Tuesday preview: Inchcape, Old Mutual, Ashtead ...

7th Mar 2011 17:00

For all the worries over consumer spending, car dealerships seem to do reasonably well in 2010, especially those with international networks such as Inchcape.At its interim management statement in October Inchcape lifted profits guidance for the year following a strong third quarter. Revenues in the nine months to September 30 were up by 7.6% from the same period the previous year, the company said.Market expectations are for full year profit before tax of £204.9m, up from £155m in 2009, on sales of £5,873m, up from £5,584m the year before.Charles Stanley is a little above consensus with a forecast of £210m in pre-tax profits, giving earnings per share of 31p (market consensus: 30.81p). The broker thinks the company will pay a full year dividend of 6p, having suspended payments the year before."Overall, Inchcape's car markets continued their recovery in 2010 and at the same time there has been solid margin performance and strong cash conversion. In 2010, profits advanced strongly in Hong Kong and Australia together with increases in the UK and European divisions. Also, there will be an improvement in the results from Russia and Emerging markets but this division was operating well below its potential, in our opinion," Charles Stanley said. "In 2010, the market in Singapore has been difficult and we anticipate a £35m profit contribution compared to £56m in 2009," the broker added. Panmure Gordon is forecasting revenues for Inchcape of £5,865m, up 5% on last year. It predicts adjusted profit before tax will be £200.0m, and notes the range of market forecasts spans from £192.8m to £205.2m. It reckons earnings per share (EPS) will be 30.3p while a "total dividend of 7.0p has been pencilled in vs. 0.0p last year, and implies a yield of 1.8% at current levels, dividend cover of 4.3x and a payout ratio of 23% on projected EPS.""We anticipate strong levels of cash generation and are forecasting net cash balances of £105.0m (23p per share)," the broker said. "We expect the overall outlook to point towards an uneven global recovery in the new car market. Within this, we expect the key positives to be Hong Kong, Australia and South America. A close eye will be kept on progress in Russia and Emerging Markets as this should drive a lot of the operational gearing in this growth cycle, and we expect to see strong progress here with signs of recovery in the Baltics also underway," Panmure Gordon said."Elsewhere, we expect to see tough market conditions in Greece, Belgium and Singapore. The UK is also expected to have a tough year in 2011, albeit the market has been stronger than anticipated of late, so this guidance may change. Ongoing site disposals, headcount reductions and other cost initiatives should also help offset any weakness from these areas," the broker added.Wound care specialist Advanced Medical Solutions (AMS) has had a good year, reckons Singer Capital Markets, what with its restructuring, the move into its new manufacturing facility in Winsford and the launch of LiquiBand, its surgical glue product, in the USA/"The period end update in mid December highlighted that performance for the year had continued to go well into the second half and that AMS was likely to be towards the top end of analyst expectations that range from £4.9m-£5.5m profit before tax. Our revenue forecast is £30.2m and we expect adjusted fully diluted EPS at 3.7p. We were at the top end of expectations and did not upgrade forecasts for full year 2010," the broker noted. Peel Hunt thinks the focus will be on the rates that equipment hire firm Ashtead is achieving when it announces its third quarter results."We suspect that US rates have held up better than expected given healthy levels of utilisation across the industry. Importantly, this suggests that pricing momentum going into the fourth quarter could be stronger than anticipated - leading to further upgrades. Moreover, as Ashtead enters in fiscal 2012 with increasing levels of fleet and the stronger pricing the potential for more meaningful upgrades over the coming twelve months is high," the broker reckons.South African insurance giant Old Mutual has had a torrid time of it recently, notes Charles Stanley, "with the sale of its US life business, preparations for the IPO [flotation] of its US Asset Management business and the failed sale of Nedbank to HSBC." "However, we recognise that the group has made progress this year with its strategic repositioning and has experienced good sales and net client cash inflows, rising funds under management and is working towards reducing its debts," the broker added.Charles Stanley is forecasting earnings per share for the year will rise to 15.2p from 12.4p. It has pencilled in a figure of 3.3p for the full year dividend, comfortably more than twice 2009's 1.5p payment. INTERIMSAbcam, Interior Services GroupINTERNATIONAL ECONOMIC ANNOUNCEMENTSBankruptcies (JPN)Machine Orders (JPN)Bank of France Business Sentiment (FRA) (07:30)Trade Balance (FRA) (07:45)Factory Orders (GER) (11:00)NFIB Small Business Optimism (US) (12:30)Q3Ashtead GroupGMSForte Energy NLFINALSAdvanced Medical Solutions Group, Antofagasta, Cupid, FBD Holdings, Hydro International, Inchcape, InterQuest Group, Johnson Service Group, Old Mutual, Pace, Pinewood Shepperton, Spirax-Sarco Engineering, STM Group, Tullett Prebon, Weir Group, ZotefoamsAGMSHenderson Diversified Income Ltd.UK ECONOMIC ANNOUNCEMENTSBRC Sales Monitor (00:01)RICS House Price Balance (00:01)FINAL DIVIDEND PAYMENT DATEArtemis VCT