The Week Ahead: Housebuilders' updates reveal little
Monday 06 July 2009
Is a housing market recovery in the offing? Or does the slump still have some way to go? The answer to questions such as these will set the tone when Persimmon, Redrow, Barratt Developments and Bovis Homes issue trading updates this week. Their fellow housebuilder Taylor Wimpey boosted the optimists last month, talking of "continued stability" in the market in its pre-close update. Recent data on mortgage approvals and last week's house price report from the Nationwide have added to hopes of a recovery, or at least a moderation in the pace of decline.
Yet it may be too early to tell if the sector has indeed a turned a corner. Analysts at Bank of America-Merrill Lynch suspect we will learn little in the way of additional market insight from this week's updates, "for the simple reason that the industry is entering its normal 'quieter' period". "Much more significant will be the end August to mid-September trading period which should provide a clearer indication of how strong prospective buyer interest really is," they said.
Today: Regeneration specialist St Modwen Properties is likely to confirm that the trading environment remains challenging when it posts interim results this morning, according to Numis Securities. Nonetheless, the broker does expect to hear of "tentative signs" of an improvement in residential land sales. "We continue to believe that St Modwen is a unique way to play the recovery in both commercial property and residential markets," Numis said.
Results/Updates: St Modwen Properties.
Tomorrow: Results/Updates: Cape, N Brown, Michael Page International, Quadnetics and Persimmon.
Wednesday: Numis is looking forward to an upbeat statement from Tullow Oil, the oil explorer and producer which posts a trading update mid-week. The group's recent exploration and appraisal successes in Ghana and Uganda are likely to be the focus of the statement, Numis said, sticking to its "hold" stance before the update. Also on Wednesday, Marks and Spencer's annual meeting promises to draw the headlines. Last week's trading statement should help in easing the pressure on executive chairman Sir Stuart Rose, but some institutional shareholders are still calling for his role to be split, and for an independent chairman to be appointed by July 2010.
Results/Updates: 3i and Tullow Oil. Other: Marks and Spencer's annual general meeting.
Thursday: UBS is cautious ahead of Man's first-quarter update, due later this week, warning that assets under management at the London-based hedge fund "could disappoint", owing to institutional net outflows. The broker is more positive on Charlemagne Capital, the independent investment manager which is due to publish a trading update, expecting the figures to be broadly in line with forecasts.
The third-quarter update from Associated British Foods, the owner of Primark, is likely to be largely qualitative in form, according to Citigroup, with little in the way of quantitative information. The update on Primark promises to be positive, the broker added, pointing to recent comments from the company and peers.
"Notwithstanding recent foreign exchange moves, we remain comfortable with our (consensual) 2009 earnings estimates (our analysis points to a second half foreign exchange benefit broadly comparable to that in the first half)," the broker said. "Earnings risk feels biased to the upside."
Also on Thursday, the recruitment agency Hays is due to publish a trading update. The company's quarterly permanent and temporary placement trends have closely tracked those of its rival Michael Page, according to Collins Stewart, with a lower overall rate of decline owing to its exposure to temporary placement.
Seymour Pierce makes a similar point ahead of the update, saying that while the demand for permanent staff is falling in all areas, "demand for temps is proving more resilient".
"The pace of decline in staffing activity appears to be slowing but we expect it to continue to fall in the second half of the year," Seymour Pierce said, "Hays has a more resilient business than the average because of its high level of temp exposure. When the upturn comes, it will be the temp market that reacts first."
Results/Updates: Computacenter, Hays, Associated British Foods, Charlemagne Capital, Man, Barratt Developments and Redrow.
Friday: Results/Updates: Interserve and Bovis Homes. Other: John Lewis weekly sales figures.
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