Former PBoC adviser Li Daokui: China's economic fundamentals are sound, to start pro growth policy in Q2
- Feb export decline does not reflect fundamentals
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Bouygues Spectrum Buy to Benefit Iliad’s Mobile Business: UBS 2014-03-10 07:53:58.110 GMT
By Sam Chambers March 10 (Bloomberg) -- If Iliad’s proposed purchase of Bouygues’ spectrum and mobile network completed by end 2014, Iliad’s net debt/Ebitda would fall <1 by 2017, UBS says. * Iliad would benefit from higher opFCF, as a result of not paying roaming fees to Orange, UBS says * Purchase would allow Iliad to bypass execution risk from roll out of a mobile network and close the 4G gap vs rivals * Orange’s est. 2015 opFCF may fall 10% in 2015, 6% in 2016, 3% in 2017 * Disposal of Bouygues’ mobile network makes its ambitious est. of EU1.4b synergies from SFR deal even less achievable * Rates Iliad buy, Vivendi neutral; has sell ratings on Orange, Bouygues * NOTE: Iliad-Bouygues talks make regulator’s task simpler, Echos reports * NOTE: Iliad reported 2013 sales, Ebitda above ests. today
For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>
To contact the reporter on this story: Sam Chambers in London at +44-20-7673-2021 or schambers7@bloomberg.net To contact the editors responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net Andrew Rummer
--> Daimler shares could have more earnings power in 2014 and 2015 than expected a couple of months ago. The stock could rise about 20%, to €80, in the next 12 months, say analysts.
Quintessential German car maker is outpacing local rivals and has a chance to beat bullish forecasts, as its long-term investments pay off.
Daimler , the maker of Mercedes-Benz luxury cars, has moved into the passing lane and is threatening to put its German rivals in the rear-view mirror.
Thanks to a slate of popular car models and improving demand for trucks, Daimler's profit growth this year should outstrip that of Volkswagen , maker of the premium-priced Audi, and Bayerische Motoren Werke , whose BMWs are a staple of upper- and upper-middle-class neighborhoods. As a result, Daimler could be a bigger beneficiary of Europe's gradual recovery. The world's biggest manufacturer of commercial vehicles, including trucks, vans, and buses, also is looking to make deeper inroads into the lucrative China market, which should improve profitability.
Like its cars, Daimler's shares aren't cheap. After climbing about 48% in the past year, the stock (ticker: DAI.Germany) trades at a slight premium to Volkswagen and BMW. It recently closed in Frankfurt at 68.93 euros ($95.54), or roughly 12 times forecast 2014 earnings. Volkswagen (VOW.Germany) trades at 8 times and BMW (BMW.Germany) trades at 10. (Daimler has American depositary receipts that trade in New York under the ticker DDAIY .)
But Daimler's earnings per share are projected to grow at 17% this year and next, better than Volkswagen's expected 14% and 13% gains in those years, and BMW's 2% and 5% increases. With strong product offerings in all sectors, the car maker, which has a market value of more than €70 billion, could overtake even the most optimistic expectations. The stock could rise to €80 in the next 12 months, according to some analysts' estimates. Including the dividend that would be a return of about 20%.
Sales last year nudged €118 billion, compared with €114 billion the previous year. They are forecast to pick up steadily, reaching €137 billion in 2016. Management last month delivered a confident assessment of Daimler's prospects. "Our products are in great demand around the world," Chief Executive Dieter Zetsche told reporters. "Our efficiency programs are paying off, and our investments are bearing fruit." Zetsche wasn't available to comment for this article.
Investors view his optimism this early in the year as an encouraging sign of what lies down the road. "It is a very good indication that it can surprise the market positively," says Jon Ingram, a fund manager at JPMorgan Asset Management in London. He thinks the current valuation is attractive and counts Daimler among the top holdings in his Intrepid European fund (VEUAX).
DAIMLER TRACES ITS origins to the 1880s, when Gottlieb Daimler and Carl Benz separately pursued development of internal combustion engines. They weren't the first to do so, but they persevered. The engineers reputedly never met, but their companies merged as Daimler-Benz in 1926 and manufactured the first Mercedes-Benz in the same year. (Daimler produced cars under the Mercedes brand, named after the daughter of a businessman who funded development of a high-performance car.)
There have been a few potholes along the way. Following the devastation of World War II, Daimler restarted production in 1947 but didn't resume European expansion until 1955. A move into aerospace and electronics in the 1980s ended badly. In 1998, Daimler acquired Chrysler for $36 billion as a way to advance the auto industry's consolidation. But DaimlerChrysler, as the merged entity was known, struggled to leverage that scale. Chrysler's problems—a costly restructuring, huge losses, and onerous labor costs—sank the combination. By 2007, Daimler had ditched the U.S. car maker.
