viewStandard Life

Standard Life and Aberdeen Asset will be a good income earner after merger, suggests HSBC

The enlarged group will offer a pro-forma dividend yield of 5.4% in 2017 that can grow at 10% per year until 2019

picture of Standard Life logo
Market is underestimating benefits of merger says HSBC

Standard Life PLC (LON:SL.) and Aberdeen Asset’s (LON:ADN) merger is a sensible move according to HSBC, which is a buyer of both investment groups ahead of the formal completion.

In particular, HSBC points to a 33% earnings discount currently for Standard Life to UK asset managers overall, while the enlarged group will offer a pro-forma dividend yield of 5.4% in 2017 that can grow at 10% per year until 2019.

READ: Competition regulator greenlights £11bn Standard Life-Aberdeen merger

The merger builds scale, diversifies both companies’ businesses and helps offset revenue and cost pressures, said the broker.

Savings of about £200mln will boost operating profit margins with the cost:income ratio set to reduce to 56% in 2019 versus 63% in 2016, though this forecast may be conservative suggests HSBC.

There are also signs that outflows from funds managed by both companies may be easing with an improvement in the performance of Standard Life’s flagship fund and money moving back into emerging markets.

At present, both share prices underestimate the merger synergies concludes HSBC, while assuming no growth in future at Standard Life.

Upgrading from hold, its new target prices are 350p for Aberdeen Asset and 460p for Standard Life, or potential upside of about 13% for both shares.

Quick facts: Standard Life

Price: 0 0

Market: LSE
Market Cap: £0.00

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...



Polar Capital Global Healthcare's Daniel Mahony talks key sector developments

Polar Capital Global Healthcare's (LON:PCGH) Daniel Mahony talks through the key developments he's seeing in the healthcare sector at the moment in addition to the impact of political issues stemming from the US. He also discusses how IT is beginning to disrupt the healthcare landscape.

3 hours, 23 minutes ago

2 min read