>>> Europe : Brokers Upgrades & Downgrades - 10th of July 2023 V2(+)

>>> Up
* Acerinox Raised to Overweight at Barclays; PT 12.50 euros
* Adidas PT Raised to 220 euros from 190 euros at Deutsche Bank
* Bakkavor Raised to Buy at HSBC; PT 120 pence
* BE Semiconductor PT Raised to 125 euros at Morgan Stanley
* Boliden Raised to Overweight at Barclays; PT 380 kronor
* Capricorn Energy Raised to Buy at Jefferies; PT 225 pence
* Coca-Cola HBC Raised to Buy at Numis; PT 2,950 pence
* Coloplast Raised to Buy at DNB Markets; PT 950 kroner
* EnQuest Raised to Buy at Jefferies; PT 20 pence
* IQE Raised to Buy at Panmure Gordon; PT 40 pence (+)
* National Bank of Greece Raised to Overweight at Morgan Stanley
* Netflix PT Raised to $450 from $350 at Morgan Stanley
* NOS Raised to Outperform at Grupo Santander; PT 4.35 euros
* Rockwool Raised to Buy at ABG; PT 1,816 kroner
* Tesla PT Raised to $265 from $185 at Jefferies

>>> Down
* Apple Cut to Neutral at Phillip Secs; PT $183
* Assura Cut to Hold at HSBC; PT 49 pence
* BASF PT Cut to 39.50 euros from 43 euros at Bankhaus Metzler
* Big Yellow Group Cut to Hold at HSBC; PT 903 pence
* British Land Cut to Reduce at HSBC; PT 233 pence
* Derwent London Cut to Hold at HSBC; PT 2,144 pence
* Dorian LPG Cut to Hold at DNB Markets; PT $26.90 (+)
* Eurobank Cut to Equal-Weight at Morgan Stanley
* Great Portland Cut to Hold at HSBC; PT 424 pence
* Hammerson Cut to Reduce at HSBC; PT 12 pence
* Land Sec. Cut to Reduce at HSBC; PT 485 pence
* Microsoft Cut to Neutral at Phillip Secs; PT $328
* Pernod Ricard Cut to Hold at HSBC; PT 212 euros
* Primary Health Cut to Hold at HSBC; PT 102.10 pence
* Safestore Cut to Hold at HSBC; PT 770 pence
* Schindler Cut to Neutral at Goldman
* Scout24 SE Cut to Sell at UBS; PT 51.40 euros (+)
* Segro Cut to Hold at HSBC; PT 608 pence
* Shaftesbury Capital Cut to Hold at HSBC; PT 121 pence

>>> Initiation
* Amazon Rated New Outperform at CICC; PT $140
* AMD Reinstated Accumulate at Phillip Secs; PT $125
* Cava Group Rated New Neutral at Citi; PT $42
* Cava Group Rated New Buy at Jefferies; PT $48
* Cava Group Rated New Overweight at JPMorgan; PT $45
* Cava Group Rated New Equal-Weight at Morgan Stanley; PT $43
* Cava Group Rated New Outperform at Baird; PT $50
* Cava Group Rated New Buy at Stifel; PT $48
* Prudential Reinstated Outperform at KBW; PT 1,550 pence
* Qiagen Still Rated Overweight at Morgan Stanley
* Titan Cement Resumed Buy at Citi; PT 24 euros

>>> Call
* Anglo American Cost Concerns Prompt Downside Watch at Citi
* BE Semiconductor Now Top European Semis Pick at Morgan Stanley
* CITI STRATEGISTS CUT US STOCKS TO NEUTRAL FROM OVERWEIGHT
* CITI STRATEGISTS CUT GLOBAL IT STOCKS TO NEUTRAL
* National Bank of Greece Raised, Eurobank Cut at Morgan Stanley
* Schindler Cut at Goldman; Sees New Equipment Business Weakness

