Look Ahead To FTSE 350: TED, SMDS, VTY And More

Look ahead to FTSE 350 & other companies reporting from 6 to 10 September

Q2 2021 hedge fund letters, conferences and more

Ted Baker, Q2 Trading Update, Tuesday 7 September

Susannah Streeter, Senior Investment and Markets Analyst

“Ted Baker had already been struggling to find a new sense of style before the pandemic ripped even bigger holes in its business model. Ted’s racks of formal wear fell out of fashion during the crisis, as loungewear was piled up in virtual shopping baskets instead. Pandemic lockdowns hit particularly hard, but even as stores have reopened the long-term structural retail issues still have to be grappled with. The decline of the department store is a particularly thorny issue for Ted Baker given its large number of concessions and overall, the high costs of running bricks and mortar stores is a big headache. The group has been cutting costs as fast as it’s been cutting occasion wear ranges and it’s making headway on improving its buying practices. Its online sales though still need a significant boost so progress made here will be crucial and will be a key metric to watch. Issuing £100 million in new shares gave management the firepower to transform the group’s fortunes, but the team is now under pressure to come up with the goods.’’

DS Smith, Q1 Trading Update, Tuesday 7 September

Laura Hoy, Equity Analyst

“For box-maker DS Smith, striking a balance between rising input costs and increased output is the key challenge. We’re expecting to see a huge year-over-year volume increase for the first quarter owing to the pandemic-related weakness baked into last year’s figures. But the group should be at or close-to pre-pandemic levels, putting it on-track to outperform 2019 sales. Volumes improved through the second half of last year, but management flagged inflation as a potential challenge. The increase is expected to be passed seamlessly on to customers, most of which will likely stomach the higher bill. Three months isn’t long enough to say the strategy is iron-clad, but next week should give investors some idea of whether or not things are going to plan. Executing on this balancing act is essential if the group is to live up to its expected 3.4% dividend yield—a big part of the investment case. Remember that yields are not a reliable indicator of future income.”

Vistry, Half Year Results, Tuesday 7 September

Laura Hoy, Equity Analyst

“If peers’ results are anything to go by, we’re pretty confident that Vistry’s half-year results will outline a strong performance. The UK’s housing market has been on fire over the past six months, buoyed by pent-up lockdown demand, affordable mortgages and the stamp duty holiday. Vistry has likely capitalised on the situation. We’re most interested in where things are headed. Forward sales will be a key metric to watch as it offers a glimpse into whether demand is starting to wane. With the stamp duty holiday wrapping up, there’s concern that the market may be starting to cool.

The most recent HRMC data showed property sales slowed considerably in July, as some of the government’s helpful schemes draw to a close. We’d like to hear Vistry’s take on the situation and get a sense of whether prices are holding up in the absence of tax savings incentives.”

WM Morrison Supermarkets, Half Year Results, Thursday 9 September

Susannah Streeter, Senior Investment and Markets Analyst

‘’The grocer is at the centre of a storm of speculation over future ownership with counter offers coming in thick and fast. Clayton, Dubilier & Rice currently appear to be in pole position, but the market clearly believes Fortress could come back with an improved deal. There is a lot to like about the grocer from a private equity standpoint and these half year results should give a snapshot of the existing investment case for the company. The capacity for further growth in Morrisons’ online channels is attractive, with digital sales more than doubling last quarter. The wholesale business also offers an alternative source of revenue and can help mitigate pressures in its core retail business where margins might end up even tighter given the ultra-competitive grocery sector. The fact that most stores are owned not leased is another major plus point, but that’s led to concerns that a future buyer could sell off the assets and laden the group with debt. Potential suitors have promised that won’t happen but if the company lags the supermarket pack for too long future management may have no choice but to monetise its stores.’’

EMIS, Half Year Results, Thursday 9 September

Nicholas Hyett, Equity Analyst

“EMIS’ management have said that they were heading for “business as usual”, with trading actually slightly ahead of expectations and better than pre-pandemic. While we expect EMIS Health – the group’s core business selling software to GPs surgeries – to have done well this year, it’s unlikely to deliver transformative growth. After all the group already services 57% of GP’s in the UK. Instead it’s EMIS Enterprise, which includes patient-facing services, analytics and pharmacy services, which we think is the engine for future expansion. In particular its Patient Access business has enjoyed very rapid growth over the pandemic – as patients increasingly require digital access to NHS services. We suspect that trend could continue to gather pace even now the pandemic is subsiding.”

FTSE 100, FTSE 250 and selected other companies scheduled to report next week

*Events on which we will be writing research

06-Sep

07-Sep

08-Sep

09-Sep

10-Sep

No FTSE 350 Reporters

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