The Expert View: Valiant Petroleum, Cineworld, StanChart, Premier Farnell

Our daily round-up of analyst recommendations and commentary, featuring Valiant Petroleum, Cineworld, Wessex Exploration, Standard Chartered and Premier Farnell.

Key stats
Market capitalisation	£361m
No. of shares out	143m
No. of shares floating	138m
No. of common shareholders	not stated
No. of employees	4672
Trading volume (10 day avg.)	0m
Turnover	£348m
Profit before tax	£24m
Earnings per share	16.73p
Cashflow per share	29.95p
Cash per share	3.86p

*Correct as at 6 Dec 2012

Peel Hunt cheers Cineworld's Picturehouse buy-out

Nick Batram, analyst at Peel Hunt, has welcomed Cineworld (CINE.L)'s acquisition of indy cinema chain Picturehouse, saying it looks like a compelling strategic move.

Cineworld paid £47.3 million in cash for Picturehouse, in a move that will make the arthouse cinema chain's co-founder Lyn Goleby a multi-millionaire. Picturehouse runs 21 cinemas in the UK, and has plans in place to open another 10.

'Independent cinema often appeals to an older and more affluent customer base and, with an ageing population, should become an increasingly important segment of the market,' Batram noted.

Batram reiterated his 'buy' recommendation on the shares, and his 264p target price is under review as he analyses the ramifications of the acquisition.

Shares in the group rose 5p or 2% yesterday to close at just over 251p.

Key stats
Market capitalisation	£178m
No. of shares out	41m
No. of shares floating	35m
No. of common shareholders	not stated
No. of employees	43
Trading volume (10 day avg.)	0m
Turnover	197m USD
Profit before tax	67m USD
Earnings per share	1.64 USD
Cashflow per share	2.60 USD
Cash per share	0.28 USD

*Correct as at 6 Dec 2012

Westhouse downgrades Valiant Petroleum

Andrew Matharu, analyst at Westhouse, has downgraded oil and gas explorer Valiant Petroleum (VPP.L) from 'add' to 'neutral' amid continuing uncertainty over a possible management buy-out.

'The continuing uncertainty surrounding the outcome of the strategic review launched by Valiant Petroleum on 6 September 2012 has been compounded by the replacement of Peter Buchanan as CEO to allow him to focus on a buyout proposal,' the analyst said.

Matharu estimates Valiant to have a net asset value per share of 494p, but has lowered his price target to 440p on the basis that the buy-out plans may not go as planned.

'Our target price of 440p per share is a probability-weighted average of the share price scenarios associated with the various outcomes of the current strategic review and as a result, we are downgrading our recommendation from Add to Neutral,' he concluded.

Shares in the group closed at 435p on Thursday, down 3p or 0.68%.

Key stats
Market capitalisation	£36,400m
No. of shares out	2,411m
No. of shares floating	2,376m
No. of common shareholders	not stated
No. of employees	86918
Trading volume (10 day avg.)	3m
Turnover	10,300m USD
Profit before tax	2,949m USD
Earnings per share	1.23 USD
Cashflow per share	1.41 USD
Cash per share	12.34 USD

*Correct as at 6 Dec 2012

Canaccord says 'sell' Standard Chartered

Gareth Hunt, analyst at Canaccord, has reiterated his 'sell' recommendation on Standard Chartered (STAN.L), saying consensus expectations look decidedly optimistic.

The bank's interim management statement suggests pre-tax profit will fall in line with Hunt's expectations, with income up by a 'high single digit percentage' (Hunt is expecting 9%).

With the shares trading at 1.34x price-to-book, the bank needs estimate upgrades for the shares to rally, the analyst said. 'But, with consensus already forecasting sustained asset and income growth of 10% and impairment charges remaining at multi-decadal lows (45 basis points, 47 basis points and 47 basis points for 2012, 13 and 14 respectively) we see estimate risk to the downside.

'We are of the view these estimates are inconsistent with management’s decision to grow the proportion of unsecured lending within the consumer bank.'

Shares in the group closed at £15.07 on Thursday, up 19.2p or 1.29%.

Key stats
Market capitalisation	£689m
No. of shares out	370m
No. of shares floating	361m
No. of common shareholders	not stated
No. of employees	4459
Trading volume (10 day avg.)	1m
Turnover	£973m
Profit before tax	£77m
Earnings per share	20.89p
Cashflow per share	25.84p
Cash per share	31.62p

*Correct as at 6 Dec 2012

Shore Capital: one last downgrade for Premier Farnell?

Robin Speakman, analyst at Shore Capital, has reiterated his 'hold' recommendation on electronics distributor Premier Farnell (PFL.L), saying the bottom of the business cycle looks to be in sight following another disappointing trading update.

Revenues in the third quarter came in £7 million below Speakman's forecast at £233 million, with earnings per share of 3.4p 0.7p below his forecast.

'As a cyclical point, it is true to say that the bottom is getting ever closer, but visibility remains weak,' Speakman said.

'We note that like-for-likes have materially eased for future reporting periods and the upturn looks set to benefit from ongoing cost reduction and through leveraging the strengthening balance sheet. We hope that this is the last downgrade to our forecasts before the recovery emerges, but for now, hold.'

Shares in the group closed at 187p on Thursday, up 9.9p or 5.59%.