FT : SES-imagotag/Gotham: racy pricing helps short seller inflict shelf harm

SES-imagotag/Gotham: racy pricing helps short seller inflict shelf harm
The path back to a premium valuation will be tricky even after a detailed riposte

Mockney wheeler dealer “Del Boy” Trotter was known for his French language faux pas and council flat in Nelson Mandela House, London. By mere coincidence, SES-imagotag resides in Nelson Mandela Place, Paris.

Its detailed counterblast against claims made by short seller Gotham City avoided any gaffes in English. But they will not leave international investors comprehensively reassured.

The riposte from the internet-of-things company reduced rather than wiped out a drop in the shares of almost 60 per cent at the end of last week. Gotham says revenues and ebitda are overstated. The path back to a premium valuation will be tricky.

SES makes and sells electronic shelf labels for retailers.
They are a handy way for brick and mortar shops to digitise. Sales have exploded in recent years from €250mn in 2019 to a forecast of more than €800mn this year. SES’s compound annual growth rate of 27 per cent easily beats listed peers Pricer of Sweden and Korea’s Solum.

Gotham says related party transactions boost SES-imagotag revenues via a circular chain. The company strongly denies this.

Aggressive accounting policies do not help SES’s wider cause. The company capitalises a lot more of its research and development spend as a share of revenues than Pricer.
Free cash flow remains negative and fails to reflect ebitda growth in recent years.
SES blames large investments.

The cash shortfall should be a red flag for shareholder regardless. Similar complaints led by short seller Muddy Waters hit the highly-valued shares of legal financier Burford in 2019.

Before Gotham’s attack, SES shares had risen fivefold in five years. On a price to sales multiple SES’s valuation was at a substantial premium to peers and well above the gap applying to price to earnings multiples. 

Del Boy’s ride was a Reliant Robin, a vehicle famed for overbalancing when manoeuvring at speed. Something similar has happened to SES. Gotham’s more lurid claims are disputed. But SES’s accounting has clearly been too racy. The price correction is merited.

FT : New York office market bolstered by sale valuing tower at $2bn

New York office market bolstered by sale valuing tower at $2bn
SL Green shares jump 20% after deal with Japan’s Mori Trust for stake in Park Avenue building

New York City’s largest office landlord has agreed to sell a stake in a prominent tower that gives it a $2bn valuation, a modest markdown from its previous price that came as a relief to a commercial property market beset by vacancies.

SL Green will sell the 49.9 per cent stake in Manhattan’s 245 Park Avenue building to Japan’s Mori Trust, supplying much-needed cash to the real estate investment trust.

The deal announced on Monday is one of the largest New York City office transactions since the US Federal Reserve began raising interest rates in March 2022, hastening a downturn for the office sector precipitated by remote working.

SL Green has been a particular victim: Its shares fell from more than $80 last March to dip below $20 earlier this year. On Monday, they jumped 20.5 per cent to $28.39.

Harrison Sitomer, SL Green’s chief investment officer, said its Park Avenue properties were still commanding robust rents in spite of the broader market turmoil. He also predicted more deals would be in the offing, with foreign investors such as Mori searching for bargains in the world’s largest office market.

“There’s been a notable momentum shift for groups wanting to find product in New York,” he said, citing growing inquiries from potential partners. “Investors that are well-capitalised are going to continue to see opportunity in New York.”

Other real estate executives were heartened by the valuation, which approached the $2.2bn that China’s HNA Group paid for 245 Park in 2017 when the market was near its peak. They also saw it as proof that choice New York office properties still appealed to foreign investors.

“Rumours of New York’s demise are greatly exaggerated,” wrote Ruth Colp-Haber of Wharton Property Advisors, calling the deal “an unmistakably positive development”.

The 245 Park building was built in 1967 and hosts businesses including the investment managers Ares Capital and Angelo Gordon. While it boasts a prime address across the street from Grand Central Station, it has been shedding crucial tenants in recent years and was in need of renovation.

SL Green announced a plan for a revamp, including new lobbies and amenities, when it bought the building out of bankruptcy last year following a dispute with HNA, its one-time partner. As part of that deal, SL Green assumed $1.76bn in mortgage and mezzanine loans attached to the property, which come due in 2027.

Monday’s transaction contrasted with the gloom hanging over office towers and their owners since the Covid-19 pandemic accelerated a trend towards remote working. In many US cities, office occupancy has hovered around 50 per cent, prompting tenants to dump space on the sublease market and landlords to reduce rents.

The newest and most advanced buildings, such as SL Green’s One Vanderbilt, have defied those trends and continued to command record rents. Older buildings, however, have fallen out of favour, with some owners handing them back to lenders.

A recent study by broker JLL found that office buildings in New York had lost $76bn from their most recent sales prices.

