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02 Nov 2021 | 14:08

ShoreCap stays at 'buy' on StanChart, says shares most undervalued in UK peer group

(Sharecast News) - Analysts at ShoreCap reiterated their 'buy' recommendation for shares of StanChart, telling clients that it remained the most undervalued lender in its UK banking universe. The day before, the Asia-focused lender reported a better-than-expected core tier 1 capital ratio, while profits were in line if an IFRS 9 interest income catch-up adjustment was excluded.

StanChart also raised its guidance "modestly", ShoreCap's Gary Greenwood said in a research report sent to clients.

Greenwood noted how while the lender conceded that the recovery from Covid-19 remained uneven and was punctuated by supply-chain disruptions, management said they drew encouragement from the "robust levels of export growth across many of our markets in Asia".

He also highlighted that group guidance for 5.0-7.0% income growth from financial year 2022 assumed just 30 basis points of interest rate increases from 2021-25.

"Although the results themselves are unlikely to set pulses racing, at 0.5x [tangible net asset value] the shares continue to look very good value versus longer-term RoTE targets, in our view."
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