>>> Morgan Stanley beats by $0.08, beats on revs (29.89)

Morgan Stanley beats by $0.08, beats on revs (29.89)
Reports Q1 (Mar) earnings of $0.68 per share, $0.08 better than the Capital IQ Consensus Estimate of $0.60; revenues rose 9.6% year/year to $8.93 bln vs the $8.55 bln consensus.
  • Income from continuing operations applicable to Morgan Stanley was $1.5 billion, or $0.72 per diluted share, compared with income of $981 million, or $0.49 per diluted share, for the same period a year ago. Results for the current quarter included positive revenue related to changes in Morgan Stanley's debt-related credit spreads and other credit factors (Debt Valuation Adjustment, DVA) of $126 million, compared with negative revenue of $317 million a year ago. Excluding DVA, net revenues for the current quarter were $8.8 billion compared with $8.5 billion a year ago. Income from continuing operations applicable to Morgan Stanley was $1.4 billion, or $0.68 per diluted share, compared with income of $1.2 billion, or $0.60 per diluted share, a year ago.
  • Compensation expense was $4.3 billion compared to $4.2 billion a year ago. Non-compensation expenses were $2.3 billion compared to $2.4 billion a year ago.
Institutional Securities
  • Reported pre-tax income from continuing operations of $1.4 billion compared with $799 million in the first quarter of last year. Net revenues for the current quarter were $4.6 billion compared with $4.1 billion a year ago.
  • Advisory revenues of $336 million increased from $251 million a year ago reflecting higher levels of M&A activity.
  • Equity underwriting revenues of $315 million increased from $283 million a year ago reflecting higher IPO volumes.
  • Fixed income underwriting revenues of $485 million increased from $411 million a year ago reflecting an increase in loan fees.
  • Equity sales and trading net revenues of $1.7 billion increased from $1.6 billion a year ago reflecting higher levels of client activity across products and particularly strong performance in prime brokerage.
  • Fixed Income & Commodities sales and trading net revenues of $1.7 billion increased from $1.5 billion a year ago. Results reflect strong performance in commodities and solid results in credit and securitized products, despite lower volumes across most fixed income businesses.
  • Other sales and trading net losses of $244 million compared with net revenues of $72 million a year ago, primarily reflecting costs related to the Firm's long-term funding.
  • Value-at-Risk (VaR) was $50 million compared with $51 million in 4Q13.
Wealth Management
  • Reported pre-tax income from continuing operations of $691 million compared with $597 million in the first quarter of last year. Net revenues for the current quarter were $3.6 billion compared with $3.5 billion a year ago.
  • Asset management fee revenues of $2.0 billion increased from $1.9 billion a year ago primarily reflecting an increase in fee based assets and positive flows.
  • Transactional revenues of $1.0 billion decreased from $1.1 billion a year ago primarily reflecting lower closed-end fund and other new issue activity.
  • Net interest income of $539 million increased from $413 million a year ago on higher deposit and loan balances.
  • Client assets in fee based accounts of $724 billion increased 17% compared with the prior year quarter. Fee based asset flows for the quarter were $19.0 billion.
Investment Management
  • Reported pre-tax income from continuing operations of $263 million compared with pre-tax income of $187 million in the first quarter of last year. Net revenues of $740 million increased from $645 million in the prior year. Results primarily reflect higher gains on investments in Merchant Banking and higher results in Traditional Asset Management, partly offset by lower gains on investments in Real Estate Investing.
  • Assets under management or supervision at March 31, 2014 of $382 billion increased from $341 billion a year ago primarily reflecting market appreciation and positive flows. The business recorded net flows of $6.0 billion in the current quarter.
Capital
  • Morgan Stanley's Common Equity Tier 1 capital ratio was approximately 14.1% and its Tier 1 capital ratio was approximately 15.6% at March 31, 2014. At March 31, 2014, book value and tangible book value per common share were $32.38 and $27.41,18 respectively, based on approximately 2.0 billion shares outstanding.

>>> Pepsico Inc Reports Q1 $0.83 adj v $0.75e, R$12.6B v $12.5Be

Pepsico Inc Reports Q1 $0.83 adj v $0.75e, R$12.6B v $12.5Be- Guides FY14 core EPS % implies $ v $4.53e (prior +7% implies $4.68 on Feb 13th) - Guides FY14 Rev '' v $67.4Be (prior 'to grow mid-single digits') - Guides FY14 cash flow from operations $ (prior over $10B) - Guides FY14 Fx impact on EPS %, impact on Rev % (prior impact on EPS -4%, impact

>>> US Early premarket gappers

Early premarket gappers
Gapping up: AAU +31%, PLXS +8%, SNDK +5.8%, TPLM +4.1%, SD +3.4%, URI +3%, AF +2.9%, NE +2.7%, NFLX +2.6%, ALSN +2.5%, EEFT +1.9%, TTM +1.8%, END +1.6%, PLUG +1.3%, SYT +1.1%, MU +0.7%

Gapping down: REGI -15.7%, SSN -8.7%, SNH -5.6%, SYNM -4.3%, EFII -4.2%, IBM -4.1%, SAP -4.1%, DEO -3.8%, NSR -3.4%, GOOG -2.6%, BIDU -2.1%, YELP -2.1%, MPET -2%, SLM -2%, FB -1.9%, YY -1.8%, BBL -1.5%, SPWR -1.3%, BHP -1.2%, AMZN -1.1%, LNKD -1.1%, RIO -1%, BUD -0.9%, FEYE -0.9%, HPQ -0.7%, GDX -0.6%

