InterContinental Hotels is on the rise on hopes of more details of its disposal programme, which could lead to cash returns to shareholders.
Ahead of the group’s full year figures next Tuesday, Liberum Capital issued a buy note, based on recent upbeat comments from US rivals and the prospects of hotel sales. Analyst Patrick Coffey said:
InterContinental has four major assets left to sell. The sale of the New York Barclay has proved complicated due to capital expenditure negotiations; we expect the hotel to be sold in 2013. We understand demand for the London asset [in Park Lane] has been strong and would anticipate management are positive on the likelihood of selling the asset in 2013.
[We] expect upgrades to consensus forecasts (around 3%-5%) when InterContinental reports full year results. Recent comments from Starwood suggest InterContinental will give a positive outlook on US and European revenue per available room. We expect the New York Barclay and London Park Lane assets are sold for around $830m in 2013.
Having returned $9.5bn to shareholders since 2003, these asset disposals could trigger further buybacks in the second half of 2013. Buy InterContinental for high return on invested capital, strong free cash flow, market leading brands and emerging market exposure.
Overall, with UK inflation steady at 2.7%, the FTSE 100 is managing to hold onto its early gains. The leading index is up 20.10 points at 6297.16, with banks still dominating the gainers. Barclays is currently 12.15p better at 313.65p.
But miners are putting pressure on the index, with Xstrata off 11p at 1149.5p after a 16% fall in copper production compared to 2011 and merger partner Glencore down 4.45p at 381.95p. Antofagasta is also lower, down 11p at £11.22.