>>> ArcelorMittal Receives US antitrust clearance for ThyssenKrupp Steel USA acq

ArcelorMittal Receives US antitrust clearance for ThyssenKrupp Steel USA acquisition
- Under the Hart-Scott-Rodino Antitrust Improvements Act (HSR) terminated on January 29, 2014 with respect to its acquisition, through a 50/50 joint venture with Nippon Steel & Sumitomo Metal Corporation, of ThyssenKrupp Steel USA.
- The termination of the HSR waiting period satisfies one of the conditions to the closing of the acquisition. Subject to the satisfaction of other customary conditions (including the receipt of additional regulatory approvals), the acquisition is expected to close later in the first quarter of 2014 or in the second quarter of 2014.

(Makor) : TECH VIEW OR FP (120.55 last) - a break below 120 would be negative

Summary - The stock has been trading in a 120-130 range over the past 7 Month - A break below 120 (38.2% Fibonacci retracement + bottom of recent range) would be a negative developemt and argue for a move to 115 and possibly 110 over time - Based on the Hieght of the recent range a move below 120 should argue for a 10EUR move lower to 110

Support: 120, 115 & 110 Resistance: 130 & 137.5 (Cycle High)

(MS) Eurotunnel - More to go for - Overweight

The shares are up c.15% over the past couple of months but we think there is more to go. European confidence indicators continue to edge up and Eurotunnel is, in particular, a strong play on the buoyant UK economy. Overweight.

* After the strong run, is valuation a concern? 
It is not easy to benchmark Eurotunnel’s valuation given virtually no relevant comps, no earnings, high operational & financial leverage, long concession life (until 2086) and a relatively low FCF (4% 2014) and div yield (2% 2014).

* It is worth exploring how Eurotunnel’s financial profile could change over next 4 years... 
FCFE yield could double to c.8% by 2018 when we expect Eurotunnel to reach 5x net debt/EBITDA. It would then be able to maintain a dividend that implies a sustainable yield >10% (p.4). Putting our 2018e dividend on a 5% yield (top end of peer range) and discounting it back to today represents ~50% upside potential.

* …but our PT does not fully discount this scenario.
There are risks to the scenario above. Eurotunnel might have different thoughts on cash allocation, for example. Although Eurotunnel has a potentially compelling dividend story, there are other infrastructure companies that look able to sustain higher dividend payouts too. Based on our fundamental analysis, we estimate the shares trade on a 12% IRR, while our PT implies 11%.

* Sentiment and trading momentum are key, both of which suggest the shares can go further. 
In short, we don’t think valuation should cap the shares yet, which, given Eurotunnel’s high operational leverage, means sentiment is key. PMIs continue to edge up, and we expect trading momentum to improve and regulatory concerns to ease. 2015 catalysts remain on the horizon, with Sulphur regulation increasing the Ferries’ fuel bill and new Eurostar services on track.

WWD ; Luxe Spending to Grow to $1.2 Trillion

MILAN — The luxury sector will mainly grow organically in the next decade, boosted by 440 million consumers that will spend a total of 880 billion euros, or $1.2 trillion, in 2020, according to the first True Luxury Global Consumer Insight study presented here Tuesday by Fondazione Altagamma and Boston Consulting Group. Today, 380 million consumers of luxury goods spend around 730 billion euros, or $998.5 billion, on personal luxury goods.

Antonio Achille, partner and managing director of Boston Consulting Group, touted the research as “the most complete ever on the luxury consumer,” with more than 40,000 shoppers analyzed in 20 countries. “Retailing is a science, you can’t improvise it,” said Achille.

The study focuses on a target of around 380 million consumers and an elite of 32 million core luxury consumers, with average yearly spending of 300,000 euros, or $410,352.

According to the research, to be successful in an increasingly transforming market, companies will need to leverage the evolution of the monobrand store toward one that is customized per country and generation and it will be necessary to focus on quality and exclusivity to defend and develop the brand globally. Word of mouth and advocacy will be pillars of an effective omni-media communication strategy and the digital and brick-and-mortar channels will need to be integrated for a true omnichannel approach, said Achille. Made in Italy is seen as a fundamental asset to develop a brand in the medium and long-term. “A deep knowledge of the customer, or ‘Amazonization,’ is key to grow,” he added.

