(BFW) M&A to Drive EU Telecoms Shares in 2014, Macquarie Survey Says

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M&A to Drive EU Telecoms Shares in 2014, Macquarie Survey Says 2014-01-17 08:53:20.871 GMT

By Gaurav Panchal Jan. 17 (Bloomberg) -- M&A is expected to be the driver of European Telecoms sector in 2014 as expectations for fundamentals remain to the downside, Macquarie’s buy-side investor survey shows. * Macquarie estimates Vodafone is implying a 55%-60% probability of offer from AT&T * Ziggo, Telenet also likely M&A candidates, given LBTYA’s publicised interest: Macquarie * Beyond M&A exposure, investors expect regulatory model to continue to shift towards rewarding investment rather focusing solely on price: Macquarie * Key stocks for 2014: BSkyB, Mobistar, Orange, Portugal Telecom, Swisscom, Sky Deutschland, Telecom Italia, Telenet, United Internet * Earlier: Vodafone cited most often as merger target in M&A desk survey {NSN MZJ98T6JIJUO <go>}

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To contact the reporter on this story: Gaurav Panchal in London at +44-20-7392-0511 or gpanchal2@bloomberg.net

To contact the editor responsible for this story: Brian Lysaght at +44-20-7330-7908 or blysaght@bloomberg.net

(BofA-ML) Flow Show : Equities: Chunky $9.4bn inflows; note that $6.5bn via long

Weekly flows show Equities (+$9bn) over Bonds (+$1bn) again - Chart 1. And though the Great Rotation thesis is fast becoming consensus, Chart 2 suggests the rotation is far from over…

…more good news is that long-only funds see $6.5bn inflows this week (largest in 12 months), a sign that investors are warming to idea of active funds (as opposed to just passive index strategies)

Meanwhile, 12 straight weeks of EM equity redemptions = longest outflow streak in 11 years

>>> Asset Class Flows
* Equities: Chunky $9.4bn inflows; note that $6.5bn via long-only funds = largest weekly inflows in a year!
* Bonds: Modest $1.0bn inflows (Table 1)
* Commodities: 10 straight weeks of redemptions
* MMF: $22bn redemptions (first outflows in 4 weeks)

>>> Equity Flows
* EM: 12 straight weeks of outflows ($1.3bn –longest outflow streak in 11 years – Table 3)
* Europe: 29 straight weeks of inflows ($4.1bn)
* Japan: 4 straight weeks of inflows
* US: $3.7bn inflows = largest in 7 weeks

>>> Fixed Income Flows
* 4 straight weeks of inflows to HY bond funds ($1.2bn) and IG bond funds ($0.6)
* 82 straight weeks of inflows to floating-rate debt (Table 2)
* 35 straight weeks of outflows from MBS
* 16 straight weeks of outflows from Munis
* 16 straight weeks of outflows from EM debt

(MS) European Software : Temenos, SAP & DS in Software, Atos & Cap Gemini in IT

Looking for Catalysts and Surprises

After two strong years of sector re-rating, a return to EPS upgrades looks priced in here. We focus on companies where EPS can still surprise or where we see catalysts to change investor perception. Atos is our top pick, with Temenos and Telecity the best potential surprises in the mid-cap space.

We like Temenos, SAP & DS in software: After a tough period, Temenos has stabilised and we believe it has a variety of levers to drive licence growth and deliver EPS upside. We still see room for investor perception to improve here. Our stance on SAP is based on an improving macro continuing to help growth and the market warming to the business model transition. We are more cautious on DS in the very short term but see a strong setup once we get past 4Q results.

We favour Atos, Telecity & Capgemini in IT Services: We still see a SOTP discount at Atos, which
we expect to narrow this year, and M&A and deal wins are further possible catalysts. We see significant room for sentiment to turn more positive on Telecity provided the gentle improvement in growth we forecast comes through. Finally, we believe Capgemini is nicely levered into an improving macro in Europe, which could drive better EPS growth than the market forecasts.

We downgrade both Amadeus & Aveva to EW from OW: We remain very positive on the long-term
opportunities and business models at both companies. However, we feel the growth is now more fairly discounted at Amadeus and see less room for upside surprises. We fear slowing growth in Oil & Gas capex could impact Aveva negatively. 

More cautious on Indra, Tieto, SOWG & Sage: Generally we feel growth prospects are fairly valued by the market and we have less confidence on upside surprises at these companies.

>>> Credit Suisse Pre-Market Indication

Accor +1-2% Q4 overnight. Sls inline, guidance at top end of range
Carlsberg +0.5% Daily Mail report SAB looking at Carlsberg
Essilor -2% 2013 sls growth target cut to 5.4% (cons 6%)
HSBC +0.5% Stk not reacting to -ve analyst rpt saying assets o/stated
Intertek -1-2% CS d/grade to N from OP (see better valuation elsewhere)
K&S +2% Spec Uralkali may sign China Potash contract @ decent price
Lufthansa +1-2% WSJ pushing stock (+ve on restructuing strategy)
Miners unch Copper +0.3%, Brent -0.5%, China -1%
SAB unch Daily Mail report SAB looking at Carlsberg
Sainsburys +1-2% Spec Phil Green & QIA may team up with PE to bid 450-500p
Shell -4-5% Profit warning. Says net to be $2.9b (cons was mid $4b)
Spectris +1% No's all fine. Q4 fine vs a tough comp. Margins inline
Tech Stks -1% Negative read from poor Intel no's and Nintendo warning
Tullow unch The Times rpt on bid spec (mentions Statoil, not new)
Will Hill +3% Good stmnt. Underlying growth gd despite tought start to yr

WSJ : Nintendo Sees Loss on Dismal Wii U Sales

Nintendo Sees Loss on Dismal Wii U Sales Game Maker Slashes Wii U Console Sales View

Shoppers take escalators under the logo of Nintendo and Super Mario characters at an electronics store in Tokyo in December. Associated Press TOKYO—Nintendo Co. Friday said it now expects to post an operating loss in the current business year ending in March, blaming much weaker than expected sales of game consoles and software during the year-end shopping season.

The Kyoto-based company said it estimates an operating loss of ¥35 billion, considerably worse than the ¥100 billion profit it previously predicted in April. The revised figure compares with the ¥36.41 billion operating loss it posted in the last fiscal year.

The dismal performance highlights how Nintendo, which competes with Sony Corp. and Microsoft Corp., in the videogame market, has been struggling to sell its Wii U consoles and software as its rivals pull ahead with the latest generation of devices.

For the full fiscal year, the company sharply cut its Wii U console sales outlook to 2.8 million units from 9 million.

As a result, it cut its overall sales outlook to ¥590 billion, 36% below its previous forecast of ¥920 billion.

(BFW) Enel Repaid Banks EU4b, Continuing With Debt-Cut Plan: Corriere

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Enel Repaid Banks EU4b, Continuing With Debt-Cut Plan: Corriere 2014-01-17 07:22:53.270 GMT

By Daniele Lepido Jan. 17 (Bloomberg) -- Co.’s target is to reduce debt by 2014 to EU37b, Corriere della Sera reports without saying where it got information. * Co. may dispose of Slovenske Elektrarne: Corriere * NOTE: Enel said to offer six spot LNG cargoes from Nigeria via tender NSN MZDR2L6JIJV7 <GO>

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--Editor: Jerrold Colten

To contact the reporter on this story: Daniele Lepido in Milan at +39-02-8064-4266 or dlepido1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at +49-30-70010-6215 or kwong11@bloomberg.net