>>> Stoxx 600 Pre-Market Indication

  • Bayer (BAYN TH) +2.8%
    • Bayer Working on Spinoff of Crop Science Unit, Platow Reports
  • Smurfit Kappa (SK3 TH) +2.3%
  • Direct Line (D1LN TH) +1.9%
  • Vodafone (VODI TH) +1.3%
  • Legal & General (LGI TH) +1.2%
  • NatWest (RYSD TH) +1.1%
  • Imperial Brands (ITB TH) +1.1%
  • Diageo (GUI TH) +1%
  • Maersk (DP4B TH) -1.2%
  • ING (INN1 TH) -1.3%
  • Sartorius (SRT3 TH) -1.4%
  • Viscofan (VIS TH) -1.4%
  • Andritz (AZ2 TH) -1.6%
  • Iberdrola (IBE1 TH) -1.6%
    • Nuclear U-Turn Would Limit Upside for Wind in Spain: BNEF Chart
  • Alfa Laval (AA9 TH) -1.7%
  • Nel (D7G TH) -1.9%
  • Pernod Ricard (PER TH) -2.2%
    • Pernod Ricard Cut to Hold at HSBC; PT 212 euros
  • Scout24 SE (G24 TH) -3.9%
    • UBS cut stock to sell form neutral

>>> TradeGate Pre-Market Indication

DAX:
  • Bayer (BAYN TH) +3.3%
    • Bayer Working on Spinoff of Crop Science Unit, Platow Reports
  • BASF (BAS TH) -0.8%
    • BASF PT Cut to 39.50 euros from 43 euros at Bankhaus Metzler
  • Sartorius (SRT3 TH) -1%
MDAX:
  • Knorr-Bremse (KBX TH) +1%
  • Fraport (FRA TH) +0.9%
  • Encavis (ECV TH) -1.1%
  • Hochtief (HOT TH) -1.6%
  • Scout24 SE (G24 TH) -3.3%
    • *UBS LOWERS SCOUT24 TO ‘SELL’ (NEUTRAL) - TARGET EUR 51.40 (59): APA
SDAX:
  • Vitesco (VTSC TH) +1.3%
  • United Internet (UTDI TH) +1.2%
  • PNE AG (PNE3 TH) -1.1%
  • Varta (VAR1 TH) -1.4%
  • Deutz (DEZ TH) -1.6%

>>> Europe : Brokers Upgrades & Downgrades - 10th of July 2023

>>> Up
* Acerinox Raised to Overweight at Barclays; PT 12.50 euros
* Adidas PT Raised to 220 euros from 190 euros at Deutsche Bank
* Bakkavor Raised to Buy at HSBC; PT 120 pence
* BE Semiconductor PT Raised to 125 euros at Morgan Stanley
* Boliden Raised to Overweight at Barclays; PT 380 kronor
* Capricorn Energy Raised to Buy at Jefferies; PT 225 pence
* Coca-Cola HBC Raised to Buy at Numis; PT 2,950 pence
* Coloplast Raised to Buy at DNB Markets; PT 950 kroner
* EnQuest Raised to Buy at Jefferies; PT 20 pence
* National Bank of Greece Raised to Overweight at Morgan Stanley
* Netflix PT Raised to $450 from $350 at Morgan Stanley
* NOS Raised to Outperform at Grupo Santander; PT 4.35 euros
* Rockwool Raised to Buy at ABG; PT 1,816 kroner
* Tesla PT Raised to $265 from $185 at Jefferies

>>> Down
* Apple Cut to Neutral at Phillip Secs; PT $183
* Assura Cut to Hold at HSBC; PT 49 pence
* BASF PT Cut to 39.50 euros from 43 euros at Bankhaus Metzler
* Big Yellow Group Cut to Hold at HSBC; PT 903 pence
* British Land Cut to Reduce at HSBC; PT 233 pence
* Derwent London Cut to Hold at HSBC; PT 2,144 pence
* Eurobank Cut to Equal-Weight at Morgan Stanley
* Great Portland Cut to Hold at HSBC; PT 424 pence
* Hammerson Cut to Reduce at HSBC; PT 12 pence
* Land Sec. Cut to Reduce at HSBC; PT 485 pence
* Microsoft Cut to Neutral at Phillip Secs; PT $328
* Pernod Ricard Cut to Hold at HSBC; PT 212 euros
* Primary Health Cut to Hold at HSBC; PT 102.10 pence
* Safestore Cut to Hold at HSBC; PT 770 pence
* Schindler Cut to Neutral at Goldman
* Segro Cut to Hold at HSBC; PT 608 pence
* Shaftesbury Capital Cut to Hold at HSBC; PT 121 pence

>>> Initiation
* Amazon Rated New Outperform at CICC; PT $140
* AMD Reinstated Accumulate at Phillip Secs; PT $125
* Cava Group Rated New Neutral at Citi; PT $42
* Cava Group Rated New Buy at Jefferies; PT $48
* Cava Group Rated New Overweight at JPMorgan; PT $45
* Cava Group Rated New Equal-Weight at Morgan Stanley; PT $43
* Cava Group Rated New Outperform at Baird; PT $50
* Cava Group Rated New Buy at Stifel; PT $48
* Prudential Reinstated Outperform at KBW; PT 1,550 pence
* Qiagen Still Rated Overweight at Morgan Stanley
* Titan Cement Resumed Buy at Citi; PT 24 euros

>>> Call
* Anglo American Cost Concerns Prompt Downside Watch at Citi
* BE Semiconductor Now Top European Semis Pick at Morgan Stanley
* CITI STRATEGISTS CUT US STOCKS TO NEUTRAL FROM OVERWEIGHT
* CITI STRATEGISTS CUT GLOBAL IT STOCKS TO NEUTRAL
* National Bank of Greece Raised, Eurobank Cut at Morgan Stanley

>>> what to look at today - 10th of July 2023

Stocks and currencies in Asia slipped, with risk appetite dented by deflation risks in China.  An Asia equity benchmark fell, headed for the lowest close in more than a month. Shares in Hong and mainland China pared gains after Chinese data showed further declines in factory-gate prices while core inflation slowed. The dollar gained against most Asian currencies, with the offshore yuan swinging to a loss after the report. 
Traders had initially focused on signs that a Beijing crackdown on Chinese tech companies was nearing an end, sending the Hang Seng Tech Index up as much as 3.2%, before getting weighed down by the outlook for the world’s second-largest economy.  US stock futures slipped further after most American equities dropped Friday when wage data showed inflation remained a threat. The S&P 500 fell 1.2% over the holiday-shortened week, while the Nasdaq 100 dropped 0.9%. Despite the current economic downturn, some investors still see China as a prospective market. Chinese authorities said on Friday they would wrap up a probe into Ant Group Co., with the financial technology company paying a fine of almost $1 billion, to suggest that a broader regulatory crackdown is ending. The dollar edged higher against all of its Group-of-10 currencies. The yen fell fell 0.5%, while Japanese stocks led losses in the region. Treasury yields were little changed, with the two-year remaining below 5% and the 10-year just above 4%.  Meanwhile, investors continue to face a host of competing forces, including the risk of higher interest rates and recession.  Some jobs reports last week have tamped down speculation the Federal Reserve would leave interest rates unchanged later this month. The outlook beyond that was unclear. Government jobs data fell short of estimates but brought signs that wage inflation remained a threat to the Fed’s fight against price gains.  Traders will also be closely watching this week’s US consumer price print. Bloomberg economists are expecting the headline number to fall 3.1%, though they don’t see that stopping the Fed hiking at its meeting later this month. Reports from big banks including Citigroup Inc. and JPMorgan Chase & Co. may also set the tone for second quarter earnings. US Treasury Secretary Janet Yellen said over the weekend she wouldn’t rule out the threat of a US recession, noting that it was “appropriate and normal” for growth to moderate and that inflation remains too high. Oil edged lower Monday after two consecutive weekly increases, and gold steadied.

Nikkei -0,28% Hang Seng +0,48% CSI +0,39% Shanghai +0,07% Shenzen +0,21%

Eur$ 1,0957 CNH 7,2390 CNY 7,2330 JPY 142,93 GBP 1,2814 CHF 0,8906 RUB 91,3727 TRY 26,0656 WTI$ 73,41 -0,55% Gold 1922 -1% BTC 20,136 ETH 1862

S&P -0,42% Nasdaq-0,62% EuroStoxx -0,52% FTSE -0,23% Dax -0,30% SMI -0,49%

Macro :
- US Equities Will ‘Absolutely’ Drop in 2H in CLSA’s Base Case
- UK Chancellor Hunt Set to Outline New Capital Market Rules
- US to Buy 6 Million More Barrels of Oil for Emergency Reserves
- Fed’s QT Ghosts Are Haunting Powell Bid to Shrink Balance Sheet
- Yellen Says US-China Ties on ‘Surer Footing’ After Beijing Visit

Keep an eye on :
- BABA US : Alibaba Surges on Report China to Unshackle Ant With Fine
- BABA US : Alibaba Mulling Selling Shares to Ant for Buyback as Probe Ends
- CS FP : Amundi, AXA Accused of Funding Myanmar Junta: Le Monde
- BAYN GY : Bayer Working on Spinoff of Crop Science Unit, Platow Reports
- BBED NA : Torqx to Buy Beter Bed Holding for €6.10/Share Cum Div.
- BT/A LN : BT Engaged in ‘Regular’ Succession Planning Before CEO Departure
- CO FP : Casino Offer From Kretinsky Sees Ex-Metro Exec as CEO: Echos
- CO FP : Casino Says 3F Holding Extends Bid Validity to July 10
- CLNX SM : Cellnex Carrier-Consolidation Concerns Limited by Regulation
- CSGN SW : Saudi National Bank Wanted 40% Stake in Credit Suisse: Blick
- DIC GY : DIC Asset Cuts FY FFO Forecast
- DIDIY US : Didi Narrows Losses to 1.2 Billion Yuan in First Quarter
- EDP PL : EDP Says Norges Bank Increased Its Stake in Utility to 5.06%
- GM US : GM Cuts Cadillac Lyriq Electric Vehicle Price by $8,300 in China
- HCM LN : Hutchmed Starts Phase I Study of HMPL-415 in China
- ILTY IM : Tycoon Pignataro Wins ECB Approval to Get Stake in Italian Bank
- KER FP : Kering Paid €3.5 Billion for Fragrance Brand Creed, FT Says
- LHA GY : Deutsche Bank Wins Lufthansa Frequent-Flyer Credit Card Deal: FT
- META US : Threads Attracts 70 Million Users; Character.AI App: TMT Wrap
- NOVN SW : Novartis Maintains 2023 Group Forecast
- NOVN SW : Samsung Biologics Signs 511.1b Won Deal With Novartis Pharma
- OMV AV : Austria’s OMV CEO Says to Keep Importing Russian Gas, FT Reports
- RIEN SW : Rieter Sells Land in Winterthur to Allreal for CHF96M
- SFL IM : Safilo Names Melotti as Group CFO
- SAN FP : Sanofi CEO Sees Recognition for Drugmaker’s Innovation Focus
- SESL FP : Ses-Imagotag Says Report ‘Contains Several Gross Inaccuracies’
- SHBA SS : Swedish Real Estate Woes Pile Pressure on Handelsbanken’s Rating
- UBSG SW : UBS Introduces Fee for Inactive Clients With $2m Assets: HKEJ
- WIHL SS : Wihlborgs 2Q Income From Property Management Beats Estimates
- UCG IM : UniCredit Pact With UnipolSai Assicurazioni, Allianz on Incontra

FT : Glencore boss considers the unthinkable — spinning off coal

Glencore boss considers the unthinkable — spinning off coal
Gary Nagle faces growing shareholder concern over mining company’s climate plans

When Gary Nagle became chief executive of Glencore two years ago, the world was still gripped by the Covid-19 pandemic, and the Swiss mining company had just signed a deal to expand its ownership of a giant thermal coal mine in Colombia, Cerrejón.

Nagle, who was 46 at the time, had previously run Glencore’s coal business, and the Cerrejón deal negotiated by his predecessor Ivan Glasenberg proved to be one of the most profitable mining deals of all time. Coal prices soared after Russia’s full-scale invasion of Ukraine, and in 2022 coal accounted for more than half of Glencore’s record profits.

But now Nagle, who cut his teeth in coal mining, may be about to do something that would have been unthinkable when he took office: spin off Glencore’s coal business. That would leave behind a sizeable metals mining, processing and trading business, with nickel, cobalt and copper mines stretching from Canada to the Congo.

Under a proposal earlier this year, Glencore offered to buy in cash the metallurgical coal business of Teck Resources, merge that with its own thermal coal business, then spin out the new coal behemoth on the New York Stock Exchange.

“We would create what would definitely be the world’s best coal company,” he said in a recent interview in London at a Melbourne Mining Club event. “It would have assets in Canada, in Colombia, in South Africa and Australia . . . and it would also be represented across the different qualities [of coal].”


The negotiations with Teck are ongoing, and if those talks fail then Glencore might not spin out its coal unit.

Nagle started his 23-year career at Glencore in the coal business, rising to become the head of coal just prior to his appointment as CEO.

Although some shareholders have questioned Glencore’s coal strategy, and a growing number of them are uncomfortable with the company’s climate plans, Nagle is not afraid to defend coal.

“There is a role for coal, both steam coal and met [metallurgical] coal, in the world, as the world decarbonises,” he said. “Steam [thermal] coal is needed to provide the baseload energy needs of today,” he added, while metallurgical coal is used for steelmaking as the substitute technologies are not yet available.

Glencore’s emissions are larger than many countries: it emitted 380mn tonnes of carbon dioxide equivalent last year (including both direct emissions from operations, and indirect emission from sales of coal and other products). That’s nearly on par with the UK’s emissions (417mn tonnes last year) and greater than that of Spain.

If the deal to purchase Teck’s coal business succeeds, the combined company’s production would rise to 131mn tonnes a year of both met and thermal coal, flirting with the coal production “cap” of 150mn tonnes that Glencore set for itself.

Nagle said that target was only meant to apply to Glencore’s existing business. He added that Glencore’s thermal coal production would be phased down in line with the company’s emissions targets, which target a 15 per cent reduction by 2026, relative to the 2019 baseline.

For shareholders, views on Nagle’s plan are divided. One shareholder, Bluebell Capital, wrote to the board last month demanding Nagle’s resignation, saying the proposed coal deal made a mockery of Glencore’s climate goals.

“Glencore has demonstrated no intention to accelerate the transformation into a world-class pure player in green economy transition metals, but rather the intention is to become the undisputable leader in coal (thermal and steel),” wrote the shareholder.

Other shareholders are more supportive, saying Nagle is the right person to lead a coal spinout because of his background.

“It’s a very important step, and he has the experience to know how to do it,” said George Cheveley, portfolio manager at asset manager Ninety One. “There is a window of opportunity here [to spin out coal] and I think they should take it.”

Many shareholders and analysts believe Glencore’s share price valuation is depressed by its coal holdings, because coal companies trade at much lower multiples than other mining companies.

“The rest of the business is very focused on base metals, and transition metals. And there is an element in which one is holding the other back,” added Cheveley.

Nagle has been expanding some areas of the metals business, including with an investment earlier this year in low-carbon alumina refining.

Glencore is the world’s fourth-largest producer of copper, producing just over 1mn tonnes a year, and has plans to increase its production further.

Nagle has also been growing the recycling business, which accounts for less than 1 per cent of Glencore’s earnings before interest, taxes, depreciation and amortisation, but which he expects will grow significantly.

“Customers are coming to us and saying, before you offer us primary metal, do you have recycled metal for us,” said Nagle. “As mining companies, we love running around the world and digging all these big holes . . . but ultimately we can’t just keep doing that. Our responsibility is also to recycle.”

The company also bid repeatedly for all of Teck Resources, both the coal and the metals business, which would have greatly increased its copper production, though those approaches were rebuffed.

Many analysts expect Nagle’s focus on growing the metals and recycling side of the business, while spinning out coal, will lead to more deals down the line.

“Glencore has been the most aggressive [in pursuing deals], among the major miners,” said Chris LaFemina, mining analyst at Jefferies. “They have a clean balance sheet, which gives them the opportunity . . . Previously they were limited by their balance sheet, and now that constraint is no longer there.”

He added that the timing was optimal for base metals deals, due to the combination of temporarily weak prices for metals such as copper, but strong projections for longer-term demand.

As Glencore goes on the hunt for more deals — and continues the coal discussions with Teck that would lead to a spin-off of its coal business — the future company could take a very different shape to the present one.

Nagle himself said he was not sure what the company would look like in five or 10 years’ time. “What Glencore looks like, we don’t know. Not everything is in our control.”

FT : Philippe Jabre’s taste for an unexpected second act

Philippe Jabre’s taste for an unexpected second act
Hedge fund trader is now third-generation owner-manager of Beirut brewer Brasserie Almaza

Renowned hedge fund manager Philippe Jabre is enjoying an unexpected second act as a brewer after buying back his family business. 

Jabre, who hails from a prominent Lebanese Catholic family, was once one of Europe’s best-known hedge fund traders — not least for a run-in with the UK financial regulator in 2006 for alleged market abuse. Now he is the third generation owner and manager of the Brasserie Almaza that was created by his grandfather, Michel Jabre, 90 years ago.

“My family makes fun of me, because I’ve gotten really into it,” Jabre said in an interview. “But I’ve been enjoying the challenge of doing something completely different.”

Jabre carved out a reputation as a star manager at London-based hedge fund GLG Partners, where he ran as much as $7bn. 

But in 2006 he received what was then a record individual fine of £750,000 from the UK watchdog for trading on confidential information from Goldman Sachs about a 2003 convertible bond sale, although the authorities stopped short of calling his actions intentional. He moved to Switzerland from London and set up a hedge fund, Jabre Capital. 

Jabre ran money at his eponymous business for just over a decade. At the end of 2018, he announced he would return money to outside investors after suffering heavy losses that year. But after stepping back from professional money management, he admits that he was “bored to tears”.

In mid-2021, Jabre learned that Almaza’s longtime backer Heineken was looking to sell off its controlling stake in the company due to Lebanon’s difficult economic circumstances. The brewery was at risk of shutting down for good, putting nearly 200 jobs at risk. He bought Heineken’s stake for an undisclosed amount with his personal money.

“Almaza has been around since 1933 and survived Lebanon’s many rocky periods, including the civil war. It didn’t sit well with me that it could shut its doors because of this crisis,” he said.

Speaking from Almaza’s works in Beirut, which has occupied the same building since its founding, Jabre said: “This is not Lebanon’s first crisis, and it’s not even its worst.”

He added: “I hope to show others that they shouldn’t give up on Lebanon, that despite the difficulties, we should keep investing in our country.”

Since 2019, Lebanon has been mired in one of the world’s worst economic crises in modern history: more than three-quarters of the population has been plunged into poverty, while its currency has lost more than 95 per cent of its value against the dollar. Most Lebanese have had their funds frozen in its zombie banking system since late 2019, with monthly withdrawals capped and dollar deposits forcibly converted into Lebanese currency at a punishingly low rate.

The country is also trudging through an unprecedented leadership vacuum, without a president for the past nine months and only a caretaker administration governing and stalling on reforms.

Jabre bought the brewery when Lebanon had not yet adapted to its new economic reality and purchasing power was greatly reduced. In 2022, Almaza’s profits stood at around 8 per cent of its sales and were reinvested in the capital-intensive business, Jabre said. He declined to provide sales figures.

Now, almost four years into the crisis, the economy has largely been dollarised but the brewery still cannot get credit lines. Jabre initially had to front the business cash to pay for around half of its imports but he said this will be phased out “because our cash flow is now positive as the business is more stable”.

The brewery’s exports are sometimes delayed because underpaid civil servants are frequently on strike. “It’s not exactly ideal but there’s no alternative right now,” Jabre said.

Still, Jabre has big plans. Almaza produces around 200,000 hectolitres of beer a year. A hectolitre is equivalent to 100 litres. Exports currently make up a quarter of its production, a number he hopes will reach 40 per cent soon.

This summer, Almaza is launching the company’s first new product in a decade, Almaza Unfiltered. Its recent ad campaign caused a furore as it dedicated itself to “all Lebanese enduring unacceptable and unjust daily deceptions”.

Seen more than 1mn times online, it was pilloried by many who accused the company of exploiting Lebanon’s tragedies for commercial gain. Jabre defended it as capturing “the many contradictions of this tiny country”.

His own switch from hedge fund manager to brewer shows, he says, that “life doesn’t stop. It just continues under a different hat.”