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The FTSE 350 this week
Nicholas Hyett |
Equity Analyst |
13 November 2017 |AAA
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
The British public is said to be incurably interested in property. If that’s true then this week should be a good one for Business editors, with housebuilders and property companies reporting left, right and centre.
Among those we’ll be covering:
Experian report for the first time since rival Equifax reported a huge data breach.
British Land update on conditions in the London property market as Brexit headwinds gather.
Royal Mail looks to deliver a steady performance despite ongoing pension disputes.
Since Experian last reported, the credit ratings industry has been rocked by a data breach at rival Equifax. The breach saw hackers make off with the personal details of more than 145m Americans and hundreds of thousands of Brits and Canadians.
The effect on Experian is mixed. On the one hand a huge own goal by one of its biggest rivals must surely be a good thing. On the other it highlights one of the major risks faced by a company whose bread and butter involves processing huge quantities of potentially sensitive information.
We’d be surprised if there wasn’t some commentary on steps the group has taken to protect its data. Whether we’ll see an uptick in business following the breach is less clear.
On an operational level, progress in the UK and US consumer businesses will be key. Both have seen revenues drain away as the group moves towards a subscription model to counter free competition. However, we’re starting to lap that strategic shift, so we would hope to see an improvement.
Elsewhere, the Latin American business has so far shown remarkable resilience, despite the ongoing political and economic turmoil in Brazil. Hopefully this’ll continue.
British Land announced a £300m share buyback back in the summer.
The group argued there was strong demand for its assets, but limited opportunity for reinvestment at attractive values. With the company’s own shares trading at a discount to net asset value (NAV) it considered buying them back to be the most attractive option for investors.
Given that fairly pessimistic outlook, the group’s commentary on market conditions will be watched with interest.
Last time British Land reported, rental performance remained robust, and with the huge London campuses still to be let, continued progress will be important. That is especially true given the potential headwinds posed by a Brexit process that threatens to hit demand for British Land’s super-prime London office space.
Royal Mail successfully averted the threat of industrial action in the run up to Christmas. But the dispute with the Communication Workers Union over changes to the pension plan hasn’t gone away.
Given that disruption, we’d be very happy to see a ‘business as usual’ set of results on Thursday.
Declines in letter volumes have been right at the top end of expectations, so a moderation here and steady performance from UK parcels should be enough to keep shareholders happy. GLS, the international parcels business, has proven an expected boost for the group. Growth has been consistent and quite impressive, with recent acquisitions still being integrated we hope this continues.
Cost cutting remains a key focus, although the current pension dispute suggests to us that there may be cost headwinds ahead.
Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.
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