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The Week Ahead: Local releases lead the way

Several companies are expected to report full-year results next week:

  • Super Group: As per a previous update, headline earnings per share (HEPS) are expected to increase between 29.6% and 43.7% y/y to between 370 ZAR cents and 410 ZAR cents, with the bottom-end of guidance ahead of expectations (Bloomberg: +29.3%). In addition, management confirmed good growth in revenue and profitability amid continued market share gains and efficient cost controls. The group has also maintained a robust financial position and cash flows have remained resilient.
  • Harmony Gold Mining: HEPS are expected to be between 461 ZAR cents and 549 ZAR cents – a decrease of 44% to 53% y/y, with the mid-point of this range coming in weaker than expectations (Bloomberg: -44.3%). In US dollar terms, HEPS will decline between 45% to 53%. Production costs over the year increased due mainly to the inclusion of Mponeng and related operating costs for a full twelve-month period, as opposed to just nine months in FY21. Inflationary increases also affected various facets such as labour, consumables, and electricity costs. Overall, all-in sustaining cost (AISC) was marginally higher than the guided range.
  • MAS Real Estate: Back in June, the company provided investors with a positive trading update as management saw a further recovery in various key portfolio metrics following the easing of lockdown and trading restrictions. Tenant sales were reported to be well above pre-Covid-19 levels – a strong improvement compared to the half-year point. Footfall also gained further momentum and exceeded 2019 levels during the months of April and May 2022. In addition, managements’ outlook statement remained positive, despite ongoing macroeconomic headwinds.
  • Motus Holdings: The company recently released an updated trading statement, with HEPS now expected to increase by between 68% and 73% y/y, compared to initial guidance for growth of 50% to 60%. This was also well ahead of consensus expectations (Bloomberg: +38.3%). Management previously noted that growth was supported by increased volumes, favourable foreign exchange movements and higher average selling prices. Increased demand from the pre-owned vehicle market as well as an improvement in car rentals provided further upside. 
  • Woolworths: According to a prior trading update, the group’s turnover, and concession sales for the FY22 increased by 1.4% and 2.6% in constant currency terms (Bloomberg: +2.2%). Online sales grew 16.4%, contributing 12.4% to the group’s total turnover and concession sales over the year. This was largely due to improved trade during 2H22 underpinned by a better run across all businesses. Adjusted diluted HEPS for the group are expected to increase 4.8% y/y to 358 cents.
  • Cashbuild: HEPS are expected to decrease 30% to 35% y/y to between 1867.2 ZAR cents and 2010.8 ZAR cents, as growth over the period remained largely subdued due to lingering headwinds associated with last year’s social unrest/looting event, reprioritised spending habits among consumers, and a normalisation in sales trends. Demand has also been heavily impacted by rising inflation, as seen globally.
  • Aspen: Normalised HEPS are expected to increase by between 20% and 25%, with the midpoint of this range slightly ahead of market expectations (Bloomberg: +21.1%). Growth in earnings has been positively impacted by a widening of the EBITDA margin and lower net finance charges. Revenue, on the other hand, is expected to increase by between 1% and 3% (Bloomberg: +7.5%).
  •  Impala Platinum: The company is set to report a weaker FY22, with HEPS expected to decrease 13% to 21% y/y to between 3 669 and 4 030 ZAR cents, due to a combination of lower sales revenue and inflationary pressures on operating costsThe mid-point of guidance, however, is slightly better than consensus expectations (Bloomberg: -18.6%) alleviating some pressure.
  • Truworths International: As per a recent trading statement, HEPS will range between 760 ZAR cents to 785 ZAR cents, representing growth of between 46% and 51% y/y (52-weeks adjusted range: +38% to +43%) which came in well ahead of expectations (Bloomberg: +27.5%). The previous highest HEPS achieved by the group was in 2016 at 667.6 ZAR cents. There have been no material acquisitions since 2016 and as such, the results are reflective of organic growth rather than acquisitive growth, driven by an improved sales performance, strong gross profit margins, and a continued focus on expense management.

African Rainbow Minerals, and Fortress REIT are also expected to release full-year results next week. Sun InternationalAdvTechSantam and Massmart are set to release interim results. 

  • Massmart is expected to have had a relatively weak start to year, with HEPS from total operations coming in at a loss of between 420.5 ZAR cents and 450.3 ZAR cents, representative of a decrease between 40.7% to 50.7%. This was well behind full-year expectations for a swing into profitable territory. The loss from continuing operations will range between 409.1 ZAR cents to 425.7 ZAR cents (26W21: loss of 166 ZAR cents), widening by 146.4% to 156.4%.

Steinhoff International will provide a 3Q22 update.

Looking at a few corporate actions, BHP GroupMpactHomeChoice International and Nedbank, among several other companies will trade ex-dividend on Wednesday 31 August 2022. Vukile Property FundAlexander Forbes and DataTec will be hosting shareholder meetings.

Second quarter earnings season in the US is in its final stages, with over 482 companies in the S&P 500 having reported results so far. Aggregate earnings across all sectors have grown ~8.3%, while revenue is up ~13.9%. On our radar this coming week, we have computer hardware manufacturer Hewlett Packard, vehicle manufacturer Ford, as well as wholesale retailers Best Buy and Costco. 

  • Adjusted earnings per share for Best Buy are expected to fall 57.5% y/y to $1.27, while revenue is set to decline 12.9% y/y to $10.3 billion, due mainly to a rapid decline in consumer demand as households continue to cut discretionary spending amid persistent increases in price inflation. 
  • Costco on the other hand, is set for an improved quarter with growth in both adjusted earnings (+9.3% y/y) and revenue (+13.9% y/y) amid an increase in store traffic. The company continues to benefit from robust demand for consumer staples and is well positioned to see this top-line strength persist throughout the year. 

Earnings releases in Europe are limited, while releases in the Asia-Pacific region will be dominated by a number of Australian-based mining companies.

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