Thursday share tips: StanChart, Stagecoach Group

25th Jun 2015 17:21

Like other global banks new StanChart chief Bill Winters's remit is clear, seek high, sustainable and low-risk returns while culling costs at the rest of business units. Hopefully, he will not be as timid as Deutsche Bank on divestments nor be as keen as HSBC to reinvest. Winters is making the right noises with institutional investors. He is planning to improve the group's technology and to concentrate capital and authority at its regional hubs.Yet what the bank needs to do is take a knife to its core commercial and investment banks, where 70% of its risk-weighted assets lie, and dump businesses reliant on high-risk or leverage. Winters also needs to lay out concrete targets and show ruthless determination in doing the above. The world has changed. Investors want small and focused banks. He needs to show he got the message, writes the Financial Times's Lex column.Stagecoach Group tends to offer a smooth ride in terms of its financial performance. Indeed, its latest financial results were slightly ahead of expectations. Nonetheless, they highlighted how the group can fall victim to the whim of regulators. Profits at its rail operations dropped 22% as its two main franchises become less profitable as they near the end of their lives.That is the result of the regulatory framework the company operates in. On a more positive note, the expansion of its megabus operations on the continent offer an opportunity for growth. However, by and large the market for passenger transport tends to grow slowly in the long-term. Furthermore, given the shares are trading at 14 times this year's profit forecasts and further returns of capital do not look imminent, the stock is best avoided for now, says The Times's Tempus.