Armando Branchini, vice president of Fondazione Altagamma, said the goal is to keep a customer’s business. “There are more consumers we need to retain in order for them to be loyal than markets to conquer. This is the challenge today for high-end, international brands,” he noted.

The association also presented the Altagamma Retail Evolution study, prepared with Exane BNP Paribas, which studied 12,500 stores. Luca Solca, managing director global luxury goods of Exane BNP Paribas, said high-end brands “have progressively transformed into retailers,” a fact that boosted their revenues in the 2005-2013 period. The trend has been to increase the number of countries to plant a flag in, rather the number of stores per country. Solca urged companies to increase productivity per store, which varies depending on the product category, the strength of the brand and the dimension of the store, and to integrate online and brick-and-mortar channels. Creating a relation between the penetration of luxury boutiques and per-capita income in each country, Solca noted that China shows “a saturation” in this sense. He predicted a reduction of franchised operations and a transition from wholesale to concessions in department stores. “The key for a successful retail integration is the productivity of spaces,” he said.

Solca forecasts that, in 2020, direct distribution will grow from 31 to 40 percent of the total, while franchising will decrease from 10 to 6 percent; department stores will decrease from 23 to 19 percent, and wholesale will remain at 36 percent.

High-end consumer spending is expected to increase from 217 billion euros, or $296.8 billion, today to 310 billion euros, or $424 billion, in 2020, of which 44 billion euros, or $60.2 billion, will be online. The number of monobrand boutiques totaled 12,500 in 2013 and is expected to reach 16,000 in 2020.

(Exane) Telco : Vivendi & Bouygues Upgraded - KPN Upgraded

*** French Telcos
- With 4G failing to live up to initial expectations and newly listed players emerging, we look at
potential M&A combinations in the French telco space.
- 4G is not going according to plan
With Iliad integrating 4G into its EUR20/month price point, Bouygues Telecom has rapidly cut 4G
pricing back to 3G levels, and Orange is now giving up partially on ARPU uplift hopes as well. We
have once again cut our French mobile service revenue estimates.
- We doubt Bouygues can disrupt the fixed-line market
In our view, Bouygues cannot afford to simply cut its core triple-play prices. We expect a 4G-based
home broadband with a limited TV service and do not foresee a significant impact in the market.
- M&A back to the forefront – Potential for EUR3bn–7bn of value creation
With Numericable (=) and Altice listed, SFR spun-off by June, Bouygues under pressure, Iliad
pragmatic and a more open government, M&A is looming. In fixed-line, Numericable-SFR is likely.
In mobile, we now attribute 20% probability to Iliad-Bouygues but still zero to other combinations.
A number of scenarios would destroy value for Orange (=), on which we remain Neutral.
- Vivendi upgraded to Outperform – Upside from Telco consolidation and Media turnaround
Vivendi ex-SFR is deleveraged, returning to growth and trading broadly in line with Media. We now
value SFR at EUR15bn. We play the Numericable-SFR deal via Vivendi rather than Numericable.
- Bouygues: when bad news is good news – Upgraded to Neutral, TP EUR29 (from EUR23)
We have been guilty of focusing too much on earnings and not enough on the improving chances
of M&A. However, even assuming Bouygues Telecom is sold for EUR5bn, we see limited upside.
- Iliad (+) remains the structural winner
We expect Iliad’s EBITDA to double by 2017e, driven by mobile market share gains (tapping the
huge subsidised segment) and margin uplift (network rollout). TP trimmed to EUR210 vs. EUR220.

*** KPN
- Upgrading to Outperform, TP raised to EUR2.90 (from EUR2.35)
We upgrade KPN to Outperform with a new TP of EUR2.90 (8% upside). Two things have changed
over the last month, in our view. We believe the risk of a disruptive entry by Tele2 has diminished
and the probability that the sale of E-Plus will be approved has increased. Admittedly, the stock
has already had a nice run (+19% rel. over 1m), but it still screens attractively in a sector context.

