Investors remain cautious but push index higher after three month lowAfter hitting a three month low, leading shares are attempting to mount a revival, despite continuing fears about the financial crisis surrounding Greece.Standard Chartered is among the leading risers, up 24.5p at 1058.5p on talk that the UK chancellor might announce changes to the bank levy at his Mansion House speech on Wednesday evening. The theory goes that George Osborne could unveil a new corporation tax surcharge levied on UK assets alone, which would benefit an Asia-focused bank like Standard for one. It means it’s been a good day so far for Standard’s new chief executive Bill Winters to begin his stint at the top of the bank.We expect the shares to come under pressure today and struggle to justify a 2015 PE of 20 times and enterprise value/EBIT of 15 times given end market exposure and downgrade risk.Weir has often been heralded as a takeover candidate given its attractive margins and market leading positions. A US player looking to utilise some offshore cash is often mooted as the most likely acquirer (e.g. General Electric). We see this as the key risk to our view. Ahead of the Capital Markets Day focused on the Minerals division this afternoon, Weir has provided a trading update. The main change from April 29 interim management statement appears to be deterioration in Oil & Gas order input; down 34% in the first five months of 2015 compared with 23% decline in January to March period. As a result we are downgrading our forecast for Oil & Gas revenues by 10% to £695m, which based on 14% margins reduces our earnings per share by 5% to 93p. Continue reading...
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