Weekly outlook: Nvidia, Ninety One and Imperial Brands report; UK inflation and wage growth

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12 November 2021

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Portfolio Adviser

Monday 15 November

-Rightmove UK house price index

-Chinese monthly growth figures for retail sales, industrial production and investment I tangible fixed assets

-In Europe, quarterly results from Vodafone spin-off Vantage Towers

-In the US, quarterly results from Tyson Foods and Warner Music

Tuesday 16 November

-UK unemployment and wage growth figures

AJ Bell investment director Russ Mould and financial analyst Danni Hewson said all eyes will be on whether the last leg of the classic inflation cycle, wage growth, continues trending upward.

Unemployment fell to 4.5% in the three months to August, a figure rarely seen since records began in the early 1970s, the pair note, and wage growth was 8.3% year-on-year or 6.3% excluding bonuses as the number of job vacancies hit a record 1.1 million.

However, the Office for National Statistics has warned the wage growth figure could be misleading owing to the base effect caused by the furlough scheme and pandemic and lockdowns a year ago.

The UK claimant count is also still 2.1 million, which suggests a lot of workers and families are still struggling to get by and are in need of extra financial support, Mould and Hewson said. “And that’s before the recent jump in fuel and heating bills.”

-Full-year results Imperial Brands

Mould and Hewson said while the company “seems to be shaking off the tumult of 2020” when it issued profit warnings, fired its chief executive and slashed its dividend, it is not out of the woods yet.

Its ‘next generation’ vape and heated tobacco products have failed to turn a profit, while demand for traditional cigarettes is waning. The tobacco giant is also sitting on a debt pile, said to be 2.6x higher than underlying cash profits, according to Hargreaves Lansdown equity analyst Matt Britzman.

The rise of professional and retail investors using ESG screens have also likely impacted its share price which “has not made any progress at all” since late spring, Mould and Hewson added.

Analysts are pencilling in a low-to-mid single digit increase in adjusted operating profit on a constant currency basis due to weaker tobacco profits, lower losses in the next generation business and higher profits from distribution. Sales for the year in September 2021 are expected to hit £7.7bn compared to £8bn last year.

-First-half results from Land Securities, Homeserve and Mr. Kipling-owner Premier Foods

-First-half results Ninety One and Intermediate Capital Group

Both fund groups saw assets increase in the first quarter of their respective financial years.

While Ninety One shares are trading 11% higher year-to-date, Intermediate Capital Group’s (ICG) have taken off and are now some 37% higher than the start of the year thanks to its rapid growth in assets under management. In Q1 it saw 27% growth in third-party assets to $61.5bn compared to the same period a year ago, which netted it 24% higher fees.

Jefferies continues to rate ICG as a ‘buy,’ highlighting its ability to surprise on the upside.

“After a very strong Q1 for fundraising (20% of the four-year fundraising target done in a single quarter) these interim results will give us a better idea of performance fee potential, which the market has currently pegged at 15% of management fees for FY22 (YE March),” analyst Julian Roberts said.

“Although this is at the top end of guidance, the positive divestment environment could nudge it ahead of the current £23.4m 1H consensus (£49m for the full year), and the recent pull-back in the share price provides more room for a company which habitually beats guidance to surprise to the upside.”

-First-half results Vodafone

Mould and Hewson note Vodafone’s shares have been flat over the last year and are trading no higher now than they did in 2002 when the dotcom bubble burst.

Investors have been “disappointed” by its latest string of results. In its annual figures in May, the group revealed it would be targeting mid-single digit percentage growth in earnings and cash flow and would maintain its reduced payout of €0.09 a share as it looks to implement a more progressive dividend policy.

Over the interim, analysts will be looking to see if the telecoms company is on track to meet its full-year guidance of adjusted operating profits between €15bn and €15.4bn and adjusted free cash flow of at least €5.2bn.

Hargreaves Lansdown equity analyst Sophie Lund-Yates said other things to watch for include improvements in roaming revenue, which took a hit as travel collapsed during the pandemic, and cost savings efforts after the Liberty Global acquisition.

-US retail sales

-US industrial production and capacity utilisation rate

-US NAHB house building industry sentiment survey

-US business inventories data

-In Asia, quarterly results from Sea Limited

-In the US, quarterly results from Walmart and Home Depot

Wednesday 17 November

-UK inflation

The UK consumer price index unexpectedly dipped to 3.1% in September from 3.2% the month before. However commentators were quick to point out the figures represented a snapshot of a bygone era following surging energy prices and significant supply shocks in October.

-Full-year results from Sage

-First-half results from SSE, British Land and Experian

-Trading updates from Informa and Spirax-Sarco

-EU inflation figures

-US new building permits and housing starts data

-US oil inventories

-In Asia, quarterly results from Baidu

-In the US, quarterly results from Nvidia, Cisco and Target

Nvidia’s biggest challenge is maintaining its recent string of stellar results, said Hargreaves Lansdown equity analyst Nicholas Hyett.

The group, which makes graphic chips used in gaming and crypto mining, reported a 68.3% jump in revenues last quarter, while its operating profits more than doubled.

“Analysts expect growth to slow to ‘just’ 44.2% year-on-year in Q3, but that’s still an impressive number in the face of rising supply chain disruption,” Hyett said. “Those sorts of high expectations are reflected in a PE ratio of 67.9, nearly two and a half times the 10-year average. Should the company disappoint the fallout could be dramatic.”