Broker snap: StanChart's 'sitting pretty', says Investec

6th Dec 2012 10:19

Investec has reiterated its 'buy' rating and 1,800p target price for emerging markets lender Standard Chartered following the group's pre-close trading update, saying the business is 'sitting pretty'.The company said today that full-year income growth is expected to be in the high single digits, though on a constant currency basis growth will be in the double digits due to the continued weakness of Asian currencies against the US dollar.Investec said that this suggests a 2012 reported income of $19.3bn, up 9% year-on-year, up 11% on a constant currency basis. The broker reckons that the currency headwind should abate in 2013."We expect the actual 2012e outturn to beat current consensus on every line - income, costs, impairments and underlying profit before tax," said analyst Ian Gordon."Investors have a stark choice, in our view: back loss-making UK domestic banks where the easy pickings have already been had, or lock into STAN at an entry level still below seven times 2016 earnings with a c.4% 2013e dividend yield," Gordon said.He said that while the prospect of the UK bank levy now rising from $210m this year to $300m next year may look "quite inequitable", it is not enough to sour a robust outlook."STAN may have travelled well ahead of today's statement, but with improving momentum into 2013e, we remain committed buyers," Gordon said.Shares were up 1.28% at 1,507.5p in mid-morning trade.BC