Short trading week full of excitement with housebuilders, 888 Holdings and Bunzl

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The short trading week post-Bank Holiday will see a peak of results on Wednesday slowing down again towards the weekend, as the City eases back into September.


Yet more housebuilders are on the schedule, following a few weeks of financial updates from the sector, while we will hear from 888, Bunzl and Melrose too.


It’s set to be a pretty rich week in terms of economic data, with a flurry of PMI readings and job figures from both the UK and the US.


Is momentum continuing for 888?


888 Holdings (LSE:888) PLC, the online betting and gaming firm, is in a line of business that thrived during lockdown so the gradual lifting of lockdown restrictions might not have been greeted by management with unalloyed joy. The interims on Wednesday will reveal more on that.


The second quarter of the year was slightly ahead of board expectations, reflecting continued momentum in the business and favourable exchange rate movements, but in its July trading update the company said the board “remains mindful of the potential impact of greater than normal seasonality in the summer post COVID-19, retail and leisure venues reopening across international markets, and the previously disclosed expected impact of regulatory and compliance changes, which are weighted towards the second half of the year”.


Between 17 May, when UK retail and leisure venues reopened, and 7 July, when the group gave a second-quarter trading update, average daily revenues in the UK were (as expected) roughly 20% lower year-on-year. Analysts, therefore, will be keen to learn whether this trend has continued throughout the rest of July and August.


More on driver shortages from Bunzl


Bunzl PLC (LSE:BNZL), the specialist international distribution and services group, releases interims on Wednesday and may have something to add to the rapidly unfolding driver shortages story.


There was little mention in the group’s June pre-close statement about any logistical issues other than an oblique reference to “continuing pandemic-related challenges”.


Underlying revenue over the first half is expected to be some 6% higher than the comparable 2019 period. Group adjusted operating margin for the first half is expected to be nearly 1% higher than that achieved in the first half of 2019, thanks in part to COVID-19 related orders.


Positive interims in sight for John Menzies (LSE:MNZS)


John Menzies (LSE:MNZS) will update investors with its interim results in mid-week, coming after a trading announcement where it said it was trading ahead of market expectations.


Regional variations exist, with ground services in Europe particularly weak, but this is offset by trading elsewhere driven by new business gains, a generally strong performance within cargo, tight cost management and additional support from government schemes, according to Peel Hunt.


“Commercially, the first half was very strong and significantly ahead of last year,” the broker said.


“As at 30 June, net debt (pre-IFRS 16) was GBP183mln (31 December 2020, GBP216mln) and total liquidity stood at GBP187mln, with significant headroom against a covenant level of GBP45mln. The restructured cost base and rationalisation of the portfolio should enable Menzies to generate higher returns as volumes improve.”


More housebuilders coming up


We are going to hear from more housebuilders in the coming week, with Barratt Developments (LSE:BDEV) PLC and Berkeley Group (LSE:BKG) PLC on the schedule.


Barratt Developments (LSE:BDEV) will release its finals on Wednesday, where investors will focus on the outlook statement since we already have an idea of what the full year might look like.


Full year underlying pre-tax profit is expected to come in at around GBP899mln – the high end of market expectations. That’s predicated on a strong recovery in completion volumes, which are meant to be just around 3.4% lower than before the crisis.


Looking ahead, the FTSE 100 group faces ongoing build cost inflation, which is running at 3-4%, analysts at Hargreaves Lansdown said.


Another key focus will be demand expectations.


“The stamp duty holiday and pandemic lifestyle changes lit a fire under the housing market,” the analysts said.


“The government is still committed to supporting the housing market with things like 95% mortgages, which makes buying a house more accessible for those with only a small deposit. But demand is likely to dissipate as some of the headwinds of the last eighteen months ease.”


Meanwhile, Berkeley is dropping a trading update on Friday covering the first four months of its financial year, coming alongside its annual general meeting for shareholders, where one important vote will see investors give their opinion on a planned capital return of GBP509mln in the fiscal year to April 2022, via share buybacks and dividends and a so-called B share scheme.


In the latter, Berkeley will issue the shares, then repurchase and cancel them, leaving the owners with a taxable gain rather than dividends that would be taxed as income.


The housebuilder has previously announced plans to distribute at least GBP281mln per year to shareholders via buybacks and dividends until April 2025, helped by a net cash pile that had reached GBP1.1bn by April 2021.


According to analysts at AJ Bell, the market will want to hear about the state of said cash pile, as well as comment on forward sales, which stood at GBP1.8bn a year ago and GBP1.7bn April.


Mixed bag for Melrose


Thursday will also come with Melrose’s half-year results, which are likely to paint a dire picture for at least a couple of its segments.


Its largest division, Automotive, is being weighed down by the issues caused by the global semi-conductor shortage, while the aviation businesses, which rely heavily on commercial air travel, are likely going to be hugely disrupted.


Margins might be a bright spot, analysts at Hargreaves Lansdown said, as the manufacturer has been protecting them with tight cost control. Operating margins are expected to be around 5.6% by the full year, up from 3.9% at the end of last year.


All about macro


Monday is a bank holiday in the UK so only the truly dedicated UK traders will be interested in US pending home sales, which are expected to be down 1.9% year-on-year in July after falling 2% in June.


Tuesday will see the release of the Nationwide Housing Prices index for the UK where the expectation is for a slight cooling off in the massively overheated UK housing market.


Economists expect prices will be up 10.2% from a year earlier, down from the previous month’s 10.5% increase.


On Wednesday, the final Markit/CIPS Manufacturing Purchasing Manufacturers’ Index (PMI) reading is tipped to be 60.1, down a tad from the preceding month’s reading of 60.4.


It will be followed by the Markit/CIPS UK Services PMI on Friday, with the final reading expected to be 55.5, compared to July’s reading of 59.6.


Significant announcements expected for week ending 3 September:


Monday 30 August:


Finals: Base Resources plc


Tuesday 31 August:


Interims: Centralnic plc


Economic data: Nationwide House Price Index, US consumer confidence


Wednesday 1 September:


Finals: Arcontech Group PLC (AIM:ARC)


Interims: 888 Holdings (LSE:888) PLC, Johnson Service PLC, Menzies PLC, Petropavlovsk PLC (LSE:POG), PPHE Hotel Group Ltd, Bunzl PLC (LSE:BNZL), Melrose PLC


Economic data: UK/US manufacturing PMI


Thursday 2 September:


Finals: Barratt Developments PLC


Interims: Gem Diamonds Limited (LSE:GEMD), Gulf Keystone Petroleum Limited (LSE:GKP), Inspired PLC (AIM:INSE, FRA:7PK), Wentworth Resources PLC (AIM:WEN)


Trading updates: Berkeley Group (LSE:BKG) PLC


FTSE 100 ex-dividends to knock 15.83 points off the index: Glencore PLC (LSE:GLEN), Admiral Group (LSE:ADM) plc, BHP Group PLC (LSE:BHP), Antofagasta PLC (LSE:ANTO)


Economic data: US initial jobless claims


Friday 3 September:


Finals: Allergy Therapeutics PLC (AIM:AGY, FRA:HHU)


Economic data: UK/US services PMI, US non-farm payrolls, US unemployment rate

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