Uncertainty about the prospects for offices and rising rates has damped investment activity. The volume of office transactions in US central business districts was down 70 per cent in May compared with May 2020, according to MSCI Real Capital Analytics.

FT : Aston Martin aims to hit adjusted profit and revenue targets by 2024-25

Aston Martin aims to hit adjusted profit and revenue targets by 2024-25
Car group bids to revive fortunes amid switch of batteries plan from Mercedes to US start-up Lucid

Aston Martin forecast it would hit midterm targets of £500mn of adjusted profits and £2bn of revenues by 2024-25 and said it could eventually sell 17,000 cars a year.

The luxury-car maker, which sold 6,400 cars last year, will ditch official targets for sales when it sets out midterm targets on Tuesday, focusing instead on cash flow, margin improvements and revenue targets.

Owner and chair Lawrence Stroll said the business had the capacity to sell 10-15,000 models a year, with likely sales “maybe 17 [thousand] at its peak in years to come”.

Aston has had a bruising life on the stock market since its initial public offering in 2018, with the group’s pre-tax loss more than doubling last year. After leading an investment in Aston in 2020, Canadian tycoon Stroll is attempting to revive its fortunes and push the group into electric vehicles.

Speaking at the group’s headquarters in Gaydon in Warwickshire, Stroll on Monday claimed he “should be knighted” for his efforts at the business, which he said had involved “saving thousands of jobs” and “investing hundreds of millions into Formula1” through the Aston Martin racing team. 

“If you take my investment between both companies [F1 and the carmaker] as a whole, it’s staggering,” he said. 

His comments came as Aston Martin ditched a plan to buy batteries from Mercedes-Benz and instead struck a deal with Lucid that will see the US start-up take a stake in the struggling carmaker.

The agreement with Lucid will allow Aston to escape a series of financial commitments it made to Mercedes, which is a significant shareholder in the UK company, in a deal struck in 2020.

The carmaker plans to integrate Lucid’s batteries and driving units into its electric models, which it intends to roll out in 2025. Alongside the transfer of technology, Lucid will take a 3.7 per cent stake in Aston and receive up to £186mn in cash and shares.

Stroll said the deal would give Aston “access to the industry’s highest performance and most innovative technologies for our future [battery electric vehicle] products”.

Under chief executive Peter Rawlinson, who made his name helping to develop the Tesla Model S, Lucid has created highly regarded battery and drivetrain technology. But like rival start-ups, it has struggled to produce the technology on any scale.

Lucid is majority owned by Saudi Arabia’s sovereign wealth fund, which also has a stake in Aston.
Rawlinson said on Monday that the deal “represents a landmark collaboration between Aston Martin, a storied marque with a rich history, including winning at Le Mans and its current successes in F1, and the very best of Silicon Valley innovation and technology from Lucid”.

While the agreement puts Lucid at the heart of Aston’s electric ambitions, the UK company will still use some electric systems from Mercedes as well as engines and in-car technology that date back to the 2020 deal.

Aston had been due to issue new shares and make a large payment to Mercedes by the end of this year. The payment would have given Aston access to Mercedes’ new battery systems for its electric cars.

The 2020 deal with Mercedes was struck when Aston shares were trading above £12, giving the German carmaker a potential windfall. Although Aston shares have rebounded from the record low touched last year, they remain below £4. They were up 6 per cent in morning trading on Monday.

Franz Reiner, who represents Mercedes on the Aston Martin board, said the UK carmaker now had “access to a wide range of Mercedes-Benz technologies, while at the same time giving the iconic British carmaker the opportunity to explore new opportunities”.

The payments to Lucid, whose shares have tumbled in recent years, will be staggered, starting with £26mn and the rest coming over the course of 2025 and 2026. Aston has also pledged to spend at least £177mn buying parts from Lucid, as well as an additional £8mn integration fee.

>>> Pharrell Casually Carries $1 Million EUR Louis Vuitton Bag

Pharrell Casually Carries $1 Million EUR Louis Vuitton Bag During Paris Fashion Week
The “Millionaire” Bag is not your average Speedy.

Hot off his runway debut with Louis Vuitton’s Spring/Summer 2024 presentation, Pharrell Williams has continued to keep the attention on him sitting front row at a series of fashion shows. Moving through Paris Fashion Week SS24, the new Artistic Director has been spotted throughout the city attending Kim Jones’ Dior SS24 presentation, the Junya Watanabe show, and supporting longtime friend NIGO at KENZO’s SS24 runway.


Already turning heads with his full Louis Vuitton (PARIS:MC.PA +1.07%) looks, Pharrell has also captivated the fashion world with his Speedy duffle bag, reportedly valued at $1 million EUR. The bag is reportedly dubbed the “Millionaire” bag and offers insight into the level of luxury the new Artistic Director is set to bring to the storied fashion house.

