>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • CDMO -17.4%

Other news:

  • ALVR -23.1% (prices offering of 20.0 mln shares of common stock at $3.75 per share)
  • GPOR -9.4% (prices offering of 1.3 mln shares of common stock by selling stockholders at $95.00 per share)
  • IGMS -9.3% (announces $100 mln public offering and concurrent private placement)
  • ASTL -8.9% (reports Q4 results; files shelf prospectus)
  • SPR -8.5% (to suspend factory operations)
  • XOMA -5.2% (acquires royalty and milestone economics to Phase 3 first-in-class orphan disease asset for Niemann-Pick Disease Type C and Phase 2 oncology asset)
  • CRNC -3.7% (prices $190.0 million aggregate principal amount of 1.50% convertible senior notes due 2028)
  • BA -3.3% (Spirit AeroSystems news to suspend factory operations)
  • IPI -1.9% (completes Phase One and provides update on Phase Two of its HB Injection Pipeline Project)
  • GMAB -1.5% (Announces Epcoritamab Added to National Comprehensive Cancer Network Clinical Practice Guidelines in Oncology (NCCN Guidelines) for ‘B-Cell Lymphomas')
  • SPCE -1.1% (Board Chair Evan Lovell died unexpectedly)
  • RIVN -1% (acquires mapping company Iternio)
  • NVO -1% (European regulators raised safety concerns about NVO drug according to Reuters)

Analyst comments:

  • DOCN -5.7% (downgraded to Underweight from Neutral at Piper Sandler)
  • AA -3.2% (downgraded to Underweight from Equal-Weight at Morgan Stanley)
  • TSLA -3.1% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
  • PAGS -2.5% (downgraded to Neutral from Buy at New Street)
  • MRCY -1.7% (downgraded to Neutral from Outperform at Robert Baird)
  • EQNR -1.3% (downgraded to Underweight from Equal-Weight at Morgan Stanley)

FT : Swiss central bank calls for overhaul of banking regulations after Credit S

Swiss central bank calls for overhaul of banking regulations after Credit Suisse rescue
SNB warns that dependence on regulatory capital and liquidity rules may have contributed to problems

The Swiss National Bank has called for a review of banking regulations as it warned that existing global rules on capital and liquidity do not safeguard systematically important lenders from collapse, in its first public reflections since the rescue of Credit Suisse.

“The experience with Credit Suisse shows the need for a review of the Too-Big-To-Fail framework in order to facilitate early intervention,” the SNB said in its annual financial stability report, published on Thursday.

The report contains a number of damning preliminary observations from the emergency rescue of Switzerland’s second-biggest bank, when it was taken over by its rival UBS in March in a government-engineered deal greased with a SFr260bn ($291bn) liquidity support package.

The SNB warns in the report that dependence on existing regulatory capital and liquidity rules may even have contributed to the bank’s problems.

“The experience with Credit Suisse has shown that in a period of stress, regulatory metrics are relatively narrow and may delay corrective action,” the SNB said,

The SNB, which is responsible for overseeing financial stability in Switzerland alongside the market regulator Finma, said it had identified three principal concerns.

First, it said Credit Suisse’s higher-than-required capital ratios had provided little reassurance. It also said it had concerns over exactly what was permitted to be classed as regulator capital under existing rules, citing deferred tax assets. As the bank’s situation deteriorated, the existing accounting rules for those tax assets created a SFr2bn hole on the bank’s balance sheet, the SNB said.

Second, the SNB said additional tier 1 bonds issued by Credit Suisse — a debt instrument that has been one of the banking world’s most popular capital-raising tools in the post-2008 regulatory environment — were not fit for purpose.

The bank should have been able to wipe out the value of the AT1 bonds far earlier to improve its balance sheet, the SNB said, which was supposed to be the instruments’ regulatory purpose, but could not because the trigger point which was tied to capital ratios was an inadequate barometer of the bank’s financial health.

By the time the bonds were wiped out — in a controversial decision that has launched a ferocious legal battle in Switzerland — it was too late, the SNB said.

