LCG: HSBC and BHP miss but turnaround on track – By Jasper Lawler, Head of Research London Capital Group

 

08.20am GMT Tuesday February 20th, 2018

HSBC and BHP miss but turnaround on track

By Jasper Lawler, Head of Research. LCG – London Capital Group

Shares in Europe opened mixed on Tuesday as investors reacted to corporate results and awaited the open on Wall Street after a long holiday weekend. The FTSE 100 was held back by mixed results from HSBC, BHP Billiton and IHG. Both HSBC and BHP results were characterised by missed estimates mixed in with signs turnaround plans are nearly complete.

HSBC turnaround on track despite Q4 miss

Following the decline in its Hong-Kong-listed stock in response to full-year results, HSBC shares took a shallow dip at the open in London. There is clear evidence of a turnaround afoot at HSBC, but just not quite at the pace anticipated by investors. HSBC reported pre-tax profit of $2.30bn in Q4, meaning full-year pre-tax profit at $17.7bn, below the $19.55bn forecast. We think that when the dust settles over the missed estimates in this set of results, shareholders will feel happy about the direction of travel.

Outgoing CEO Stuart Gulliver has done the job he set out to do. Incoming chief executive John Flint will have the advantage of a honeymoon period to establish himself, stronger global growth and higher interest rates.  The bank’s biggest footprint is in Asia and Europe where lending should benefit from the best economic growth in years. It feels like HSBC is shifting from turnaround to growth. HSBC shares have been consolidating around 770p, which capped three price rallies since the 2008 financial crisis. We expect HSBC shares to finally breakout, targeting 900p this year.

BHP Billiton shows boom time for miners

Barring the bottom line, which slightly missed expectation it was a bumper half-year for BHP Billiton. It is really a goldilocks time for mining company shareholders. The rally in oil and copper prices means revenues have jumped but the cost-base is still drastically down because of cuts made after commodity prices crashed in 2014. We think while shares hold above 1300p, the uptrend can continue towards 1800p this year.

Available via Globelynx at ‘London Capital Group’

Twitter: @jasperlawler

Email: jasper.lawler@lcg.com

Tel: 0207 456 7086

The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. Losses can exceed deposits.

 

 

 

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About the author

Jasper delivers regular commentary, seminars and webinars on market news, trading analysis, strategy and psychology. He is regularly interviewed by BBC News, Bloomberg, CNBC and Sky News, and has featured in The Times, Guardian and Daily Telegraph. Jasper hosts a weekly charting analysis webinar. He is qualified as a Chartered Market Technician (CMT) with the Market Technician Association, and has a degree in Finance and Economics.