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Corporate deluge kicks off with a vengeance on Tuesday, including updates from HSBC and BP


This week’s deluge of corporate updates kicks off with a vengeance on Tuesday, with global bank HSBC PLC (LON:HSBA), oil giant BP PLC (LON:BP), and discount hotels operator Whitbread PLC (LON:WTB) all on the slate.

Shares in the banking sector are at long-term lows, with HSBC’s stock last month falling in line with levels last seen back in 1994 as it became embroiled in new money-laundering allegations.

The Asia-focused lender said in August that it is accelerating restructuring plans, which includes 35,000 job cuts, after reporting a 65% drop in first-half pre-tax profit.

After taking US$3bn of loan and asset impairments in the first quarter and US$3.8bn in the second, the consensus forecast in the City is for HSBC to unveil further provisions of around US$2bn for the third quarter.

This is estimated to lead to a pre-tax profit of US$2.1bn, compared to US$1.1bn in the second quarter and US$3.2bn in the first quarter.

Oil under pressure

BP’s third-quarter results may make grim reading for oil investors.

In a preview, Swiss bank UBS pointed out the obvious, by describing the third quarter as “a difficult period” – with the oilers’ share price down nearly 28% since its prior quarterly results and strategy reboot.

“This reflects the fact that the refreshed strategy did not land well with investors – we think this lies with the deliberate shrinking of upstream in favour of investing in a renewables operation unlikely to generate meaningful earnings or cashflows before 2025,” the UBS analysts said

“Further, the negative narrative around the Upstream is unhelpful to the investment case when so much of the value of the business lies in the Upstream and will do for the next decade.”

Previously, BP lowered production guidance for the quarter but UBS noted that the company “will be essentially balanced from a cashflow perspective”.

Whitbread books in for expected losses

Coronavirus (COVID-19) restrictions impeding trading will be high up on the agenda when Whitbread PLC (LON:WTB) releases half-year results.

The Premier Inn and Brewers Fayre parent previously reported that sales had slowed by 77% for the half.

On that basis, first-half earnings (EBITDA) will fall to a £285mln loss from a £285mln profit in the same period a year ago, according to forecasts from UBS.

“The focus is likely to be on the start to 2H21, the restructuring program, pipeline delivery, competitor pressures and outlook for opportunistic bolt-ons,” the Swiss bank said in a preview.

Significant announcements expected on Tuesday, October 27: 

US earnings: Microsoft (after-hours)

Trading updates: BP PLC (LON:BP), HSBC PLC (LON:HSBA), St James’s Place PLC (LON:STJ), Plus 500 PLC (LON:PLUS), First Derivatives PLC (LON:FDP)

Interims: Whitbread PLC (LON:WTB)

Finals: Quiz PLC (LON:QUIZ), Renalytix AI PLC (LON:RENX)

Economic data: US durable goods orders; US house prices

McCarthy & Stone private equity bid expected to “put a floor under valuations across the sector”, ac

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