Brexit is casting its shadow over everything, and the housing sector is suffering more than most, so Persimmon’s trading update could provide some cheer.
The update is likely to be robust, although investors will focus on any difference in business before and after the vote result.
Reports have suggested the referendum is likely to depress house prices, which is bad for sellers but potentially good for first-time buyers.
“Have the enquiry levels tailed off or have buyers been reducing their offer prices?” wonders Graham Spooner at The Share Centre.
“The numbers prior to the referendum should reflect what other companies in the sector have shown, such as increasing completions and average prices. Investors will also look to see if the company becomes more cautious in acquiring land banks and plots,” Spooner suggested.
A loss of Imagination
The year just gone was not a good one for chip designer Imagination Technologies.
Numis Securities noted its earnings per share forecast at about this time last year was in line with consensus at 6.7p but by the time of the trading update in late May of this year it had switched to a loss per share of 3.3p.
“There have been multiple issues including underlying softness in licensing revenues, weakness in royalty volumes (particularly from Apple), some one-off revenue adjustments and an inflated cost base. The change in CEO actioned in Feb-2016 was a key change in order to address these issues and put the business on a path to recovering earnings and realising value. This resulted in immediate cost actions worth circa £25mln with net savings of circa 19% of opex [operating expenditure] and circa 18% of revenue, which should start to improve financial performance in FY17E,” suggested Numis analyst Nick James.
“Management have also been conducting an operational review of the remaining business and should report back on early findings at the results. This should provide greater detail on how value and profitability will be maximised in the future either through further disposals (the Pure business is already in the process of being sold), further cost cuts (there is still significant dilution to earnings from R&D in the MIPS and Ensigma businesses) or confidence in a revenue trajectory that can monetise some of the R&D operations which are currently loss making,” James added.
Numis is forecasting a loss before interest and tax of £12.4mln on revenue of £126mln.
Hands to the pumps at Hayward Tyler
Although valued at less than £50mln, the turnaround at the pumps and motors specialist Hayward Tyler since 2012 has seen the company’s profile grow.
The shares have hit a plateau since 2014 as investors fret about the effects on the business of the slumping oil & gas sector, despite management highlighting other parts of the business that are thriving.
As such, management is likely to throw the spotlight on its nuclear business plus plans to revive the Peter Brotherhood business it acquired late last year.
As for Brexit, the shares are currently higher than they were on the day of the referendum vote, so it might be safe to assume the market does not rate the impact highly.
Announcements expected
Finals: Hayward Tyler Group PLC (LON:HAYT); Imagination Technologies Group PLC (LON:IMG); Polar Capital Technology Trust PLC (LON:PCT); Solid State PLC (LON:SOLI)
Interims: St Modwen Properties PLC
Trading statement: Carillion PLC (LON:CLLN); Connect Group PLC (LON:CNCT); Persimmon (LON:PSN); The Gym Group PLC (LON:GYM);