(RTR) Italy says Sawiris welcome to invest in Telecom Italia

Jan 29 (Reuters) - Italy would have no objections to an investment in Telecom Italia by Egyptian tycoon Naguib Sawiris if he were prepared to put cash into the business, a government official said on Wednesday.

"Investors who bring money are welcome," Deputy Industry Minister Antonio Catricala told reporters on the sidelines of a conference in Rome, in response to recent comments by Sawiris who said he was interested in the former state phone monopoly.

Telecom Italia, controlled by Spain's Telefonica together with three Italian financial companies, is carrying out a 4-billion-euro ($5.5 billion) plan to cut debt and fund investments as it seeks to reverse years of sluggish growth.

In the last few days, the Egyptian billionaire has told the media he would be prepared to invest in the Italian company on condition Telefonica withdrew from it. Sawiris also said he would be interested in bidding for Telecom Italia's prized Brazilian unit, TIM Brazil.

He said no talks were underway.

In comments emailed to Reuters on Wednesday, Sawiris said instead of selling assets, Telecom Italia should cut debt through a capital increase which he would be prepared to subscribe to if Telefonica exited.

"(Telecom Italia) needs around 3-4 billion euros, which it can raise through a rights issue," Sawiris, who unsuccessfully attempted to buy a stake in Telecom Italia in 2012, said.

Italian politicians are keen to see more investments in Telecom Italia's fixed-line network, Italy's largest telecoms infrastructure, and safeguard jobs at one of the country's top employers.

On Tuesday, Telecom Italia's chief executive, Marco Patuano, rejected rumours the company could consider a rights issue to cut its nearly 28 billion euros of net debt.

In the email, Sawiris said the Italian company should keep TIM Brasil, its main source of growth, but should the company decide to sell it he would be interested in making an offer.

Patuano, who took the helm at Telecom Italia in October after Telefonica agreed to a gradual takeover of its Italian rival, has said TIM Brasil is a strategic asset which could be sold only at a convincing price.

The possibility of a sale of TIM Brasil was triggered by antitrust issues after Telefonica raised its indirect stake in Telecom Italia to 15 percent.

Both operators own competing mobile networks in Brazil and the South American country's competition watchdog has ordered the Spanish telecom giant to downsize its presence there.

(GS) TURKEY - "Whatever It Takes". Clear & Decisive Action

The CBRT hiked the Non-PD lending rate by +425bp to 12.00%, significantly above our (+150bp) and consensus expectations (+225bp). The Bank also hiked the borrowing rate (+450bp) and the 1-week repo rate (+550bp) such that its interest rate corridor now is symmetric (+/- 2%) around the 1-week repo rate at 10.00%. This marks a first step towards a more conventional monetary policy framework, in our view.

The CBRT stated that liquidity "… will be provided primarily from one-week repo rate instead of the marginal funding rate in the forthcoming period". This implies that the effective rate hike is 225bp (to 10.00%; the 1-week repo rate), as the Non-PD lending rate was 7.75% prior to the announcement. But the Bank now has the option to tighten monetary policy by an additional 200bp on extraordinary days (to 12.00%; the lending rate).

We have recently argued that a clear and decisive tightening in monetary policy was necessary in order to stabilize the TRY and anchor inflation and inflation expectations (see CEEMEA Economics Analyst No 14/02, "Turkey: The CBRT at a cross-roads – a policy shift is now necessary". Today's announcement was exactly what we have been looking for and should be TRY supportive in the near term as short-term risks are likely to be contained (and there may be downside risks to our 3-month US$/TRY forecast at 2.20). Over the longer-term, however, there could potentially be need for a stronger monetary adjustment, as the fed normalizes monetary policy.

Today's rate hikes also increase the downside risks to our (below-consensus) 2% growth forecast for 2014, and the current account may adjust at a faster pace than we originally had anticipated. Finally, the decision should be credit supportive, as it greatly reduces the risks associated with FX balance sheet pressures.

(Barcap) Turkish banks - Down 55% in USD, time to add?

