Tuesday preview Whitbread, Home Retail, Chemring, inflation – MoneyWeek

CreditSuisse,however,saysthatwithrevPARgrowthintheUKstillsubdued,itisnotexpectingtheupdatetoleadtoearningsforecastupgradesforWhitbread。

RevPARinWhitbreadsfourthquarterwasdownyear-on-yearby1%buttheSwissbankthinksthatintheMarchtoMayquarteritwillturnpositivebyasimilaramount。

ForthegroupsCostaCoffeechain,CreditSuissehaspencilledinlike-for-like(LFL)salesgrowthof4。

0%,downfrom+5。

2%intheprecedingquarter。

Jefferies,however,seesnoreasonforCostasmomentumtohaveslowed,anditistippingLFLgrowthofaround6%,aidedbytherecentwetweather。

ThepubsrestaurantsdivisionisseenbyCreditSuisseachievingLFLgrowthof1。

5%,littlechangedfromthefourthquarter,buttheissueremainstherecoveryofcostinflationgivengrowthhasbeenvolumenotpricedriven,CreditSuissesays。

Jefferiesisonceagainofamoreoptimisticbent。

ItpointstorelativelysolidnumbersbycompetitorswhichindicateLFLsalesgrowthofbetween2%and5%,althoughitdoesconcedethatWhitbreadspub-grubdispenserswillprobablyachievegrowthatthelowerendofthatrange。

CreditSuissescurrentestimatesassumeWhitbreadsmarginswillfallbyonepercentagepointinfiscal2013。

ItseemsunlikelyconsensusnumberswillchangeaftertheQ1[firstquarter]updateandweseegreaterupgradepotentialelsewhereinthesector,CreditSuissesaid,citingsectorpeersAccorandInterContinentalHotelsGroupasbetterpicks。

Asforthesecondquarter,Jefferiesthinkstradingcouldbealotmorevolatile。

WethinkthatthetimingoftheDiamondJubilee,theEuro2012footballtournament,andtheOlympicGamescouldallcausevolatilityintrading(withthecontinuedwetweatherasanaddedfactor)withtheriskthatpeoplejuststayathomeandlosttradingisnotmadeup,thebrokersaid。

PanmureGordon,meanwhile,isgoingfor2。

0%LFLgrowthatPremierInn,1。

0%LFLsalesgrowthinRestaurantsand3。

0%LFLsalesgrowthinCosta。

ThesamebrokertakesalookatstrugglingretailerHomeRetailwhichownsHomebaseandArgos。

WeexpectthatthepoorweatherinAprilwillhaveimpactedbothArgosandHomebase,thelatterinparticular。

Argosshouldhaveseensomebenefitfromthedigitalswitchoverandgenerallydecentconsumerelectricalssales,butindustryconditionswillnothavebeenhelpful,thebrokersaid。

ItpredictsaLFLsalesdeclineof4%andflatgrossmargins。

Thisisinlinewithearlyconsensus,althoughtherangeiswide,from-1%to-6%,PanmureGordonnotes。

DIYchainHomebasewillnothavebeenhelpedbythewettestAprilin100years,promptingPanmureGordontoforecastalike-for-likesalesdeclineof5%inthisdivision,assistedbyanimprovementinMayandJune。

Consensusisfor-8%but,again,therangeiswide,from-4%to-12%,thebrokerinforms。

Welookforflatgrossmargins,comparedwithaconsensusfor25basispoints[aquarterofapercentagepoint]。

Overall,fallinglike-for-likesalesandhighfixedcostsmeansthatprofitswillbedownforthegroup,PanmureGordonpredicts。

Movingawayfromthehighstreettothedefenceindustry,themarketsfocusislikelytobeoncash,accordingtoCreditSuisse,whenmilitarycounter-measuresspecialistChemringissuesinterimfiguresonTuesday。

WithUSdefenceuncertaintylikelytopersistfortherestofthisyear(andamplydiscountedinChemringsvaluation),webelieveinvestorattentionwillbeontheproposedH2[secondhalf]sharebuyback,theSwissbanksaid。

Itisforecastingnetoutflowof£12moverthefirsthalfofthefinancialyear,takingnetdebtto£275m。

AddingproceedsfromMarinedisposalannouncedlastweek(£32m)indicatesa£40-50mbuybacklooksrealistictousandat320psharepricethiscouldbe4%accretivetoearnings(netofthe4%dilutionfromMarine)。

WhileweviewthemultipleforMarineaslow,itisapositivesignthatChemringiswillingtodivestunder-performingassets,CreditSuissestated。

Thebankisgoingforinterimsalesof£332m,underlyingearningsbeforeinterestandtax(EBIT)of£55mandunderlyingearningspershare(EPS)of18。

9p。

WeviewourforecastsasconservativeandwouldbesurprisedifChemringmissesnumbers,particularlygiventhisyearsUSContinuingResolutiononlylastedthreemonthswhichshouldsupportshort-cycleorders,CreditSuisseadvised。

BritainpunchesaboveitsweightintheworldofcomputerchipdesignandthoughitisusuallyARMHoldingswhichgetsthebulkofthespotlight,ImaginationTechnologiesisnosloucheitherwhenitcomestoservicingtheflourishinghand-heldcommunicationsdevicesmarket。

Nevertheless,theshareshavetumbledfroma52-weekhighof717patthestartofApriltoaround485pnow,suggestingacertainamountofnervousnessaroundTuesdaysfullyearfigures,withsomewonderinghowmuchlongtheexplosivegrowthindemandforsmartphonescancarryonatthecurrentrate。

Marketconsensusisforprofitbeforetaxof£31。

4m,whichwouldbealmostdoublewhatitachievedtheyearbefore。

Salesaretippedtoriseto£126。

9mfrom£98。

0m。

BrokerJefferiesisaboveconsensuswithitsrevenueforecastof£132m,drivenbyanexpectedto%increaseinroyaltiesto£62m。

UKinflationdataforMayisoutonTuesday,andthereislikelytobeencouragingnewsontheCoreConsumerPriceIndex(CPI)annualinflationrate,whichistippedtonarrowto2。

2%from2。

9%inApril。

TheregularCPIisseenrising0。

2%inMayafterAprils0。

6%increase,leavingtheannualadvanceunchangedat3。

0%。

TheRetailPriceIndex(RPI)isalsoforecasttoriseby0。

2%inMay,havingjumped0。

7%inApril。

RPIinflationisexpectedtodeclineslightlyto3。

3%from3。

5%。

INTERIMS

ChemringGroup

INTERIMDIVIDENDPAYMENTDATE

LowlandInvestmentCo,MatchtechGroup

INTERNATIONALECONOMICANNOUNCEMENTS

BuildingPermits(US)(13:30)

HousingStarts(US)(13:30)

ZEWSurvey(EU)(10:00)

ZEWSurvey(GER)(10:00)

GMS

AllNipponAirwaysCoLtd。

FINALS

ImaginationTechnologiesGroup,Trifast

ANNUALREPORT

PolarCapitalHoldings

IMSS

HomeRetailGroup,Whitbread

AGMS

CoastalEnergyCo(DI),FortuneOil,NBGlobalFloatingRateIncomeFundLtdGBP,NBGlobalFloatingRateIncomeFundLtdUSD,OphirEnergy,RegalPetroleum,RichouxGroup,SurgicalInnovationsGroup,TigerResourceFinance,Whitbread

UKECONOMICANNOUNCEMENTS

ConsumerPriceIndex(09:30)

RetailPriceIndex(09:30)

FINALDIVIDENDPAYMENTDATE

HiscoxLtd。

JH

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