Mindful Money’s Monday Share tips: L&G, Rio Tinto, Standard Chartered

5th August 2013


This week sees results and updates arrive from InterContinental Hotels, Asian focused bank Standard Chartered and mining giant Rio Tinto. We look at what the brokers are saying about them writes Philip Scott.

Tuesday sees InterContinental Hotels, often viewed as something as a barometer for the global economy, reports its half year results. Over the past six months, it has seen its shares remain flat but over 12 months they are up by 17 per cent. Growth in North America is expected to have remained solid, while previously reported more difficult conditions in China and Europe may again be reiterated.

Keith Bowman, equities analyst at Hargreaves Lansdown Stockbrokers says: “Having completed on the sale of its London Park Lane hotel for $469m back in May, speculation regarding an effective return of this cash persists, whilst further new contracts to manage additional hotels could be announced.

“In all, and despite some valuation concerns, the group’s exposure to a potentially recovering global economy currently underwrites positive – ‘buy’ – consensus analyst opinion. Share data hub, Digital Look, by its broker consensus has the group listed also as a ‘buy’.

Sheridan Admans, investment research manager at stockbroker, The Share Centre adds: “Investors will be looking to see the group continue to deliver on the strong performances off the back of the full year results and that the forward bookings outlook remains robust. We currently list Intercontinental Hotels as a ‘hold’.”

Insurer Legal & General has been progressing well, reflected in the momentum of its share price, up 29 per cent over six months and 55 per cent over the past year. “Consequently, investors will be looking for evidence that it continues to deliver in key areas singled out as providing good opportunity for growth, those being retirement solutions, digital solutions, protection and direct investment. Investors will also be keen to see how L&G is progressing with its plans for international expansion,” says Admans. The Share Centre has the group down as a ‘buy’ while broker consensus on Digital Look has it pointing nearer to a ‘hold’.

A slowing economy in China, has hit the miners hard. Rio Tinto, delivering its second quarter up this week has seen its shares fall by 16 per cent over the past six months and over the past year they have only firmed 1 per cent. Even so the consensus across Digital Look points to a ‘strong buy’. For its part The Share Centre also lists it as a ‘buy’. Admans says: “Production levels across certain commodities have been at record levels following investments in large scale capacity enhancing projects. Investors will be keen to hear what impact this has on the bottom line given the weakness in commodity prices. We anticipate further commentary on how other large scale projects are progressing and the company’s views on a slowing Chinese economy.”

Fellow miner Randgold Resources, delivering its second quarter results this week, over the past six and 12 months has seen its shares collapse by 23 per cent and 20 per cent respectively, echoing the volatility in the price of bullion in recent times. However operationally things look positive for the business and Digital Look lists it as a ‘buy’, as does Admans. He says: “Production has been at record levels and relatively unaffected by the unrest in Mali. Investors will be keen to see what effect these dynamics have on underlying revenues and net profits. It remains to be seen whether management have concerns about future declines in the price of gold which may result in operational losses.”

Asian and emerging markets focused bank Standard Chartered, reporting its half year results this week has witnessed its shares fall by 8 per cent over six months and by 2 per cent over the past 12. In the wake of a late June 2013 trading update, the bank is unlikely to surprise, although with concerns persisting regarding the pace of economic growth in China and Asia more generally, any current trading/outlook comments will receive close scrutiny notes Bowman. He says: “As already highlighted, Korea is likely to have remained a weak spot, although in light of events at other banks, management may look to underline its considered solid financial position. Prior to the announcement, analyst opinion currently denotes a strong hold.”   Digital Look’s analysis is more positive, having it listed as a ‘buy’.


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