First, the good news: Turkish banks' underperformance may be behind us. Since their May 2013 peak, Turkish banks are down 55% in USD, underperforming EM peers by 45%, in line with the average performance delivered in the last 4 selling cycles since 2005.
We upgrade Akbank to O/W, PT of TRY 7.59 (25% upside), keep Halk O/W new PT of TRY14.53: at its recent investor day Akbank confirmed its commitment to improving profitability, maintaining focus on its best in class cost efficiencies, which we see as a competitive advantage in times of revenue pressures.

FULL NOTE ATTACHED

>>> What to look at today - 30/01/2014

US Mkt closed lower after yest. Rebound (with no volume), small cap leaded the move Russel -1,5%, FOMC meeting comments pushed market lower...VIX @ 17,35 +9,81%...volume slightly higher than yest. But below averge @ 610mil shares...FB Trading above the $60 (+10%) After hours...Lenovo announced deal to acquire Google Motorola Mobility for $2.9b, lenovo-8%, GOOG +2% after Hours...China final manufacturing PMI print from HSBC declined to 49.5 from 49.6
flash figure, confirming the first contraction in the manufacturing space in 6 months. Even more notable, HSBC report said China's employment sector saw the "quickest rate of job shedding since March 2009." Hong Kong's Hang Seng and Shanghai Composite saw modest losses in the final trading session before the start of the Lunar New Year holiday break. Shanghai -0.66%...Nikkei225 hit 11-week lows below 14,900, dragged down by firmer yen...holding the 15,000 level now...Nikkei -2.45%


Eur$ 1,3660 S&P fut.+0.23% European Fut-0.10

Keep an eye on :
- Emerging : Mobius Says Emerging Market Panic Overdone, UBS Sees 10% Upside in EM Equities in 2014
- ALT FP : Altran Confident of 2012-2015 Targets as 4Q Sales Rise 13%
- ALV GY : Allianz Pushes Back Property-Buying Goals as Rivalry Intensifies {NSN N06IIP6K50YR <go>}
- BUCN SW : Bucher Sees Substantial Increase in Op. Profit, Earnings in 2013
- CAP FP : Lenovo to buy Motorola Mobility for $3bil, could be -ve for IBM --> less spec on CAP
- DBK GY : Deutsche Bank Suspends NY Head of Emerging FX Trading: Reuters
- DSY FP : Dassault Systemes Offers to Buy Accelrys for About $750M, offered $12.5/ share
- ERICB SS : MORE: Ericsson 4Q Sales Miss as N.American Projects Peak
- ERICB SS : Ericsson’s Vestberg Said to Tell Board He Has No Plan to Leave
- FCAM LN : F&C Asset Holder Elliott Capital Discloses Stake
- GIVN VX : Givaudan 2013 Ebitda Beats Estimates, Confirms Forecast
- GWi1 GY : Gerry Weber Says FY Sales In Line With Target, Sees 2014 Growth
- IFX GY : Infineon Sees 2Q Sales Rise as 1Q Rev. Beats; Confirms Outlook
- LXS GY : Lanxess’ Leverage Up, New CEO May Focus on Credit Ratios, Rating
- NOVN VX : Novartis CEO Jimenez Says Has No Plans to Sell Roche Stake: AZ
- NOVOB DC : Novo Nordisk 4Q Net Income DK6.05b; Analyst Est. DK6.26b
- PC IM : Marco Tronchetti Provera Says No Offers Made to Pirelli Board
- PTI PL : Portucel 2013 Net Falls 0.5% to EU210m; Sales Rise to EU1.53b
- PUM GY : Sell Puma, Chances of a Kering Minority Takeout is Fading: UBS
- QIA GY : Qiagen 4Q Adj. EPS Beats Est.; Adj. Net Sales Miss
- RCO FP : Remy Cointreau to End Share Buyback Program
- REP SM : YPF Slides on Argentine Devaluation, Repsol Compensation Talks, Postpones YPF Deal Approval to Feb., Expansion Says
- ROG VX : Roche FY Core EPS CHF14.27; Misses CHF14.8 Est. M&A Strategy Hasn’t Changed, CEO Schwan Says
- SNI NO : Stolt-Nielsen 4Q Profit Beats Ests; Sees Slow Tanker Recovery
- STS IM : Ansaldo 2013 Rev., New Orders In Line With Target
- TLSN SS : TeliaSonera 4Q Ebitda Misses; Sees Flat Sales, Margin in 2014
- TRYG DC : Tryg 4Q Net Beats Estimates; Proposes Div of DKK27/shr
- ONO SM : Ono Interested in Spanish Cos.(Euskatel & Telecable, R Cable) If It Carries Out IPO, FT Says
- TOD IM : Tod's 4Q, 2013 Rev. Misses Ests.
- UG FP : Peugeot Family Said Feuding Over Dongfeng Deal: Les Echos Link {http://bit.ly/MgPP7f }
- UG FP : JPMorgan Ready to Guarantee EU3B Peugeot Capital Increase: Echos
- VOE AV : Voestalpine Gets EU1b Contract for Pipe for South Stream Line

