Whitbread (WTB) & Polymetal (POLY): What the budget holds for them?

The UK’s blue-chip index, the FTSE 100, reached new 20-month highs today as its constituent, consumer company Reckitt Benckiser (LON: RKT) boosted the index after raising its full-year earnings forecasts today. It has breached the highs of February 2020, just before the onset of the pandemic.

It was also supported by hotel company Whitbread (LON: WTB)’s strong H1 2022 results released today. The FTSE index was up over 0.7 per cent in today’s mid-day trading session.

Also, stocks have been in focus ahead of the Autumn Budget set to be presented by Chancellor Rishi Sunak tomorrow. Several sectors are eyeing some support measures from the budget. One of the most affected sectors, hospitality, had recently warned any plan B type measures would severely affect the sector, which it may not survive.

In view of this, let us take a look at 2 FTSE 100 index listed stocks and their investment prospects:

1. Whitbread PLC (LON: WTB)

Whitbread is a UK based multinational hotel and restaurant company.  The company owns the hotel brand Premier Inn.

The company released its H1 2022 interim results today, where its revenues were down by 39 per cent to £661.1 million, from £1,084.0 million in H1 2020. However, it was much higher than £250.8 million reported in H1 2021.

The company said its recovery was ahead of expectations and outperformed the market due to a surge in demand. It also said it expects to see a full recovery in 2022.

(Image source: Refinitiv)

Whitbread’s shares were trading at GBX 3,200.00, up by 1.43 per cent on 26 October. Comparatively, FTSE 100 index was trading at 7,275.24, up by 0.73 per cent.

The company’s market cap stands at £6,373.02 million, and its one-year return is at 36.04 per cent as of 26 October.

Budget demand of the industry - Major hospitality chiefs have asked the chancellor to make the existing reduced rate of 12.5% VAT rate permanent for the industry.

2. Polymetal International Plc (LON: POLY)

Polymetal International is an Anglo-Russian metals and mining company. The company is among the top 10 gold producers and a top 5 silver producer in the world.

The group reported its Q3 2021 production results today, wherein its Q3 gold equivalent production dropped by 8 per cent on year on year basis to 437 thousand ounce (Koz) as results moved back to their mean from Q3 2020’s record quarterly production data.

Also, the YTD FY 2021 gold equivalent production fell by 4 per cent to 1,151 Koz due to some planned grade declines at its Kyzyl, Svetloye and Voro sites.

(Image source: Refinitiv)

Polymetal International’s shares were trading at GBX 1,392.50, down by 1.80 per cent on 26 October. Comparatively, the precious metals sectoral index was trading at 21,383.95, down by 0.96 per cent.

The company’s market cap stands at £6,715.44 million as of 26 October.

Budget demand of the industry: Though there is no specific demand, all eyes will be on new taxes and levies, especially related to the government’s green initiatives.

Bottom Line

The blue-chip index has given a return of over 12 per cent this year, boosted by record-low interest rates and following the relaxation of lockdown restrictions. However, it has not performed as well as its US and European counterparts due to having a higher mix of commodity stocks in its index.

The UK has also been weighed down with rising inflation concerns and the possibility of an upcoming rate hike which may impact some stocks within the index.