Newspaper article The Journal (Newcastle, England)

Oil Shares Continue to Prove Good Value; Taking Stock in Association with RBS SHARE WATCH

Newspaper article The Journal (Newcastle, England)

Oil Shares Continue to Prove Good Value; Taking Stock in Association with RBS SHARE WATCH

Article excerpt

Byline: Andrew Miller

BP - BP's shares continue to be rated as outperform relative to the sector with a fair-value estimate of 670p based upon our DCF analysis. The stock ranks in the top quintiles of our Dividend Discount Model on both a global and regional basis.

BP remains our preferred UK major oil company over the medium term, despite the short-term operational problems. The group has high quality upstream assets, good conventional fundamentals and a favourable capital management programme (enhanced dividend payments and significant share buybacks). The shares continue to look good value on a 2008 PER of around 9x and dividend yield of 3.9%.

Standard Chartered - The key message following Standard Chartered's recent results is that income growth accelerated in the second half of 2007 and we believe, based on the management's comments, this has continued into 2008. The management reiterated its caution that there is still risk that the slowdown in the US (and other economies) could still impact its core Asian and African markets, but this has yet to occur, as evidenced by its update of trading this year.

Land Securities - We retain our outperform recommendation on Land Securities. Although the group's interim results showed that Land Securities' net asset value (NAV) increased modestly, recent industry data points to a significant decline in asset values over the coming months.

Accordingly, we have lowered our NAV expectations by 12% for the current fiscal period and by 20% for the year to the end of March 2009. In turn, we have reduced our fair value estimate on Land Securities to 1640p from 2020p previously, which represents a 15% discount to our NAV forecasts for calendar 2008. The main risks to NAV forecasts relate to movements in property yields and the outlook for rental growth. …

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