Third, the SNB said regulatory liquidity buffers were nowhere near adequate for Credit Suisse to cope with its situation.

“The bank’s liquidity buffers and the collateral prepared for central bank facilities were not sufficient to cover the massive liquidity outflows and the higher prepositioning requirements,” the report states.

The report proposes that in the future Swiss banks should be required to set a far higher minimum level of assets held on their balance sheet at any given time which are eligible to be pledged to the SNB as collateral for emergency liquidity lines.

The central bank is conducting a more in-depth investigation into the Credit Suisse crisis which will be delivered to Swiss parliamentarians next year.

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • AAOI +10.2%, MRNS +4.3%, KURA +4%, OSG +3.8%, XEL +3%, COLD +2.9%, MDGL +2.9%, EPAC +2.8%, GVA +2.7%, GMS +2.5%, GLUE +1.9%, ICL +1.7%, LOGI +1.5%, TD +1.4%, AEG +0.6%
  • Gapping down:
    • ALVR -23.5%, CDMO -17.4%, GPOR -10.1%, ASTL -9%, IGMS -4%, CRNC -3.7%, ERAS -2.1%, IPI -1.9%, RIVN -1.8%, RTX -0.6%, MOS -0.6%, SPCE -0.5%

>>> Accenture - Reports Q3 $3.19 v $2.96e, Rev $16.6B v $16.5Be - Guides Q4 Rev

Reports Q3 $3.19 v $2.96e, Rev $16.6B v $16.5Be
- Guides Q4 Rev $15.8-16.4B v $16.3Be
- Raises mid-point FY23 adj EPS $11.52-11.63 v $11.58e, Cuts mid-point Rev +8.9% y/y ( EPS $11.41-11.63, Rev +8-10% y/y)
- Affirms FY23 adj op margin 15.4%, +20bps (prior 15.3-15.5%, +10-30 bps)
- Affirms FY23 op cash flow $8.7-9.2B, Raises FCF $8.1-8.6B (op cash flow $8.7-9.2B, FCF $8.0-8.5B)
- New bookings $17.3B, +4% y/y (cc)
- Gross margin 33.4% v 32.9% y/y
- Op margin 16.3% +20bps y/y

- CEO: "Our third quarter results reflect solid bookings and revenue and very strong adjusted operating margin, earnings per share and free cash flow, which demonstrates the rigor and discipline with which we run our business. The strength of our strategy to be our clients’ transformation partner of choice continues to resonate, with 26 clients with quarterly bookings of $100 million or more; and our business model, which for decades has been built around the diversity of our markets, industries and services, along with our more than 730,000 talented people position us well to continue to deliver 360° value for our clients and stakeholders every day"

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • EPAC +2.8%, GMS +2.5%

Other news:

  • ERAS +6.9% (FDA issues orphan drug designation for treatment of malignant glioma)
  • ROIV +5.2% (Reports Chronic Period Data for RVT-3101 from the TUSCANY-2 Phase 2b Study)
  • AAOI +4.4% (enters into supply agreement with MSFT to provide design and assembly services)
  • IVVD +4.4% (Initial Data from Ongoing Phase 1 Clinical Trial of VYD222 a Monoclonal Antibody Candidate in Development for the Prevention of Symptomatic COVID-19 in Immunocompromised People)
  • MRNS +4.3% (patent granted by USPTO)
  • KURA +3.5% (Director bought 50000 shares)
  • GVA +2.7% (awarded a $48 mln contract)
  • OSG +2% (awarded government contract)
  • NRG +1.9% (provides strategic update and announces new capital allocation framework; increased share repurchase authorization to $2.7 billion through 2025)
  • LOGI +1.4% (authorizes new $1 bln share repurchase program)

Analyst comments:

  • ADC +0.8% (upgraded to Buy from Neutral at Mizuho)

>>> Europe : Brokers Upgrades & Downgrades - 22nd of June 2023 V3(++)

