The pub estate is heavily weighted towards the City and the West End in London and improved footfall here could drive the sort of like-for-like sales growth capable of driving profits back to, and then above, pre-pandemic levels.
Questor says: hold
Ticker: FSTA
Share price at close: £7.04
Update: Standard Chartered
Fresh allegations from whistleblowers concerning sanctions-busting, money laundering and poor internal controls at Standard Chartered will be a source of concern, not to say frustration, for shareholders, even though the bank’s management team dismisses them as baseless.
The share price could remain subdued as any potential legal process plays out, but we shall sit tight for now pending further developments as comfort can be drawn on three fronts.
First, Standard Chartered has paid out far less on conduct fines and regulatory penalties than the other four FTSE 100 banks. While Standard Chartered’s tally since 2011 of £1.5bn is nothing of which the bank will be proud, it pales next to the £73bn total paid out to regulators by HSBC, Barclays, Lloyds and NatWest.
Second, the bank is well capitalised, on the basis of regulatory ratios and requirements and is therefore able to withstand any further financial penalties, should that indeed be the end result (which is currently far from certain).
Finally, the shares already trade on just 0.7 times book, or net asset, value per share. That discount prices in a lot of bad news already and may provide some downside protection.
The recent first-quarter results suggest that underlying earnings momentum at the FTSE 100 index member is strong, thanks to healthy advances in the net interest margin, an ongoing efficiency drive and limited sour loan impairments.
Further interest rate cuts across emerging markets could also be a further boost for sentiment toward the bank’s shares.
Questor says: hold
Ticker: STAN
Share price at close: £7.50
Update: GSK
A second potential brush with the courts in a week is not ideal, but at least in the case of GSK we defined this as a potential risk in our initial study of the pharmaceutical giant.
The lowly valuation will hopefully provide some downside protection, as may a prospective yield of 3.6pc for 2024, based on management’s target of a 60p-a-share dividend this year, while improved sales and profits in the core business could yet generate share price upside.
Markets had begun to worry a lot less about a series of lawsuits in the USA that linked GSK’s heartburn drug Zantac to cancer, especially as a series of legal rulings had gone the company’s way. However, a judge in Delaware has permitted 70,000 cases to go forward and also allowed expert witnesses to testify in court that the drug may have indeed caused cancer.
GSK and the other parties involved, America’s Pfizer and France’s Sanofi, have publicly disagreed with the ruling and GSK is to appeal, but the legal process will now drag on and that could, admittedly, weigh on the shares in the near term.
Questor says: hold
Ticker: GSK
Share price at close: £16.17
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