Although not much is known about Pharrell’s Millionaire Speedy bag, rumored reports are noting that the one-of-a-kind bright and bold bag is completely handmade by one of Louis Vuitton’s experimental exotic leather ateliers. The bag itself features a body constructed of yellow crocodile leather with flipped white Monogram and matching tan accents, while the hardware on the carrying option like the rivets, buckles, and chunky Cuban link carrying chain comes in yellow gold. Finishing up the design of the bag is an “LV” padlock set with VVS pavé diamonds.

Take a closer look at Pharrell’s Louis Vuitton Millionaire Speedy duffle bag above.

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • BMEA +27.8%, LCID +8.4%, MLTX +8.2%, ETNB +7.1%, IPHA +6.6%, LXRX +5.1%, LL +4.7%, ESPR +3.8%, CDLX +2.9%, ALTO +1.7%, NN +1%, VRTX +0.8%, AZN +0.7%
  • Gapping down:
    • MRCY -9.7%, SUPN -5%, PRST -3.1%, ELVN -2.8%, CBAY -1.9%, RLYB -1.6%, SWI -1.3%, AMR -0.5%

>>> Europe : Brokers Upgrades & Downgrades - 26th of June 2023 V2(+)

>>> Up
* Aker Carbon Capture Raised to Buy at Pareto Securities (+)
* Cranswick Raised to Outperform at RBC; PT 4,000 pence
* Endesa Raised to Equal-Weight at Morgan Stanley; PT 23 euros
* Hypoport Raised to Neutral at BNPP Exane; PT 160 euros
* NN Group Raised to Overweight at JPMorgan; PT 47 euros
* Pandox Raised to Buy at ABG; PT 130 kronor
* Whitbread Raised to Add at AlphaValue/Baader

>>> Down
* Getinge Cut to Neutral at Redburn; PT 205 kronor (+)
* Lloyds Cut to Underweight at JPMorgan; PT 42 pence
* M&G Cut to Hold at HSBC; PT 210 pence
* Opdenergy Cut to Equal-Weight at Barclays; PT 6.10 euros
* RNEW LN Cut to Underperform at Peel Hunt (+)
* Siemens Energy Cut to Neutral at Citi; PT 18 euros
* Siemens Energy Cut to Hold at Jefferies; PT 16.50 euros
* Tesla Cut to Neutral at Goldman; PT $248
* Viaplay Cut to Underperform at Jefferies; PT 50 kronor

>>> initiation
* Aryzta Rated New Buy at Stifel; PT 2 Swiss francs
* Bachem Rated New Sell at Citi; PT 74 Swiss francs
* Italian Design Brands Rated New Buy at Citi; PT 14.30 euros
* Italian Design Brands Rated New Buy at Equita; PT 16.80 euros (+)
* On The Beach Rated New Buy at Shore Capital
* PolyPeptide Group Rated New Neutral at Citi; PT 23 Swiss francs
* Sartorius Rated New Buy at Citi; PT 375 euros

>>> Call
* Endesa Loses Last Sell as Morgan Stanley Upgrades on Momentum
* JPMorgan Sees Higher Risks for UK Banks, Lloyds Downgraded (+)
* NN Group Raised at JPMorgan on Strong Capital Return Outlook (+)
* Sartorius, Lonza Top Life Sciences Picks at Citi, Bachem Sell
* Siemens Energy Cut at Citi, Jefferies Following Profit Warning (+)
* Viaplay Downgraded at Jefferies on Further Downside Risks

>>> Stoxx 600 Pre-Market Indications

  • LSE Group (LS4C TH) +1.7%
    • UK’s LCH Seeks to Become Counterparty for India Derivatives: ET
  • NN Group (2NN TH) +1.6%
  • Sartorius (SRT3 TH) +1.6%
    • Sartorius, Lonza Top Life Sciences Picks at Citi, Bachem Sell
  • Siemens Energy (ENR TH) +1.4%
    • Siemens Energy Cut at Citi, Jefferies Following Profit Warning
  • Pernod Ricard (PER TH) +1.3%
    • Pernod Ricard Agrees Potential Sale of Clan Campbell Blended
  • Diageo (GUI TH) +1.2%
  • Nel (D7G TH) +1.1%
  • OMV (OMV TH) +1%
  • Glencore (8GC TH) +0.9%
  • Snam (SNM TH) -1.1%
  • Lloyds (LLD TH) -1.2%
    • JPMorgan Sees Higher Risks for UK Banks, Lloyds Downgraded
  • K+S (SDF TH) -1.2%
  • Philips (PHI1 TH) -1.6%
  • BE Semiconductor (BSI TH) -2.2%
    • BE Semiconductor Cut to Hold at Deutsche Bank