>>> General Electric beats by $0.01, reports revs in-line; 2014 framework unchan

General Electric beats by $0.01, reports revs in-line; 2014 framework unchanged (26.12)
Reports Q1 (Mar) earnings of $0.33 per share, $0.01 better than the Capital IQ Consensus of $0.32; revenues fell 2.2% year/year to $34.18 bln vs the $34.43 bln consensus.
  • Industrial sales of $24 billion increased 8% compared to the first quarter of 2013. GECC revenues of $10.5 billion decreased 8% from last year. Industrial segment profits rose 12% to $3.3 billion. Industrial segment margins improved 50 basis points over the prior-year period. Industrial segment revenues grew 8%, with organic growth of 8%. Growth market revenues were up 7% for the quarter, with double-digit growth in five of nine growth regions. Services revenues grew 3%, with double-digit growth in Aviation and Oil & Gas. Equipment revenues grew 12%, on strong new product introductions and solid share positions. The breadth of the GE portfolio was reflected in the quarter as the Company offset market volatility in Appliances, Healthcare, and Mining.
  • Infrastructure orders for the quarter were $23.7 billion, flat with the year-ago period. GE's backlog of equipment and services at the end of the quarter was $245 billion, with increases in every segment over the year-ago period.
  • GE Capital earnings were flat, with ENI (excluding cash and equivalents) at $374 billion at quarter-end, down $7 billion from last quarter. General Electric Capital Corporation's (GECC) estimated Tier 1 common ratio (Basel 1) rose 32 basis points to 11.4%, and net interest margin was strong at 4.9%. During the quarter, GECC paid $500 million in dividends to the parent.
  • Also during the quarter, GE filed a registration statement with the SEC for the IPO of its North American Retail Finance business, the first step in a planned, staged exit from that business. The Company made good progress in accelerating efforts to achieve its simplification goals.
  • GE is on track to achieve its goal of $1 billion or more in structural cost-out for the year. Industrial structural costs in the first quarter were down $254 million versus the prior-year period, driven by simplification initiatives and benefits from restructuring investments.
  • "We're off to a good start to the year, and our 2014 framework remains unchanged. The environment is consistent with our expectations, with a positive bias. The GE team is executing with strong organic growth, consistent margin enhancement, cash growth with disciplined allocation, and a stronger GE Capital. We are on track for our Retail Finance IPO and remain committed to a GE that has 70% of our earnings from the Industrial businesses. GE is in good shape."

>>> Buy Marks& Spencer Sell Ahold

{MKS LN Equity AH NA Equity GRT D <GO>}

* Marks & Spencer
- Company pulished on the 10/04 and was weak because of misunderstanding on Q4 Gross Margin Weakness, Company is expected to publish FY on the 20th of May...but numbers have been adjusted now
- M&S generak merchamfise should continue to head in the good direction, food is quite isolated from a branded food price war
- Strong execution from management and potential cash return could help the stock to rebound
- Historically MKS is trading with a 20% to UK Market P/E, trading only with 5% now

* Ahold
- Since Last publication on 27th of Feb stock outperformed the SXRP by 7%, publication can justify that move but there is no clear reason on fumdamentals
- weak LFL sales growth in the US (-2.1%) and in the Netherlands (-1.0%),
- Risk of stiffer competition and margin rebasing in the Dutch market (more powerful competitors, with in particular Jumbo)
- Still no real signs of pick-up in volumes or food inflation in the US
- It looks fully valued to us – trading at a 2014e P/E ratio of 13.7x vs 12.8x for peers

* The spread is trading on bery low historical levels - we can see a quick reversal, historical lows (-3.3% / 29.86 )
MKS 410 levels appear to be a strong support, stock can trade quickly to 460/470 levles
AH : 14 levels are a strong resistance, could see stock trading back on support 200d MA on 13 levels

BUY MKS SELL AHOLD

>>> Buy Remy Cointreau / Sell LVMH - Weak Q1 was expected, good opp. to step in

{RCO FP Equity MC FP Equity GRT D}

* Remy Cointreau (RCO FP) - Buy
- Q4 Sales a 3% miss, Cognac still weak, we could see some more dwg to consensus EPS, but pfr story is not there anymore.
- Valuation still not cheap regarding the Cognac business but not too far from historical premium the stock is trading with the sector
- RCO is highly correlated to Luxury trend in China and most of dwg has been done
- Few weeks ago M&A rumors re-surface with a blog mentionning Brown& Forman was looking to the company, this blog was mentioning a €85/share minimum price on any deal to get the family to table.
- 55/56 appears to be a strong support.

* LVMH (MC FP) - Sell
- Numbers were published on the 9th of April, the analysis fo numbers show us that we continue to see a down trend in volume that has been so far compensated by price increase, main point of the strategy remained of potential of price increase and maintain margin.
- Stock is trading not far from historical highs (3.5%) and even if we can test this level I don't expect a major break up


Buy Remy Cointreau Sell LVMH - expecting MC to not really move and RCO to go back to the 70's levels

Laurent