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Don’t expect fireworks from Taylor Wimpey’s quarterly numbers

House builders and telcos will provide some of the weeks highlights.
New build houses
Taylor Wimpey and Bovis Homes both report next week

House builder Taylor Wimpey Plc (LON:TW. gives a third quarter update on Monday having already advised the market not to expect any fireworks after a strong first half.

The company completed a lot of houses in the first half of the year, partly in an attempt to get a more even balance between the first and second halves of the year.

As such, JP Morgan Securities is expecting volumes to be flat year-on-year in the second half of the year.

The broker also thinks the sales rate “should be at least flat” year-on-year but it sees “some scope for a beat against this figure” given that the sales rate in July was up 9% year-on-year.

It’s still too early for the interest rate rise to have had any impact on the housing market, though there might be some commentary on the expected impact in Taylor Wimpey’s statement.

Bovis Homes Group to be keenly observed

In a busy week for trading updates from house-builders, the report from Bovis Homes Group Plc (LON:BVS) might be more keenly observed than most, seeing as of late it is just about the only one in the sector that has not been making out like a bandit.

It’s barely a couple of months since the new chief executive, Greg Fitzgerald, outlined his turnaround plan and signalled confidence in the future by hiking the dividend.

Fitzgerald's strategic plan to overhaul the business includes cutting building costs, reducing its land investment on a number of larger sites, disposing of non-performing assets and streamlining its operations to focus on a few core regions. As it reduces its operations to seven from eight regions, the group expects to see 4,000 completions per year.

Given the reputational damage the company suffered from dubious build quality, investors will be keen to see signs of progress on this front.

Vodafone – income mainstay has second quarter results

As an income portfolio mainstay the attention on Vodafone Plc’s (LON:VOD) largely boils down to how much and how secure the dividend will be.

The telecoms blue-chip reports second quarter results on Tuesday.

 “With little in the way of share price growth over the last 2 years, investors have focused more on the attractive 6% yield,” said Graham Spooner, analyst at The Share Centre.

“Areas to concentrate on will be the performance in key European operations, which have been mixed, along with India and other emerging markets.”

The market will also be interested in any further commentary around the so called ‘fibre land grab’.

Advertising income pressures to ease in Q3 for ITV

Ahead of its third quarter trading update on Tuesday, ITV plc (LON:ITV) has said pressures on its advertising income are likely to ease during the period.

The broadcaster said in its July interims that net advertising revenue for its family of channels is expected to fall by around 4% in the third quarter, compared with an 8% drop in the first half.

HSBC thinks the decline will be slightly better than ITV had been predicting at 3.5%, thanks to a decent September.

“We believe that a lot of the potential negatives are discounted, expectations have bottomed and the market has formed a view that ‘everything is bad’. This arguably leaves room to beat expectations and close some of the discount to peers,” HSBC said

Meanwhile, ITV is in a stand-off with Virgin Media over retransmission fees. ITV wants to extract up to £80mln from Virgin Media for its main public service channel for the first time following a change in the law. However, investors are likely to focus on advertising revenue trends.

Talktalk Telecom Group – “Best stock” but tough times

Deutsche Bank sees Talktalk Telecom Group Plc (LON:TALK) as “one of the best European Telco stocks this year” even though it has had a downgrade to guidance, has had a dividend cut and is facing tough competition.

Analyst Robert Grindle in a recent note highlighted that TalkTalk is a beneficiary of the regulatory tightening on BT Group, but it has not been involved in the ‘fibre land grab’.

Wednesday’s second quarter results are expected to shed light on the group’s enterprise business which is seen as a catalyst.

“Q2 will likely provide more details of TalkTalk Business unit which is growing (Enterprise revs. +3.1% in Q2 ex volatile carrier revenues) as well as update as to how its MVNO model will be replaced with a distribution deal,“ Grindle said.

The German bank reckons TalkTalk will report a 4.2% decline in total revenue, with earnings seen 30% lower.

Royal Mail to report first half profit decline

Royal Mail Group PLC (LON:RMG) has been cutting costs as its letter delivery business continues to struggle and the parcels division contends with tough competition.

The company is expected to report on Thursday a 15% decrease in operating profit to £270mln for the first half, according to Jefferies.

Jefferies said first half profits have been hit by deteriorating revenue trends and increased cost pressures in UK Parcels, International and Letters (UKPIL) arm, partly offset by a continued strong performance in European parcels unit, General Logistics Systems (GLS).

It sees a 26% drop in UKIL operating profit to £183mln on the back of a letter volume decline of 6%. GLS, on the other hand, is expected to deliver a 21% increase in operating profit to £88mln.

In an effort to rein in costs, the postal service operator plans to close its current pension scheme on 31 March 2018 after finding that annual contributions could triple to £1.3bn if no changes were made. The firm’s workers had planned to strike in October in protest over pensions, wages and jobs but Royal Mail won an injunction in London's High Court preventing it from going ahead.

“The FY17/18E outlook is dependent on the outcome of labour negotiations about pay and pensions, which have entered into an external mediation process,” Jefferies said. 