>>> Brokers Upgrades & Downgrades - 30/01/2014

>>> Up
*ANTOFAGASTA RAISED TO NEUTRAL AT MACQUARIE
*INDRA RAISED TO HOLD VS SELL AT SOCGEN
*PREMIER FOODS RAISED TO HOLD VS SELL AT SOCGEN
*STMICROELECTRONICS RAISED TO NEUTRAL VS UNDERWEIGHT AT HSBC
*WERELDHAVE RAISED TO BUY VS HOLD AT ING

>>> Down
*BALDA CUT TO ADD FROM BUY AT FIRST BERLIN
*MARINE HARVEST CUT TO NEUTRAL VS BUY AT CITI
*MERSEN CUT TO HOLD VS BUY AT SOCGEN
*PREMIER OIL CUT TO NEUTRAL VS BUY AT GOLDMAN
*PUMA CUT TO SELL VS NEUTRAL AT UBS
*SINO-OCEAN CUT TO SELL VS NEUTRAL AT UBS
*WAERTSILAE CUT TO HOLD VS BUY AT NORDEA
*ZUMTOBEL RAISED TO BUY VS NEUTRAL AT UBS

>>> PT Change
*SAIPEM PT CUT TO EU11 VS EU13 AT NOMURA; KEPT AT REDUCE
*TOD’S PT CUT TO EU95 VS EU98 AT SOCGEN; KEPT AT SELL

>>> Initiation
*AEGON RATED NEW HOLD AT BERENBERG; PT EU7.2
*ANHEUSER-BUSCH RATED NEW BUY AT BTIG, PT EU86
*BEIERSDORF RATED NEW NEUTRAL AT BTIG, PT EU73
*CARLSBERG RATED NEW BUY AT BTIG
*DELTA LLOYD RATED NEW BUY AT BERENBERG; PT EU22.3
*DEUTSCHE POST RESUMED AT HOLD AT KEPLER CHEUVREUX; PT EU25
*DIAGEO RATED NEW NEUTRAL AT BTIG
*GENERALI RATED NEW HOLD AT BERENBERG; PT EU17.4
*HEINEKEN RATED NEW NEUTRAL AT BTIG
*HENKEL RATED NEW NEUTRAL AT BTIG
*LEONTEQ RATED NEW NEUTRAL AT UBS, PT SFR120
*L’OREAL RATED NEW NEUTRAL AT BTIG
*ORIFLAME RATED NEW BUY AT BTIG
*PERNOD RICARD RATED NEW NEUTRAL AT BTIG
*RECKITT BENCKISER RATED NEW NEUTRAL AT BTIG
*SABMILLER RATED NEW NEUTRAL AT BTIG
*UNILEVER RATED NEW NEUTRAL AT BTIG

>>> Call
>> Stock
*IAG ADDED TO BOFAML’S EUROPE 1 LIST
*KINNEVIK REMOVED FROM UBS’S LEAST PREFERRED LIST
*ZUMTOBEL ADDED TO UBS’S MOST PREFERRED LIST