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FTSE moves higher but Standard Life and L&G head in opposite directions

Discussion in 'Market News' started by Lily, Aug 9, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Insurers in focus after results while investors keep market’s positive run going

    Financial firms are in the spotlight as leading shares continued their recent positive run.

    But it is a tale of two insurers, with Standard Life among the biggest risers but Legal and General leading the losers after their latest updates.

    First half 2016 pre-tax IFRS operating profit from continuing operations at £341m (+18%) was ahead with our forecast of £315m and consensus at £314m. The beat was driven largely by a £22m one off impact linked to the introduction of Solvency II and the Scheme of Demutualisation. Despite this, the figures were still good. Within this the UK pensions and savings business contributed £151m (+7%) which compared to our forecast of £140m and Standard Life Investments £176m (+14%) compared to our £179m forecast.

    Group assets under administration at 30 June was well ahead of expectations at £328bn (31 Dec 2015: £307.4bn) compared to our £320m forecast reflecting market movements towards the period end and positive foreign exchange post Brexit. The shares are trading on 2016/17 forecast PE multiples of 11.7 times and 10.8x times respectively together with a 2016 forecast dividend yield of 6.2% which view as a buying opportunity.

    Whilst Ocado has given up pre-ordained fees and margin, the group has potentially secured better long-term cash flows and created a credible basis, perhaps, to engage with the long list of international partners that [chief executive Tim] Steiner has reportedly said are patiently queueing around Hatfield awaiting Ocado’s blessing to work with them.

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