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Wednesday preview: EC's Brexit decision, Stagecoach results

By Oliver Haill

Date: Tuesday 05 Dec 2017

LONDON (ShareCast) - (ShareCast News) - Wednesday will be another important day for Brexit, as Theresa May's rollercoaster week of negotiations continues, while its quite quiet on the company results front, with Stagecoach the biggest name expected.
Among the data on offer, the ADP employment change report in the US, while final revisions to third-quarter nonfarm productivity and unit labour costs will also be released, while the Bank of Canada is widely expected to keep the overnight rate unchanged at 1.0% as it has turned to a more cautious stance the past two months after back-to-back rate hikes in July and September.

Wednesday is scheduled for the European Commission to make a recommendation on whether or not "sufficient progress" has been made in order to move the negotiations onto Stage Two, where they can get talking trade. UK Brexit Secretary David Davis is also due to address a Brexit parliamentary committee, with Chancellor of the Exchequer Philip Hammond also due to speak at the Treasury select committee.

Stagecoach's interim results are in the diary with the train and bus operator in the headlines last week after Transport Secretary Chris Grayling was accused of "bailing out" the company with a potential new public-private partnership for its written-off East Coast mainline contract that could see the company avoid paying a large portion of its promised 3.3bn premiums to the government.

As for the half-year results to the end of October, in September the group announced UK bus revenues were down 0.1% in London and 0.4% in the regions, North America up 0.8%, UK rail was up 3.8% and Virgin Rail was up 4.4%.

UBS forecast revenue of 1.89bn, PBT of 76.7m and EPS 11.1p for the period, with a flat dividend of 3.8p.

"The key issues will be the outlook in UK bus and any signs of a stabilisation in trends, as well as the recently announced changes to the UK rail franchising regime. The latter is especially important given the problems at East Coast, with the new arrangements possibly capping Stagecoach's liabilities," analysts said.

"The dividend remains the key support for the stock and the share price's recent rise on the back of the UK rail newsflow indicates the market is more hopeful the current level can be maintained."

Final results are also due from RWS Holdings, the intellectual property services group.

The AIM-listed company put out a positive trading update in early October, followed by the $320m-plus deal acquisition of Moravia, a leading provider of technology-enabled localisation services.

Based on revenue guidance of at least 163m, house broker Numis estimated that constant currency organic growth in the second half has been high single digits, following first-half growth of around 10%, well ahead of the group's trend for underlying growth of around 5% from recent years.

Adjusted PBT was expected to be ahead of market expectations, partly due to a better revenue performance, but Numis thinks particularly reflecting stronger performances from the group's higher margin businesses and good underlying margin progress in those businesses.



Wednesday December 06

INTERIMS
Mercia Technologies , Mulberry Group, Plastics Capital, Stagecoach Group, Sysgroup, Tricorn Group

INTERIM DIVIDEND PAYMENT DATE
First Derivatives, Marshalls

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
Factory Orders (GER) (07:00)
MBA Mortgage Applications (US) (12:00)

FINALS
easyHotel, Image Scan Holdings, Numis Corporation, Oxford Metrics, Redhall Group, RWS Holdings, Schroder European Real Estate Investment Trust

AGMS
Billing Services Group Ltd., Ceres Power Holdings, Gattaca, Orchard Funding Group , YouGov

TRADING ANNOUNCEMENTS
Carillion

UK ECONOMIC ANNOUNCEMENTS
BRC Shop Price Index (00:01)