>>> Up
* AB InBev Raised to Buy at Deutsche Bank; PT 60 euros (+)
* Boliden Raised to Equal-Weight at Morgan Stanley; PT 300 kronor
* Enel Chile ADRs Raised to Buy at Banco BTG Pactual; PT $4.30
* ISS Raised to Buy at UBS (++)
* Nordex Raised to Outperform at BNPP Exane (+)
* SAP Raised to Hold at Jefferies; PT 115 euros
* Sartorius Raised to Buy at Berenberg; PT 390 euros
* Shell Raised to Equal-Weight at Morgan Stanley; PT 2,450 pence

>>> Down
* AO World Cut to Hold at Shore Capital (+)
* Bittium Cut to Accumulate at OP Corporate Bank; PT 4.90 euros (++)
* Crayon Cut to Sell at DNB Markets; PT 100 kroner (++)
* Eneti Cut to Neutral at Citi; PT $14
* Equinor Cut to Underweight at Morgan Stanley; PT 290 kroner
* Inditex Cut to Neutral at Alantra Equities; PT 37.25 euros (++)
* Lime Technologies Cut to Hold at DNB Markets; PT 300 kronor
* Maisons du Monde Cut to Sell at TP ICAP Midcap; PT 9.40 euros (++)
* McPhy Cut to Sell at Panmure Gordon; PT 7.50 euros
* Steico Cut to Hold at Pareto Securities; PT 40 euros
* Valmet Cut to Hold at Danske Bank Markets; PT 29 euros (++)
* WithSecure Cut to Sell at Danske Bank Markets; PT 1.30 euros (++)

>>> Initiation
* Atrys Health Rated New Outperform at Oddo BHF; PT 6.50 euros
* Bunge Rated New Buy at Roth MKM; PT $138
* Burford Capital Re-Initiated Buy at Berenberg; PT 1,350 pence
* Caterpillar Rated New Neutral at DA Davidson; PT $263
* DELIVEROO RATED NEW BUY AT GOLDMAN
* DELIVERY HERO RATED NEW BUY AT GOLDMAN
* Helios Underwriting Rated New Buy at Numis; PT 240 pence
* Idorsia Resumed Underweight at Morgan Stanley; PT 7 Swiss francs
* IMCD Rated New Buy at KBC Securities; PT 156 euros (+)
* InPost Rated New Buy at Biuro Maklerskie mBanku; PT 13 euros (++)
* *JUST EAT TAKEAWAY RATED NEW NEUTRAL AT GOLDMAN
* Ossur HF Resumed Buy at Nordea; PT 37.80 kroner
* THG PLC Reinstated Equal-Weight at Barclays; PT 87 pence

>>> Call
* Morgan Stanley Sees Positive Skew for Miners, Raises Boliden
* Energy Sector Reset Not Finished, MS Raises Shell, Cuts Equinor
* Idorsia Resumed Underweight at MS on Cautious Quviviq Outlook
* IMCD Rated New Buy at KBC on Expectation of Strong Upside (++)
* SAP Loses Only Sell as Jefferies Says Negatives Have Played Out
* Sartorius De-Stocking Now Priced In, Berenberg Upgrades to Buy

FT : Kapara, London: ‘A fever dream’ — restaurant review

Kapara, London: ‘A fever dream’ — restaurant review
For chef Eran Tibi, the food’s the thing — but it deserves better than this Tel Aviv-inspired party restaurant

I was tipped off about Kapara by a chef mate. It’s one of a clutch of restaurants that have opened in London recently that focus on food and drink, yes, but also aspire to generate a “party” vibe. It’s similar to the idea behind places like the Big Mamma group’s Gloria trattoria and Circolo Popolare — big, glitzy places with loud music and everybody frantically Instagramming each other — although here the influence is Israeli rather than Italian. I find the whole thing exhausting. My mate, though, was insistent. Chef Eran Tibi is worth the effort.

James Court, off Manette Street, sounds deeply Old Soho but actually turns out to be inserted under the back of a vast new development near Tottenham Court Road. The restaurant is a big place, two floors plus a large covered terrace. It looks exciting but I worry. What if I don’t party like they do in Tel Aviv? Maybe I shouldn’t be trying to do so at lunchtime and by myself.