THE DIVESTITURE OF CHRYSLER coincided with the beginning of the worst downturn in the history of the auto industry. However, luxury-car makers fared better than most. Daimler invested in developing a broad line of smaller vehicles to meet the needs of environmentally aware and cost-conscious consumers. It is now reaping the rewards.
Among its top-selling compact cars are the A-class, B-class, and CLA, the first of which was launched in 2012. There's also buzz around the launch this month of the GLA, a compact sport-utility vehicle that will expand the range of offerings further. Sales of compact autos were up 66% last year from 2012 and accounted for a quarter of the 1.57 million cars the company sold in 2013. Analysts at Deutsche Bank see total sales rising steadily, to 1.74 million in 2016.
Compacts have helped to reinvigorate the brand, with more-affordable sticker prices and fuel-efficient engines drawing in new and younger drivers. (In the U.S., a basic CLA sedan starts at just under $30,000.) The average age of CLA buyers in the U.S. is 45 years old—10 years younger than the average Mercedes-Benz customer. It's an important shift for the company.
While getting a lift from its compacts, Daimler also has revamped its S-class luxury sedan, the standard bearer for Mercedes-Benz cars since 1972. Daimler sold 71,000 S-class cars in 2013, down from 81,000 in 2012. However, the latest generation was launched only in the second half of last year, and fourth-quarter sales of 27,000 demonstrate encouraging momentum. A cascade of new models will continue rolling off the production line well into 2016.
Daimler's trucks business, which includes the Mercedes-Benz, Freightliner, and Western Star brands, also seems to be chugging along nicely. Sales increased 5% last year, to 484,000 trucks. Aided by a strengthening global economy, orders from North America have taken off. In Western Europe, orders could pick up in the second half as the economic recovery continues, and Daimler is well positioned thanks to engines that comply with tough new European environmental standards. Weakness in emerging markets could impede progress, but analysts at HSBC see truck sales rising 5% in 2014 and 11% in 2015.
In Western Europe, there could be a pronounced uptick in demand for cars this year, which would be welcome. Overall sales have fallen 25% since 2006.
Daimler plans to add another 100 dealerships to its Chinese network in 2014, and it has high hopes this year for brisk sales growth. It is already off to a fast start: Sales in January alone were ahead 45% year over year in China. Giving Daimler's performance in China a bit of luster, its lucrative lending business finances one in every five vehicles the company sells there.
Brisk sales in China will be critical in helping Daimler wring fatter profit from its business. It quietly abandoned a longstanding profit target equal to 10% of earnings before interest and taxes, after repeatedly falling short. UBS analysts forecast Ebit margin at 7.9% this year, with the cars division producing an 8.3% margin and trucks, 5% to 6%. Group margins could grow to 9% in 2015 and 9.3% in 2016, according UBS.
CAPITAL EXPENDITURE HAS passed the peak in the current cycle, which means more earnings will flow to the bottom line in the years to come. Daimler is expected to earn €5.84 per share this year, rising to €6.84 in 2015. It earned €6.40 in 2013, although that number was inflated by the sale of Daimler's remaining stake in the aerospace business, which bumped up earnings by €1.40 per share. Stripping out that figure, last year's earnings were €5 a share, so the forecasts suggest healthy growth.
Free cash flow, forecast at €2.8 billion this year, is relatively poor, and investors want to see improvement. Daimler may look at its workforce to make savings—it employs 275,000 workers, which looks bloated compared with BMW's labor force at 106,000. Stronger free cash flow could lead to bigger dividends. Daimler shares currently yield more than 3%. Though a bit pricey, Daimler offers drivers and investors the prospect of a comfortable ride.
Koninklijke Ahold NV To suspend buyback program, cites completion of capital repayment and reverse stock split
- Has repurchased 3,966,000 Ahold common shares in the period from March 3, 2014 up to and including March 7, 2014. The shares were repurchased at an average price of € 13.8086 per share for a total consideration of € 54.76 million. These repurchases were made as part of the € 500 million share buyback program announced on February 28, 2013 as increased by € 1.5 billion to a total amount of € 2 billion announced on June 4, 2013.
Groupe Lucien Barriere acquires two casinos from FRR for undisclosed amount
Groupe Lucien Barriere, the French luxury hotels and casinos operator, has acquired the casinos Casino du Cap D’Agde and Casino de Megeve from Financere Royal Resort (FRR), the French daily Les Echos reported. The acquirer confirmed the announcement without disclosing the price of the transaction.
The report noted that Casino du Cap D’Agde and Casino de Megeve generated combined revenues of EUR 16.6m in 2013.
Source Les Echos
US Investors net buying of European equities has hit a record $126bn
over the last 12 months. Now above the 2007 peak of $109bn. This doesfeel like a spike, but it is worth pointing out that it has been going
on for just over 1 year and follows almost 5 years of famine. It may
even explain some of the strength in the Euro.