“We believe risks remain to the downside and stick to our ‘underperform’ rating.”

UK inflation, jobs and retail sales figures in focus

Away from corporate earnings, UK data on inflation, employment and retail sales will be closely eyed.

UK consumer price inflation may hover at 3% or just above that in November as the Brexit-induced slump in pound pushes import costs higher, data from the Office for National Statistics is expected to show on Tuesday.

CPI reached 3%, the highest level since April 2012 and well above the Bank of England’s 2% target. The growth was driven by higher food prices.

The market will be keen to see how the increase in CPI affected real wages when the ONS publishes its jobs data for the quarter to September on Wednesday.  Real wages, which include the impact of inflation on wage growth, fell by 0.4% in the three months to August.

The decline in real wages has squeezed consumers’ spending power, which has hit UK retailers with Next Plc (LON:NXT) and Marks & Spencer PLC (LON:MKS) among those reporting weaker trading recently.

The ONS will reveal on Thursday whether the challenging consumer environment had an impact on UK retail sales in October. Sales fell by 0.8% month-on-month in September.

Week Ahead

Monday November 13

Interim Result - Zoo Digital Group PLC (LON:ZOO), Datatec Ltd (LON:DTC), McKay Securities PLC  (LON:MCKS).

Final results - Carrs Group Plc (LON:CARR), Lonmin PLC (LON:LMI)

Trading Statement - Ladbrokes Coral Group PLC (LON:LCL), Taylor Wimpey PLC (LON:TW.), Dignity PLC (LON:DTY), Lonmin PLC (LON:LMI)

AGM / EGM - Kin Group Plc (LON:KIN)

Tuesday November 14

Interim results - Land Securities Group Plc (LON:LAND), Jackpotjoy PLC (LON:JPJ), Trifast PLC (LON:TRI), AVEVA Group PLC (LON:AVV), Telecom Egypt (LON:TEEG), Speedy Hire Plc (LON:SDY), Romgaz (LON:SNGR), Picton Property Income (LON:PCTN), SRT Marine Systems PLC (LON:SRT), Vodafone Group PLC (LON:VOD), Intermediate Capital Group PLC (LON:ICP), DCC Plc (LON:DCC),  BTG PLC (LON:BTG), Cropper James PLC (LON:CRPR), Electrocomponents PLC (LON:ECM), Wentworth Resources (LON:WRL), Renold (LON:32ID), FirstGroup PLC (LON:FGP)

Final results – McCarthy Stone Plc (LON:MCS)

Trading statement - BBA Aviation PLC (LON:BBA), Meggitt plc (LON:MGGT), Polypipe Group Plc (LON:PLP), UBM Plc (LON:UBM), Bovis Homes Group PLC (LON:BVS), Irish Continental Group PLC (LON:ICGC),  ITV plc (LON:ITV)

AGM/EGM - Global Petroleum Ltd (LON:GBP), Mucklow Group PLC (LON:MKLW), Nanoco Group PLC (LON:NANO), Smiths Group PLC (LON:SMIN), Rainbow Rare Earths Limited (LON:RBW)

Wednesday November 15

Interim results -Premier Foods PLC (LON:PFD), Celtic PLC (LON:CCP), Talktalk Telecom Group PLC (LON:TALK), Great Portland Estates PLC (LON:GPOR), Experian PLC (LON:EXPN), Helical Bar PLC (LON:HLCL)

Final results - Zambeef Products PLC (LON:ZAM), Game Digital (LON:GMD), Avon Rubber PLC (LON:AVON), Fenner PLC (LON:FENR),  AB Dynamics plc (LON:ABDP)

Trading statement - Blue Prism Group plc (LON:PRSM), Barratt Developments PLC (LON:BDEV), Akers Biosciences, Inc. (LON:AKR)

Thursday November 16

Interim results - Young & Co's Brewery PLC (LON:YNGN), Royal Mail PLC (LON:RMG), TBC Bank Group Plc (LON:TBCG), Mediclinic International Plc  (LON:MDC), 3i Group PLC (LON:III), Dart Group PLC (LON:DTG), Assura Group Ltd (LON:AGR), British Land Co PLC (LON:BLND), Investec PLC (LON:INVP), Medica Group Plc (LON:MGP), QinetiQ Group PLC (LON:QQ.), Norcros PLC (LON:NXR)

Final results - Nanoco Group PLC (LON:NANO)

AGM / EGM - Nextenergy Solar Fund Ltd (LON:NESF), Record PLC (LON:REC)

Friday November 17

Interim results - Nextenergy Solar Fund (LON:NESF), Record PLC (LON:REC)

AGM / EGM - Salt Lake Potash Limited (LON:SO4), Sylvania Platinum Ltd (LON:SLP), Kier Group PLC (LON:KIE), Central Rand Gold Ltd (LON:CRND), Amur Minerals Corporation (LON:AMC), Seeing Machines Ltd (LON:SEE), Myanmar Strategic Holdings (LON:SHWE)

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