My heart plummeted on opening the hot pink menu to discover a section entitled Foreplay. Oh, sweet Jesus. A comedy menu. I might, in other circumstances, have been in the market for a snack of taleggio, smoked bell pepper, harissa, jalapeño, honey and lime — but not when it’s pitched as “cheesy balls”. Ditto the “salty nuts”.

“Prawn baklava” had less irritating nomenclature. Three prawns of impressive size. They were whole, but the shell between the top and tip of the tail had been removed and replaced with a deep-fried woolly sweater of shredded kadaifi pastry. They had a quality that a Chinese friend has just taught me a new word for — song (爽), meaning crispness to the bite, like a fresh apple or grape. English is inadequate where texture matters. There were new flavours too. “Sticky bitters” sounds like an Eastbourne nightclub in 1985, but tastes sensational. Like chilli jam, but with as much sourness as heat. There’s a layer of it, worn under the prawn’s pastry sweater like a Liberty bodice. Then there’s a sour cream mayo for dipping that’s been sprinkled with nori seaweed and rose petals. This is the key thing to realise about chef Tibi. He’s extraordinarily creative, apparently fearless and possibly unhinged.

I’ve never encountered “naughty” gazoz before. The menu says it’s a homemade old-school Israeli soda, which I can get behind. I just can’t see quite what’s so naughty about it. It’s a sparkling infusion of blackberry and lavender. Adult, sophisticated and smelling only a bit like my nan. There’s nothing naughty about my nan.

I ordered the “aubergine heart” because the menu description didn’t make any sly references to the widely recognised phallic emoji. It would have been an easy shot, but Tibi’s shown restraint and, actually, it’s a much quieter display of skill. It’s the fat end of the aubergine, peeled along one side and cooked gently so the flesh is moist but not caramelised or discoloured, and the skin is silken and easily digestible. A topping of pine-nut jam, tahini and clementine marmalade sounds fairly out there but actually turns out to be a balanced foil. Just enough sweetness to be interesting, just enough crunch to enliven, just enough citrus to cut.

“Squid and black” contains no entendres, single or double. Baby squid cones, cut even smaller and deep fried in a spiced batter, are the support mechanism for a sparkling fresh salad of chervil, grapes and pickled chillies. To be honest, the squid was disappointing, cut so small that the batter predominated. Next to it, for dipping, was a coiled pile of black garlic aioli, oily and, now I think of it, oddly reminiscent of the poo emoji. Please tell me this wasn’t another playground joke.

Finally, a plate of “crispy crunchy bums”. Sorry, I’m just reporting here. It’s not even a sly pun or cunning reference. It’s chicken, and they don’t have buttocks. They have cloacas. And anyway, these were thighs. Gorgeous, paprika-marinated, plump and greasy chicken thighs, deep-fried and served with orange harissa kimchi and wild-garlic mayo. They were outstanding, moreish and addictive. Crispy and crunchy, just not bums.

The food at Kapara shows flashes of inspired brilliance. Tibi’s cooking is joyful, imaginative, novel and delicious. That kind of talent should be treasured because it doesn’t come often. The awkwardness of the serving regime, though — a sort of irregular scattergun delivery — meant all that skill was without any cohering structure. So, what are actually pyrotechnically delightful small courses can be diminished to bar snacks. Add to this a slight over-reliance on the deep fryer and a skew towards sweetness and it amounts to distraction.

Perhaps the most awkward part of the experience was that, for the hour and a half I ate, I was the only customer. The staff were amazing, and with no other punters to distract them, looked after me with my favourite kind of informal professionalism. But it’s a glamorously provisioned space, designed to be heaving with beautiful young people, mingling, dancing to Tibi’s brilliantly curated playlists (available to download), nibbling on his crazy creative dishes, sharing with abandon, getting naughty on his gazozes and probably even laughing attractively at the laboured bottom gags. That’s the full “Tel Aviv Fantasy” — as signalled in giant neon lettering under the chef’s name in the front window.

Tibi is an exceptional maverick creative but Kapara seems more inspired by the fever dreams of backers. When I am king I’m going to have him dragged out of the place by his hair and set up in a proper restaurant. The same food, but with the menu written by a grown-up.

