The coming week is expected to be a slightly quieter one with both the late May bank holiday and a thinner corporate calendar curbing interest.
However, there will still be results and updates from some big hitters on the exchange as well as more UK and US economic data as the coronavirus-induced economic crisis continues to rumble on.
Softcat logs in with update
The IT infrastructure firm saw a strong performance in the first half to the end of January, so investors will be keeping an eye on whether demand has held up in the months since under the impact of the coronavirus pandemic.
In March, Softcat said its second half and started well and that it had not seen any material impact from the crisis on its trading, however, it did warn of uncertainty going into the rest of the year.
The firm also said it is planning to continue to invest in its business, so more clarity on these plans may also be eyed by shareholders.
Kainos hopes to stay on track
As most of the company’s revenues are recurring and contracted in advance, investors are likely to expect them to have held up despite the recent volatility, particularly with the group providing digital transformation and platform services to the NHS and other parts of the UK government.
However, given that IT transitions are unlikely to be a high priority given the current disruption, this reliability could be in doubt and may see growth slow down.
Investors will also be keeping an eye on the company’s future prospects, particularly with management having already cancelled the dividend and cut costs.
British Land to provide property market clarity
British Land Company PLC (LON:BLND) will publish its full-year numbers on Wednesday, two weeks after big property rival Land Securities reported hefty losses plus an 8.8% fall in the value of its property portfolio and a 21% decline in the value of its retail properties.
British Land, which pushed back its results by two weeks, is also likely to write down the value of its property, with most of the hit coming for retail.
The first half of the year already saw an 11% fall in the retail portfolio, leading to a 5% drop in net asset value (NAV) to 856p.
Reading across from Land Securities‘ numbers, analysts at UBS forecast negative revaluations from British Land‘s retail portfolio will lead to NAV per share falling by 4.5% in the second half of the year to 812p, leading to a 10.3% year on year decline.
As the coronavirus (COVID-19) pandemic only impacted the last few weeks of the financial year to end-March, the UBS analysts predict only a 4% drop to gross rental revenues to €552mln, leading to adjusted earnings falling 6%.
“We will be looking closely at the impact of COVID-19 on rent collection levels since the last business update, which saw dividends suspended and various actions taken to help retailers,” they said.
Britvic to clear dividend doubts
The maker of Robinson’s fruit juice said in March, which is when we last heard from them, that it was considering whether to postpone its interim payout as it predicted the coronavirus outbreak could knock up to £18mln off its monthly earnings.
Last week, analysts at City broker Liberum expressed some cautious optimism over a potential final dividend, doable they said if £50mln free cash flow is generated this year, while the firm has £585mln of liquidity in the trough month of May.
But debt levels may preclude opportunistic acquisitions, the analysts noted, which would hold Britvic shares back from re-rating this year.
DMGT investors braced as pandemic hits sales
Thursday will bring half-year figures from newspaper group Daily Mail & General Trust PLC (LON:DMGT).
Investors are unlikely to be looking forward to the figures after the owner of the Daily Mail suspended its full-year guidance as the coronavirus pandemic hit sales, particularly in its Events and Exhibitions and Consumer Media businesses.
As a result, shareholders are likely to look for how serious the damage will be as well as how healthy the company’s balance sheet is and how the firm is planning to ride out the effects of the crisis.
All eyes on IWG renewals
In March, the serviced offices provider suspended its dividend and its share repurchase programme, while flagging expected pressure on its businesses from the coronavirus pandemic.
In a preview, Peel Hunt said the immediate impact will be limited, considering many tenants will have had at least six months left on their leases so it is the rate of renewals that now matters.
“We are assuming that renewal rates drop to 40%, from a usual 70%, in April-June, although rent suspension in exchange for a contract lengthening might make this too pessimistic,” the Peel Hunt analysts said.
“Renewals are is a metric that IWG does not normally communicate hence even if it is quantified, it will require comparative period data and a level of detail that may not be forthcoming, hence we will have to look at general occupancy rates which give only limited clarity.”
IWG’s occupancy rates rose from 75% in the first quarter to 78% in the last quarter of 2019.
“Over time, we would expect new business from tenants seeking flexible office space at a time of uncertainty, but this will take time to work through,” the City broker’s analysts concluded.
As with the company updates, the macroeconomic perspective will still see attention focused on the coronavirus pandemic and associated health metrics.
The most notable UK data releases of the week will be the latest Kantar and Nielsen grocery sales figures, a wider CBI retail survey and Nationwide house prices.
US weekly initial jobless claims will also remain in the spotlight given they provide a high-frequency indicator of how the economy is faring, according to economists at Deutsche Bank.
“We’ve now seen seven straight reductions in the weekly numbers, but at 2.438m for the week through May 16, this is still far in excess of anything seen before COVID-19, suggesting that we haven’t yet seen the worst of the rises in unemployment,” they said.
Other highlights for macro watchers will include continued discussions on a European recovery fund, remarks from Federal Reserve chair Jerome Powell, and from ECB president Christine Lagarde, and follow-ups on the proposed €500bn EU recovery fund.
Significant announcements expected for week ending May 29:
Monday May 25:
UK and US public holidays
Finals: RDL Realisation PLC (LON:RDL)
Tuesday May 26:
AGMs: Aviva PLC (LON:AV.)
Wednesday May 27:
Thursday May 28:
Interims: Daily Mail & General Trust PLC (LON:DMGT)
Economic data: US weekly jobless claims, US GDP
Friday May 29:
Economic data: UK consumer confidence, UK house prices, US personal spending, US consumer confidence, US Chicago PMI