The week ahead: easyJet, BowLeven, Balfour Beatty
20th March 2015 17:09
Monday 23 March
Trading statements
SCS Group, Nanoco Group, YouGov, Finsbury Food Group, Md Medical Group Investments, SVM Global Fund, CityFibre Infrastructure Holdings, GVC Holdings, Akers Biosciences, Pennon Group.
Tuesday 24 March
Plumbing supplies giant is due to report first-half results. UBS looks for like-for-like sales growth of 6.5% in the period, although suggests the reported figure may be higher if the heavily-declining French business is re-classified as a discontinued operation.
UBS re-iterates its 'buy' rating with a new price target of 4,500p (previously 3,980p).
"Our valuation approach based on peer multiples moves with a re-rating of the group, in particular in the US which is by now the biggest driver of Wolseley (c75% of FY15E EBITA)," adds the Swiss broker.
"While multiples are certainly not depressed anymore, we believe 16.1x CY15E / 14.1 CY16E PER remains an attractive valuation in the context of the peer group for a business delivering 5-6% organic top line growth and expected 6-year 12% EPS CAGR (before balance sheet usage)."
Trading statements
Wolseley, Panmure Gordon & Co, Spire Healthcare Group, Faroe Petroleum, Gulf Marine, John Laing Infrastructure Fund, Quixant, IQE, 7digital Group, SkyePharma, Barr (A G).
AGM/EGM
Entu UK, eServGlobal, Electronic Data Processing, Metminco.
Wednesday 25 March
Housebuilder will release first-half numbers, and while most financial details were provided in a trading update last month, Westhouse Securities will be looking for pre-election signals.
"We will be looking to see the year-on-year run-rate of reservations per site per week - a good lead indicator of trends," says Westhouse's Alastair Stewart.
"Most volume housebuilders have seen this weaken against strong comparables in H1; a key question will be whether there has been any sign of consumers holding off purchases ahead of the election, as a number of housebuilders have suggested could be the case."
Profit before tax (PBT) for the year is estimated at £156.1 million (up 50% year-on-year), earnings per share (EPS) at 98.3p (up 49% year-on-year) and dividends per share (DPS) at 20p (up 25% year-on-year).
Stewart has a 'neutral' rating on the shares with a 1,411p target price.
Africa-focused oil and gas group will post interims on Wednesday, a week after completing the Etinde farm-out to LUKOIL and NewAge.
The group received $165 million in cash for the transaction and will take a further $5 million shortly for working capital.
It will also enjoy a $40 million two well appraisal carry on Etinde, offshore Cameroon, another $15 million on completion of the appraisal programme and a further $40 million once Etinde development Final Investment Decision is secured.
Westhouse are bullish: "Bowleven has just received a sum of cash in excess of its current market cap and is carried for the next stage of the derisking of the Etinde development, which we currently value at 47.6p on a risked basis. Bowleven will also soon begin an exploration campaign in the Bomono permit, onshore Cameroon, with the Zingana-1 well (targeting over 100mmboe) expected to spud in coming weeks.
"We see Bowleven as one of the most undervalued E&P stocks in our universe, with a significantly strengthened balance sheet that puts it in an interesting position in the current weak oil price environment."
The broker says 'buy' with a 93.4p target price.
Continuing the bullish theme is broker Jefferies, who upgrades its rating for from 'underperform' to 'buy' - the construction firm is set to publish full-year results mid-week.
"With the KPMG review now complete and a new management team on board, we believe Balfour Beatty is well set to both fix the internal problems that have plagued the business over the past 18 months and ride the wave of construction market recovery in the UK and US," says Jefferies.
Given the depressed level of earnings and nature of the turnaround opportunity at Balfour, Jefferies value the shares on 2016 and 2017 estimates. They apply EV/EBITDA (10x) and PER (17x) multiples consistent with historical valuations to their 2016 and 2017 estimates, with a 10% discount in the outer year.
Despite the positive outlook for the coming years, revenue for 2014 is forecast at £8.4 billion (-4% year-on-year) and PBT at £6 million (-97% year-on year).
Trading statements
United Utilities Group, TUI AG, Topps Tiles, John Laing Group, Atlas Mara Co-invest, Alliance Pharma, Anglo Pacific Group, Powerflute Oyj, Marimedia, Johnston Press, Source BioScience, Hilton Food Group, ServicePower Technologies, Card Factory, Balfour Beatty, Graphite Enterprise Trust, Chime Communications, Futura Medical, Bellway, BowLeven.
AGM/EGM
Innovation Group (The), Guscio, Bluecrest Bluetrend.
Thursday 26 March
Media conglomerate will publish an IMS summarising trading performance and developments during its second quarter and first half as a whole.
After an encouraging start to the year, Westhouse Securities expects a continuation of this trend and will take the opportunity to sense check its full-year forecasts which currently suggest useful year-on-year EPS and DPS increments of 10% and 7% respectively.
"We will also look for an update on the potential impact of recent US dollar strength versus sterling (DMGT derives around 1/3 of its annual revenues from N. America) and on the group’s acquisition pipeline," says Westhouse analyst Roddy Davidson.
"We see scope for forecast upgrades as the current year develops and will review our target price and recommendation following this update."
Forecasting PBT for the year of £278.6 million, EPS of 53.2p and DPS of 21.9p, the analyst currently rates the stock an ‘add’ with a 920p target price.
Budget airline releases a pre-close trading statement. The team at Barclays remain 'overweight' following an upbeat presentation to their sales team by chief executive Carolyn McCall, and after detailed analysis of summer schedules.
"An easing competitive environment, strong UK demand trends, and Gatwick self-help benefits all suggest to us easyJet could surprise on pricing this summer (our blue-sky scenario sees 15% EPS upside, with H2 RPS +1%). Valuation is attractive, with a clear multi-year structural growth story, and sector-leading ROCE,", says Barclays.
First-half results are due in a couple of months and Barclays expects revenue of £1.77 billion (full-year £4.74 billion), PBT of -£19 million (full-year £675 million) and earnings before interest, taxes, depreciation, and amortisation (EDITDA) of £114 million (full-year £956 million)
"The stock may not deliver quite as much momentum as on a 2-3 year view, but we remain confident that, at least for 2015, this remains a double-digit EPS growth story at a very reasonable valuation (12.3x 12-month forward P/E)."
Trading statements
EasyJet, Daily Mail and General Trust, Epistem Holdings, SciSys, Science In Sport, Signet Jewelers, IFG Group, Churchill China, Concurrent Technologies, Amec Foster Wheeler, International Public Partnership, Boot (Henry), Corero Network Security.
AGM/EGM
MoneySwap, Banco Santander SA.
Friday 27 March
Trading statements
Imperial Innovations Group, Public Power Corp S.a., Judges Scientific, Novolipetsk Iron And Steel Corp, Cathay International Holdings, Homeserve.
AGM/EGM
MCB Bank, Attraqt Group, Range Resources.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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