George Salmon 21 September 2017
The transitionary weeks between Summer and Autumn isn’t usually the busiest time of year in the reporting calendar.
However, with a broad selection of companies reporting next week, including two of our five shares to watch in 2017, there will be plenty to keep UK investors interested. In this week’s look ahead, we preview updates from;
- Pennon, who release a trading update ahead of half year results in November.
- RPC Group, where progress on the Letica integration will take centre stage in the group’s half-year trading statement.
- Imperial Brands, where we’ll be looking to see if the group reacts to the US regulator’s plans to limit the nicotine content of cigarettes.
FTSE 350 stocks reporting next week
|3i Infrastructure||Pre-close Update|
|AA||Half Year Earnings|
|Barr (A.G.)||Interim Results|
|Card Factory||Half Year 2017 Earnings Release|
|Close Brothers Group||Full Year Earnings Release|
|Thomas Cook Group||Pre-close Trading Update|
|United Utilities Group*||Pre-Close Trading Statement|
|Circassia Pharmaceuticals||Half Year Earnings Release|
|Grainger||Q3 Trading Statement|
|PZ Cussons||Trading Statement Release|
|SSE*||Close Period Statement|
|CMC Markets||Q2 Trading Update|
|Euromoney Institutional Investors||Pre-Close Trading Statement|
|Imperial Brands Group*||Trading Update|
|RPC*||Half Year Trading Statement|
|TUI AG (LSE)||Q4 Trading Statement|
|Carillion*||Half Year Earnings Release|
*Hargreaves Lansdown provides research updates on these stocks
The main attraction of Pennon is, as one might expect for an unglamorous water utility, the dividend. While many others in the sector have similar inflation-linked policies, none are more generous than Pennon’s stated aim of increasing the dividend by the rate of RPI inflation plus 4%. We don’t expect the group to announce any changes here.
As far as the numbers go, we’re expecting another strong operational performance in the core water and wastewater division. After all, Pennon has recently been top of the class for efficiency, with outperformance in the areas of both cost and delivery.
However, following on from Kier describing conditions in its environmental division as ‘challenging’ earlier this week, investors might be more anxious about the waste management division.
Along with Pennon, RPC figured as one of our five shares to watch in 2017.
So far, it’s been a pretty interesting year. A short attack from Northern Trust focused on the group’s strategy of acquisition-led growth, and placed its attribution of exceptional costs under the microscope. RPC’s response was to put further deals on the back burner, and instead knuckle down to prove it can deliver a seamless integration of the Letica business, its first foray into the US market.
The focus of the group’s half year update will therefore be on progress here, while we’ll also be hoping for further positive news on margin growth. In July, management confirmed first quarter profitability was ahead of prior expectations.
Imperial Brands Group
This summer has seen Imperial shares fall as fears over increased US regulation take hold. The group, through bands such as Winston and Kool, has a sizeable presence across the pond so we’ll be looking to see what it says in response to the regulator’s plans to reduce the level of nicotine to ‘non-addictive levels’.
Earlier this month, Imperial announced plans to sell down a 10% stake in Spanish distributor Logista, with the proceeds set to be used to pay down debt and launch a share buyback of up to £160m.
Nonetheless, the main avenue of shareholder returns remains the dividend, which Imperial aims to increase by at least 10% per annum over the medium term.
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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. George Salmon owns shares in Pennon and RPC.