Shares in Standard Chartered (STAN), were marked down by 4.3% in early trading to 525p, following the announcement of full year results to 31 December 2021, which missed profit expectations.
The shares are up 22% year-to-date and currently sit 4% below their 12-month high, so today’s results have undoubtedly prompted a degree of profit taking. On a more encouraging note the group has announced a proposed $750 million share buyback.
The group reported adjusted profit before tax of $3.89 billion, which was below a consensus forecast of $4.29 billion. Reported earnings per share of $0.61 was also below expectations of $0.76. The full year dividend per share of $0.12 compared to a consensus estimate of $0.16.
GUIDANCE UPGRADED
Management have outlined new ambitious plans to achieve a 10% return on tangible equity by 2024. This compares with a previous target of greater than 7% by full year 2023, and greater than 10% in the medium term. It has been suggested that this will be achieved through a combination of costs control and faster income growth.
If this target is met, it would imply 20% upside to 2024 consensus pre-provision profit and over $5 billion of shareholder returns over the next three years. This is equivalent to 22% of the company’s market capitalisation.
SHORE CAPITAL VIEW
Shore Capital markets analyst Gary Greenwood maintains that ‘Standard Chartered trades on a trailing price/tangible net asset value of 0.58x, which suggests there is still significant upside potential if the group can deliver on management’s new return on tangible equity target of 10% by 2024’.
