House builder Bovis Homes kicks off the week with its interim results.
The company gave a trading update in the first week of July, which soon enough after the EU referendum vote to duck the issue of whether it is likely to have an effect on house buying sentiment, but that will not be the case on Monday.
“Investors will be looking for information on where demand levels are as the Autumn selling season fast approaches. Movements in reservation rates over the last seven weeks and regional trends will be of particular interest,” reckons Peel Hunt.
“Given Bovis has no operations within the M25, we expect trading to have been relatively normal with good availability of mortgage finance and Help to Buy continuing to support demand,” the broker said, adding that, like others in the sector, the group will be exercising caution around near-term land buying activity.
What's in the pipeline?
Numis Securities is expecting robust first half results from Polypipe, the manufacturer of plastic piping systems.
It is forecasting underlying earnings (EBIT) of £34.5mln, up from £25.6mln the year before.
“Looking forward, the result of the Brexit referendum has created uncertainty and we therefore believe that current trading and comments on outlook will be of key interest to investors. In line with others, we expect Polypipe to state that there has been no significant Brexit impact to date and that it is too early to reliably estimate the likely implications,” the broker said.
Since 23 June, Polypipe’s share price has fallen 20%, which is double the average fall recorded by sector peers, which Numis attributes to Polypipe’s dicier debt position.
“However, a simple sensitivity analysis suggests that Polypipe could withstand relatively significant volume declines and we would also point to the group’s strong record of cash generation. Based on this, we believe that the fall in Polypipe’s share price since the referendum is overdone,” the broker added.
LFL sales growth set to slow at Kingfisher
Returning, obliquely, to the theme of house building, DIY-focused retailer Kingfisher gives a trading update on Thursday.
Inevitably, Credit Suisse is on the look-out for any signs of a post-Brexit vote slowdown, though it thinks UK house prices will be resilient.
“Moreover the home improvement market looks well-disciplined with B&Q and Homebase reducing space ,” it added.
Fellow Swiss bank UBS predicts second quarter like-for-like (LFL) sales will be up 2% year-on-year, which would represent a slow-down from first quarter growth of 3.6%.
UBS points out that B&Q and Poland were up against tougher comparative figures in the second quarter while in France the focus seems to have been more on gross margin rather than chasing sales in a dull market.
“In the UK, Screwfix is expected to show further strong growth while B&Q should have benefited again from sales flow-back from closed stores, and potential disruption at Homebase as Bunnings get to grips with the business,” UBS said.
The first quarter update suggested good progress on plans to generate £500mln of incremental profit from common product, operational efficiency and digital expansion, UBS noted.
“Given the timing of costs and benefits the first year of material profit uplift will be FY19. Success of the Transformation Plan is the biggest swing factor for the stock, in our view, although there are potential headwinds from the EU vote (slower UK growth), offset by some benefits (currency translation) and some each-way bets (whether Bunnings succeeds with Homebase),” the bank said.
Results expected this week
Monday
Final: Nakama Group plc (LON:NAK)
Interims: Bovis Homes Group PLC (LON:BVS), Clarkson PLC (LON:CKN), Georgia Healthcare Group PLC (LON:GHG)
Tuesday
Interims: Antofagasta PLC (LON:ANTO), Cairn Energy PLC (LON:CNE), H&T GROUP PLC (LON:HAT), Hochschild Mining PLC (LON:HOC), Mears Group PLC (LON:MER), John Menzies PLC (LON:MNZS), Polypipe Group PLC (LON:PLP), John Wood Group PLC (LON:WG.)
Final: BHP Billiton PLC (LON:BLT)
Wednesday
Interims: Admiral Group PLC (LON:ADM), Apax Global Alpha Ltd (LON:APAX), Balfour Beatty PLC (LON:BBY), Gem Diamonds Limited (LON:GEMD), Lookers PLC (LON:LOOK)
Trading statement: Imperial Brands PLC (LON:IMB)
Thursday
Final: The Rank Group PLC (LON:RNK)
Interims: Capital & Regional PLC (LON:CAL), Evraz plc (LON:EVR), Kaz Minerals PLC (LON:KAZ), Premier Oil PLC (LON:PMO), UK Commercial Property Trust (LON:UKCM)
Trading statement: Kingfisher PLC (LON:KGF)