Trustpower report first for third quarter

Andrew Rooney
Andrew Rooney
The third-quarter reporting season starts on Friday with Trustpower due to release its first-half 2016 results.

Xero and Z Energy follow on November 5 before the season starts to gear up on Tuesday, November 10.

Forsyth Barr broker Andrew Rooney said it was the smaller of the quarterly reporting seasons, with 22 companies reporting.

The season was largely dominated by the property sector with six property companies due to report.

Forsyth Barr analysts were forecasting total revenue growth of 8.3% at a median level for the 22 reporting companies, with earnings before interest and tax (ebit) forecast to fall 1.5%.

Normalised earnings per share (EPS) growth was forecast to be up 2% and dividend growth was estimated to rise 1.5%.

''Given the small sample size, with large cap companies skewing the aggregated growth figures, we chose to focus on the median growth figures for this reporting season.''

In the property sector, steady aggregated revenue growth was expected to rise 2%, driven by acquisitions, development activity and rental growth - partially offset by assets sales, he said.

Revenue growth, plus lower funding costs, was driving solid pre-tax earnings growth of 6%.

However, reported profit and EPS growth was negative, reflecting higher tax expense and the issue of shares.

Steady dividend growth was expected, Mr Rooney said.

''This reflects the underlying strength in pre-tax earnings, although payout rates are being increased by some LPVs [listed property vehicles].

''Given the strength in the property market, we could see some interim portfolio revaluation gains confirmed.''

Company forecastsTrustPower: Better generation, the weaker New Zealand-Australian dollar cross and increasing retail sales will combine to ensure reasonable profit growth in the first half.

TPW was also expected to increase its interim dividend 5% to 21 cps.

Xero: The majority of Xero's customer growth will come from Australia but the focus will be on the United States.

Traction in the US has been difficult to achieve with increases in absolute customer numbers the key.

The cash burn rate will also be in focus.

Z Energy: Z Energy has had a bumper first half with fuel margins and the refinery both strong during the period.

Nevertheless, Z will remain in limbo until the Commerce Commission comes out with its clearance decision on the Chevron takeover.

Diligent: Currency benefits will continue to deliver for Diligent.

Costs will be up, driven by its investment in Diligent teams.

The focus is on the US unlisted market and growth in Europe.

Mainfreight: The weaker New Zealand dollar will boost earnings growth in the first half given the translation benefits of US operations, in particular.

Geographically, performance has been mixed with Australia, and to a lesser extent New Zealand, subject to softer trading conditions.

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