HSBC Holdings has revised its price target on shares of Rio Tinto, reducing it to £5,150 from £5,400, while maintaining a Hold rating on the stock. The adjustment is based on a new valuation that considers discounted cash flow (DCF) and forward EV/EBITDA multiples. HSBC's decision to modify the price target is influenced by anticipated growth in Rio Tinto's operations at Oyu Tolgoi in Mongolia and Simfer in Simandou, Guinea. However, HSBC notes that these projects are associated with above-average risks, prompting a more conservative outlook on Rio Tinto's future performance. [d7ab4456]
In addition to the adjustment in Rio Tinto's stock target, HSBC also reported a fourth-quarter loss of $153 million, primarily due to a $3.0 billion impairment related to its investment in the Bank of Communications. The quarterly pretax profit declined to $977 million from the previous year's $5.05 billion, missing the consensus estimate of $4.55 billion. Net interest income also decreased to $8.28 billion from $8.99 billion, falling short of the expected $9.03 billion. Despite the financial setback, HSBC announced a new $2.0 billion share buyback program, aiming to complete it by the announcement of its first-quarter 2024 results. [b8d74c81]
Meanwhile, Standard Chartered PLC reported a pre-tax profit of $5.09 billion for 2023, an 18% increase from the previous year. The bank took a $850 million impairment mainly from its stake in Chinese lender Bohai Bank. Standard Chartered set restrained new guidance, expecting income to grow 5-7% between 2024 and 2026. The bank aims to increase return on tangible equity from 10% to 12% by 2026. In line with its positive financial performance, Standard Chartered announced a $1 billion share buyback for shareholders. [d886940d]
Standard Chartered also announced a final dividend of $560 million or $0.21 per share, resulting in a 50% increase in the full-year dividend payout. The bank aims to return at least $5 billion over the next three years. CEO Bill Winters stated that the bank expects income to grow 5-7% between 2024 and 2026 and aims to increase return on tangible equity from 10% to 12% by 2026. Group Chairman José Vinals mentioned geopolitical risks and the ongoing war between Ukraine and Russia as sources of uncertainty. [4c3cef6f]
HSBC has also upgraded Petrobras stock from Hold to Buy, setting a price target of $18.00. The upgrade comes after a period of decline in Petrobras' stock price, which HSBC views as an opportunity for investors to acquire shares at a more attractive valuation. The firm's analysts predict over 20% upside potential for both ordinary and preferred shares of Petrobras, expressing a particular preference for the PN shares. HSBC's price target is grounded in a discounted cash flow (DCF) analysis, which utilizes a 10% weighted average cost of capital (WACC) and assumes $15 billion per annum in sustainable, long-term free cash flow (FCF) generation for Petrobras. The stock valuation also incorporates a sum-of-the-parts (SOTP) review, which highlights an increased valuation for Petrobras' Upstream segment. Despite these adjustments, HSBC's estimates for Petrobras have increased by less than 5%, and the firm maintains its distribution estimates for the next two years, which imply dividend yields of 9-12% after the stock's recent devaluation. [70134505]
Stifel has adjusted its price target for VAALCO Energy to GBP7.22, down from GBP7.36, while maintaining its Buy rating. The revision comes after a review of VAALCO Energy's financial year 2023 results, guidance for 2024, and recent acquisition in Côte d'Ivoire. Stifel's analysis suggests that VAALCO Energy's growth prospects remain strong, with the potential to increase production to over 35,000 barrels of oil equivalent per day by 2027. The slight decrease in the net asset value (NAV) is primarily due to a technical adjustment for the time value of money and the progression into a new fiscal period. Stifel's maintained Buy rating reflects confidence in VAALCO Energy's growth trajectory and reinvestment opportunities. [58700dce]
Morgan Stanley has increased its target prices on the H-shares of CHINAHONGQIAO (01378.HK) and CHALCO (02600.HK) from $11.4/ $6.4 to $15.1/ $7.5 each, with both ratings kept at Overweight. The global alumina supply is disrupted at 5.9 million tons, equivalent to about 10% of the global supply after excluding China, leading to tighter supply of alumina in China and globally and higher alumina prices for longer. [1250c623]