FT : Vivendi to fight Telecom Italia’s plan to sell landline network to KKR

Vivendi to fight Telecom Italia’s plan to sell landline network to KKR
Move opens new chapter in long-running battle over future of heavily indebted mobile and broadband group

Vivendi, the French media group backed by billionaire Vincent Bolloré, plans to fight a proposal by Telecom Italia to sell its prized landline network to KKR, according to people with knowledge of the situation.

The Telecom Italia (TIM) board is expected to back the opening of exclusive negotiations with KKR on Thursday, said the people, opening a new chapter in a long-running battle over the heavily indebted mobile and broadband group’s future.

Vivendi, which holds a 23.75 per cent stake in TIM and more than 17 per cent of its voting rights, believes that the private equity firm’s offer undervalues the network and that any sale would be a strategic mistake. “Separating the network without solving the problem of what’s next for Telecom Italia is just procrastination . . . and deficient governance and management,” said one of the people.

Vivendi, which is controlled by Bolloré, has “been fighting this battle because the asset that is the jewel of the company is the network. So if you separate the network from the rest of the company it’s a dead man walking,” the person added. 

KKR’s offer values the network at about €22.5bn, but Vivendi argues it is worth more than €30bn.

“As any shareholder, we say that we want to make sure that the board takes into consideration how to maximise the value for all the stakeholders, including the shareholders,” Yannick Bolloré, chair of Vivendi’s supervisory board, said in an interview with the Financial Times on Tuesday. He declined to comment further on any asset sales.

TIM declined to comment.

The fixed-line network’s valuation has long been a sticking point between the parties, including Italian state investor Cassa Depositi e Prestiti (CDP), which is already an investor in TIM. It has also submitted a competing joint bid with Australian fund Macquarie that values the network at under €20bn. 

Vivendi has invested more than €4bn in building its stake in TIM since 2015, billing it initially as a strategy to create a media champion in southern Europe. However, it has had to write down its investment twice as the Italian company’s valuation plunged amid high debt, increased domestic competition, lower margins and multiple management overhauls. 

TIM’s stock now trades at €0.20, but when Vivendi first invested in the group eight years ago the shares were worth more than €1 each.

Vivendi at present has no board representation after its chief executive Arnaud de Puyfontaine announced his resignation from TIM’s board in January. 

KKR’s offer is expected to trump the competing one by CDP and Macquarie as they are also investors in Open Fiber, a domestic competitor, which poses antitrust concerns.

The mooted sale is part of chief executive Pietro Labriola’s attempt to relaunch the debt-laden group, but his plan has run into opposition from Vivendi, which appointed him in late 2021.
elecom Italia: Italian saga series finale at risk from cornered Vivendi Premium content

The current disagreement is the latest in a string of clashes between TIM and its main shareholder. Former chief executive Luigi Gubitosi left the company after grappling with Vivendi over KKR’s first €33bn bid, which he supported and which envisaged taking the company private.

People close to the talks in Rome said the US group is well placed to turn the company around. It would also allow the company to slash its €25bn pile of debt and improve its valuation. Italian infrastructure fund F2i is also likely to take a minority stake if talks with KKR move forward, according to people close to TIM and the Italian government.

Italian officials said Vivendi’s “tacitly obstructive opposition” to the deal had “profoundly” irritated Rome, which did not believe the French group had a viable alternative solution. “It’s either this or a capital increase. It’s understandable they don’t want to lose money on their investment, but this behaviour is rather childish because the alternatives to KKR — CDP and Macquarie — don’t look very good at all,” said a senior Italian official. 

Under Italy’s so-called “golden power” rules, the government can intervene to block or facilitate investments by foreigners in assets deemed strategic for the country. Telecommunications networks are one of the sectors over which Rome has the broadest oversight. 

Last week, Prime Minister Giorgia Meloni’s cabinet approved measures to curb Chinese group Sinochem’s influence over tyremaker Pirelli, whose technology was deemed strategically relevant for national security.