What about within Europe? UBS clients have been shifting more to the
"core" markets of Germany and France (both seeing decent inflows in the
last 4 weeks). But the periphery has split: investors have been buyers
of Spain and selling Italy. Spain has been the high beta play on a
recovery in risk appetite in the EuroZone - it troughed relative to
Italy just before Draghi launched the OMT and then sharply outperformed.
But now seems to be giving some of that out performance up.
What about the sectors?
Investors have just turned small net sellers of cyclicals in Europe for
the first time since in May 2013. In the last 4 weeks they have been
heavy sellers of Construction and Media. In contrast, they have turned
net buyers of Consumer Staples for almost the first time in a year and
solid buyers of Utilities for only the second time in the last two
years.
At an aggregate level UBS client flows are basically net neutral over
the last 4 weeks. But this masks a gap: Long Only investors have been
buying into the rally over the last month, whilst Hedge Funds have been
net sellers and their net leverage ratio has fallen back to 0.32x - well
below recent peaks of 0.66x.
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*ILIAD CEO SAYS SFR SALE PROCESS IS 'WELL ADVANCED' 2014-03-10 07:05:48.929 GMT
--DAVID WHITEHOUSE
-0- Mar/10/2014 07:05 GMT
US Market closed slightly higher on Friday, Financials contiune to OP, investors are trying to evacuate the Ukraine situation, pricing that the worst won't happen...Volume were just below average @ 710mil shares ...VIX @ 14.11 -0.77%...No economic data today...Soft weekend economic data from China have once again put a dent in the
seemingly resilient economic sentiment from last week....seemingly resilient economic sentiment from last week. February terms of trade saw its first contraction in nearly a year and also the biggest deficit in 2 years, as exports surprisingly fell 18.1%. Shipments to US, EU, and Japan were all down double digits despite the expectations of rising demand from improving economic conditions in those markets. Stats bureau was quick to attribute the deficit to the distortions caused by the timing around the Lunar New Year, so the jury on the China trade as a gauge of global demand may still be out until March figures. Meanwhile, China CPI also came in surprisingly tame, with annual CPI hitting a 13-month low of 2.0%. Local press has surmised the February data may force the govt into a fiscal stability policy, and several analysts also hinted that weak economy may persuade the increasingly-hawkish PBoC to decelerate its mopping up of excess liquidity to forestall the risk of deflation...- Japan revised its Q4 GDP to a final figure of 0.2% from 0.3% q/q and 0.7% on annualized basis vs 1.0% prelim...Nikkei -1%....HS-1.75%...Shanghai -2.06%...
Eur$ 1.3878 S&P Fut -0.48%...European Fut -0.23%
Keep an eye on :
- ARYN SW : Aryzta Says Guiding Double Digit Underlying EPS Growth in 2014
- EN FP L Bouygues in Talks to Sell Mobile Network to Free for EU1.8b
- EN FP : Iliad-Bouygues Talks Make Regulator’s Task Simpler, Echos Says
- BP/ LN : BP Goes From Top Pentagon Fuel Supplier to U.S.’s Biggest Loser {NSN N27FSQ6JTSE9 <go>}
- CNA LN : Centrica Reiterates Plan to Double North America Earnings: FT
- DAI GY : Daimler Sells Stake in Toray Carbon Venture, Handelsblatt Says
- GAS SM : Gas Natural to Sell Telecoms Unit to Raise Cash: Confidencial
- GSZ FP : GDF Questioned by French Regulator Over Suez Env. Ties: Echos
- HELN SW : Helvetia 2013 Profit Up 9.9% to CHF363.3M, Est. CFH360M
- HOT GY : Hochtief to Consider Full Leighton Takeover in Future. Leighton +11.4% in Sydney (LEI AU) , to Make A$22.15/Shr Proportional Bid for Leighton
- ILD FP : Iliad 2013 Net Income Misses Estimates
- MS IM : Mediaset in Talks With Telefonica on Digital Plus Stake: Sole
- ONO SM : Ono Shareholders Moving Ahead With Plans for Madrid Listing: WSJ
- SGL GY : SGL Carbon Posts Loss on Impairments, Restructuring
- SU FP : *SCHNEIDER IN EXCLUSIVE TALKS TO SELL CST SENSORS UNIT: ECHOS
- SY1 GY : Symrise 2013 Rev. In Line, Targets Mkt Growth Outperformance
- TDC DC : TDC Buys 50% of Small Danish Competitor Justfone, Borsen Reports
- THR BB : ThromboGenics Awarded EU3m for Diabetic Macular Edema Research
- VIV FP : French Competition Probe of SFR Deal Could Take 9 Months: Figaro
- VOD LN : Vodafone Could Offer as Much as EU7.5b for Ono, Expansion Says