Investment Column: Standard Life's Nish is worth backing

Cineworld; Clarkson


Our view: Buy

Share price: 226.9p (-17.8p)

Ouch. Standard Life suffered a rough session as its shares fell more than 7 per cent after it issued full-year results.

Stripping out various one-offs, yesterday's figures came in roughly in line with expectations, with operating profit rising to £425m from £399m a year earlier. There was therefore probably a touch of profit-taking after the shares rose 22 per cent from the end of November. But there was also some disappointment about cash generation, which on a headline basis slipped 6 per cent from a year earlier.

The Scottish insurer was unfortunate in following Prudential, which wowed the market on Wednesday with impressive cash generation that let it increase the dividend by 20 per cent.

But the Pru and Standard Life are at different stages. Prudential said its performance reaped the gains from work set in train three or four years before. By contrast, Standard Life's newish chief executive, David Nish, is only just over a year into his three-year plan to boost the former mutual's performance. The plan requires heavy investment in new technology to improve products and the speed of service, and drive more business through the systems.

Mr Nish points out that if you add back the investment spend, cash has grown in line with profit – an argument that is fine if you believe the investment spend will pay off.

It's easy to forget that Standard Life broke with 80 years of mutual ownership only in 2006. Mutuality has many strong points but innovation and drive are not high on the list.

Unlike his predecessor, Sandy Crombie, who joined the insurer from school, Mr Nish isn't a Standard Lifer, so to speak, and arrived in 2006 from ScottishPower. If he can add commercial drive to Standard Life's strengths – a trusted brand and big customer base – there is a real opportunity here.

Sales of long-term savings were healthy in 2010 even before Mr Nish's plan got to this year's execution stage. Next year is when the investment is meant to start paying off. Combined with a solid forecast dividend yield of about 5.5 per cent, Mr Nish's plan is worth backing.

Cineworld

Our view: Buy

Share price: 210.25p (-8.5p)

The roaring success of The King's Speech may not mark a golden age of UK film – as some high-profile commentators fear the business may have peaked with the closure of the UK Film Council – but it has certainly contributed to thriving tills at cinema box offices across the country.

The King's Speech has raked in more than £40m in the UK since its release in January, but none of this will be included in the Cineworld cinema operator's latest results, which cover the year to the end of December.

Even so, its box office receipts rose more than 4 per cent, making it the number one operator in the UK for the first time, with a market share of 26.2 per cent. This was a strong set of results for an industry hit by the World Cup over the summer and the poor weather during the winter, and Cineworld's revenues of £342.8m were marginally ahead of expectations. It benefited especially from the premium pricing for 3D screenings.

Following the period covered by the results, the box office is already a tenth higher than a year ago, with The King's Speech effect and the prospect of even more 3D movies. The stock is on an undemanding multiple of 10.2 times forward earnings, with a healthy yield of 4.8 per cent.

Clarkson

Our view: Buy

Share price: 1,088p (+14p)

Shares in Clarkson firmed up after the shipping broker posted better-than-expected full-year figures yesterday. The uptick came against the backdrop of a recovery in dry bulk volumes, with Clarkson reporting growth in market share across all its broking divisions.

Pre-tax profits rose by 44 per cent to £32.4m, while earnings per share were up nearly 40 per cent at 125.4p. One point of caution is the uncertainty regarding the global economic picture. Any major wobbles on the macro front could hit shipping. But Clarkson stands out, boasting a strong balance sheet, which should help to see it through any surprises in the months ahead.

The results, coupled with the balance sheet, would be enough to underpin a positive stance. The fact that the shares trade on multiples of less than 10 times forward earnings only cements the investment case.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there