Thursday tips round-up: Next, Genus, StanChart

9th May 2013 06:59

Retailer Next is facing a "new normal," something which its Chief Executive, Lord Wolfson of Aspley Guise, describes as an environment where the shopper is careful with his or her money and retailers can no longer expect an automatic year-on-year rise in like-for-like sales. So much so in fact that analysts believe that a sales rise across the group of 2.2 per cent in the 14 weeks to last weekend masks an underlying fall of about 4.4 per cent. Nevertheless, the company continues to generate more than sufficient cash to continue with its current share buy-back policy. Those buybacks, and the prospect of special dividends, then, provide a strong support, and Next looks like one of the few retailers worth having in the present environment, The Times´s Tempus writes.Some analysts had been expecting better from animal genetics company Genus´s nine month results out yesterday. However, last year management clearly stated that this year would be "transitional" and tough, with the benefit of the new China-centric strategy coming through next year. For example, its new "nucleus" farm in that country´s Yunnan region should be fully up and running in 2014, producing 3m animals for slaughter. Yes, at 25 times profits the company´s valuation is significantly above its 5 year average of around 20, but is expected to fall to 18.6 in 2015 and 21.8 this year. Hence, The Daily Telegraph´s Questor team is unconcerned about the valuation of the business. However, it does seem pretty full so a hold rating is maintained.Not all is going well at emerging market-focused bank Standard Chartered. Thus, while the lender is sanguine about its prospects investors will be watching to see if events in March turn out to be more than just a blip. If that is so then expect its current premium valuation of 1.6 times tangible book value to come under pressure. In particular, it may be worth watching how margins in wholesale banking evolve. These are not what they used to be after foreign players were lured into Asian trade finance by the attractiveness of the same. In turn, of course, it is precisely the strength of Asian markets which had justified its premium valuation to date, according to the Financial Time´s Lex column. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB