FT : SSE needs more wind to boost power output

SSE needs more wind to boost power output
UK energy company’s renewables arm produces about one-fifth less power for homes and business than expected

UK energy group SSE is banking on windy weather over winter after its renewables arm produced about one-fifth less power for British homes and businesses than expected since April. 

The FTSE 100 company said output from its fleet of wind turbines and hydropower stations was 19 per cent lower than planned during the six months to the end of September due to adverse weather conditions. 

The lower output is one factor behind guidance published on Wednesday of adjusted earnings per share for the period of at least 30 pence, lower than the 41.8 pence it made in the same period last year. 

However, the company is sticking to its guidance of adjusted earnings per share of more than 150 pence for the full year to the end of March 2024. 

“With the key winter months to come, full-year performance remains subject to weather conditions, plant performance and market conditions,” the company said. 

“These risks will be carefully managed through the second half.”

SSE is one of the UK’s largest renewable power companies, with an installed generation capacity of almost 4 gigawatt, capable of powering several million homes, mostly onshore wind.  

That portfolio produced 10,159 gigawatt hours of renewable power in the year to the end of March 2023, up from 9,423 GWh in the previous year. 

The company is building what is set to be the world’s largest wind farm, the 3.6GW Dogger Bank farm off the north-east coast of England, and owns and runs electricity networks. 

It also owns gas-fired power plants and gas storage sites around England.

SSE has set out plans to invest £18bn by 2027, and potentially as much as £40bn over the decade, in clean energy projects and networks, mostly in the UK and Ireland. 

The company benefited last year from surging gas and electricity prices connected to market turmoil following Russia’s invasion of Ukraine and low output from France’s nuclear power stations. 

Its adjusted pre-tax profits for the year ending March 2023 climbed 89 per cent, from £1.16bn to £2.2bn. The bulk of that came from its gas business, which made £1.2bn in operating profits. 

Electricity and gas prices in Britain have since eased, with France’s nuclear output returning and Europe filling up gas storage stocks, although they are still higher than long-term averages before the Ukraine war. 

In its update to the stock exchange, SSE described a “more stable market environment”. 

It expects its gas storage business to report a loss for the first half of the year as it stocks up, which would turn to profit when the gas is withdrawn during winter. 

Gregor Alexander, finance director, said the company’s focus “remains on delivery of our five-year plan out to 2027, which is the platform for up to £40bn of investment in net zero over the next decade”.

He added: “We have reached key milestones in the construction of our flagship renewables projects.”

Shares climbed 1 per cent to £15.30 by lunchtime on Wednesday in London trade. 

>>> US Research Calls

Research Calls
  • Upgrades:
    • America Movil SA (AMX) upgraded to Buy from Neutral at UBS; tgt lowered to $22
    • Fluor (FLR) upgraded to Buy from Neutral at UBS; tgt raised to $47
    • Hub Group (HUBG) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $98
    • KeyCorp (KEY) upgraded to Peer Perform from Underperform at Wolfe Research
    • Life Time (LTH) upgraded to Equal Weight from Underweight at Wells Fargo; tgt $17
    • LyondellBasell (LYB) upgraded to Buy from Neutral at Citigroup; tgt raised to $106
    • Matson (MATX) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $113
    • Orange (ORAN) upgraded to Buy from Underperform at BofA Securities; tgt raised to $13.65
    • ODDITY Tech Ltd. (ODD) upgraded to Buy from Neutral at BofA Securities; tgt lowered to $37
    • Olaplex (OLPX) upgraded to Equal Weight from Underweight at Barclays
    • RELX (RELX) upgraded to Buy from Neutral at Goldman
  • Downgrades:
    • Apple (AAPL) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
    • Assoc Banc-Corp (ASB) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $18
    • B&G Foods (BGS) downgraded to Underweight from Neutral at Piper Sandler; tgt lowered to $8
    • Banc of California (BANC) downgraded to Equal Weight from Overweight at Wells Fargo; tgt lowered to $13.50
    • First Horizon (FHN) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $11.50
    • First Interstate Bancsystem (FIBK) downgraded to Equal Weight from Overweight at Wells Fargo; tgt $25
    • Newmark Group (NMRK) downgraded to Mkt Perform from Outperform at Raymond James
    • ON Semiconductor (ON) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $95
    • PPL Corp (PPL) downgraded to Neutral from Buy at UBS; tgt lowered to $25
    • Ryder System (R) downgraded to Peer Perform from Outperform at Wolfe Research
    • Sunnova Energy (NOVA) downgraded to Hold from Buy at Truist; tgt lowered to $11
    • Sunrun (RUN) downgraded to Hold from Buy at Truist; tgt lowered to $12
    • Trinseo (TSE) downgraded to Hold from Buy at Jefferies; tgt lowered to $9
  • Others:
    • DT Midstream (DTM) initiated with a Buy at Stifel; tgt $60
    • Fiverr (FVRR) initiated with a Buy at UBS; tgt $33
    • Lithium Argentina (LAAC) resumed with a Market Perform at BMO Capital Markets; tgt $7.50
    • Upwork (UPWK) initiated with a Neutral at UBS; tgt $13
    • ZipRecruiter (ZIP) initiated with a Neutral at UBS; tgt $13

