we expect managed AUM to come in at £8bn."
Friday July 21
UK ECONOMIC ANNOUNCEMENTS
Public Sector Net Borrowing (09:30)
Acacia Mining, Beazley, Capital & Counties Properties , PJSC Magnit GDR (REG S)
AO World, Close Brothers Group, Empresaria Group, Euromoney, Homeserve, Vodafone Group
INTERIM DIVIDEND PAYMENT DATE
RWS Holdings, Standard Life Private Equity Trust, Urban&Civic , Zytronic
QUARTERLY PAYMENT DATE
Alpha Real Trust Ltd., Real Estate Credit Investments Ltd
SPECIAL DIVIDEND PAYMENT DATE
Northern 2 VCT, Northern 3 VCT
Bank Audi SAL. GDR
AO World, Georgian Mining Corporation NPV (DI), Homeserve, KCOM Group, Lekoil Ltd (DI), Securities Trust of Scotland
FINAL DIVIDEND PAYMENT DATE
3i Group, Amati Vct 2, Capital Gearing Trust, Edinburgh Inv Trust, Gresham House Strategic , Helical, Morses Club , Nex Group , Northern 2 VCT, Northern 3 VCT, Northern Investors Co, Oxford Technology 3 VCT, Oxford Technology VCT, Panther Securities, Premier Technical Services Group , Severn Trent, Tex Holdings, Warpaint London , Wynnstay Properties