Electrocomponents under the microscope, price trends eyed for housebuilders
On Tuesday’s business agenda there is a continuation of the stream of mid-cap company updates and some macroeconomic data that will be of interest to investors in various industries.
Building society Nationwide will publish its house price index in the early morning, which will be an important indicator for the residential construction sector, with analysts at JPMorgan recently saying this data is “the big unknown” after the companies upped tools and restarted work on construction sites last month.
Later in the morning, the Bank of England will put out a report on mortgage lending, consumer credit and the money supply in April.
Consumer and industrial trends on show for Electro
The last the market heard from Electrocomponents PLC (LON:ECM) was a coronavirus update on March 23, confirming a significant drop in sales volumes to customers into locked-down markets such as Italy and France.
Sales in the week ended March 22 revenue growth had slowed, the FTSE 250 group said, by a “high single-digit” percentage.
The industrial distributor added that in the preceding eleven weeks to March 15 saw like-for-like revenue growth of around 4%.
“Whilst early days in the scheme of the crisis we thought it read more positively than could have been expected,” said analysts at Peel Hunt in a preview of Tuesday’s full-year numbers.
With Electro reporting a strong cash position and saying it had been able to leverage its global supply chain and strong online offering to mitigate the worst impact, using its UK hub to meet global demand, “we don’t see a reason for these mini-trends to have changed materially,” the analysts said.
Workspace dividend at risk
In fact, a dividend may not be declared since the property owner has deferred or reduced rent for its hardest-hit tenants, collecting only half of the rent due at the end of March.
Rental enquiries have seen a material slowdown since the lockdown began.
The property owner rents office space in London with flexible leases, giving more exposure to risks during the current crisis.
“Despite the disruption, the group thinks profit for the year ended March 31 will be in line with expectations, so it’s the outlook statement that’s most important next week,” analysts at Hargreaves Lansdown said.
“Fortunately the group has considerable headroom on the terms set by its lenders, known as covenants – it can withstand a 61% fall in rental income or 63% fall in asset valuation.”