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:
  • ATEN -17.8% (provides guidance for Q3/Q4), CALM -11.4%, HELE -5%
Other news:
  • CDNA -4.8% (Supreme Court denies CDNA request for appeal in patent case with Natera; issues statement on Supreme Court decision regarding Stanford-Licensed Patents)
  • NVS -4% (executes Sandoz Spin-off; reaffirms outlook)
  • TRN -3.6% (reports Q3 railcar deliveries below projections due closing of the US-Mexico border)
  • KRTX -3% (to Present Data from the EMERGENT Program Evaluating KarXT in Schizophrenia at the 36th European College of Neuropsychopharmacology (ECNP) Congress)
  • MLTX -2% (Phase 2 MIRA primary analysis trial results (12-week) for MoonLake's Nanobody sonelokimab in hidradenitis suppurativa to be presented at a late-breaking session at the European Academy of Dermatology and Venereology Congress)
  • TAK -1.8% (dengue vaccine recommended by WHO advisory group)
  • BP -1.6% (exploring possible sale of 49% stake in US pipeline network according to Reuters)
  • OCUL -1.3% (initiates first pivotal clinical trial of OTX-TKI in Wet AMD)
  • PODD -1.1% (CFO to step down)
Analyst comments:
  • TSE -2.3% (downgraded to Hold from Buy at Jefferies)
  • ON -1.6% (downgraded to Neutral from Outperform at Exane BNP Paribas)
  • R -1.3% (downgraded to Peer Perform from Outperform at Wolfe Research)
  • AAPL -1% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:
  • PXLW +6.5%, ANGO +5%, RPM +3.4%, TLRY +2.2%
Other news:
  • FRLN +46% (reports initial safety tolerability and enzyme activity data from the ongoing Phase 1/2 GALILEO-1 trial evaluating FLT201 its adeno-associated virus gene therapy candidate in Gaucher disease)
  • BROG +15.5% (receives formal acquisition proposal from GULFNAV)
  • IGMS +4.9% (Chairman retires)
  • FREY +4.4% (surpasses most complex remaining technical hurdle to commence initial fully automated production at the CQP in 4Q 2023)
  • ARAY +4.2% (registration dossier for JV system approved by China govt)
  • NTRA +3% (Supreme Court denies CDNA request for appeal in patent case with Natera)
  • RGNX +2.8% (presents interim clinical data from Phase I/II AFFINITY DUCHENNE trial of RGX-202)
  • PLTR +2.8% (closes in on UK NHS contract according to Bloomberg)
  • ONON +2.6% (provides three year financial outlook at Investor Day)
  • INTC +2% (to separate its Programmable Solutions Group (FPGA) unit into a standalone business)
  • ETON +2% (to acquire an abbreviated new drug application for Nitisinone Capsules via Oakrum Pharma's Chapter 11 bankruptcy proceeding)
  • STNE +1.7% (authorizes share repurchase program of up to R$300 million in outstanding Class A common shares)
  • PACB +1.1% (stock offering by selling shareholders)
  • TEVA +1% (Teva Pharma and Sanofi announce exclusive collaboration to deliver inflammatory bowel disease treatment)
Analyst comments:
  • ORAN +2.7% (upgraded to Buy from Underperform at BofA Securities)
  • MATX +2.2% (upgraded to Outperform from Peer Perform at Wolfe Research)
  • RELX +2.2% (upgraded to Buy from Neutral at Goldman)
  • LYB +1.2% (upgraded to Buy from Neutral at Citigroup)
  • HUBG +1.1% (upgraded to Outperform from Peer Perform at Wolfe Research)
  • KEY +1.1% (upgraded to Peer Perform from Underperform at Wolfe Research)

>>> US Early premarket gappers

Early premarket gappers
  • Gapping up:
    • BROG +17.3%, ONON +5.7%, IGMS +4.9%, ARAY +4.2%, PACB +3.1%, NTRA +3%, RGNX +2.8%, PLTR +2.2%, INTC +2%, STNE +1.4%
  • Gapping down:
    • ATEN -13%, CALM -12.4%, TRN -5.1%, CDNA -4.8%, NVS -3.9%, NG -3.1%, TAK -2.1%, VRTX -1.8%, FREY -1.7%, OCUL -1.3%, BP -1%, ETRN -0.9%

FT : Vaccine-like drug to prevent HIV ‘could be ready early next decade’

Vaccine-like drug to prevent HIV ‘could be ready early next decade’
UK drugmaker steps up investment in long-acting medication to protect those exposed to the virus

A vaccine-like drug administered once a year to prevent HIV could be ready just after 2030, according to drugmaker ViiV, transforming management of a virus that has killed nearly 40mn people in an epidemic that has lasted more than four decades.

While there is no vaccine to treat HIV, a virus that can lead to Aids, pre-exposure prophylaxis (PrEP) has reduced transmission rates by offering protection to those who may be exposed to the virus.

Most PrEP therapies rely on taking oral medications daily or when unprotected sex might take place, but the potential emergence of a prevention drug with the characteristics of a vaccine could dramatically reduce the burden on patients and health authorities globally.

HIV drug developer ViiV is accelerating research into VH184, an antiretroviral drug designed to block the action of the integrase enzyme which inserts the genetic code of the HIV virus into the host cell’s DNA.

Kimberly Smith, head of research and development at ViiV, said a long-acting drug administered every 12 months would soon be attainable: “I can’t say when, but not too far beyond the end of this decade. It will be possible, I believe.”

“[VH184] has demonstrated a very long half-life in pre-clinical studies,” she told the Financial Times. “We need to determine if that very long half-life translates to humans.”

Long-acting drugs are given intramuscularly every month or less frequently, releasing chemicals over a long period of time. Meg Doherty, head of the HIV programme at the World Health Organization, said ViiV’s long-acting drug pipeline was “exciting” but stressed the need to ensure low-cost, universal coverage.

“It will be important to continue to ensure these [HIV] regimens and new approaches will be available to all — including people living in low- and middle-income countries,” she said.

ViiV, a GSK majority-owned venture with Pfizer of the US and Japan’s Shionogi, told investors last week that it had raised its sales growth projection to between 6 and 8 per cent between 2021 and 2026, as its bet on long-acting drugs offsets the “patent cliff” — or loss of exclusivity — for its blockbuster oral treatment dolutegravir.

The company has two long-acting drugs based on cabotegravir, another integrase inhibitor, approved by regulators: Cabenuva, in combination with another molecule, for treatment of patients who have contracted HIV, and its PrEP medication Apretude. These non-oral products are typically taken monthly or every two months.

Smith said people have started saying Apretude is “almost like a vaccine . . . you basically get your shot and then you don’t think about it anymore, unlike the need to take something every day”.

“Certainly, you know, the longer we get with those intervals, the more it feels like that,” she added, likening it to yearly flu and Covid-19 shots. US-based Gilead Sciences is also developing long-acting HIV treatments.

While Deb Waterhouse, ViiV’s chief executive, said there was strong uptake of long-acting PrEP drugs in the US, the picture was more mixed in the EU despite their regulatory approval.

Reimbursement has to be negotiated with every country individually, and while some governments had shown interest, many had not placed orders because they had been able to control HIV caseloads with cheaper oral treatments.

Access to long-acting drugs in poorer nations with high HIV rates remains patchy, despite the signing of licences for their generic manufacture. Médecins Sans Frontières refused to sign a non-disclosure agreement on pricing requested by ViiV for an access deal in Mozambique and other countries.

Waterhouse said it was looking to find “the middle ground” with MSF and finalise a resolution “because we want them to be partners”.

“It will be a shame if there is a repeat of what we see now with [long-acting PrEP], where people in Africa with the greatest burden of HIV, have little access to it for prevention,” the WHO’s Doherty said.

>>> Europe : Brokers Upgrades & Downgrades - 4th of October 2023

>>> Up
* Asos Raised to Buy at UBS
* Aviva Raised to Buy at Jefferies; PT 480 pence
* Dino Polska Raised to Buy at Biuro Maklerskie mBanku
* J. Martins Raised to Buy at Biuro Maklerskie mBanku
* Severn Trent Raised to Neutral at JPMorgan; PT 2,400 pence
* SKF Raised to Buy at DNB Markets; PT 215 kronor
* TEN Square Games Raised to Buy at Biuro Maklerskie mBanku
* Vaisala Raised to Buy at Inderes; PT 40 euros

>>> Down
* Apple Downgraded at KeyBanc on Valuation, Weak Sales Outlook
* Azelis Cut to Hold at HSBC; PT 20.40 euros
* Brenntag Cut to Hold at HSBC; PT 82 euros
* Eezy Cut to Reduce at Inderes; PT 2.30 euros
* Kruk Cut to Hold at Biuro Maklerskie mBanku; PT 440.73 zloty
* Legal & General Cut to Hold at Jefferies; PT 230 pence
* Sandvik Cut to Hold at DNB Markets; PT 220 kronor
* Shoper Cut to Hold at Biuro Maklerskie mBanku; PT 38.10 zloty
* Zalando Cut to Neutral at UBS

>>> Initiation
* Axfood Rated New Outperform at BNPP Exane; PT 300 kronor
* Brodrene A&O Johansen Rated New Buy at SEB Equities
* Kesko Rated New Underperform at BNPP Exane; PT 12.50 euros

>>> Call
* Apple Cut to Sector Weight at KeyBanc on Valuation, Slow Sales

>>> What to look at today - 4th of October 2023

Asian shares slumped, following losses on Wall Street, after better-than-expected US employment data backed the case for the Federal Reserve to keep interest rates elevated and pushed up Treasury yields.  MSCI’s Asia stock benchmark was on course for a technical correction as shares declined more than 1% in Japan and South Korea and Hong Kong stocks slipped at the open. US equity contracts edged lower. New Zealand’s dollar fell after the central bank kept interest rates unchanged and signaled a subdued growth outlook. The S&P 500 dropped to a four-month low Tuesday and yields on US 10- and 30-year debt climbed to the highest since 2007 after job openings unexpectedly increased. A vote that toppled US House Speaker Kevin McCarthy is likely to further fuel uncertainty after Wall Street’s fear gauge, or VIX, rose to the highest since May.  Wall Street has been speculating rates on longer maturity yields will climb to 5%. Tuesday’s increase in yields stoked anxiety in the credit market, where at least two issuers called off sales. Treasuries extended losses in Asian trading. Bloomberg’s gauge of dollar strength edged up after rising to the highest since November on Tuesday, bolstered by climbing Treasury yields. The yen crept lower after Japan’s top currency official Masato Kanda declined to comment on whether any intervention was conducted on Tuesday following the currency’s decline to the weakest level in a year.  The yield on Chinese investment-grade dollar credit rose to an 11-month high at 6.51%, having climbed more than 100 basis points from May’s low. Spreads, though, remain well within this year’s range. China is in the midst of a week-long holiday. US markets tumbled Tuesday after the number of available job openings rose to 9.61 million in August from less than 9 million the previous month, according to the Bureau of Labor Statistics. The report drove swaps traders to increase wagers on the Fed raising rates in December to greater than 50%.  The next key data point for the US labor market will be the monthly payrolls print on Friday. oil steadied ahead of an OPEC+ review of the global crude market and a weekly update of US stockpiles. Gold was little changed. US After Hours CALM -11.6% lower on earnings; ATEN -14.6% lower on guidance; INTC +2.5% to separate its FPGA unit into a standalone business; BROG +27.5% receives acquisition proposal.

Nikkei -1.93% Hang Seng -0.60% CSI Closed Shanghai Closed Shenzen Closed

Eur$ 1.0465 CNH 7.3265 CNY 7.2980 JPY 149.29 GBP 1.2067 CHF 0.9218 RUB 99.8551 TRY 27.5530 WTI$ 89.19 Gold 1,822 BTC 27,426 ETH 1,643

S&P -0.29% Nasdaq -0.29% EuroStoxx -0.34% FTSE -0.18% Dax -0.41% SMI

Macro :
- BofA’s Quinlan Still Looking for Earnings to Spur Year-End Rally
- Panic Creeps Up as VIX Curves Invert for First Time Since March
- Ikea Cuts Jobs in Furniture Plant in Poland Due to Low Demand

Keep an eye on :
- AF FP : SAS Gets $1.18b Investment From Group Including Air France-KLM
- BP/ LN : BP Exploring $1B US Pipelines Stake Sale: Reuters
- BF/B US : Jack Daniel’s Maker Brown-Forman Up on $400M Buyback Plan
- COIN US : SEC Doubles Down on Its Case Against Crypto Exchange Coinbase
- FME GY : NY AG Sues Fresenius Medical Unit Citing Unnecessary Surgeries
- Golden Goose IPO : Golden Goose Picks Lazard to Explore Milan IPO Next Year: Rtrs
- GOOGL US : OpenAI Rival Anthropic in Talks to Raise $2 Billion From Google, Others as AI Arms Race Accelerates
- GTT FP : GTT, Ascenz Marorka Win Service Contract for 49 CMA CGM Ships
- INTC US : Intel to Make Former Altera Into Standalone Business, Seek IPO
- KER FP : Kering Names Seán McGirr Creative Director of Alexander McQueen
- TAP US : Molson Coors Sets $2b Stock Buyback, Gives Long-Term Targets
- NOVN SW : Novartis CEO Says Focus Remains on Bolt-On M&A: CNBC
- RNO FP : Nissan Group 3Q US Sales 216,878 Units, +40.8% Y/Y
- SAF FP : Delta Says Some Aircraft Flew With Uncertified Engine Parts
- SAS SS : SAS Gets $1.18b Investment From Group Including Air France-KLM
- STLAM IM : *FCA 3Q US VEHICLE SALES FELL 1%
- VOLVB SS : Class 8 Truck North American Orders Fall 45% YoY in September

FT : Hedge funds Millennium and Schonfeld in advanced partnership talks

Hedge funds Millennium and Schonfeld in advanced partnership talks
War for talent heralds the largest tie-up of its kind between multi-managers

Millennium Management is in advanced talks to put billions of dollars to work with smaller rival Schonfeld Strategic Advisors, according to people familiar with the situation, in a partnership deal that would mark the largest of its kind in the $4tn global hedge fund industry.

Under the plans for the agreement, computer-driven manager Schonfeld, which manages $13bn, would handle money for Izzy Englander’s firm, which has almost $60bn in assets, the people said. Schonfeld would continue to manage money for other investors, they added. The plans have not yet been finalised.

Millennium, which employs more than 5,300 people, would get access to Schonfeld’s more than 100 investment teams, as it seeks an edge in a sector-wide war for talent. Schonfeld would remain independent and use Millennium’s long-term capital to fuel the growth of its business. 

Millennium and Schonfeld declined to comment.

After Ken Griffin’s Citadel, Millennium and Schonfeld have been the two best-performing names in the multi-manager universe, the fastest-growing and most profitable part of the hedge fund industry. Both firms were founded in New York more than three decades ago.



The multi-manager groups typically employ between tens and hundreds of autonomous and highly specialist risk-takers in teams or so-called pods, which trade a range of different strategies and operate within strict risk limits. While the pods focus on investing, the parent platforms take care of everything else from operations to marketing.

Millennium allocates capital across more than 300 investment teams. As its assets have swelled, through strong performance and client inflows, the firm has faced the challenge of putting cash to work. It has returned billions of dollars to investors over the years and no longer takes in new money.

The Schonfeld deal presents an opportunity for Millennium to diversify its business, with a meaningful amount of capital that could boost returns.

Millennium’s investment approach focuses on four areas: relative value fundamental equity, equity arbitrage, fixed income and quantitative strategies. A tie-up with Schonfeld, which concentrates on fully automated trading strategies, would boost its firepower in quantitative investing.

Instead of an annual management fee, the multi-managers employ a “pass-through” expenses model, where the manager passes on all costs — including office rents, technology and data, salaries, bonuses and even client entertainment — to their end investors. Costs in the pass-through model typically work out at between 3 per cent and 10 per cent of assets each year, and a performance fee of 20-30 per cent of profits is typically charged on top. 

The planned tie-up between Millennium and Schonfeld comes as a voracious and increasingly expensive competition for talent is putting pressure on the platforms’ business model, and returns for many multi-managers have tailed off this year.

In the year to the end of August, Millennium gained 5.5 per cent, Schonfeld was roughly flat, and Citadel was up 10.8 per cent, according to investors.

Millennium has a similar partnership agreement with WorldQuant, the quantitative investment shop run by Igor Tulchinsky, who joined Englander’s firm in 1995. WorldQuant spun out of Millennium in 2007 and manages about $10bn, split between the $7bn or so it trades on Millennium’s behalf and a roughly $3bn fund open to other investors. 

WorldQuant has been a crucial contributor to Millennium’s record and Tulchinsky is one of its best-paid investors.

Schonfeld began life as a family office in 1988 with $400,000 that its eponymous founder Steven Schonfeld earned working as a stockbroker. The hedge fund’s current iteration dates back to 2015 when it opened up to external investors. In addition to quantitative trading, it also runs discretionary macro, fundamental equity and fixed income strategies.

>>> US After Hours Summary: CALM -11.6% lower on earnings; ATEN -14.6% lower on

After Hours Summary: CALM -11.6% lower on earnings; ATEN -14.6% lower on guidance; INTC +2.5% to separate its FPGA unit into a standalone business; BROG +27.5% receives acquisition proposal;

After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: None
Companies trading higher in after hours in reaction to news: BROG +27.5% (receives formal acquisition proposal from GULFNAV), PLTR +2.8% (closes in on UK NHS contract, according to Bloomberg), INTC +2.5% (to separate its Programmable Solutions Group (FPGA) unit into a standalone business), RGNX +2.4% (presents interim clinical data from Phase I/II AFFINITY DUCHENNE trial of RGX-202), CSV +2.3% (confirms that it is continuing to review strategic alternatives), PODD +1.4% (CFO to step down), ARAY +0.8% (registration dossier for JV system approved by China govt), TAK +0.5% (dengue vaccine recommended by WHO advisory group), BA +0.1% (UAL orders 110 more Boeing aircraft), GD +0.1% (awarded $967 mln U.S. Navy contract modification), TDY +0.1% (to acquire Xena Networks, a Denmark-based provider of high-speed Terabit Ethernet validation)

After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ATEN -14.6% (provides guidance for Q3/Q4), CALM -11.6%, NG -0.2%
Companies trading lower in after hours in reaction to news: TRN -2.7% (reports Q3 railcar deliveries, below projections due closing of the US-Mexico border), OCUL -1.3% (initiates first pivotal clinical trial of OTX-TKI in Wet AMD), PACB -0.6% (stock offering by selling shareholders), CDNA -0.4% (Supreme Court denies CDNA request for appeal in patent case with Natera), ETRN -0.1% (PHMSA issues Consent Order)