George Salmon 3 August 2018
Next week is the last truly manic week of the summer. However, there’s still time for a glut of UK financials, worth a collective £229bn, to report.
Among the companies we’ll be covering:
- We’ll be looking out for Prudential to give more details on its strategy after deciding to split the business.
- Tritax delivers half year earnings on Thursday. We’ll be keeping an eye out for any comment around the wellbeing of the retailers it counts as tenants.
- The size of fund outflows at Standard Life Aberdeen will be under the (probably quite large) microscope.
FTSE 350 stocks reporting next week
|HSBC*||Half Year Results|
|Synthomer||Half Year Results|
|Ultra Electronics||Half Year Results|
|Domino's Pizza||Half Year Results|
|Hargreaves Lansdown||Full Year Results|
|InterContinental Hotels*||Half Year Results|
|Intertek||Half Year Results|
|IWG||Half Year Results|
|Meggitt||Half Year Results|
|Rotork||Half Year Results|
|Standard Life Aberdeen*||Half Year Results|
|TP ICAP||Half Year Results|
|Glencore||Half Year Results|
|Hastings||Half Year Results|
|Hill & Smith||Half Year Results|
|Paddy Power||Half Year Results|
|PageGroup||Half Year Results|
|Prudential*||Half Year Results|
|Spirax-Sarco||Half Year Results|
|UDG Healthcare||Q3 Earnings Release|
|Card Factory||First Half Trading Statement|
|Cineworld||Half Year Results|
|Coca-Cola HBC||Half Year Results|
|Derwent London||Half Year Results|
|Evraz||Half Year Results|
|G4S||Half Year Results|
|Ibstock||Half Year Results|
|Legal & General*||Half Year Results|
|Randgold Resources*||Half Year Results|
|Savills||Half Year Results|
|Tritax Big Box REIT*||Half Year Results|
|TUI||Q3 Earnings Release|
|No FTSE 350 reporters|
*Companies on which HL offers research
The decision to split Prudential into two companies with different goals seems a good one on first glance, but has left us with a few questions.
The first business is a life insurer targeting the US, as well as the growing middle classes in Asia. It should be a solid foundation for rapid growth.
With the second, a mature UK/European life insurer and asset management company, you’d expect slower growth, but with potential for a consistent dividend.
Management should be able to focus on the separate aims of each of the businesses. But with the resignation of current Chief Executive of M&G Investments, Anne Richards, a deeper dive into understanding the group’s new strategy is what we’re really looking for.
Tritax runs a simple business model. Acquire sought-after warehouses and distribution centres, then lease them out to those that need them, usually big retail names.
Occasionally, it goes to shareholders to ask for new cash to help fund more acquisitions. That’s due to its REIT structure. Real estate investment trusts need to pay out 90% of rental profits, so retaining funds for future development is out of the equation.
Its latest round of financing saw it raise £155.6m. A good chunk of this has been used to buy up a £120.7m site in Darlington, but it hasn’t quite spent it all yet.
Appetite for new sites should be strong. While high street names have been battling stiff headwinds, online retailers have been soaring. As long as this remains the case, we think Tritax will be on the lookout for new assets to augment its portfolio of big boxes.
When Aberdeen and Standard Life merged back in 2017, both were seeing significant outflows. Fast forward to the present day, and not much has changed.
In fact, we wouldn’t be surprised if outflows in the flagship fund have increased as performance hasn’t met expectations. A steady stream of outflows isn’t a great look for a group which is increasingly focused on asset management after the sale of its remaining life books.
There are some brighter points, however. Savings from integrating the two businesses are coming in strongly, and the group has outlined plans to return £1.75bn to shareholders. We’ll be keeping an eye on what the group has to say on its capital returns plans on Tuesday.
Author George Salmon is an Equity Analyst.
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