The Week Ahead: Royal Bank investors look for update on China
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Your support makes all the difference.A quiet week for results will be lit up by a handful of trading statements from major UK companies.
Tomorrow, Royal Bank of Scotland will update the market on current trading, and few surprises are expected with the bank reporting strong trading in its April update.
With a market capitalisation of more than £64bn, most analysts believe that a bid for Royal Bank is a long shot, although the market has been rife with takeover rumours in the last few months.
The only conceivable bidder, Citigroup, has the firepower to make an offer, but has hinted within the last week that it is not yet in a position to make a major overseas acquisition.
Royal Bank has said that it will focus on organic growth and investors expect its chief executive Sir Fred Goodwin to focus on organic issues on Tuesday, with acquisitions remaining firmly off the agenda in the short term. The bank's last major announcement was a strategic partnership with the Bank of China, which floated in Hong Kong on 1 June, and investors will be looking out for an update on the Chinese business.
TODAY: Renold is about as old economy as old economy gets. Although the engineering group is involved in a wide range of industrial activities, its main focus is on making chains, something it has been doing since 1864.
Recent performance has not been good; the company has suffered from energy price inflation and competition from South-east Asia. The broker Williams de Broë is looking for a pre-tax loss of £100,000, but believes that much of the recovery is already priced into the shares.
The rumour doing the rounds last week was that Alliance & Leicester's trading update, due today, may not contain a lot of good news. Any weakness will be good news for potential suitors, as the mortgage bank is already thought to have turned down one approach, from the French banking giant Credit Agricole, valuing the shares at 1,300p each. If trading is not going well, expect another offer to come sooner rather than later.
Three years of solid gains for shareholders in Workspace Group, the provider of flexible office space for small- and medium-sized businesses, appear to have run out of steam.
The shares have dropped 15.5 per cent in the last three weeks, underperforming a weak equity market. Consensus forecasts are for net asset value per share of 250p, putting the shares on a substantial premium. With a market capitalisation of £498m, converting to Real Estate Investment Trust may be too expensive.
Results: Full year - Carclo; Hyder Consulting; IFX Group; Latchways; London Merchant Securities; Renold; Workspace Group. First half - Civica.
TOMORROW: Polar Capital, the technology investment trust run by Brian Ashford-Russell, has performed strongly in the last three years, outperforming many individual stocks in the sector. Mr Ashford-Russell remains one of the top managers of technology assets and most investors are satisfied with performance in what remains a very tough sector.
Patientline, the provider of hospital telecommunication services, has given its shareholders a rough ride over the last few years, with the shares collapsing from a high of 230p in early 2002 to trade at just 19.5p at the close of trading last week.
A group of rebel shareholders - supported by the broker Shore Capital, which owns 17 per cent of the shares - forced the resignation of the chairman Derek Lewis in April. Investors will be hoping for a reversal in fortune since Mr Lewis vacated his job, but a rapid turnaround looks unlikely. Shore is expecting the company to report a pre-tax loss of £9.7m.
Results: Full year - CML Microsystems; Oxford Instruments; Patientline; Polar Capital Trust; Ten Alps; William Ransom & Sons. First half - ATH Resources; First Choice Holidays; Grainger Trust; Pursuit Dynamics.
WEDNESDAY: Trading updates from Tesco, House of Fraser and Woolworths will give investors a good picture of what sort of state the retail sector is in.
House of Fraser is thought to have accepted a 150p per share offer from the Icelandic investment group Baugur last week, so its new owners will be as keen as anyone to hear how the group is trading.
Shares in the food retail giant Tesco have held up well during the sell-off in equities in the last week, mainly because investors see it as a safe haven. Any bad news from Tesco could see the sector take a hammering although most analysts are upbeat on current trading.
Results: Full year - Accident Exchange; Celsis International; Ensor Holdings; London Asia Capital.
THURSDAY: Results: Full year - Chamberlin & Hill; New Avesco. First half - MyTravel Group; OMG.
FRIDAY: Results: No results due.
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