Look ahead to FTSE 350, other companies reporting & economic events from 27 June – 1 July 2022

•                Polar Capital Holdings looks to diversify away from the struggling tech sector.

•                It will be revealed whether inflation’s derailed Petrofac’s rebuilding year.

•                Moonpig will hope to reverse poor market sentiment.

                 

Polar Capital Holdings, Full year results, Monday 27 June
Matt Britzman, Equity Analyst

“Polar Capital Holdings is a fund management group with particular focus on thematic funds in the technology and healthcare sector. That’s a precarious position to be in given current economic conditions. Rising interest rates have a negative impact on the valuations for higher growth companies, which typically reside in the tech sector. Polar’s fees are charged as a percentage of assets under management, so having the larger funds struggle for performance is a drag on growth.

Full year operating profit’s expected to come in around 15% lower as revenue remains steady, but costs tick higher. The group’s been pushing a diversification strategy to wean off its reliance on higher growth sectors. Lately, net flows out of the tech funds have been offset by flows into these new areas. It remains to be seen how that trend will play out.”
 

Petrofac, Trading Statement, Tuesday 28 June
Laura Hoy, Equity Analyst

“The impact of inflation will make or break Petrofac this year, which has finally made its way out from under the bribery investigation. The group’s core engineering and construction business is struggling against cost and supply chain headwinds, which could ultimately tip free cashflow into the red.  It’s been reported that management was expecting a “modest” free cash outflow this year but things may have worsened as persistent inflation potentially pushes the division’s projects further overbudget. This would have a knock-on effect on net debt, which was already on the rise last year.

Existing projects aside, new business is the other focus for Petrofac. The ongoing bribery investigation meant major markets like the UAE were off the table. But now that chapter’s closed, we’d like to see the group build up its order book. At last check there was $37bn still on offer before the end of 2022. It would be good to see the group manage a win rate in the low double digits with a relatively large slice of that business funnelling through to the order book.”

Moonpig, Full year results, Wednesday 29 June
Sophie Lund-Yates, Equity Analyst

“Moonpig has had a very tough time, with the valuation coming under pressure since the online card and gift specialist listed shares for the first time at the start of last year. Part of the reason for the pressure is that it’s hard to see how conditions can ever exceed lockdowns for an online-only company like Moonpig. Now the world is back to normal and physical shops are an option once again, Moonpig is having to peddle even harder to keep up with expectations.

The market is expecting revenue and operating profit of £300m and £55m respectively next week. This already represents a decline from last year, but failure to meet the already lower bar could see further downwards pressure on the group’s valuation. With that in mind, there will be a watch on cost inflation, and how this is expected to impact margins in the coming year.

The outlook statement more generally will be in focus too. Father’s Day is a big event in the world of greeting cards, and it seems Moonpig stepped up promotional activity for the big day. On the one hand this may simply be a classic marketing tool, but discounting is also a fast way to hurt gross margins and can suggest business isn’t flowing as fast as expected.”