{RR/ LN Equity SA FP Equity GRT D<GO>}
* Rolls-Royce (RR/ LN)
- Las news of disposal o Energy to Siemens is a positive step even if it has a slight negative impact on EPS (2/3% dilutive)
- Integration of Tognum on its way
- 2014 could be disappointing due to decline in defence but starting in 2015 we could several years of double digit EPS growth driven by top-line growth in the non-defence divisions and by ongoing significant cost reduction.
- All geo-politics developments should disminish the pressure on defence program cut in the US, next US elcetions are in 2016 and we should see some stability in term of budget before that
There is few risks on the stock, some are already priced but could create volatility on the stock
- Some bad news on few new programmes that could face development delays or slower coule weight on the stock
- SFO investigations for Bribery could also be -ve for the stock
- Large acquisition could be also a potential -ve news
- Chart : stock only rebound 4% from support, see another 5% of potential reboud on short term, still a big gap open since last Feb. ( 1095/1185)
* Safran (SAF FP)
- last set of numbers were a bit disappointing on Aerospace Propulsion & Defence (weakness on helicop. & delays on defence contract), civil market still strong
- Eur$ still an issue, there is a risk above the 1.40 levels
- Still some risk of Delays on LEAP project which is a big part of next years plan
- French state has a 22% stake and as they have moved on Airbus, sector is not key anymore for the state, as we see rumors on EDF of state decreasing its stake, we could see some speculation also on this one
- chart : Stock had a nice rebound from 46.20 support (7%), strong resistance on the 51 levels, don't expect the stock to break these levels
* The Spread
I will play a quick 3.5% perf on this one, with a target above the 7% perf on the ratio