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Companies Reporting: BP, HSBC, PayPal and Ascential

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Here’s our regular look at the FTSE 350 and a selection of other companies reporting from 1 – 5 August 2022

  • A watch on whether Ascential’s growth will make a comeback after lockdown impact
  • HSBC will show how it has been affected by sluggish growth in Asia
  • BP profits expected to rise as it transitions to renewables
  • PayPal will reveal whether it’s been able improve the profitability of customer transactions

Ascential [LON:ASCL], Half Year Results, Monday 1 August

Steve Clayton, Fund Manager at HL Select

“Ascential plc report their interim results next week and there should be plenty to talk about. The group recently held its first physical Cannes Lions event following the pandemic and investors will want to know how well the event worked out financially and how the group’s other event strategies are evolving.

The digital side of the group helps brands outperform on platforms like Amazon around the world. With many digital businesses reporting lower growth, it will be interesting to see if Ascential have seen any impact. Earlier this year the group revealed it was considering whether a listing of the digital division on Wall Street might create value. It is expected that the group will provide some further detail on its thinking here.

With growth last year heavily impacted by lockdowns, the headline numbers will look very strong this year, but the key really will be how they stack up against 2019.”

HSBC [LON:HSBA], Half Year Results, Monday 1 August

Sophie Lund-Yates, Equity Analyst

“Profits for HSBC have been underwhelming so far this year. Despite having large operations in Europe, sluggish growth in its biggest market, Asia, has meant pre-tax profits are expected to fall to $4.0bn down from $4.7bn in the first quarter.

The Chinese property market has a large part to play in this. As China’s property development stalls and house prices fall, the upcoming results will indicate the additional impact the sector has had on profits. As a reminder, last quarter HSBC absorbed a $160m charge for expected credit losses due to a slowdown in the Chinese property market.

HSBC have also signalled more share buybacks are unlikely for 2022 due to a weakening of its required capital position. Investors should not be holding their breath for a return of share buybacks until this issue is resolved.

A rising interest rate environment has benefitted HSBC. Net interest income rose to $7.0bn, compared to $6.5bn last year. While this remains beneficial, the worsening macroeconomic environment has reduced investment banking fees for many competitors. As such, HSBC should feel this squeeze too.

HSBC is also grappling with the proposed split of its western and eastern operations demanded by its largest shareholder Pin An Insurance Group. The hope is to unlock more value for shareholders, however, any material update from HSBC is unlikely in the upcoming results so investors shouldn’t hold their breath.”

BP [LON:BP], Q2 Results, Tuesday 2 August

Laura Hoy, Equity Analyst

“BP will continue to reap the reward of elevated oil prices in the second quarter with healthy profits expected this time round. BP has promised further share buybacks to the tune of $2.5bn in the second quarter, as they aim to return a portion of surplus cash flow to investors. Though no shareholder returns are guaranteed.

Capital expenditure in oil and gas is on the decline as BP marches forward with its transition to renewables. The recent Windfall Tax imposed by the UK government is still looming over the industry. But given that projects within the industry take years—or even decades—to set up, it should have little impact on the group’s investment plans. Still, any update from management on potential implications will be welcomed.

Aggressive spending on lower carbon assets means this will also be an area of focus for investors. These yet unproven projects could become a cash furnace to oil profits, so any update on BP’s aims to generate returns of 8-10% in this part of the business could move the needle.

BP’s exit from Russia will also be on investors’ minds, although the bulk of the impact has likely been priced in. The group’s decision to sell-off Rosneft is the right one, but eager buyers are not expected to emerge anytime soon. That means continuous write-downs are anticipated as the value of this asset declines.”

PayPal [NASDAQ:PYPL], Q2 Results, Tuesday 2 August

Laura Hoy, Equity Analyst

“Payment volume growth is always a metric to watch when PayPal reports since this is the crux of the group’s business. The group’s expecting between 15% and 17% total payment volume growth this year, and it’s important PayPal hits this target. That’s slower than the group’s delivered in the past, but given the exponential growth seen during the pandemic, it’s nothing to sneeze at.

The slower rate of growth means squeezing more out of each customer will be PayPal’s focus. PayPal’s investing heavily in new services that it can upsell to existing customers. While they’re expensive build out to begin with, they should become more profitable with every new customer that uses them. The group’s transaction expense rate, which will fall as these transactions become more profitable, has seen annual increases over the past three consecutive quarters. It would be good to see it come down, or at least plateau, this time around. Otherwise, it could indicate a long-term trend that will put added pressure on margins.”

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

01-Aug

Activision Blizzard* Q2 Results
Ascential Half Year Results
Heineken* Half Year Results
HSBC* Half Year Results
Pearson* Half Year Results
RHI Magnesita NV Half Year Results
Spectris Half Year Results
XP Power Half Year Results

02-Aug

BP* Q2 Results
Capital & Counties Properties Half Year Results
Coats Group Half Year Results
Direct Line* Half Year Results
Domino’s Pizza Half Year Results
Elementis Half Year Results
Fresnillo Half Year Results
Greggs* Half Year Results
Keller Half Year Results
Rotork Half Year Results
Sage Q3 Results
Synthomer Half Year Results
Travis Perkins Half Year Results
Virgin Money UK Q3 Results
PayPal* Q2 Results

03-Aug

Endeavour Mining Q2 Results
Ferrexpo Half Year Results
Hill & Smith Holding Half Year Results
Hiscox Half Year Results
IP Group Half Year Results
Morgan Sindall Group Half Year Results
Taylor Wimpey* Half Year Results

04-Aug

Alibaba* Q1 Results
Centamin Half Year Results
ConvaTec Group Half Year Results
EVRAZ Half Year Results
Glencore* Half Year Results
Hikma Pharmaceuticals Half Year Results
Meggitt Half Year Results
Mondi Half Year Results
Morgan Sindal Half Year Results
Next* Half Year Results
Novo Nordisk* Q2 Results
Pantheon International Full Year Results
Rolls-Royce* Half Year Results
Serco Half Year Results
Spirent Communications Half Year Results
Tritax Big Box* Half Year Results

05-Aug

Deutsche Post Half Year Results
Hargreaves Lansdown Full Year Results
London Stock Exchange Half Year Results
Pets at Home* Q1 Trading Statement
WPP*

Half Year Results

This article is brought to you in association with Hargreaves Lansdown. All opinions expressed in this article are from the analysts and do not necessarily represent the opinions of The Armchair Trader.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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