Mindful Money’s weekly shares watch: Rio Tinto, InterContinental, Standard Chartered & Randgold Resources

4th August 2014

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The market will be keen to hear how progress has been coming along at InterContinental Hotels, now widely viewed as something of a global economic barometer, when it updates with its half-year results on Tuesday.

The hotelier’s shares have enjoyed a robust period of late, after rising by 20% over the past six months and while Deutsche has just reiterated its own ‘buy’ recommendation, ahead of the report the overall analyst consensus currently points towards a ‘strong hold’.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers notes growth in North America, on the back of the better economic backdrop in the region, is expected to have remained strong.

He says: “China remains a focus given InterContinental’s planned expansion in the nation – it accounts for about one third of the group’s new room pipeline. Revenue Per Available Room grew by 3.9% in the first quarter, just over half that enjoyed in the US. The UK may once again lead in Europe, whilst geopolitical hotspots could once more provide some drag.”

Asian and emerging markets focused bank Standard Chartered follows on Wednesday with its own set of half-year numbers. With its stock down by 21% over the past year, investors will be hoping for a more positive update following a stream of negative news. Prior to the announcement, the analyst consensus denotes a ‘strong hold’ however Numis Securities has just upgraded its stance to a ‘buy’ while JP Morgan Casenove also changed its recommendation to ‘overweight’ according to Digital Look.

Sheridan Admans, investment research manager at stockbroker The Share Centre, who rates the firm a ‘hold’, says: “Management has been under pressure which has led to a strategic review. The group is unlikely to point to any significant change in the situation it may find itself in. Holders of the shares will have much to focus on such as trading conditions in Asia, bad loans, currencies, regulatory costs and individual country performance.”

Bowman notes a slowdown in profits, the result of difficulties at both its financial markets and Korean businesses, have seen its chief executive, Peter Sands, come under increasing pressure. He adds: “Management’s renewed focus on managing costs and disposing of non-core businesses is likely to be re-emphasised. Less favourably, both currency headwinds and geopolitical tensions could also feature.”

Thursday sees the FTSE 100 listed African gold mining and exploration group Randgold Resources deliver its second quarter results. The bounce in the price of gold this year has helped drive the firm’s shares 21% higher over the past six months and the broker consensus is pointing towards ‘buy’ territory.

Admans says: “In terms of production numbers, this company has been a good news story despite the political turbulence in Mali, the country in which it chiefly operates. Production levels have been setting record highs consistently and investors may be expecting more of the same. Investors will be looking for an update on its exploration programmes, which have also been a positive news story lately. However, the share price has suffered due to the underlying price of gold. We currently list Randgold Resources as a ‘buy’.”

Fellow mining giant Rio Tinto, up 10% over 12 months, unveils its own second quarter numbers on Thursday. With analysts including Canaccord Genuity and UBS having recently reiterated upbeat recommendations, the miners shares are sitting in ‘buy’ territory.

Admans, who also rates the stock a ‘buy’, says: “Investors will expect to hear of improved production numbers and may be pleased to see an improvement in sales, as most of the mined metals prices have held up well or have been rising in recent quarters. Updates on certain large projects such as Oyu Tolgoi in Mongolia will be sought after.”

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