Wednesday tips round-up: InterContinental Hotels, Meggitt

7th Aug 2013 06:41

InterContinental Hotels Group's (IHG) future looks bright as the global population is rising significantly, which means more people are travelling and booking accommodation, The Telegraph's Questor said. The world's largest hotel company by number of rooms, which owns nine brands including the Holiday Inn and Crowne Plaza chains, announced a special dividend of 350m dollars on Tuesday, on top of the 500m dollar share buy-back already announced at the interim stage last year. IHG's strategy to focus on the "most attractive markets" will help it grow in future. In China, a key growing market, the firm currently has 659,000 branded hotel rooms. International travellers are important, but expansion is geared to China's domestic travellers who tend to favour branded hotels. IHG shares are trading on a 2013 earning multiple of 19.7, falling to 18.2. While it is not cheap, Questor believes it is justified by earnings prospects and recommended a 'buy' rating. Meggitt, like Senior and GKN, has in this reporting season highlighted the amount of work coming through from two large jet programmes being ramped up by Boeing, the ill-starred 787 Dreamliner, and Airbus, the A380, The Times Tempus column said. The company receives around 45% of its total revenues from civil aerospace. Revenues on new civil aircraft were up by 15% on a comparable basis in the first half. Meggitt, a FTSE 100 company, believes that revenues from those two large jet programmes will grow by about 10% a year from now on. First-half revenues were ahead by 4.0% across the group and underlying operating profits 5.0% higher at £193.3m. The second half will be better because of that civil aerospace work, so the interim dividend is raised by 10% to 3.95p. The shares, a strong market since November, lost 10.50p to 544p. They sell on about 14 times earnings. Tempus believes it its "one to lock away, though immediate outperformance may be limited".The sale of the Washington Post newspaper to Amazon Chief Executive Jeff Bezos is a shock but its parent company should not stop there, according to the Financial Times' Lex column. Two of its three key remaining businesses are cable and local television stations and both industries are consolidating fast, leaving plenty of scope for more disposals. The Washington Post Company posted 2012 revenue of $4.0bn but the newspaper accounted for just $600m of that with most of its revenue coming from the Kaplan education segment. The Post's shares have surged 50% this year, putting its enterprise value on seven times its forward cash flow. But the cable and local TV assets, based on sector valuations, could easily be sold for more than that. They made slightly more than $1.0bn in revenue last year. The Post newspaper was cast off because it was the best choice for the business and shareholders. Lex believes the company should now take that principle one stage further.RDPlease 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.