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.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
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

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker