Thursday preview: SABMiller, Investec, Halfords

17th Nov 2010 16:41

South Africa-focused investment bank Investec has put in a bit of mixed performance of late, according to broker Charles Stanley. "On the one hand Investec has benefited from a solid recurring income base as well as a strong performance from the Asset Management and Private Wealth businesses. However, Investec also point out that 'weak economic growth continues to impact the overall demand for credit and levels of transactional activity, and the performance of the core banking businesses remains dependent on the sustainability of economic recovery and the normalisation of economic activity'," the broker notes.Charles Stanley is predicting interim profit before tax of £216m, earnings per share of 24.0p and an interim dividend of 8.0p.Sticking with the South African theme, brewer SABMiller is expected to grind out an increase in interim profits, driven by economic recovery in its key markets.Charles Stanley forecasts profit before tax of $1,960m, up from $1,920m last year, on revenue of $13.7bn, up from $13.36bn last year. The broker has pencilled in 86.0p for earnings per share (2009:80.0p) and a 2p hike in the interim dividend to 19.0p."The improved trading environment means beer volumes have strengthened and it has been possible to push through price increases. Lower raw material prices and favourable currency movements will also have been beneficial," the broker said. The high reputation of the management of Halfords, the cycles and car parts firm, has taken a buffeting this year, with the company admitting it had got things wrong with its core cycles range in its second quarter. After peaking at 550p back in June the shares are now struggling to keep their head above 400p so Thursday's interim results will see shareholders looking for some good news.There won't be much of interest in the rear view mirror. The company has already set out guidance for profit before tax of £67m to £69m. KBC Peel Hunt says the focus will be on whether management has "successfully addressed problems over bike ranges, pricing and marketing that had such a detrimental impact on second quarter trading."The broker notes that after the first quarter, the company was projecting sales levels that would have required year on year like for like sales growth in the second quarter of 2%, so the 5% or so slide "was a sizeable shortfall". "On this front, we expect management to provide details of a more forthright marketing and promotional programme for the second half," the broker continued. "Having set out the basis for 15% compound EPS growth in June, the company then missed revenue plans for the next two consecutive quarters. Consequently, to gain investor support and re-rating, we believe Halfords needs to start meeting revenue expectations and proving the 15% EPS [earnings per share] target is not a one-year phenomenon, but a sustainable medium-term KPI [key performance indicator]," the broker said. Peel Hunt has a "hold" recommendation for the shares. Peel Hunt's prediction for profit before tax is at the top of the guidance range at £69m; Charles Stanley is slap bang in the middle at £68m. It also thinks revenue will rise to £457m from £425m at the interim stage last year, while earnings before interest, tax and amortisation is tipped to advance to £71m from £62m.Charles Stanley is expecting Halfords to announce an interim dividend of 7.6p, up from 6.0p last year.The broker is looking for an update on the integration of the Nationwide Autocentres purchase. The goal is to rebrand all 240 centres by March 2011.Power grid operator National Grid releases interim results on Thursday that should be solid, according to Charles Stanley, while confirming "that the outlook remains positive for another year of underlying growth."Market consensus is for earnings per share of 17.6p and an dividend of 12.9p."Net debt is expected to fall following the £3.2bn rights issue, offset by the net cash outflow from the capital investment programme. The financing charge will be broadly flat year on year with the anticipated reduction in pension interest largely negated by the pick-up in inflation on index-linked debt," Charles Stanley predicted. Shifting focus to the economy, public finances data for October is due to be announced at 9:30, as are retail sales figures. Public sector net borrowing is expected to narrow to £8.9bn from £15.6bn in September, while retail sales, including fuel, are tipped to have risen 0.4% in October after dipping 0.2% the month before. If the forecast is correct, that would leave retail sales unchanged from October 2009's level, down from September's 0.5% year on year gain.The Industrial Trends Survey for November from bosses' lobbying group the Confederation of British Industry is expected to show that the percentage of manufacturers reporting that orders are at normal levels will be 24 points lower than the percentage reporting sub-par levels of activity. A -24% score would, at least, be an improvement on October's -28%, but below September's -17%.INTERIMSDart Group, Halfords Group, National Grid, Norcros, QinetiQ Group, SABMiller, UK Mail Group INTERIM DIVIDEND PAYMENT DATEBritish Polythene Industries, Game Group, Tullett PrebonINTERNATIONAL ECONOMIC ANNOUNCEMENTSCurrent Account (EU) (09:00)Continuing Claims (US) (13:30)Initial Jobless Claims (US) (13:30)Leading Indicators (US) (15:00)Philadelphia Fed Index (US) (15:00)Q3AFI DevelopmentGMSProbabilityIMSSAlpha Pyrenees Trust Ltd., Avis Europe, Chaucer Holdings, Close Brothers Group, Keller Group, Melrose, Reed Elsevier, RicardoEGMSJPMorgan Global Emerging Income TrustAGMSClose Brothers Group, Critical Information Group, Henderson EuroTrust, Netcall, Ricardo, Sinclair Pharma, Worldspreads GroupUK ECONOMIC ANNOUNCEMENTSInternet Retail Sales (09:30)M4 Money Supply (estimate) (09:30)M4 Sterling Lending (estimate) (09:30)Mortgage Approvals (09:30)Public Sector Finances (09:30)Retail Sales (09:30)Trends in Lending (09:30)FINAL DIVIDEND PAYMENT DATEIndigoVision Group, Thorpe (F.W.)