June 7, 2019 / 12:45 PM / 8 months ago

BUZZ-Royal Mail slips after HSBC downgrade

** Britain’s former postal monopoly Royal Mail Plc down 3.1% at 197.1p after HSBC downgrades stock to ‘hold’ from ‘buy’ and cuts PT to 216p

** HSBC is the first brokerage to downgrade the stock after RMG announced a new ‘turnaround and grow’ strategy last month

** Brokerage calls the plan to increase automation and re-focus on parcels credible, but says it will take time to deliver

** Underscoring the scale of recent profit deterioration, HSBC says it will take six years for profits to exceed 2018 level

** Says EPS likely to be lower this year and sees little chance of a dividend raise for some years

** Says management will not earn the benefit of the doubt from investors until tangible benefits are seen

** HSBC notes 3 risks plaguing shares: Plan execution risk, GDP-linked market risk and political risk stemming from Britain’s Labour party’s nationalisation plans

** Stock has fallen ~27.5% this year and fell ~18% in May (Reporting by Yadarisa Shabong in Bengaluru)

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