Wednesday tips round-up: Premier Foods, Intercontinental Hotels, Mondi

Hovis owner Premier Foods declined to offer any guidance yesterday on when it will resume dividend payments, which it suspended in November 2008. It also has a sizeable pensions deficit and its current servicing costs will increase by £10m in 2010.

Nevertheless, Premier is likely to benefit from a further up-tick in demand for brands as the worst of the recession recedes. It appears to have genuine momentum behind it, so buy says the Independent.

While the hotel downturn is far from over, this year's forecast is for Intercontinental Hotels to return to flat earnings and revenues on the back of strong leisure demand. This should create a solid platform for the return of higher-yielding business travellers, whenever that may be. At 892œp, down 27p, or 20 times earnings, hold says the Times.

IHG's shares trade on a 2010 price-to-earnings multiple of 21.2, cheaper than rivals such as Marriott but still pricey. Because of this and the likelihood it will be at least 2011 before the industry really gets going, it's time to take profits. Sell says the Independent.

There were few winners from the collapse of Enron, but Green Dragon Gas (GDG) might be considered one of them. GDG and Enron were two of only five companies granted rights to produce coal-bed methane in China at the end of the last century - and when Enron failed, GDG took on its licence, too. The problem is one of liquidity. Randeep Grewal, chief executive, retains a 72% stake, while big outside investors speak for a further 20%. Given that balance of power, at $6.88, smaller shareholders would do best to steer clear says the Times.

Green shoots are difficult to detect at Low & Bonar, the maker of artificial grass. The draw is Low & Bonar's strong market position and exposure to infrastructural spending, especially rail and roadbuilding programmes in China and the Middle East, where its textiles are used to stabilise track beds and highway foundations. At 35Ÿp, down 1œp, or less than nine times earnings, hold on says the Times.

Paper group Mondi's house broker UBS is upbeat, saying that the positive second-half performance augurs well for the future. It is attracted by Mondi's grade exposure, low cost position, restructuring actions and leverage from recent investments. Trading on a forcast multiple of 8.78 times full-year earnings, there is certainly room for growth, while the 2.15% dividend yield is a nice bonus to have. Despite the recent rise in the share price there is more in the tank, so buy says the Independent.

Inter-dealer broker ICAP still faces turbulence and uncertainty, not least from President Obama's determination to shrink trading at investment banks, but on a price-earnings ratio of 10.5 times and a yield 5.4%. Buy says the Telegraph.


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