Tips from the press
That keen equestrian Dido Harding, chief executive of
The company is now not far off hitting the targets set in May last year, of 2 per cent annual revenue growth, probably in the next financial year, and 25 per cent margins some time thereafter. This last figure would require a fair proportion of its subscriber base, perhaps half, to take three services - line, broadband and TV. Given that TalkTalk's main attraction to customers is its relatively low prices, this looks achievable; then throw in further growth in television and services to corporates, where revenues are rising by 25 per cent a year. TalkTalk shares, down 11.5p at 242p on profit-taking, sell on about 11 times next year's profits. They have doubled over the past year, which suggests much of the good news is in the price. Ideally, buy on weakness then, The Times' Tempus says (Last IC rating: Buy, 13 Nov).
An investment in BG was always about "jam tomorrow". Even before the production guidance cuts, the growth in output was back-end loaded. However, the market has re-rated the shares significantly over the past three months. The shares now trade on a current year earnings multiple of 12.9 times, compared with a previous rating of about 16 or 17. This valuation is still at a higher level than oil majors such as Dutch, however, which trades on an earnings multiple of 8. The Telegraph's Questor team is happy keeping a buy rating looking beyond 2015.
What's a few thousand barrels of oil between friends? In the case of BG Group, it is the difference between being a stock market darling and just any old oil company. Thus, BG is still having trouble meeting its production targets. A well-received presentation from Chief Executive Chris Finlayson was encouraging, but investors must wait for his more detailed strategy update in May to figure out quite where the company stands. BG is finding it tough to go from being a go-go explorer and acquirer of oil and gas assets to ho-hum producer. Let's face it, the one thing an oil production company needs to do is meet production targets, and this is where BG slips up. The company's shares trade at a 50 per cent forward earnings premium to either BP or Shell. Investors still clearly think BG should grow faster that its two bigger sisters. It is just that they would love to know how, the Financial Times's Lex column writes on Tuesday (Last IC rating: Buy, 31 Oct).
Business press headlines:
The American billionaire known on Wall Street as the "swamp alligator" has confirmed his assault on the British market, announcing a takeover of Virgin Media worth $23.3 billion. The deal, which was announced earlier this morning, transforms John Malone's Liberty Global into the world's largest cable provider. The US cable giant said the agreement will create "the world's leading broadband communications company" with 25 million customers in 14 countries. It a statement Liberty Global said the stock and cash merger, subject to shareholder approvals, was valued at approximately $23.3 billion (£15 billion). The acquisition was expected to cost the American company at least £13 billion, including Virgin Media's £5.5 billion of debt. [The Times]
China has pledged to increase minimum wages and force state-owned companies to hand over more of their revenues to the public as part of a push to tackle growing inequality. The chasm between China's rich and poor is seen by analysts as a significant threat to political stability, with discontent over inequality spilling over into angry online comment and, on occasion, street protests. Unveiling a long-awaited 35-point income distribution plan on Tuesday, the State Council, or cabinet, said it wanted to lift as many as 80m people from poverty by 2015. It pledged to raise minimum wages to 40 per cent of average salaries, boost spending on education and public housing, and force state-owned companies to pay out an additional five percentage points of their revenues in dividends by 2015. [Financial Times]
Britain's Royal Bank of Scotland is "in limbo" and should have been fully nationalised when it was rescued in the financial crisis, Business Secretary Vince Cable has said. Instead, the present government was saddled with the "worst of all worlds - responsibility without control" of a bank bailed out with £45bn of state money, Cable said in advance extracts of a speech released by his office. Cable, due to make the remarks at a London event, was expressing his exasperation at RBS, 82 per cent owned by the state but independent of ministerial control under the governance structure managing the state's investment. [The Telegraph]
Claims management firms last year pocketed £7.4m of the compensation awarded to victims of the PPI mis-selling scandal who turned to the Financial Services Compensation Scheme (FSCS) because the firm they dealt with has gone bust. The FSCS said that consumers have needlessly handed £22m to claims firms since the scandal erupted, with the average person paying £960 of their compensation. In 2012, three-fifths of claims came from managers, despite the fact that consumers can claim direct for free. [The Independent]
Bank chiefs could be forced by the Government to name and shame branch managers who refuse to lend cash to struggling small businesses. Vince Cable, the Business Secretary, will today challenge the banks to publish weekly information about their lending levels - right down to individual branches. And he will warn that ministers are prepared to legislate to require banks to release the information if they fail to do so voluntarily. [The Independent]