The Week Ahead: Lloyds and HBOS can restore some confidence

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The Independent Online

'Tis the season for banking writedowns, and the UK market will be watching with interest when Lloyds TSB and HBOS update the market this week. Last Thursday, Royal Bank of Scotland was the latest to produce an update, announcing potential losses of "only" £1.5bn, and the stock leapt more than 10 per cent as shareholders breathed a sigh of relief that the damage wasn't heavier.

Analysts do not expect any hugely unpleasant surprises from either, as they are not as exposed as some to sub-prime losses. Keefe, Bruyette & Woods did red-uce its estimation for Lloyds' 2007 numbers several weeks ago "to take account of estimated treasury investment writedowns". The bank's share price has taken a hit from the Northern Rock crisis since October, it has slumped from 571p to as low as 454p but it has performed better than many of its peers. HBOS has fallen from 1,100p at the start of the summer to 713p at the end of November.



TODAY: Northgate Information Solutions fell to year lows of 66p this month, bef-ore staging a slight rally in anticipation of today's first-half results. Citigroup is certainly predicting a brighter future.

The support services group has signed international human resources deals worth 120m in the first half, as its acquisition of Arinso International begins to have an impact. Northgate bought the HR services provider in June, which expanded the UK-based company into a further 40 territories.

Citigroup expects interim revenues to come in at 241.2m, with earnings before interest, taxation and amortisation of 31.7m. It added that the current valuation looks attractive.

Southern Cross Healthcare has been consolidating its position as one of the leading care home providers in the UK. The shares have more than doubled since debuting on the market in July 2006, and maintained their strength in recent months, despite the market volatility. It is set to announce its full-year results today and investors will look closely at its outlook for the industry as well as potential growth prospects in a fragmented market.

Results: Full Year SectorGuard, Southern Cross Healthcare. Half Year Immunodiagnostic Systems Holdings, Northgate Information Solutions. Trading update Lloyds TSB.



TOMORROW: Analysts reckon Ashtead Group is likely to put out strong numbers. Evolution Securities is predicting profit before tax of 71.3m and added that the management believes the market for its tool-hire business will remain strong. Evos explained the recent weakness in the share price was over fears of its exposure to construction in the US.

The other Northgate, this time the van rental company, is also reporting its half-year numbers. Evos forecasts a robust statement with profit before tax of 43m, after a strong performance in the UK and Spain. It believes the concerns relating to its sustainability of growth and the company's level of debt have pushed the shares down too far.

Sportingbet has proved something of an analysts' darling in recent months, and Daniel Stewart's James Hollins was backing the stock in anticipation of its first-quarter results. He expects a gross win of 30m after solid growth in European sports betting and reiterated his "buy" recommendation. "Sportingbet has consistently outperformed our initial expectations on cost controls following the introduction of the US's Unlawful Internet Gambling Enforcement Act in October 2007," Mr Hollins said.

First-half results at Carpetright are likely to be overshadowed by news of the prospective bid from its founder, Lord Harris of Peckham. He indicated in October that he could make an 850m bid for the group, but the process has drag-ged and there was talk in the market last week that he could walk away.

Results: Full Year Victrex. First Half Ashtead Group, Carpetright, Northgate. First Quarter Sportingbet. Trading Update Cadbury Schweppes, Game Group, Intertek, Laird Group, Whitbread.



WEDNESDAY: The music retailer HMV is expecting to show positive momentum in its half-year results, analysts say. Evos predicts losses will decline from 29m to 14m as sales rise 4.5 per cent to 810m. Many are waiting on the progress of its new store formats, which opened in September, and believe its future depends on its reaction to the consumer shift to downloading.

Results: Full Year Slimma. First Half Artisan UK, BBI Holdings, Consort Medical, Ensor Holdings, HMV Group. Trading Update Bunzl, Johnston Press, Rank.



THURSDAY: Results: Full Year Renovo Group. First Half Heath (Samuel) & Sons, International Greetings, Mulberry Group, Spice. Trading Update Amec, Avis Europe, Cattles, Go-Ahead Group, GKN, HBOS, Irish Life, Morgan Sindall, Rexam, Serco, Travis Perkins, Trinity Mirror.



FRIDAY: Results: First Half Ten Alps. Trading Update Centrica, PartyGaming.

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